On October 6, 2006, President George W. Bush signed into law the Federal Trademark Dilution Act of 2006 (FTDA). This law, effective immediately, clarifi es 15 U.S.C. § 1125(c) (Lanham Act § 43(c)) and largely overturns a textual interpretation by the U.S. Supreme Court of the federal dilution statute in Moseley v. V. Secret Catalogue, Inc. Very famous marks are now granted more protection against dilution by tarnishment or blurring, but marks famous in niche markets are not excluded from the scope of protection.

Moseley v. V. Secret Catalogue, Inc., 537 U.S. 418 (2003)

Victor and Cathy Moseley owned and operate a retail store named Victor’s Secret in a strip mall in Elizabethtown, Kentucky. Their 1998 Valentine’s Day advertisement to the nearby military installation Fort Knox included Victor’s Secret women’s intimate lingerie. V. Secret Catalogue, Inc., owner of the famous trademark VICTORIA’S SECRET, became aware of this use and requested immediate discontinuance of sales under this mark. The Moseleys proposed to change their store name to Victor’s Little Secret, but V. Secret Catalogue, Inc. fi led suit in District Court two months after the brochure was sent out.

The District Court was unable to fi nd any evidence of actual confusion between the marks or blurring of the VICTORIA’S SECRET mark by the Moseleys. Nevertheless, the Court enjoined Victor’s Secret from selling lingerie on the basis that it caused dilution of the distinctive quality of VICTORIA’S SECRET. The Court of Appeals for the Sixth Circuit affirmed, finding that this was a classic instance of dilution by tarnishment when VICTORIA’S SECRET was associated with sex toys and lewd coffee mugs. The Sixth Circuit refused to followed the Fourth Circuit’s test requiring proof of actual economic harm be shown by lessening the selling power of the famous mark. Instead, it found that only likelihood of dilution was required to sustain a cause of action. Because of this split in the interpretation of the Lanham Act, the Supreme Court granted certiorari and unanimously reversed the Sixth Circuit ‘likelihood of dilution’ test. The high court held that most state statutes require a likelihood of confusion between the marks—a lower threshold—while the federal statute required “use of a mark or trade name if that use causes dilution of the distinctive quality.” Here, no cause of action could be maintained since there was simply no evidence that any military personnel at Fort Knox who received the VICTOR’S SECRET advertising were suffi ciently infl uenced to “lessen the capacity of the famous mark [VICTORIA’S SECRET] to identify and distinguish the goods or services.”

The Federal Trademark Dilution Act of 2006 (FTDA) The adopted language of the FTDA of 2006 is now explicit:

INJUNCTIVE RELIEF—Subject to the principles of equity, the owner of a famous mark that is distinctive, inherently or through acquired distinctiveness, shall be entitled to an injunction against another person who, at any time after the owner’s mark has become famous, commences use of a mark or trade name in commerce that is likely to cause dilution by blurring or dilution by tarnishment of the famous mark, regardless of the presence or absence of actual or likely confusion, or competition, or of actual economic injury.

The Moseleys’ use of VICTOR’S SECRET, even without confusion, competition, or actual economic injury, is now prohibited. The FTDA of 2006 introduces (a) a likelihood of confusion standard applied to dilution, (b) a means to stop dilution at inception, (c) a better definition of which marks qualify as famous, (d) an express cause of action against tarnishment, and (e) a limited fair use defense. The law specifi es that famous marks need not only have famous recognition in their own niche market, they must also have achieved widespread fame among the general public. Understandably fewer marks may now claim protection under the FTDA of 2006.

State Dilution Rights v. the New FTDA of 2006

One author  believes that Congress has reached a balance in the Act between trademarks and free speech by limiting dilution to truly famous marks in only commercial uses that do not impede free speech. We believe that the change in the defi nition of which marks qualify for protection has changed the balance between the Federal Dilution Act, and State Dilution Acts.

In niche markets, where only a small fraction of the population has access to a mark, market leaders no longer benefi t from federal protection absent general public recognition. ORCA,  for example, a leading supplier of wetsuits for triathlons, is well known and even famous to practitioners of this sport but has very limited general public recognition, which prevents it from claiming protection under the FTDA of 2006. State statutes do not take the restrictive position of the FTDA of 2006. The Illinois Dilution Act, for example, specifically provides that “the degree of recognition of the mark in the trading areas and channels of trade in this State used by the mark’s owner and the person against whom the injunction is sought”  is a factor in determining if a mark is famous and protection can be obtained. In the above example, while ORCA is no longer entitled to federal protection under the dilution statute, protection is likely under state law. Conclusion Very famous marks of general public recognition have been given more power to act under the FTDA of 2006, a power already given to these marks under numerous state statutes. Owners of famous marks have been given one more tool in their arsenal against new emerging marks. Other marks famous only in niche markets without general public recognition must now exclusively rely on state statutes to protect against blurring and tarnishment.