Trademark law has traditionally been thought of as a shield to protect consumers from mistake and deception in identifying the source of goods. Mark owners would wield this shield on behalf of consumers by brining infringement claims against confusingly similar marks. But a distinct cause of action has been recognized for nearly seventy years that does not fit neatly into this conceptualization. Following Frank I. Schechter’s famous article in 1927 “The Rational Basis of Trademark Protection,” states began to enact anti-dilution statutes to plug the hole in trademark protection that Schechter argued existed: namely, the inability to protect the distinctiveness of one’s mark. 40 Harv. L. Rev. 813 (1927). But protection for this particular attribute would not be recognized at the federal level for decades. Congress first provided a federal dilution cause of action in 1996 with the passage of the Federal Trademark Dilution Act (“FTDA”). Marred by inconsistencies in its application, Congress revamped the statutory scheme with the Trademark Dilution Revision Act (“TDRA”) of 2006.
Although infringement and dilution claims are related, they present distinct causes of action, guarding against distinct harms. Under both, the “similarity” between competing marks is important. For an infringement claim, similarity creates the all important proof of “consumer confusion” while, for a dilution claim, similarity causes a mark to lose its distinctive character.
With the aforementioned background, this post seeks to unpack two important parts of the relationship between these claims: first, to demonstrate how the “similarity” factor has led courts to conflate the theories. Section I below focuses on the Ninth Circuit’s recent interpretation of the “similarity” factor in a dilution claim. Second, Section II cautions against over-stating the new TDRA approach to dilution claims, as interpreted by the Ninth Circuit. While its new dilution test has “lowered the threshold” for stating a claim, this should not be read too broadly. While Congress certainly intended to clarify the cause of action under the TDRA, giving full effect to the Congressional aim should remain tempered by the specific harm dilution theory is supposed to protect against.
I. The Potential Broadening of Dilution Claims Under the TDRA
To resolve ambiguities within the FTDA, courts began developing their own factor-tests to define the dilution threshold. Some of these tests were problematic because they conflated dilution with the closely associated but importantly distinguishable infringement claim. For example, courts used the “Sweet” factors which included “consumer confusion” and “mark similarity” to determine whether a mark resulted in dilution by blurring. See Jennifer Beerline, “Anti-Dilution Law, New and Improved: The Trademark Dilution Revision Act of 2006.” 23 Berkeley Tech. L.J. 511, 519 (2008). As discussed below in section II, “consumer confusion” is an inappropriate factor for defining dilution. Thus, Congress remedied this problem under the TDRA by refusing to recognize “consumer confusion” as a factor.
Thus, the question remained, how does the TDRA deal with the “similarity” element, an issue recently tackled by the Ninth Circuit. In Levi Strauss & Company v. Abercrombie & Fitch Trading Company, the Ninth Circuit had to decide what level of “similarity” a dilution plaintiff has to prove under the TDRA. 2011 U.S. App. LEXIS 2361 (9th Cir. Feb. 8, 2011). Levi Strauss (“Levi”) holds a federal trademark on the “Arcuate” design, which it uses in the design of its jeans pockets and sued Abercrombie & Fitch Trading Co. (“Abercrombie”) for using the allegedly similar “Ruehl” design. Id. at 1-2.
After a jury determined that the marks were “not identical or nearly identical,” the trial court found that Levi was unable to meet the Ninth Circuit’s dilution test that required such a showing. Id. at 5. The issue on appeal was whether the district court erred in requiring Levi to prove that its Arcuate mark was “identical or nearly identical” to the Ruehl mark. Id. at 9. Levi argued that since the statute does not specifically require proof of similarity, the Ninth Circuit’s test which did demand such proof was statutorily overridden. Id. at 9-10.
The court traced the “identical or nearly identical” standard back to Luigino’s, Inc. v. Stouffer Corp., 170 F.3d 827, 832 (8th Cir. 1999) where the Eight Circuit held “the marks must at least be similar enough that a significant segment of the two target groups of customers sees the two marks as essentially the same.” Although these cases pre-date the FTDA, the court went on to explain that subsequent cases found the legislative history, purpose, and statutory language supported this “identical or nearly identical” requirement. Id. at 17-19.
In contrast, the Ninth Circuit made three arguments for why the standard did not survive the TDRA. First, under § 1125(c)(1), dilution by blurring is defined as the “association arising from the similarity between a mark and…a famous mark.” In choosing that term, Congress did not require a showing of “substantial” similarity or exact sameness. Thus, the court concludes that the TDRA standard is “less demanding’ than the one applied by many courts under the FTDA. Id. at 38. Second, the “degree of similarity” factor is simply one among a nonexclusive list of factors listed in the statute and certainly was not a “controlling” factor. Id. at 39. Finally, Congressional purpose in the TDRA was to break with inconsistent case law that had arisen from interpreting the ambiguous language of the FTDA. Interpreting that new statutory text, it was clear from the plain meaning that plaintiffs did not need to show identical, nearly identical, or substantial similarity between the marks. Id. at 40-41.
II. Anti-Dilution Theory Within the Larger Trademark Framework & the Potential Harm of Lowering the Standard for Dilution Claims
Although anti-dilution theory is a trademark cause of action, its theoretical underpinning is remarkably different from traditional trademark law. Under an infringement claim, the mark owner must demonstrate a “likelihood of confusion” among customers or potential customers. This confusion is tantamount to an inability to distinguish the source of a product because the marks are so similar. In contrast, under a dilution claim, no showing of “likelihood of confusion” is required; in fact, according to Professor McCarthy, the public must connect the identifying mark with both the junior and senior user, meaning that the public understands there are two recognized sources for the same mark. The only impact is a dulling of the “uniqueness” of the mark’s use by the senior user as there is more than one recognized source for the same mark. 4 McCarthy on Trademarks and Unfair Competition § 24:72 (4th ed.).
Despite some courts’ misinterpretation of the distinction between these two causes of action, the Ninth Circuit correctly pointed out that even under the FTDA, “similarity” between the marks under a dilution claim never should have relied on demonstrating “confusion.” As the court noted, early cases espousing the “identical or nearly identical” standard for similarity “stopped short of requiring that ‘the marks in question…be sufficiently similar that confusion may be created as between the marks themselves’.” (citing Mead Data Central, inc. v. Toyota Motor Sales, U.S.A., Inc., 875 F.2d 1026, 1029 (2d Cir. 1989). Therefore, the Ninth Circuit correctly held that the TDRA resolved any ambiguity among the courts as to whether “similarity” as proof of potential confusion was important; it is not. It is this clarification that informed the Ninth Circuit’s decision to reject the “identical or nearly identical” element for dilution claims.
Nonetheless, it would be a mistake to assume that the lowering of this threshold—from one where substantial evidence of similarity was required to requiring no proof of similarity at all—should make dilution claims easier to establish. As Professor McCarthy explains, “antidilution law is a potent legal tool, which must be carefully used as a scalpel, not a battle axe…[as] [t]he antidilution remedy was intended to apply only in unusual and extraordinary cases.” 4 McCarthy on Trademarks and Unfair Competition § 24:67 (4th ed.). Because dilution theory does not rest on consumer mistake or confusion—the founding policy underlying traditional trademark infringement claims, “antidilution law more closely resembles an absolute property right in a trademark.” Id. Thus, it should only apply to the “truly renowned marks” and proven by a “solid evidentiary base.” Without relegating dilution claims to their appropriate application, mark owners will be allowed to pursue these dilution claims as if they were absolutely entitled to prevent uses of similar marks without proving that any actual harm resulted (i.e. that the “distinctiveness” of the mark was impacted as a dilution by blurring claims is meant to do).
Guarding against this potential harm is as simple as recognizing that, under the TDRA, similarity remains an important factor. Without similarity, dilution clearly cannot occur. Because dilution by definition is consumers understanding two different sources for two different marks, the only way “distinctiveness” can really be impacted is because of close similarity. To explain it another way, imagine two individuals who wear the most trend setting blue-jeans to school. Person A will have no problem with Person B’s choice of blue-jeans, so long as Person B’s jeans are sufficiently different such that Person A’s trendy choice is not hampered. The only way that Person B’s choice can hamper, or dilute to use the statutory term, Person A’s distinctive trend, is to dress similarly. In reality, most people wear blue-jeans of one style or another, and proving that competing jean styles cramp one’s distinctive style should remain a difficult task. Dilution claims are not there to prevent Person B from wearing blue-jeans or even to wear blue-jeans with similar marks. Dilution claims are there to prevent “famous” blue-jean marks from having their distinctive character diluted. And that causal connection requires some showing of similarity. In this way, the Ninth Circuit’s holding should not be understood as making dilution claims any easier by rejecting “similarity” as an essential element but rather correctly clarifying the difference between infringement and dilutions claims themselves.
*Luke MacDowall is a third-year law student at Wake Forest University School of Law. He holds a Bachelor of Arts in Philosophy and History from Trinity University in San Antonio, Texas. While at Wake Law, Mr. MacDowall led the National Trial Team as team-captain and participated on the National Moot Court team. In addition, Mr. MacDowall worked in the intellectual property litigation department at Womble Carlyle Sandridge & Rice, PLLC. Upon graduation in May 2011, Mr. MacDowall intends to practice general business litigation with special emphasis on employment and labor law.