Interview with Trademark Attorney Scot Duvall

What follows is the first in a series of ‘virtual’ interviews with members of the legal community.

Brandeis Professor and Trademark Attorney Extraordinaire, Scot Duvall, Discusses his Supreme Court Victory in the Victoria’s Secret Case and his Contributions to the New Trademark Dilution Statute.

Interview by Jessica Tipton

1. What is trademark dilution? Trademark dilution is a controversial area of the law particularly among trademark lawyers, owners of well-known brands, and business owners.  The basic idea is that a famous trademark should be protected against third-party uses of a similar mark, because it is unfair for the newcomer to hijack the renown of the famous mark.  Owners of well-known brands usually have invested significantly in the brand to make it famous, so the brand has significant value by virtue of its stature in the marketplace.  The fear of many brand owners is that, if that if third parties can use the mark for their own goods with impunity, the famous mark would not stand out as much in the marketplace.

2. How is trademark dilution different from trademark infringement? Traditional trademark law focuses on whether consumers are likely to be confused as to the source of the parties’ goods or services, but dilution does not require confusion at all.  Dilution focuses on two types of harm.  Blurring is grounded in the similarity of the marks and a resulting diversion from the famous brand to the newcomer’s mark, while tarnishment focuses on a third-party use that creates negative associations with, and hence a risk of aversion to, the famous brand.  One example of blurring in the case law is HERBROZAC for a natural alternative to the PROZAC brand.  A classic example of tarnishment is CANDYLAND for a sexually explicit website, versus the famous CANDYLAND children’s board game.  Tarnishment can present significant free speech concerns, so the courts traditionally have been more cautious in applying that ground.

3. Why is this separate cause of action necessary? Your question itself suggests why dilution law has been so controversial.  To some, if there is no risk of confusion, there can be no legitimate harm in the marketplace that needs to be redressed.  Owners of well-known brands usually disagree, because confusion is not the only type of harm that a brand can suffer.  Dilution law now provides a limited avenue for redress, though until the federal statute was recently revised, the federal cause of action was overutilized.  This soured many judges who were skeptical about the need for the cause of action itself, and struggled to understand how dilution could be proved in a meaningful way.

4. What must be shown to prove trademark dilution under the current law? As interpreted by the U.S. Supreme Court, the original statute (the FTDA) required that the mark sought to be enjoined must cause “actual dilution.”  The revised statute, which took effect October 6, 2006, now requires only a likelihood of “dilution by blurring” or a likelihood of “blurring by tarnishment.”  There are now two causes of action, where previously “dilution” was a single cause of action requiring the interpretation of complicated statutory language.

5. Can you tell us briefly the facts and issues of the Moseley v. V Secret Catalogue, Inc., 537 U.S. 418 (2003) in which you represented the defendant? In February 1998, Victor and Cathy Moseley opened a store called “Victor’s Secret” in a shopping center in Elizabethtown, Kentucky.  The Moseleys sold a wide variety of items, including lingerie, clothing and accessories, and adult novelties and videos.  The Moseleys’ very first advertisement was seen by a colonel at nearby Fort Knox, who promptly faxed the ad (on U.S. Army J.A.G. letterhead) to Victoria’s Secret headquarters.  As a result, counsel for Victoria’s Secret sent the Moseleys a cease and desist letter alleging trademark confusion and dilution.  On March 3, 1998, the Moseleys voluntarily changed the name of the shop to VICTOR’S LITTLE SECRET.  That change did not satisfy Victoria’s Secret, which filed suit against the Moseleys in the U.S. District Court for the Western District of Kentucky.  The rest is trademark law history.

6. Tell us about what happened at the trial court? My firm Middleton Reutlinger did not represent the Moseleys in the trial court.  The confusion-based claims were dismissed as a matter of law by the district court, but the district court found tarnishment (but not blurring) and enjoined the Moseleys under the FTDA, prohibiting use of the designation VICTOR’S LITTLE SECRET or any similar mark.  To comply with this injunction, the Moseleys changed the name of the store to CATHY’S LITTLE SECRET.

7. What happened in the Sixth Circuit? The Moseleys appealed the district court’s FTDA injunction to the Court of Appeals for the Sixth Circuit.  The Moseleys argued that the inability of Victoria’s Secret to present evidence of actual harm should result in judgment as a matter of law under Ringling Bros.-Barnum & Bailey Combined Shows, Inc. v. Utah Div. of Travel Dev., 170 F.3d 449 (4th Cir.), cert. denied, 528 U.S. 923 (1999). Victoria’s Secret principally argued that such proof was not necessary for dilution relief, citing Nabisco, Inc. v. PF Brands, Inc., 191 F.3d 208 (2d Cir. 1999).  The Sixth Circuit acknowledged this split of authority, but rejected the Fourth Circuit’s rationale expressed in Ringling Bros.  Instead, the court followed the Second Circuit’s holding in Nabisco, which allows an inference of likely harm to the senior mark “instead of requiring actual proof.”  The Sixth Circuit held there was “sufficient similarity” between VICTOR’S LITTLE SECRET and VICTORIA’S SECRET to “conjure an association,” which led the Sixth Circuit to an inference of likely harm.  On that reasoning, the Sixth Circuit affirmed, finding both tarnishment and blurring.

At that point my law partner Jim Higgins received a call asking us to seek review of the Sixth Circuit’s decision en banc (by the entire court).  That request was summarily denied, and the decision was made to appeal to the U.S. Supreme Court.

8. What happened in the Supreme Court? Why did your position ultimately prevail?
The Supreme Court granted the Petition for Writ of Certiorari on April 15, 2002.  Kentucky (the forum in which the case was filed) has no state dilution statute.  The case was clearly positioned for an appeal because the Court would be able to entertain issues of federal law, exclusively, without consideration of a state dilution statute that might dictate a different result.  Simply put, the Supreme Court rejected the view (advanced by Victoria’s Secret and the Sixth Circuit) that a likelihood of dilution was sufficient for an injunction.  Nowhere in the statute was an injunction expressly permitted based on a finding of “likelihood of dilution,” a standard that was read into the statute by several courts.  The Court also observed that “tarnishment” was not expressly mentioned as a basis for relief in the statute.

Though many in the trademark community were aghast at the result, the simple truth is that the Supreme Court unanimously applied the statute as written.  Frankly, the FTDA had gotten “too big for its britches.”  Many judges became uncomfortable applying the law in the sweeping manner that had so often been advocated.  The U.S. Supreme Court put a stop to that, and rightly so, because the text of the statute simply did not support it.  As a result, we now have a revision of the statute that provides balanced protection in a sensible manner.

9. Tell us about the new legislation and its purpose in clarifying the standard of dilution? The Moseley decision threw the law of dilution into a state of chaos, because the decision upended virtually everything that that many in the trademark community had understood the law to be.  As a result, the International Trademark Association decided that it was time to conduct a review of dilution law and to decide whether the statute should be revised.
The new statute, the Trademark Dilution Revision Act (TDRA), establishes two separate causes of action for dilution, blurring and tarnishment, and establishes that the standard is “likelihood” of dilution.  This confirms what many had believed the law was and should be. The key difference between blurring and tarnishment lies in the impact of the association.
For blurring, the “distinctiveness” of the mark is impaired by the association, whereas for tarnishment, the reputation of the mark is harmed by the association.

The “likelihood of dilution” standard is offset by a narrowing of what constitutes a “famous” mark, which is a mark of widespread renown recognized by the general consuming public of the United States.  This is a watershed moment in the federal law of dilution.  Brands that are “famous” only in a niche product market, or only in a region of the United States, no longer qualify for protection under federal dilution law.  This makes sense to me and to many in the trademark community.   Dilution was always intended to be an extraordinary remedy for a limited number of extraordinary marks, and the TDRA takes the law back to these essential basics.

10. Why and how did you become involved in drafting the new statute? The TDRA had its genesis in the work of a Select Committee convened by INTA on which I was appointed to serve after the Moseley decision was handed down.  Prior to the Moseley case, I served on an INTA working group that re-evaluated the state of dilution law, and I presented a paper at an INTA conference that proposed significant revisions to the statute.  That may have planted a seed in someone’s mind, because once the decision was made to seek revision of the current law, I served as the chair of the TDRA drafting committee.  That was an awesome responsibility with which to be entrusted, and I took it seriously.  My main role was to be a conduit for the policy decisions made by the talented and thoughtful people who participated in the project.  I found it quite a challenge to translate policy into legislative-speak, and it is impossible to do well without a collaborative effort.  Luckily, INTA has a wealth of brilliant volunteers from corporations and law firms, al having different and valuable perspective to share.  In a situation like that, it is essential to be open to the ideas of others and to be willing to redraft and redraft again (just as with any legal brief).  It was a great (though rare) thrill to draft a provision that no one felt they could improve upon.

11. Tell us about the process, and your involvement in, the writing of the dilution statute.
The INTA drafting committee and INTA officers and staff continued to work on the project during the entire legislative process in Congress.  As a result of the legislative process and concerns raised by other organizations (such as the ACLU, the American Bar Association, and the AIPLA), the statute underwent further revisions which I believe made the TDRA even better than initially conceived.  To be sure, the TDRA is a good example of the usual legislative “sausage making” that occurs in Congress, but I am very proud of the result overall.  It has been said that you don’t really want to see “how the sausage is made,” but I found the process exhilarating and a once-in-a-lifetime education.  The journey the legislation took after it was “dropped” in Congress was amazing to me.  Folks were paying close attention in the intellectual property community, and everyone wanted their two cents’ worth.  This was in stark contrast to the original FDTA which breezed through Congress just over a decade ago.  For a while it looked as if the legislation would stall in the Senate, having passed the House with some revisions (which sent the bill back to the Senate).  Luckily, the Senate approved the measure shortly before the House page scandal hit the papers.

12. Will the new statute overturn the decision in Victoria’s secret?
Yes and no.   The media reports focused on this legislation as “overruling” Moseley, but more carefully stated, the legislation overruled the central holding that “actual dilution” must be proved and that a likelihood of dilution was insufficient.  Other aspects of Moseley remained untouched by the decision, and indeed were reinforced or clarified in the statutory language.  For example, the TDRA makes clear that the presence or absence of actual economic injury is irrelevant.  The TDRA establishes that dilution results—in all cases—from consumer associations caused by the similarity of a newcomer’s mark or trade name to a famous mark.  Consumer associations arising for other reasons, such as product similarities or competition between the parties, are irrelevant.  This approach confirms the wisdom of the Supreme Court’s holding in Moseley that not just any mental association caused by the newcomer’s mark will suffice for dilution.

13. What, in your opinion, is the likely impact of the new statute and its effect on those who use and protect their trademark? The statute brings a much-needed balance to the law of trademark dilution, but courts will always be an essential but unpredictable part of the equation.  In the first reported case under the TDRA, a federal court refused to enjoin the maker of “Chewy Vuitton” brand dog toys as a parody of the “Louis Vuitton” brand.  That case is headed toward an appeal, and undoubtedly will focus on the limits of parody under the TDRA.

Undoubtedly, issues will arise for resolution under the TDRA over the next several years.  Litigants and judges will try their hand at applying the new standards to interesting cases.  We will probably read about a headline-making case from time to time and debate whether the court reached the correct result.  For now, famous brand owners and small businesses alike would be well-advised to tread the dilution waters carefully – and to consult their trademark counsel before launching new products or services that call to mind a well-known brand (or bringing suit against a newcomer under either of the dilution causes of action).

Attorney Scot Duvall is an adjunct professor at the University of Louisville: Louis D. Brandeis School of Law and a member of Louisville law firm, Middleton Reutlinger.

Writer Jessica Tipton is a Juris Doctor Candidate at the Louis D. Brandeis School of Law, class of 2007.