Trademark Dilution

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Trademark Dilution

This is our trademark dilution page.  For further information, please also see our tarnishment page.

Under trademark law, findings of trademark infringement only occur when a “likelihood of confusion” exists. This term implies that consumers might confuse one trademark for another, and this in turn means they may not get the product or service they’re expecting. When it comes to trademark dilution, however, a likelihood of confusion need not be proven for a finding of dilution in a court of law.

What is Trademark Dilution – Definition of Trademark Dilution

Trademark dilution is when a famous trademark is used in a way that lessens its uniqueness.  In other words, the trademark use doesn’t necessarily cause a likelihood of confusion, but it is still damaging to the trademark owner.  Trademark dilution only requires that dilution be proven by either “blurring” or “tarnishment.”

  • Blurring: This occurs when the connection in consumers’ minds between a trademark and its products or services becomes weakened. Some trademarks are synonymous with particular products. Starbucks, for instance, immediately brings coffee to mind. Any trademark that weakens this connection could be causing trademark dilution. Starbucks automobile tires would be an example.
  • Tarnishment: Tarnishment occurs when a trademark being used in an unsavory or unwholesome manner. In many instances, no consumer would confuse the brands. Still, the use can damage the more famous trademark. Tarnishment can also occur if a trademark is connected to inferior products.

The operable term in this area of intellectual property law is “famous trademark.” A trademark must be famous if dilution laws are to apply. Just how recognizable a trademark must be can vary by court.

Trademark Dilution Example Cases

Mr. Charbucks vs Starbucks

In Starbucks Corp. v. Wolfe’s Borough Coffee, Inc., Starbucks sued a company for using the name “Mr. Charbucks” on a coffee blend. While the court decided that Starbucks was sufficiently famous to qualify for claims of dilution, the court decided that the two trademarks were “playfully dissimilar” and that dilution would not occur.

Perfumebay Inc. v. eBay

In Perfumebay Inc. v. eBay, Inc., the popular online auction site sued Perfumebay for infringement and dilution. Not only was “eBay” contained in the junior company’s name, but the senior trademark holder also provided consumer survey evidence that showed people believed the term “bay” – used in a website setting – had some connection to eBay. The court ruled in favor of eBay.

Federal Trademark Dilution Act

Up until 1996, only 25 states had passed laws that focused on deterring trademark dilution. Once the Federal Trademark Dilution Act (FTDA) was implemented in 1996, however, all famous trademarks received federal protection. The federal statute passed by Congress only protects against blurring – not tarnishment – and requires that actual dilution take place.

Another big difference between the federal statute and many state laws was the need for a trademark to qualify as “famous.” Although there is no single answer to what qualifies a trademark to hold this status, the FTDA did set out several considerations that courts should take into account. They include:

  • The extent and duration of use of the trademark in question
  • The extent and duration of advertising that’s linked to the trademark
  • The geographic area where the trademark has been used
  • The distinctiveness of the trademark
  • The recognizability of the trademark by someone within the niche market

Not all potentially-damaging uses of a trademark fall under the FTDA. In fact, the following situations were specifically exempt:

  • Fair use: Instances of trademark use that fall under fair use – such as comparative advertising – aren’t considered dilution.
  • Non-commercial use: Trademarks being used in non-commercial materials. Courts have disagreed on when this applies.
  • News reporting and commentary: Media and commentary sources can typically use trademarks without committing infringement or dilution.

Trademark Dilution Revision Act

In 2006, Congress passed the Trademark Dilution Revision Act. The major legal change that came from this revision was that actual dilution need not be proven. Previously, dilution was required to be proven  through economic loss or consumer surveys, but this necessity ceased after the revision act. Perceived or potential dilution became enough.

There were also other alterations made to federal law upon passage of the Trademark Dilution Revision Act. These included changes to the rules related to fair use, but the most significant supplementary change regarded the aspect of “recognition.” Rather than a trademark being recognizable by someone within a niche market, it would need to be recognized by the general public.

A streamlined way to deal with a trademark dilution issue may be to file a Trademark Opposition or Trademark Cancellation. A trademark opposition can prevent a trademark from registering, whereas a trademark cancellation will remove the trademark from the federal register.

Trademark Dilution Cease and Desist Letter

Whether an instance of trademark dilution involves blurring or tarnishment, the first step to stopping the action is sending a trademark cease and desist letter. In general, these letters request that some action be ended (cease) and never started again (desist). If the offending party ends the activity that’s resulting in dilution, that’s typically the end of the road.

The great part about trademark cease and desist letters is how effective they can be. Overall, less than three percent of American legal disputes end up in court. One of the driving factors behind this is the fact that most people want to avoid litigation. If an individual recognizes that they are wrongfully diluting your trademark, there is a fairly good chance that they will end their activities after receive a cease and desist letter from an attorney.

The following information is typically included in a cease and desist letter involving trademark dilution:

  • The trademark owner
  • Information about the trademark (registration number, date of first use, etc.)
  • All circumstances involving the dilution
  • A demand that diluting behavior cease upon receipt of letter
  • A reference to further legal action that will take place if activities aren’t ceased
  • A deadline for the response

Though cease and desist letters are extremely effective, some cases still end up in court.  Over 4,000 trademark cases make their way to federal courts each year.  If the infringer refuses to stop the activity, then trademark litigation is the next step.

Outcomes of Trademark Dilution Cases

If an instance of trademark dilution cannot be rectified outside of court, the trademark owner will have to file a lawsuit to protect the trademark. Once this is done, the alleged offender will have to respond to the complaint. Failure to do so will typically result in a default judgment for the plaintiff.

A frequent outcome in trademark dilution cases is injunctive relief which is a court order requiring the defendant to stop the activity alleged to be an infringement. In fact, a court may decide to issue a preliminary injunction at the outset of a case.

Monetary damages are also possible in a trademark dilution case. When it comes to dilution, the trademark owner must show that the defendant made a knowing and willful attempt to dilute a trademark or piggyback on its reputation. In these instances, the following outcomes are possible:

  • Monetary damages: Any money lost due to trademark dilution. This could also include profits the defendant earned.
  • Attorney’s fees: Attorneys fees are generally only awarded in exception cases.
  • Cost of action: Filing fees and other court costs can also be awarded.

Though not likely, its also possible for the defendant to be awarded damages. If it can be proven that a trademark dilution case was brought in bad faith, the court may award attorney’s fees and other damages to the defendant.

Mandour & Associates – Trademark Dilution Attorneys

Whether your trademark may potentially face damage from dilution, or you’re being accused of committing dilution, we can assist.  We are experienced and aggressive trademark litigation attorneys.

Trademark Dilution Attorneys Can Help

For a trademark dilution consultation, please contact us today.

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