Dilution Bill Passes Senate and Is Cleared for the President's Signature

September 26, 2006 – Firm News

By voice vote yesterday afternoon, the Senate passed HR 683, the Trademark Dilution Revision Act of 2005 ("TDRA"). The legislation has been cleared for forwarding onto the White House for the President's signature. HR 683 is a great step forward in clarifying the law of dilution. Most importantly, the TDRA shall be a sea change in the standard of proof for dilution actions. In 2003, the US Supreme Court, in Moseley v. V. Secret Catalogue, held that the standard of proof for dilution actions under the Federal Trademark Dilution Act of 1995 ("FTDA") was "actual dilution" -- a standard for which the Court provided little guidance and which dilution plaintiffs found nearly impossible to meet. Under the TDRA, the standard of proof for dilution actions under the Trademark Act will be likelihood of dilution.

The TDRA also provides for specific causes of action for dilution by blurring and dilution by tarnishment, to address dicta in the Moseley decision casting doubt upon whether the FTDA covered dilution claims based upon a tarnishment theory. Moreover, the new legislation provides fewer yet more concrete factors for establishing when a mark is "famous" for dilution purposes, and how a claim for dilution by blurring may be shown. The new definition of "fame" also is intended to preclude dilution claims based upon marks that are well known or of renown only in a geographic or market segment niche. On the other hand, marks need not be inherently distinctive for dilution purposes under the new legislation, as had been espoused by decisions from the Second Circuit Court of Appeals, and may qualify for dilution protection if distinctiveness was acquired through use in the marketplace.

The TDRA further provides for specifically enumerated defenses to dilution claims, such as nominative or descriptive fair use, comparative advertising, identification of the famous mark, parody, criticism, comment, news reporting and commentary, and noncommercial use by the accused party. In response to concerns from goods manufacturers, the legislation additionally contains a further hurdle for plaintiffs asserting dilution claims based upon trade dress that is not registered with the US Patent and Trademark Office ("USPTO"). Plaintiff's asserting such claims must also prove that the claimed trade dress, taken as a whole, is not functional and is famous. This added hurdle also applies to the unregistered portion of trade dress that is only registered in part with the USPTO.

Injunctive relief under the TDRA is available to the plaintiff who proves his dilution claim. However, for monetary relief and an order of destruction of the diluting articles, willful dilution must be shown. As was true under the FTDA, ownership of a valid federal trademark registration is a complete bar to state common law or statutory dilution claims. The new legislation also notes that it is not intended to impair, modify or supersede the US patent laws.

Finally, continuing the theme begun under the Trademark Amendments Act of 1999, TDRA dilution claims are made applicable to opposition proceedings and cancellation actions before the Trademark Trial and Appeal Board of the USPTO. However, dilution will not be the basis for a Trademark Examining Attorney to refuse registration of a mark during the ex parte prosecution process.