Trademark dilution is a legal theory that protects famous trademarks from unauthorized uses that blur or tarnish their image.
In this article, you’ll learn the Conditions for trademark dilution, the Types of dilution, the Effects of dilution on your business brands, and the types of relief you can seek to help you protect your brand.
In a trademark complaint, the plaintiff must show that it is the owner of a valid trademark, that it has priority (its rights are “senior”) to the defendant’s, and that the defendant’s mark is likely to cause confusion among consumers as to the source or sponsorship of goods or services under its marks.
The court will generally consider evidence that addresses various factors in order to determine if there is confusion among consumers. In most cases, the court will consider the degree of similarity between marks and whether goods or services are sufficiently similar that consumers are likely to believe they are from the same source.
Courts also consider other factors such as how and where goods and services are advertised, marketed, and sold by the parties, the buying conditions, the potential purchasers of the goods and services, whether confusion is caused by the allegedly infringing marks, the intent of the defendant in adopting its trademark, and the strength and integrity of the plaintiff’s brand.
The trademark owner can also claim the likelihood of confusion. This means that the owner of a trademark may claim trademark “dilution.” It asserts that the trademark owner owns a famous mark and that the use of its trademark diminishes its strength or value by “blurring” or “tarnishing” its image. The mark could be connected to something objectionable or distasteful, even if there is no likelihood of confusion.
Conditions for trademark dilution
Under the Federal Trademark Dilution Act (“FTDA”), 15 USC 15 §1125, trademark dilution is “the lessening of the capacity of a famous mark to identify and distinguish goods or services, regardless of the presence or absence of
(1) competition between the owner of the famous mark and other parties, or
(2) likelihood of confusion, mistake, or deception.”
Thus, federal dilution law protects the identifying or distinguishing power of a trademark.
Trademark dilution may occur when a third party uses in commerce a name or mark that is similar to a well-known or famous mark to such an extent that it adversely affects the consumer’s perception of the famous mark. Harms from dilution can include “blurring” or “tarnishment”,
Blurring can harm a famous mark when a third party’s brand weakens the consumer’s perception that the famous mark is connected to the third-party products or services.
Courts look at factors like the degree of similarity, distinctiveness, the extent of exclusive use by the famous trademark owner, how easily the famous marks can be identified, the intent of third-party to form an association with the famous marks and the actual relationship between the allegedly blurring mark and the famous mark.
When the famous mark is associated with a disreputable product or service, “tarnishment” may occur. This situation typically applies to defendants who use the mark in unsavory ways or are connected with inferior products or services.
For example, the Sixth Circuit has noted “There have been at least eight federal cases in six jurisdictions that conclude that a famous mark is tarnished when its mark is semantically associated with a new mark that is used to sell sex-related products. We find no exceptions in the case law that allow such a new mark associated with the sex to stand.”
Only famous marks are covered by the Dilution Act. When deciding whether a mark is famous, you should consider the following factors: the length and use of the mark; the extent and duration of advertising for it; the geographical area in which it was used; the degree of recognition of that mark; the method by which the product has been distributed and marketed; and whether or not the mark was federally licensed. Famous marks include “Apple”, “Mercedes” and “Coca-Cola”, among others.
The trademark owner need not demonstrate a likelihood of confusion or competition before a court will allow dilution. Hence, if a third party uses the plaintiff’s mark on similar goods, the dilution may be so slight as to tarnish the reputation of the plaintiff’s mark.
In addition, the defendant must use the mark for some time after the plaintiff’s use became famous.
There are several types of dilution. First, dilution occurs when a famous mark is blurred, tarnished, or confused with similar products. In addition to blurring, trademark dilution can occur when certain symbols, languages, and marks are used interchangeably.
A typical example is when a famous trademark is used on a product unrelated to the owners. In such cases, the trademark owner can allege dilution and infringement in a lawsuit.
Dilution can also occur when a famous mark is used on similar goods. For example, McDonald’s is a well-known brand. The corporation is known for putting smiles on people’s faces. However, it was not shy about filing opposition against McFungi for apparel and games.
The McFungi company submitted an intent-to-use trademark application in September 2020 for the McFungi mark for apparel and games. The company had a large collection of clothing that featured the design as of August 27, 2021.
On August 27, 2021, McDonald’s filed a trademark objection against the application. The megacorporation stated in its filing that the registration of the design, which includes “Mc” prominently and a mushroom representing “i” in McFungi, would cause confusion among consumers.
McDonald’s states that blurring and tarnishment are two ways in which dilution could occur. It remains to see if McDonald’s would succeed in pushing its “Mc” dilution case against clothing.
Apple recently took similar acts when it opposed Prepear’s application. Prepear is a startup food blog and meal prep company. Apple stated that Prepear’s logo for the pear would confuse consumers. Both logos depict a shape of fruit in a single, solid color.
This would result in the “dilution” of Apple’s distinctiveness. Further, Apple argued that Prepear’s action violates the Lanham Act because it makes it difficult for consumers to distinguish between Apple’s products and Prepear’s services.
Apple claimed its Health app also functions in the same way as Prepear’s meal-planning application. Prepear could be mistaken by customers as an Apple product because it looks like something that the tech company would make.
Apple claims that Prepear is in the company’s zone for natural expansion due to its existing nutrition-related and health services.
Apple opposed Prepear’s original trademark because its logo is an outline of a pear with a leaf, which Apple believed to be a copy of its classic logo. The parties settled when Prepear added its name to the logo and reapplied its trademark application.
In Europe, another type of dilution is referred to as ‘free-riding’. The EU General Court discussed the concept of free-riding and stated that it encompassed instances where there was clear exploitation and free-riding on the coat-tails of a famous mark, or an attempt to trade upon its reputation.
The court held that in order to determine whether the applicant’s mark would take unfair advantage of the reputation of the earlier mark, it must be first shown that there was a link in the mind of the relevant public that connected the signs at issue and the goods concerned.
This link must then be evaluated through a global assessment, which should consider all the factors relevant to the circumstances of the case. These factors should include the strength of the earlier mark’s reputation and the degree of the earlier mark’s distinctive character, the degree of similarity between the marks in issue, and the nature and degree of closeness of the goods and services offered.
Moreover, successful plaintiffs can also claim monetary damages. Under the law, trademark dilution lawsuits are typically awarded monetary relief and injunctions preventing the defendant from further infringing upon the plaintiff’s mark.
Depending on the circumstances, this monetary relief may include attorneys’ fees, profits, or actual damages. In most cases, dilution can be avoided by a defendant’s failure to cease using the mark or ensure that the dilution party stopped using it.
Types of trademark dilution
There are many types of trademark dilution, but a few of the most common are blurring, tarnishment, and free-riding. Blurring, also known as trademark infringement, occurs when a famous mark is associated with another similar or dissimilar product.
This is because the trademark loses its distinctiveness and power of association. The best way to protect a well-known mark is to prevent its use by others.
Dilution can occur when a famous mark is used by a competitor but in a way that detracts from its distinctiveness. In most cases, dilution involves unrelated goods or services that don’t confuse.
For example, a hardware store does not use the McDonald’s mark to sell home-improvement products, and the two are not even the same product. In these situations, the plaintiff can sue a competitor for trademark dilution.
Fortunately, many of the most common types of dilution are actionable. First, a defendant can challenge a claim for trademark dilution if the use of a famous mark falls under the definition of fair use.
In some cases, a successful parody does not qualify as trademark dilution. This defense will require proof of fair use, and it’s challenging to prove fair use.
Second-party blurring is a more severe issue. The illegal party may use a well-known trademark to promote their own business in this scenario. Another form of trademark dilution is tarnishment, which involves using a famous mark by another entity that harms its reputation.
The Victor’s Secret store, for example, was a prime example. The two stores were similar in name, but they used their names to create unflattering associations. Blurring and tarnishing are the two other most common types of trademark dilution.
Blurring happens when multiple businesses use a trademark that dilutes their strength. For example, if there were two McDonald’s restaurants, one would be more likely to mistake it for the name of a burger joint.
If McDonald’s franchised McDonald’s, for example, were owned by another company, there would be a diluted trademark, and the brand’s popularity would fall.
Injunctive relief available in trademark dilution lawsuits
Trademark dilution can affect a brand’s financial value and equity. While it is a complex legal issue, trademark owners should remember that there are remedies for dilution. Trademark dilution can also undermine consumer associations with famous brands and can lead to negative word of mouth.
The first step in protecting a trademark is determining the right course of action. If you can prove the case, you will get money damages. Further, several types of injunctive relief are available in trademark dilution lawsuits.
For instance, the court can order the defendant to stop using a particular mark in certain circumstances, such as not publishing it in electronic publications.
In addition, the court can order the defendant to cease future use of the mark if it causes irreparable harm to the plaintiff. In the past, courts have tended to presume irreparable harm to trademark owners in trademark dilution lawsuits, but the Supreme Court has been changing that in recent years.
One notable exception is Section 1125, which essentially establishes the cause of action for a trademark’s false or misleading use. While the Act also mentions a mental state, the precondition is never mentioned in Section 1125(a).
This is an important consideration, mainly since the Trademark Act frequently refers to mental states. Whether a plaintiff has a pre-existing mental condition is relevant to a trademark dilution lawsuit.
Before seeking an injunction, the plaintiff must prove that damages cannot compensate for the infringement. A week or more delay may lead to a rebuttal presumption that the plaintiff does not suffer irreparable harm.
The court may also require the defendant to take affirmative action to end the infringement. Such measures may include the recall of products, disclaimers, and destruction of infringing articles.
The Lanham Act provides several types of monetary relief for trademark infringement. For example, injunctive relief may include disgorgement of the defendant’s profits, costs of bringing the lawsuit, and attorneys’ fees in exceptional cases.
However, in many trademark dilution lawsuits, the plaintiff is not entitled to monetary damages. As a result, a majority of plaintiffs are awarded only injunctive relief.
Depending on the circumstances of the case, the trademark owner may receive monetary awards. A successful trademark lawsuit may obtain monetary awards for actual damages, attorneys’ fees, and profits.
More trademark owners will use trademark lawsuits to protect their brands as the law evolves. In most cases, trademark dilution lawsuits are filed not to collect damages but to police the use of confusingly similar trademarks.
