Lott & Friedland Newsletter
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Supreme Court Rules against Victoria’s Secret:
Trademark Dilution Requires Actual Harm to the Mark In Question

By Ury Fischer

In a much anticipated decision, the U.S. Supreme Court has reversed the ruling of the U.S. Court of Appeals for the Sixth Circuit in Moseley dba Victor’s Little Secret v. V Secret Catalogue, Inc. The unanimous ruling by the Supreme Court resolves a conflict between several Circuit Courts of Appeal regarding whether “objective proof of actual injury to the economic value of the famous mark … is a requisite for relief under the FTDA [Federal Trademark Dilution Act].”

Traditional trademark infringement law protects trademark owners against the use of marks that may cause a “likelihood of confusion” between the trademark owner’s goods or services and those of a third party. However, if the third party’s goods and services are not in competition with those of the trademark owners, the requisite “likelihood of confusion” often does not exist. Trademark dilution, unlike traditional trademark infringement law, provides an owner of a famous mark an avenue to protect the distinctiveness and economic value of its mark with respect to identical or similar marks used by others in connection with non-competing goods or services. Trademark dilution law protects the owners of famous marks from the “tarnishment” or “blurring” which occurs when their marks are used in connection with the goods or services of others, even when it is obvious that the infringing goods do not emanate from the trademark owner.

Until 1995, trademark dilution had been the exclusive purview of state law. The first state to enact a dilution statute was Massachusetts, which did so in 1947. Since then, at least 25 states have enacted their own statutes. In 1995, Congress enacted the FTDA, establishing trademark dilution as a federal cause of action.

In the reversed decision, the Sixth Circuit had ruled that a cause of action for dilution of a famous mark under the FTDA could be sustained even in the absence of proof of actual damage to the mark’s distinctive qualities. According to the Sixth Circuit, a trademark owner need only demonstrate a “likelihood of dilution” in order to prevail in an action under the FTDA. The Sixth Circuit’s decision expressly rejected the Fourth Circuit’s holding in Ringling Bros.-Barnum & Bailey Combined Shows, Inc. v. Utah Div. of Travel Development which stated that in order to prevail, the owner of a mark must prove “actual economic harm to the famous mark’s economic value by lessening its former selling power as and advertising agent for its goods or services.”

In reaching its decision, the Supreme Court strictly construed the language of the FTDA as excluding cases of “likelihood of dilution” and requiring actual harm. The Court differentiated the language of the FTDA from that of various state statutes which expressly refer to “likelihood” of harm. The FTDA, according to the Supreme Court, was intended to address only “completed harm.”

The Supreme Court's ruling will make it significantly more difficult for owners of famous marks to seek redress under the FTDA. This decision, however, does not shut the door completely to the owners of famous marks. Although the Court generally approved of the Fourth Circuit’s holding in Ringling Bros., it expressly rejected one key provision of that ruling. Specifically, the Court rejected the Fourth Circuit’s pronouncement that an FTDA complainant must prove an actual loss of sales or profits. In this respect, the Court stated that actual harm could be sufficiently proven by evidence of any “lessening of the capacity of the [famous mark] to identify and distinguish goods or services sold” by the famous mark’s owner.

A copy of the Supreme Court's complete opinion may be downloaded here.

To learn more about the Victoria’s Secret decision and the impact on your trademark rights, please contact one our experienced trademark attorneys by clicking here.