Client Alert - U.S. Enacts the Trademark Dilution Revision Act of 2006

10.25.2006

President Bush has signed a law that overturns the U.S. Supreme Court, holding in Moseley v. Secret Catalogue, Inc., 537 U.S. 418, 65 U.S.P.Q. 2d 1801 (2003), and clarifies that the owner of a famous and distinctive mark has a federal cause of action for dilution even though only a likelihood of dilution can be demonstrated (rather than actual dilution), and that this applies to dilution by blurring and dilution by tarnishment. The new law replaced the existing Section 43(c) of the Lanham Act, 15 U.S.C. 1125. The following is an outline of the main provisions in the new law:

1. The protected mark must be:

• Famous (that is, “widely recognized by the general consuming public
  of the United States” -- The Act lists 4 non-exhaustive factors that a
  court may consider in determining whether a mark possesses the requisite recognition),

and

• Distinctive (inherently or through acquired distinctiveness).

2. The owner of a famous and distinctive mark is protected against another who, at the time the owner's mark becomes famous, commences use in commerce of a mark that is:

likely to cause dilution by:

• blurring (that “impairs the distinctiveness of the famous mark” --
  The Act lists 6 non-exhaustive factors),

or

• tarnishment (that “harms the reputation of the famous mark”).
• regardless of the presence of
  actual confusion
  competition, or
  actual economic injury.

3. Exclusions from liability are provided for:

• fair use (including descriptive, nominative, comparative advertising,
  parody, criticism or comment),
• news reporting or news commentary, or
• non-commercial use.

4. Trade dress dilution is recognized, but if the trade dress has not been registered as a mark, the owner has the burden of proof that the trade dress is:

• not functional, and
• is famous apart from any fame of a registered mark included in it.

5. The owner can get injunctive relief against dilution by blurring or dilution by tarnishment. In addition, for dilution activities begun after the effective date, October 6, 2006, the owner can get profits, damages, enhanced damages and an order of destruction if there was:

• a willful intention to trade on the recognition of the famous mark by blurring; or
• a willful intention to harm the reputation of the famous mark by tarnishment.

6. If the dilution defendant has a valid registration of its mark on the Principal Register, that is a complete defense.

For further information, contact William M. Borchard or any member of the CLL Litigation Group.