Good morning, Mr. Chairman. My name is Kathryn Barrett Park, and I currently serve as the executive vice president of the International Trademark Association (“INTA”). I am employed by INTA member General Electric as trademark counsel. As do all INTA officers, board members and committee members, I serve on a voluntary basis.

INTA supports and encourages legislative action to amend the Trademark Act of 1946 (Lanham Act) to address the proper standard for injunctive relief under the Federal Trademark Dilution Act of 1995 (FTDA). INTA believes that the owner of a famous trademark should be required to show a “likelihood of dilution” for an injunction to issue and that this was the intent of Congress when it adopted the FTDA. As the legislative history of the FTDA notes:

Dilution is an injury that differs materially from that arising out of the orthodox confusion. Even in the absence of confusion, the potency of a mark may be debilitated by another's use. This is the essence of dilution. Confusion leads to immediate injury, while dilution is an infection, which if allowed to spread, will inevitably destroy the advertising value of the mark.

The FTDA was designed by Congress to maintain the vitality of famous trademarks. The dilution statute is meant to quarantine the dilution “infection” before it takes hold, rather than require a plaintiff to wait until the “potency” or economic value of the famous mark has been “debilitated,” thereby damaging forever the effectiveness and reputation of the mark. It was for this reason that Congress specified that injunctive relief would be the primary remedy in dilution cases. An injunction permits the owner of a famous mark to stop the erosion of the value of the mark, harm for which later monetary relief would be inadequate.

However, at present, due to a difference in interpretation among circuit courts over the meaning of the dilution statute, there is confusion as to what is the proper standard for injunctive relief: “actual dilution,” that is, the current debilitation of the economic value of the famous mark or, alternatively, the “likelihood of dilution,” referring to the future loss of economic value of the famous mark if the injunction is not granted. To clarify Congress’ original intent and ensure the preservation of the effectiveness and reputation of famous trademarks, INTA believes that legislation should be adopted that explicitly states that “likelihood of dilution” is the proper standard.

INTA is a 123-year-old not-for-profit organization comprising more than 4,000 member companies and firms. It is the largest organization in the world dedicated solely to the interests of trademark owners. The membership of INTA, which crosses all industry lines and includes both manufacturers and retailers, values the essential role that trademarks play in promoting effective commerce, protecting the interests of consumers, and encouraging free and fair competition. Since the adoption of the Lanham Act almost 56 years ago, INTA has consistently worked with the Congress in updating the Act to meet the changing economic and legal landscapes.

Dilution of Famous Trademarks

The protection of marks from dilution differs from the protection accorded marks from trademark infringement. Dilution does not rely upon the standard test of infringement, that is the likelihood of confusion, deception, or mistake. Rather, dilution comes into play when the unauthorized use of a famous mark reduces the public’s perception that the mark signifies something unique, singular or particular.

There are two types of dilution: blurring and tarnishment. Blurring occurs when consumers “see the plaintiff’s mark used by other persons to identify other sources,” so that the “unique and distinctive significance of the mark to identify and distinguish one source may be diluted and weakened.” Examples of blurring would include such fictional examples as BUICK aspirin tablets and KODAK pianos. Tarnishment arises when a famous trademark is linked to products of inferior quality, or is portrayed in an immoral or reprehensible context likely to evoke negative beliefs about the mark’s owner. An example of the tarnishment might be GARBAGE PAIL KIDS cards, where the cards “derisively depict dolls with features with features similar to Cabbage Patch Kids dolls in rude, violent and frequently noxious settings.”

The Federal Trademark Dilution Act of 1995

Congress passed the FTDA with the goal of creating a uniform anti-dilution law. Prior to the enactment of the FTDA, the issue of trademark dilution was left to the state courts. There was no federal statute by which famous trademarks could be protected against blurring and tarnishment. Judicial decisions involving dilution were “inconsistent, the reasoning often illogical.” In short, there was a “trademark vacuum.”

The matter of a statutory trademark dilution provision was addressed in the 104th Congress. After a hearing before this subcommittee in which there were several witnesses testifying in support of the dilution amendment and unanimous adoption of the bill by both houses of Congress, the FTDA was signed into law on January 16, 1996. Adoption of the FTDA also brought the United States in line with the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), which includes a provision designed to provide dilution protection to well-known marks.

Now in effect for more than six years, the FTDA sets out criteria that a court may consider in determining whether a mark is famous. The FTDA further provides that “the owner of a famous mark shall be entitled… 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.”

Injunctive Relief: Congress' Intent to Stop Dilution Before It Takes Hold

Protection against dilution of a famous trademark is an incipient concept that does not require the mark owner to wait until provable damage has occurred before asking the court for relief. The goal is to recognize the danger posed to famous marks by what Senator Orrin Hatch referred to upon his introduction of the FTDA as “subsequent uses [of the junior user’s mark] that blur the distinctiveness of the [famous] mark or tarnish or disparage it.” Upon recognizing the danger posed by the “subsequent uses,” the next step is to take action that would protect against the mark losing its “arresting uniqueness.” As Congress recognized, the right tool for the job is an injunction.

Injunctions are tailor-made for disputes involving trademark dilution. An injunction is a protective remedy that will prevent continuing or threatened harm. For this reason, an injunction is a famous trademark owner’s most potent weapon to stop the “infection” that is dilution. The injunction stops the harm that, if allowed to continue, would lead to permanent injury of the famous trademark through either blurring or tarnishment. Injunctive relief preserves the distinctive character of the famous trademark and allows the mark owner to ensure that damage to the reputation of the mark is brought to a halt before the mark’s potency and effectiveness are gone forever.

The selection of injunctive relief by Congress as the principal means by which a court may grant relief to a famous trademark owner who alleges that another party has diluted its mark is convincing evidence that Congress meant that the standard for trademark dilution is the “likelihood” standard. The legislative history of the FTDA repeatedly refers to the dilution amendment as a device meant to “protect” against harm to the famous mark caused by “subsequent” or “future acts,” precisely what injunctions are supposed to do. Imposing an “actual dilution” standard requires famous trademark owners to suffer irreparable, crippling harm to the economic value of the mark before the court will grant injunctive relief. Once the economic harm or dilution has occurred, the damage that has taken place with respect to a famous trademark cannot be restored. As noted by courts in two recent dilution cases:

By the time plaintiffs were permitted to file suit, … junior mark holders might have the defense that the senior mark had lost its distinctiveness due to the numerous other marks that had copied it. Senior mark holders would also be open to the argument that they had failed actively to protect their marks.

The remedy of injunctive relief at the point at which actual economic harm due to dilution had already occurred would be ineffective. The “communicative clarity” of the mark has been lost. INTA believes such a scenario to be contrary to the original purpose behind the adoption of statutory protections against dilution.

The Need for Clarification

Despite Congress’ original intent as evidenced by the selection of injunctive relief as the principal remedy, some circuit courts have interpreted the phrase “causes dilution” in the statute to mean that a plaintiff must establish actual harm in order to prevail in a dilution claim under the FTDA. These courts have found that the “causes dilution” language requires a showing that a challenged mark has actually lessened the senior mark’s selling power and has caused concomitant economic harm to its value.

Other circuit courts have granted the plaintiff relief upon a showing that there is a likelihood that the plaintiff’s mark will be diluted. These courts have rejected an actual economic harm requirement. They have found that the intent of Congress in adopting the FTDA was to afford plaintiffs a remedy before dilution has caused actual harm to the senior mark and that to require plaintiffs to prove actual economic harm would “make bringing a successful claim under the FTDA unreasonably difficult.” Some courts have gone so far as to say that an “actual dilution” standard would hold the plaintiff to an impossible level of proof.

Inconsistent standards from circuit to circuit make it much more difficult for a famous mark owner to conduct business nationwide. It also leads to forum-shopping, something this subcommittee sought to prevent when it drafted the FTDA. To correct this inconsistency and clarify Congress’ original intent, INTA recommends that amendments be incorporated into the Lanham Act that explicitly state that “likelihood of dilution” is the proper standard.

Conclusion

Thank you, again, Mr. Chairman, for the opportunity to present INTA’s views on the present need to clarify Congress’ original intent that “likelihood” be the proper standard for trademark dilution. We look forward to working with this subcommittee and its staff in crafting legislation toward that end. In moving forward with legislation, Congress will be taking an important and affirmative step towards preserving special symbols of creativity from irreparable harm.