Updated, March 2016
1. What is trademark dilution?
Trademark dilution is the weakening of a famous mark’s ability to identify and distinguish goods or services, regardless of competition in the marketplace or the likelihood of confusion. Dilution typically occurs as the result of blurring or tarnishment of the famous mark. It is similar to the concept of passing off, which involves misrepresenting one’s goods as those of another. Misrepresentation, however, is not an essential component of dilution.
The law protects famous marks from subsequent marks that may be confusingly similar. When claiming confusion, one must show that the marks being compared are similar in appearance, sound or meaning, combined with evidence that they are associated with identical, competing similar or related goods or services. Under this analysis, similar and possibly even identical marks used with distinguishable goods/services or goods/services traveling in different channels of trade) may coexist in the same market.
Te concept of dilution developed from the idea that because some marks are so well known and famous, they deserve an extra level of protection beyond the likelihood-of-confusion analysis. Dilution theory seeks to prevent the coexistence of a mark that is sufficiently similar to a famous mark, regardless of the goods and/or services associated with the allegedly diluting mark. Proponents of the theory argue that it protects the goodwill associated with a well-known mark (which may have been built up over many years) and it reduces consumer confusion. Critics of the dilution theory allege, however, that stringent antidilution laws can stifle market competition.
2. Which jurisdictions recognize the concept of dilution?
Most jurisdictions recognize some form of trademark dilution and the need for businesses to have some recourse to thwart dilution-related activities. The definition and elements of dilution, however, as well as the resulting penalties imposed upon a trademark diluter, can vary across jurisdictions. This fact sheet explains the general concept of dilution with principles that can be applied to many jurisdictions.
Representative jurisdictions that expressly recognize forms of dilution include the United States, the European Union (EU), several countries in Latin America, South Africa, India, Singapore and Japan.
The recognition of dilution is sometimes the result of harmonization efforts. Within the EU, for example, the European Union Trade Marks Directive (Directive (EU) 2015/2436, Dec. 16, 2015), which establishes rules that must be reflected in the national legislation of all EU member states, includes provisions against dilution. Likewise, the World Intellectual Property Organization’s (WIPO’s) Joint Recommendation Concerning Provisions on the Protection of Well-Known Marks includes a provision on dilution. The Joint Recommendation has a binding effect upon the contracting parties to the Dominican Republic–Central America Free Trade Agreement (the United States, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic).
It is important to note that there are other jurisdictions that do not recognize trademark dilution per se but have their own, similar concept. Canada recognizes the concept of “depreciation of goodwill,” which provides a remedy against depreciation of the value of the goodwill attached to a registered trademark. Although this recourse is not frequently used by mark owners, it has received judicial attention. In determining whether depreciation of goodwill has occurred, the claimant must show that he or she is using the mark in connection with wares or services; that the mark possesses significant goodwill; that the diluting party used the mark in a way that affected that goodwill; and that the effect would amount to depreciation. While the mark must possess a sufficient degree of goodwill for a claimant to succeed with this remedy, it does not have to be famous.
Australia is another jurisdiction that does not use the term dilution. Well-known marks are granted added protection, however, in that their owners are allowed to oppose registrations of similar marks (even if the well-known mark is not registered), to seek defensive registration (even if there is no real intention to use the mark in connection with those goods or services), or to initiate an infringement action if a person uses the same or a similar mark in relation to unrelated goods or services and such use is likely to be taken as indicating a connection with the well-known mark.
3. What are the common elements of dilution?
- Fame—A famous mark is a mark that enjoys a certain degree of reputation or recognition. Related to this is a well-known mark, a mark that in light of its widespread reputation may enjoy broader protection than ordinary marks. In the United States, the Trademark Dilution Revision Act of 2006 requires a well-known mark to be widely recognized by the general consuming public. There can be no claim of dilution if the mark is not at least well known. The mark must also be distinctive or have acquired distinctiveness, and the diluting acts in question must be likely to result in blurring or tarnishment.
In the EU, being well known is also a required element of dilution, but it is left up to the courts to determine the breadth of the notion of reputation, as the European Union Trade Mark Regulation (EUTMR) (Regulation (EU) 2015/2424, Dec. 16, 2015) does not determine its meaning. In most jurisdictions, the courts and the trademark office decide whether a mark is famous or well known on a case-by-case basis. Contrastingly, there are some countries that do not require a mark to be well known for dilution protection. For example, in the Andean Community countries (Colombia, Peru, Ecuador and Bolivia), the Andean Court indicates that protection against dilution not only is recognized regarding well-known marks but also should be extended to trademarks in the same content and commercial category.
- Protects the Strength of a Mark for the Owner—Instead of protecting consumers from confusing the source of competing similar or related goods or services because of the similarity of the marks, antidilution measures protect the owner of an unusually strong or well-known mark from experiencing a decrease in the strength or value of that mark because of another, allegedly similar mark (regardless of how that allegedly similar mark is used).
- Necessary Showing—In the United States, case law in many states once suggested that a plaintiff had to show actual dilution of its mark before being granted relief. This carried over to the interpretation of the federal Lanham Act (Trademark Act of 1946) when it was amended to include a dilution cause of action. In 2006, the U.S. Congress passed the Trademark Dilution Revision Act in response to that case law. The federal statute was modified to codify the principle that the plaintiff need show only a likelihood of dilution to be awarded relief. It is, conceivably, easier to present evidence that dilution is likely occurring rather than actually occurring. Canada also reaffirmed its use of the likelihood of dilution/depreciation criterion, rather than proof of actual dilution, in a 2006 decision of the Supreme Court of Canada. (Mattel, Inc. v. 3894207 Canada Inc.,  1 SCR 772 (June 2, 2006).)
In South America, evidence is also required from the plaintiff to show the trademark is well known; specifically, in the Andean Community countries, the Andean Court stipulates that the risk of dilution of the trademark must be proven. In Australia, the owner must prove that its trademark is well known and that use of a similar mark by others is likely to indicate a connection in the minds of consumers and/or to deceive or cause confusion. In South Africa, according to the South African Constitutional Court, the detriment to a mark’s distinctive character or reputation, which is required by Section 34(1)(c) of the South African Trade Marks Act, must be proven to cause substantial harm to the uniqueness and reputation of the mark in light of established facts, not mere allegations. (Laugh It Off Promotions CC v. South African Breweries International (Finance) B.V. t/a Sabmark International, 2006 (1) SA 144 (CC May 27, 2005).)
4. What are the forms of dilution?
- Blurring—Weakening of the distinctiveness of a famous mark. This is the traditional notion of dilution—using an identical or virtually identical mark on or in connection with goods and/or services that may be completely different from and unrelated to the plaintiff’s goods and/ or services. The belief is that a mark that is highly similar or identical to the plaintiff’s unique, distinctive and well-known mark can detract from consumers’ strong association of the plaintiff’s mark with the plaintiff’s goods and services. This therefore reduces the strength or value of the plaintiff’s mark as an identifier of the plaintiff’s goods and services. In the United States, the parties tend to debate how unique, distinctive and well known a plaintiff’s mark must be in order to have sufficient strength or value as a source identifier.
In the EU, the EUTMR also recognizes dilution in the form of blurring if it is detrimental to the distinctive character of an earlier trademark. In South America, blurring of a mark diminishes the value of the trademark in the market and can also be considered unfair competition.
- Tarnishment—Weakening of the distinctiveness of a famous mark, usually through inappropriate or unflattering associations. Examples include using a similar mark, or a term that plays on one’s mark, in association with sexual or offensive content, with subject matter critical of the mark owner and its beliefs or philosophies. Tarnishment can also involve using the mark to attract the mark owner’s customers to directly criticize or attack the mark owner or its product or service. This form of dilution can conflict with free speech rights protected in the U.S. Constitution or the Canadian Charter of Rights and Freedoms and can be considered a “fair use” exception to liability. Examples of uses that are sometimes permissible under a fair use exception include referring to a competitor’s product and parodies or criticisms of a product. This fair use exception typically is asserted as a defense to dilution by tarnishment in U.S. courts.
In the EU, the EUTMR also sees dilution in the form of tarnishment if it is detrimental to the reputation of an earlier trademark. In South America and South Africa, tarnishment of a mark diminishes the value of the trademark in the market and can also fall within the realm of unfair competition.
Additional INTA Resources
- Free-riding—Enjoying the benefit of positive association with a well-known mark and its prestige. It is sometimes referred to as unfair advantage. Activity that constitutes free-riding does not have to create confusion in the marketplace or cause actual harm to the mark owner. The Court of Justice of the European Union has described free-riding as an actionable offense, and several countries within the EU (e.g., Germany and Slovakia) refer to the practice as “parasitic exploitation.” In the United States, critics have alleged that the fair use exception mentioned above has been used to absolve free-riders. When parody or satire is used to create an association between a mark and a well-known mark, the free-rider may escape liability if the parody or satire is readily apparent.
Topic Portal: Dilution
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