Supreme Court Requires Proof of Actual Injury Under Federal Trademark Dilution Statute

In a relatively rare trademark decision, the U.S. Supreme Court today resolved a conflict among several federal circuit courts in holding that proof of actual injury is required to show a violation of the Federal Trademark Dilution Act (“FTDA”). In the case of Moseley & Moseley v. V Secret Catalogue, Inc., the Supreme Court reversed the 6th Circuit’s holding that a showing of “likelihood of dilution” is sufficient, siding instead with the 4th Circuit’s requirement that plaintiffs must show “actual” dilution.

The FTDA, enacted in 1995, represents the first federal dilution law. Previously, dilution was enforced as a matter of state law only, with anti-dilution statutes in approximately 25 states. Unlike trademark infringement, which requires a showing of “likelihood of confusion,” dilution generally protects “famous” marks from “blurring” (diluting the distinctive quality of a mark) or “tarnishment” (injuring the business reputation), even without any competition or likelihood of confusion between the marks at issue.

In this case, the owners of the VICTORIA’S SECRET trademark claimed that the owners of a “mom and pop” lingerie and adult novelty shop in Kentucky called “Victor’s Little Secret” were both “likely to blur and erode the distinctiveness” and “tarnish the reputation” of the VICTORIA’S SECRET trademark. The 6th Circuit Court of Appeals had enjoined the use of the mark “VICTOR’S LITTLE SECRET” on the basis that it was likely to cause dilution of the distinctive quality of the VICTORIA’S SECRET mark, without evidence that any actual blurring had occurred.

By contrast, the 4th Circuit had previously held (in 1999) that Barnum and Bailey had failed to prove dilution of its phrase, “Greatest Show on Earth,” by the State of Utah, in its use of the phrase “Greatest Snow on Earth” on the grounds that Barnum and Bailey failed to show any actual economic harm to its mark.

The Supreme Court reversed the 6th Circuit’s decision, holding that actual dilution must be shown to prove a violation of FTDA, and that a mere likelihood of dilution is insufficient. However, the Court noted that actual loss of sales or profits need not be shown, but that circumstantial evidence of economic harm may be used. In fact, the Court noted that circumstantial evidence may well suffice when the junior and senior marks are identical. The Court also noted that, in defining dilution as the “lessening of the capacity of a famous mark to identify and distinguish goods or services,” the FTDA is arguably narrower than most state dilution statutes, since the FTDA definition appears to cover only blurring, and not tarnishment.

Please contact us if you have any questions or if you would like a copy of the Supreme Court’s opinion, which can also be found through the link above.