Supreme Court Holds That The Federal Trademark Dilution Act Requires Proof of Actual Injury

The Supreme Court unanimously held today that the Federal Trademark Dilution Act ("FTDA") unambiguously requires proof of actual injury, as opposed to a presumption of harm arising from a subjective "likelihood of dilution" standard. Moseley v. V Secret Catalogue, Inc., Case No. 01-1015 (Mar. 24, 2003).

Background

The FTDA provides that the "owner of a famous mark shall be entitled, subject to the principles of equity and upon such terms as the court deems reasonable, to an injunction against another person's commercial use in commerce of a mark or trade name, if such use begins after the mark has become famous and causes dilution of the distinctive quality of the mark." 15 U.S.C. 1125(c). The Act defines the term dilution as, "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." 15 U.S.C. 1127.

The Courts of Appeals have split on the proper standard of injury to be applied in dilution cases. In Ringling Brothers-Barnum & Bailey Combined Shows, Inc. v. Utah Division of Travel Dev., 170 F.3d 449 (4th Cir. 1999), the Fourth Circuit adopted a stringent standard that the plaintiff must suffer "actual, present injury" by reason of the dilution. The Fifth Circuit followed, Westchester Media v. PRL USA Holdings, Inc., 214 F.3d 658 (5th Cir. 2000). In contrast, the Second and Seventh Circuits adopted a "likelihood of injury" standard, more in line with the "likelihood of confusion" standard that applies to cases of trademark infringement. Nabisco, Inc. v. PF Brand, Inc., 191 F.3d 208 (2d Cir. 1999); Eli Lilly & Co. v. Natural Answers, Inc., 233 F.3d 456 (7th Cir. 2000).

In the present case, V Secret Catalogue is the owner of the trademark VICTORIA'S SECRET for women's lingerie and other clothing and accessories. V Secret alleged trademark infringement and dilution against defendants Victor and Cathy Moseley whose store, "Victor's Little Secret," sold lingerie and adult novelties. The district court granted summary judgment in favor of the defendants on the infringement claim, holding that V Secret had not established sufficient evidence of likelihood of confusion to create a genuine issue of material fact. The court granted summary judgment in favor of V Secret on the dilution claim, finding that the plaintiff had presented sufficient...