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Testimony of
Jacqueline A. Leimer
President
International
Trademark Association
Revising the
Federal Trademark Dilution Act
Before the
Subcommittee on Courts, the Internet and Intellectual Property
Committee on the
Judiciary
I. Introduction
Good morning, Mr. Chairman. My name is Jacqueline A. Leimer. I am chief counsel, global trademarks for Kraft Foods Global, Inc. and serve as president of the International Trademark Association (INTA). As do all INTA officers, board members and committee members, I serve INTA on a voluntary basis.
INTA supports revision of the Federal Trademark Dilution Act (FTDA)[1] and encourages Congress to enact legislation that will provide greater clarity regarding protection afforded under the statute, better define the standard of proof for dilution, and strengthen protection for free speech interests. INTA’s support for revising the FTDA in this manner comes after a nine-month comprehensive study of dilution law that was undertaken by a select committee of trademark experts. My predecessor as INTA president, Kathryn Barrett Park, organized the select committee after the U.S. Supreme Court decision in Moseley v. V Secret Catalogue, Inc.,[2] in which the court addressed a number of dilution issues, particularly the standard of proof for a dilution claim. I was honored to have chaired the select committee in my capacity then as the executive vice president of INTA.
INTA is a 126-year-old not-for-profit organization comprised of over 4,300 members. It is the largest organization in the world dedicated solely to the interests of trademark owners. The membership of INTA, which crosses all industry lines and includes both manufacturers and retailers, values the essential role that trademarks play in promoting effective commerce, protecting the interests of consumers, and encouraging free and fair competition. INTA has a long history of making recommendations to the Congress in connection with federal trademark legislation, including: the Trademark Law Revision Act of 1988 (TLRA),[3] the Anticybersquatting Consumer Protection Act of 1999,[4] the Trademark Law Treaty,[5] and the Madrid Protocol Implementation Act.[6]
II. History of the FTDA
INTA was also a prime advocate for
passage of the FTDA, which became law on
The FTDA affords protection that is different from trademark infringement protection. Dilution does not rely upon the standard test of infringement, that is, the likelihood of confusion, deception, or mistake. Rather, the FTDA provides equitable relief to the owner of a famous mark against another person’s commercial use of a mark or trade name that lessens the “distinctive quality of the [famous] mark,” [9] “regardless of the presence or absence of (1) competition between the owner of the famous mark and other parties, or (2) likelihood of confusion, mistake or deception.”[10] The statute also sets forth criteria that a court should consider in determining whether a mark is famous; establishes an injunction as the primary form of relief; and provides statutory defenses to a dilution claim.[11] In 1999, Congress granted holders of famous trademarks the right to oppose a trademark application or cancel a trademark registration based on dilution of their marks.[12]
III. The Need for Revision of
the FTDA
Since
its adoption in 1996, the FTDA has served a valuable role in protecting famous
trademarks. For example, during the earliest days of online commerce, before
Congress passed the Anticybersquatting Consumer Protection Act, the FTDA helped to stem the tide of the registration
and trafficking in Internet domain names with the bad-faith intent to benefit
from another’s trademark. At the same time, however, after more than eight years,
there remain open questions and courts are divided on a number of key
dilution-related concepts regarding the intent of Congress when it adopted the
FTDA. For example:
(1) What is a famous mark? Some
courts have opted to be more “discriminating and selective”[13]
in terms of what is protectable, while others have defined fame more broadly.[14] In particular, should marks that are famous
only in a “niche” market and, therefore, well known only to a select
class or group of purchasers, or in a limited geographic region, qualify as “famous” within the meaning of the present
statute? This too is an unsettled question.[15]
(2) Does the FTDA only protect
famous marks that are inherently distinctive, or does it also cover famous
marks that have acquired distinctiveness, i.e., gained secondary meaning
over time?[16] In trademark parlance, “distinctiveness”
refers to the ability of a mark to identify goods or services as originating
from a particular source – either immediately (as in the case of inherently
distinctive marks) or only after a significant period of time or investment (as
in the case of marks with acquired distinctiveness).
(3) Whether tarnishment is
covered under the FTDA was a question posed by the Supreme Court in dicta in
the Moseley decision. This
comment was based on the statutory language “dilution of the distinctive
quality of the famous mark,” which, in the view of the court, might not go to
injury to the reputation of a famous mark, the underlying concept of dilution
by tarnishment.[17] Notwithstanding this question, tarnishment,
along with blurring, has long been and is still regarded by trademark scholars
as one of the “two different dimensions” of dilution.[18]
(4) Finally, what is dilution
and how does a famous trademark owner go about proving it? In Moseley, the Supreme Court held
that the FTDA requires proof of actual harm and that consumers’ mere
mental association between the famous and challenged marks, whatever its effect
on the famous mark, is generally insufficient to establish such harm,
particularly when the marks in question are not identical.[19] But, as I will
explain later, this holding is problematic, as it does not account for the need to prevent dilution
at its incipiency, before the effectiveness and reputation of the mark
is lost.
These and other key questions, Mr. Chairman, should be answered through a revision of the FTDA, and not by forum shopping or waiting for further costly litigation to provide us with a solution. Congress should take the opportunity to better focus the application of the federal dilution statute, while at the same time clarifying the meaning of the harm the statute aims to prevent, as well as the manner in which a dilution claim is proven.
IV. Revising the FTDA
Below are the principles underlying INTA’s recommendation for a revision of the FTDA. To help the subcommittee in its review, I have divided these recommendations into four categories: “Qualifications for Protection,” “Blurring and Tarnishment,” “Safeguarding Free Speech,” and “Relief and Preemption.”
A. Qualifications
for Protection
INTA believes that fame should remain the critical requirement to qualify for federal dilution protection. As Jerome Gilson, a leading U.S. trademark law expert has stated, these marks inspire “abundant good will and consumer loyalty … and federal dilution law protects the substantial investment necessary to advertise and promote the mark.”[20]
A revised dilution statute should expressly state that
famous marks with inherent or acquired distinctiveness are eligible for
protection, because at least one circuit court of appeals has found enough
ambiguity in the current statute to exclude famous marks with acquired
distinctiveness[21]
and because a designation that “has achieved trademark status only through the
acquisition of secondary meaning is certainly capable of acquiring a greater
degree of distinctiveness and achieving the status of ‘famous’ mark.”[22]
While INTA believes that fame should remain the threshold needed in order to qualify for protection under a federal dilution statute, we do suggest that a revised statute should be more explicit as to what marks qualify as “famous.” INTA recommends that Congress define the scope of fame as being limited to marks, whether or not they are registered with the U.S. Patent and Trademark Office, that are “widely recognized by the general consuming public of the United States.” This standard does narrow the set of marks that would qualify for federal dilution protection. But, in our opinion, it is an appropriate step. This new standard would help to alleviate the “contradictory and inconclusive”[23] nature of the existing statutory language and legislative history on this issue, which has led to inconsistent decision-making and discomfort among some judges who feel compelled to render a finding of fame even though the mark in question is well known to a limited number of people. It will ensure that the broad protections against dilution provided for in the statute are available only to the select class of marks for which improper associations would be most damaging.[24] In addition, we believe this standard would also allow smaller companies to use marks in their businesses without undue restriction.
Under the proposed standard, marks that are famous in a niche product
or service market or that are recognized only in a limited geographic
region will not qualify for federal dilution protection. State dilution laws and, in appropriate cases, infringement and
unfair competition statutes, such as § 43(a) of the Lanham Act, will afford
adequate protection of the senior user’s mark in these cases.
INTA considers non-exclusive factors to be a useful guide to mark owners and the judiciary in determining whether a mark is famous. The current FTDA fame factors that a court may consider are, but are not limited to:
(A) the degree of inherent or acquired distinctiveness of the mark;
(B) the duration and extent of use of the mark in connection with the goods or
services with which the mark is used;
(C) the duration and extent of advertising and publicity of the mark;
(D) the geographical extent of the
trading area in which the mark is used;
(E) the channels of trade for the
goods or services with which the mark is used;
(F) the degree of recognition of the mark in the trading areas and channels of trade
used by the marks’ owner and the person
against whom the injunction is sought;
(G) the nature and extent of use of
the same or similar marks by third parties; and
(H) whether the mark was registered under the Act of March 3, 1881, or the Act of
February 20, 1905, or on the principal register.[25]
INTA proposes that the existing fame factors be simplified and replaced
as follows:
(A) the duration, extent, and geographic reach of advertising and publicity of the
mark, whether advertised or publicized by the owner or third parties;
(B) the amount, volume, and geographic extent of sales of goods or
services offered under the mark; and
(C) the extent of actual recognition of the mark.
The first and second factors reflect traditional concepts of marketplace recognition that courts have applied for decades and incorporate some of the existing factors. The third factor, “the extent of actual recognition of the mark,” is meant to incorporate survey evidence, market research such as brand awareness studies, and even unsolicited media coverage.
Some of the factors contained in the current statutory test are omitted from INTA’s proposal. For the most part, their absence stems from the fact that they are already accounted for in the definition itself, or are, in our view, not relevant to the issue of fame. For example, since INTA’s proposed definition of fame specifies that the mark must be “widely recognized by the general consuming public of the United States,” the current factors dealing with the geographic extent of use and recognition in the junior user’s trading area and channels of trade are no longer necessary. Because the mere existence of a registration is really not relevant at all to the question of fame, we suggest that it be omitted as well.
B. Blurring and Tarnishment
In INTA’s opinion, famous marks should be expressly protected by statute
from the likelihood that they will be either blurred or tarnished. A revised statute should be clear on what
constitutes a likelihood of dilution by blurring and what constitutes
likelihood of dilution by tarnishment.
1. The Incipient Nature of Dilution
First, why should likelihood of dilution be actionable as
opposed to actual dilution? This
question was at the heart of the Moseley case. In its decision, the Supreme Court ruled, “the text [of the
FTDA] unambiguously requires a showing of actual dilution, rather than a
likelihood of dilution.”[26] In particular, the court cited Section
43(c)(1) of the Lanham Act, which provides that “the owner of a famous mark” is
entitled to injunctive relief against another person’s commercial use of a mark
or trade name if that use “causes dilution of the distinctive quality”
of the famous mark.[27] The court did, however, hold that proof of actual
dilution does not require a showing of the economic consequences of dilution,
such as lost sales or revenues.[28]
INTA submits that a dilution cause of action should not require an actual, provable change in the way consumers think about the famous mark. This approach, which the Supreme Court adopted based on the language of the existing FTDA, does not account for the need to prevent dilution at its incipiency, the core concept underlying the dilution remedy. In the opinion of INTA, the owner of a famous mark should be able to obtain an injunction against the first offending use, even if that use has not yet resulted in provable damage to the mark. Because dilution is a process by which the value of a famous mark is diminished over time, either by one or multiple users, the owner of the famous mark should not be required to wait until the harm has advanced so far that, in the case of blurring, the recognition of the mark, and in a tarnishment case, the reputation of the mark, is permanently impaired.
Moreover, if the owner of a famous mark must wait years to challenge the multiple uses that have entered the marketplace in the interim, the defendants in those cases will be poorly served as well. Junior users will have invested in the allegedly diluting marks over the course of time, placing their accrued goodwill in great jeopardy. And, given the great hardship that a junior user could suffer as a result of delay in challenging the marks, a court could apply the laches defense. The present FTDA, as interpreted by the Supreme Court, thus presents the plaintiff with a Hobson’s choice: sue too early and lose because the harm is not yet provable, or sue too late and lose on laches grounds.
Accordingly, the most practical way to express the incipient nature of dilution in a manner a court will understand, is to expressly phrase the cause of action as a likelihood of dilution – that is, that the junior use is likely to cause dilution (whether by blurring or by tarnishment) if allowed to continue unchecked.
INTA recommends a new statutory approach to addressing a claim of likelihood of dilution by blurring. We recommend that the statute require the owner of a famous mark to prove a likelihood of association between its mark and the junior mark, arising from the similarity of the marks, which would impair the distinctiveness of the famous mark.
Under this test, not just any mental association will suffice – it must be an association that arises from the similarity (or identity) of the two marks, as opposed to an association that arises because of product similarities or competition between the owners of the two marks. Moreover, it is association that is likely to impair the distinctiveness of the senior mark.
For example, let us assume that the CLOROX mark is “widely recognized by the general consuming public of the United States.” It is a completely made up term, created only for the purpose of functioning as a trademark, not used elsewhere in the commercial arena, and associated only with a supplier of household cleaning products and detergents. If another company begins to produce CLOROX sneakers, there is little question that consumers will draw an association between the two marks due to their identity and the high degree of distinctiveness of the mark. This association will over time reduce the distinctiveness of the CLOROX mark, i.e., it will make it less likely over time that consumers will identify the goods and services bearing the name CLOROX as originating from a particular source. In short, dilution is highly likely, and indeed is probably already underway, although the impairment to the senior mark may not yet be manifest.
Another situation would be one
where the famous, senior mark is not as distinctive as CLOROX or the junior
mark is not identical or virtually identical to the senior mark. In this type of situation, courts could use
the factors for dilution by blurring
(addressed later) to determine whether the requisite association and impairment
are likely. The use of the likelihood of dilution standard in INTA’s proposal
would make clear that relief can be granted based on a court’s assessment of
the relevant factors, without proof of actual dilution as presently required by
the Supreme Court in Moseley.
3. Blurring Factors
INTA recommends that a revised federal dilution statute contain non-exclusive factors to assist courts in determining whether there is a likelihood of dilution by blurring. A court will need to balance all of these factors, as well as any others it may deem relevant in order to make a determination as to whether there is a likelihood of dilution by blurring. INTA proposes that Congress consider the following:
(1) The degree of similarity between the junior use and the famous mark.
(2) The degree of inherent or acquired distinctiveness of the famous mark.
(3) The extent to which the owner of the famous mark is engaging in substantially exclusive use of the mark.
(4) The degree of recognition of the famous mark.
(5) Whether the junior user intended to create an association with the famous mark.
(6) Any actual association between the junior use and the famous mark.
Factor one is self-evident and refers to step one of the blurring analysis: How similar are the two marks? The less similar the marks, the less likely a consumer association between the marks.
The degree of inherent or acquired distinctiveness of the famous mark considers the extent to which the public may identify the mark with a single source. Further, this factor considers whether the mark is sufficiently strong to allow single-source identification upon initial use of the mark. The more distinctive and memorable the mark, the more it is likely to be blurred by the use of other identical or similar marks. The more common or descriptive the mark, the less likely it is to be blurred by uses of identical or similar marks.
Factor three, the extent to which the owner of the famous mark is
engaging in substantially exclusive use of the mark, asks the court to
determine whether other trademark uses similar to the famous mark already exist
in the marketplace. If, for example, the famous mark is in
substantially exclusive use, it could indicate that the mark’s distinctiveness
is more likely to be impaired by the junior use. Conversely, where other similar
marks are already in use, it may be somewhat less likely that the junior use
will have the effect of blurring the famous mark, unless those uses have little
or no visibility to the average consumer.
The degree of recognition is
another way of asking, “just how famous is the famous mark?” The more famous the mark, the more likely it
will be memorable such that the association will be made, and the more likely
that the association will impair the distinctiveness of the mark in the sense
of how well it stands out in the marketplace.
If it is found that the defendant intended to trade on the recognition of the famous mark, then the defendant presumably used the junior mark with the expectation that consumers would associate their mark with the famous mark. This factor operates as an admission by the defendant that the senior mark has a sufficient degree of fame such that the mark can be blurred, and that the defendant sought to appropriate that fame to itself in order to direct consumers’ attention toward its own mark.
The last factor, actual association, refers to evidence found in surveys, news items that reference both of the marks, and other evidence that may support a finding that the requisite association between the marks is likely to occur.
4. Dilution by Tarnishment
In light of the ambiguity created
by the Supreme Court’s comments in the Moseley decision, INTA believes
that it is important to expressly state in a revised federal dilution statute
that tarnishment is within the scope of the law. Owners of famous trademarks
should be able to protect their significant investment against negative
associations, absent a protectable free speech interest, which is discussed in
more detail below. INTA suggests that a revised federal dilution statute find
liability for tarnishment if a junior use is likely to harm the reputation of
the famous mark. This standard is used
in state dilution statutes and most courts have capably adjudicated claims of
tarnishment under this standard.
C. Safeguarding Free Speech
INTA believes that it is essential when revising the federal dilution law for Congress to confirm that the rights of famous mark owners do not interfere with free speech protections that are guaranteed by the First Amendment. To accomplish this goal, we recommend that a revised dilution statute expressly provide as an essential element of the cause of action for dilution, whether for dilution by blurring or dilution by tarnishment, that the plaintiff demonstrate that the defendant is using the challenged mark as a “designation of source” (e.g., trademark, trade name, logo, etc.) for the defendant’s own goods or services.
A requirement of defendant’s use as a designation of source will prevent any descriptive fair use[29] or nominative fair use[30] from falling within the ambit of the revised statute. For example, a defendant using a famous mark to refer to the trademark owner’s goods in comparative advertising, or a newspaper using the famous mark to refer to the mark owner’s goods for purposes of news reporting or commentary, would not qualify as use as a designation of source for the defendant’s own goods or services, and therefore would not be covered by the statute at all. Moreover, the requirement of use as a designation of source for the junior user’s own goods or services should protect all legitimate parody and satire, even if that parody and satire appears in a commercial context. It is INTA’s strong belief that this requirement is necessary to protect free speech and to ensure that dilution protection is appropriately limited.
The “designation of source” requirement will serve to strengthen the existing statutory defenses to a dilution claim:
(A) Fair use of a famous mark by another person in comparative commercial advertising or promotion to identify the competing goods or services of the owner of the famous mark.
(B) Noncommercial use of a mark.
(C) All forms of news reporting and news commentary.[31]
These defenses, as interpreted and applied by the courts, have worked well to protect parties using famous marks as a form of free expression and should therefore remain part of a revised federal dilution law.[32]
D. Relief and Preemption
INTA recommends that an injunction should continue to be the principal form of relief in a federal dilution claim. The plaintiff should continue to be entitled to remedies set forth in Sections 35(a) (profits, damages, and cost of the action) and 36 (destruction of goods bearing the registered mark) of the Lanham Act, subject to the discretion of the court and the principles of equity, if willful intent is proven. However, we suggest that a revised statute specify that in order to recover damages, willful intent to trade on the recognition of the famous mark must be proved for blurring claims, and willful intent to trade on the reputation of the famous mark must be proved for tarnishment claims.
INTA believes that a federal dilution statute should not preempt state dilution laws because preemption would adversely affect the ability of relief for intrastate and regional conduct to the extent permitted under state dilution laws. A valid federal registration should, however, be a complete bar to a state dilution claim. This is the scenario under the FTDA and we recommend that it remain unchanged in a revised federal dilution statute.
V. Conclusion
Thank you, Mr. Chairman, for
the opportunity to testify before the subcommittee. INTA looks forward to
working with Congress and interested parties in addressing issues related to
the revision of the FTDA.
Curriculum Vitae
Jacqueline A. Leimer
Jacqueline A.
Leimer is chief counsel, global trademarks for Kraft Foods Global, Inc.,
which is headquartered in Northfield,
Illinois, and serves as president of the International Trademark
Association (INTA). At Kraft Foods, Ms. Leimer is responsible for
all aspects of the company’s trademark and copyright practices.
Before joining
Kraft, Ms. Leimer was a partner at the law firm of Kirkland & Ellis in
Chicago. She is a frequent speaker on trademark topics, and regularly lectures
at Chicago area law schools. She also serves on the DePaul University College
of Law, Center for Intellectual Property Law & Information Technology
Advisory Board.
Ms. Leimer received her B.A. degree from Valparaiso University and her J.D. degree from Valparaiso University School of Law. She is admitted to the Illinois bar and the United States Supreme Court.
Disclosure
of Grant, Contract or Subcontract
The subcommittee is hereby informed that the International Trademark Association has received no federal grant, contract, or subcontract in the current and preceding two fiscal years.