TRADE MARK DILUTION: Changes in the US Lessons for Europe

1
TRADE MARK DILUTION Changes in the US Lessons
for Europe?

• Intellectual Property Institute
• 18 January 2007
• Ilanah Simon
• Brunel University

2
COMING UP

• The recent US changes
• Why were they necessary?
• Are the changes adequate?
• What can Europe learn from
• (a) the need for the changes ?
• (b) difficulties with the changes?

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US DILUTION PROTECTION A TIMELINE
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THE FTDA 1995

• 43(c) 45 Lanham Act
• Owner of famous mark (8-part test for fame)
• Entitled to injunction against use which causes
  dilution of the distinctive quality of the mark
• Dilution defined as lessening of the capacity of
  the famous mark to identify and distinguish goods
  or services regardless of presence/absence of
  confusion or competition

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WHAT ABOUT EUROPE?

• Directive 89/104, Arts 4(4)(a) and 5(2)
• Reg 40/94, Arts 8(5) and 9(1)(c)
• Trade Marks Act 1994, ss 5(3) and 10(3)
• Earlier mark with a reputation AND
• Similar marks AND
• Detriment to distinctive character OR
• Detriment to repute OR
• Unfair advantage of distinctive character OR
• Unfair advantage of repute AND
• Lack of due cause

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THE CHANGES AN OVERVIEW

• New 43(c) of Lanham Act, completely replacing
  FTDA
• Likelihood of dilution standard
• New, stricter fame standard
• Blurring definition
• Blurring test
• Tarnishment definition (no test)
• Altered defences
• Altered burden of proof in trade dress cases

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PROBLEM 1 ACTUAL DILUTION

• Nothing express in FTDA
• Disagreement amongst circuit courts, esp 4th v 2d
  and 6th
• Sup Ct Victorias Secret actual dilution
  required. Proof of economic loss NOT required BUT
  little info on how to prove actual dilution

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PROBLEM 1 ACTUAL DILUTION

• Linguistic approach causes dilution,
  contrasted with likelihood of confusion
• Difficulty of proving actual dilution, esp death
  by a thousand cuts ? no successful dilution
  infringement case 2003-2006
• Difficulties mitigated by NASDAQ likelihood
  sufficient in registration cases
• EU has same wording distinction

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CHANGE 1 ACTUAL v LIKELY DILUTION

• Injunction against use likely to cause dilution
  by blurring or dilution by tarnishment
• BUT how likely must the dilution be? Probable?
  Possible

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CHANGE 1 EUROPEAN CONCERNS

• Somewhat hazy
• Conflicting European authority
• AG in General Motors actuality
• CFI in SPA-FINDERS prima facie evidence of
  future risk
• UK conflicting authority?
• Electrocoin use must have an effect on the
  economic behaviour of consumers
• PEPSI/IPSEI actuality OR reasonably
  foreseeable consequence

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CHANGE 1 EUROPEAN CONCERNS

• The solution? Actual dilution test for
  infringement cases likely dilution test for
  registrability cases (particularly where mark
  hasnt been used c.f. Quorn Hunt and Intel v
  CPM)
• BUT this was the pre-Revision Act situation in
  US. Dilution stagnated.
• No stagnation in UK (perhaps because of relative
  prominence of Registry decisions?)
• Key question if there is an actual dilution
  standard, how does one prove that actual dilution
  has taken place? Considered by Patten J in Intel
  v CPM
• It is important not to confuse the need to
  prove a particular consequence with the means of
  providing that proof.

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LESSON 1

• Actual dilution can seriously damage your TMs
  health EU shouldnt drift into it
• UK a number of cases failing for just showing a
  risk of detriment/unfair advantage
• Likelihood standard isnt self-explanatory (UK
  particularly aware of the nuances of risk v
  probability)

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PROBLEM 2 NICHE FAME

• Recognition of fame in single product
  market/limited geog area.
• High point Syndicate Sales fame amongst
  wholesale and retail florists
• Why is niche fame a problem?
• Dilution as reward for truly famous marks
  c.f. McCarthy
• How can consumers of dissimilar goods make the
  association with earlier mark if earlier marks
  fame limited to goods on which its used

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CHANGE 2 THE FAME STANDARD

• Tough new standard widely recognized by the
  general consuming public of the United States
• Simplified, 4-part test (previously 8-part)
• Circumstantial evidence permissible (actual
  recognition is only one factor) ? not as tough as
  it appears?
• Registration is a factor

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CHANGE 2 EUROPEAN CONCERNS

• General Motors
• The public amongst which the earlier trade mark
  must have acquired a reputation is that concerned
  by that trade mark, that is to say, depending on
  the product or service marketed, either the
  public at large or a more specialised public, for
  example traders in a specific sector.
• Refusal to define age recognition
• TUDAPETROL/hands logo
• opponents goods Class 42 services directed at
  chemical industry
• applicants goods chemical products
• ? reputation needed amongst chemical industry
• Lack of clarity earlier mark-holders said to
  have a reputation for certain goods ? does this
  mean amongst consumers of those goods or for
  those goods amongst the general public?
• e.g. DERBY QUEEN/DERBI (OHIM) reputation for
  motorcycles
• FERRARI example

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CHANGE 2 EUROPEAN CONCERNS

• Problems likely to be ironed out
• double accounting General Motors acquired
  distinctiveness makes dilution more likely
• association and unfair advantage less likely in
  niche fame cases where product markets are
  diverse
• where goods are general consumer goods, fame
  judged amongst entire consuming public c.f.
  SPA/SPALINE (mineral water)

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LESSON 2

• Niche fame can seriously damage dilutions
  credibility depending on how slap-happy the
  courts are with other dilution factors
• BUT
• Raising fame standard benefits an elite group of
  traders (with better advocacy methods?)

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CHANGE 3 THE BLURRING DEFINITION

• FTDA lessening of the capacity of a famous mark
  to identify and distinguish goods or services,
  regardless of the presence or absence of (1)
  competition or (2) likelihood of confusion,
  mistake, or deception.
• Vague. Better idea of what it isnt than what it
  is ? disparate definitions, e.g. 9th Cir Playboy
  v Welles misappropriation
• Revision Act association arising from the
  similarity between a mark or trade name and a
  famous mark that impairs the distinctiveness of
  the famous mark.
• No better even more vague removes the
  connection between the mark and the
  goods/services it is used on ? dangerously wide?
• Mini-test, rather than definition repetition of
  factors used in the official test

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CHANGE 3 EUROPEAN CONCERNS

• Revision Act definition equivalent found in EU
  (but not as a definition)
• Adidas v Fitnessworld infringements a
  consequence of similarity of marks leading to
  public connecting 2 marks
• i.e. both US and EU
• similarity of marks ? association ? harm
• Courts now at ease using blurring to describe
  detriment to distinctive character e.g. Intel v
  CPM.
• Main definition SPA-FINDERS (CFI) where the
  earlier mark is no longer capable of arousing
  immediate association with the goods for which it
  is registered and used
• Sounds good, but didnt work in US

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LESSON 3

• A good definition is crucial BUT is hard to find
  AND is only the starting point

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CHANGE 4 THE BLURRING TEST

• FTDA had 8-part test for fame but NO test for
  blurring
• Use of pre-FTDA Mead test
• Use of elements of confusion test Nabisco v
  Pepperidge Farm
• Use of hybrid of Mead and confusion tests Times
  Mirror
• Unclear whether multifactor tests had any role
  under actual dilution standard Autozone v Tandy

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CHANGE 4 EUROPEAN CONCERNS

• No legislative blurring test in the EU and no ECJ
  case law
• UK Registry developed a test BUT this has fallen
  out of favour
• Unfortunate lack of clear, objective basis for
  decisions BUT looking at all the cases shows a
  number of factors which come up repeatedly
  (mostly aimed at association)
• High Ct has accepted that can draw inferences
  from primary fact (Intel v CPM) allows for the
  mechanism used in multifactor tests
• Actual dilution standard could be fatal to such
  tests in infringement cases

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LESSON 4

• Lacking a clear test can seriously damage your
  credibility
• BUT
• Its not easy to put a good test together,
  particularly one for such an ill-defined harm
  how good is the new US test?

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AN ASSUMPTION

• A good test should consist of factors which test
  for the harm that the test is aimed at proving
  the existence of
• Here harm to distinctiveness
• Does the Revision Act test do this?

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4i. SIMILARITY OF MARKS

• Sensible needed to allow consumers to link the
  marks in a way that will lead to harm BUT no
  impact on detriment to distinctiveness
• Already mentioned in blurring definition
  suggests more similarity blurring more likely
• EU has always been a prerequisite
• Importance in leading to the link stressed in
  Adidas v Fitnessworld - global approach, not
  just a discrete gate-keeping factor
• Reflected in rejection of threshold level of
  similarity in Bellure and eSures Application
• Pre-empted by approach in Audi-Meds Application
  first factor in Registrys multifactor blurring
  test
• Blurring more likely where marks identical Intel
  v CPM c.f. Victorias Secret

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4ii. DISTINCTIVENESS

• Degree of inherent/acquired distinctiveness
• Shows theres something to harm BUT doesnt
  explain how its harmed could argue makes
  significant blurring LESS likely
• EU General Motors greater inherent/acquired
  distinctiveness makes dilution more likely
• High level of distinctiveness makes association
  more likely, e.g. PEPSI/IPSEI
• Suggestive element may cause consumers to link
  later mark with suggested word NOT TM owners
  mark, e.g. DERBY/DERBY QUEEN

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4iii. EXCLUSIVITY OF USE

• More to lose
• Difficulty of proving specific later users use
  responsible for the dilution
• BUT doesnt prove harm
• eSures Application earlier mark would no
  longer be only mark in market with unusual
  juxtaposition of communication device on wheels
• Also considered in Audi-Med, TYPHOON and TIC TAC
  TOE

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4iv. RECOGNITION

• How does this differ from (a) fame and (b)
  acquired distinctiveness?
• Superfame standard? Recognition in the abstract?
• EU already commented on acquired distinctiveness
• Fame part of the global appreciation of the
  link c.f. Intel v CPM BUT this shows that
  fame has limits and must be balanced against
  other factors

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4v. INTENTION TO CREATE ASSOCIATION

• Bad faith
• No clear link to harm
• Presumed to achieve what you set out to do
• UK Cts lack of bad intention noted, e.g. Intel
  v Sihra presumably converse would make blurring
  more likely
• Bellure free riding deprives later user of due
  cause defence
• Irrelevant before OHIM bad faith matter for
  invalidity ONLY, c.f. THE NEW YORKER/THE NEW
  YORKER

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4vi. ACTUAL ASSOCIATION

• Clearly relevant key role of association
• Why not evidence of actual harm to
  distinctiveness?
• Need for care too great an emphasis on actual
  association could undo the likelihood reforms
• EU no mention of actual association before ECJ
  tendency to look at circumstantial evidence, e.g.
  similarity of marks
• UK survey evidence showing actual association
  has been relied on, e.g. PEPSI/IPSEI, but note
  difficulties of producing acceptable survey
  evidence
• Would an actual dilution standard require proof
  of actual association?

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LESSON 4.1

• Tests give appearance of legal certainty
• BUT must test for the right thing
• New US test tests for association, strength of
  mark and bad faith but NOT harm to distinctiveness

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CHANGE 5 THE TARNISHMENT DEFINITION

• FTDA no mention of tarnishment
• Victorias Secret - doubt over whether
  tarnishment caught by FTDA
• Revision Act clear tarnishment is caught
• Definition association arising from similarity
  that harms the reputation of the famous mark
• No test/examples of such situations

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CHANGE 5 EUROPEAN CONCERNS

• Expressly mentioned in legislation as detriment
  to repute
• Accepted to be tarnishment c.f. AG Jacobs,
  Adidas v Fitnessworld
• UK tribunals reluctant to give it a wide scope
  (unlike Revision Act)
• LOreal v Bellure tarnishment must be caused by
  the later SIGN, rather than the context in which
  that later sign is used
• PEPSI/IPSEI requires tarnishment to result from
  intrinsic unsavoury nature of goods, rather than
  their quality
• eSures Application rejection of argument that
  loss of control of mark leaves later user open to
  risk of tarnishment (link to need for real
  risks)

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LESSON 5

• Is there a need for a multifactor test in US and
  EU OR is tarnishment self-explanatory?
• Should the EU adopt a narrow approach to
  tarnishment, or a wider approach like the US?
• Strong tarnishment requires strong defences, e.g.
  parody

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LESSONS FOR EUROPE?

• Avoid drift to actual dilution
• Overly-wide application of dilution may damage
  its credibility
• Legislative clarity is key BUT make sure it says
  what you really want it to
• Clear and simple multifactor tests bring
  objectivity to the system BUT may lead to
  over-simplification

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LESSONS FROM EUROPE?

• Link between goods used in EU to show
  association, e.g. eSures Application identity
  of goods said to make association more likely BUT
  not in US multifactor test.
• DID have role under FTDA, e.g. Nabisco
• Prominent role of unfair advantage
• TISSOT/TISSOT
• Article 8(5) CTMR exists to prevent this type
  of situation, where one mark sucks commercial
  blood from another and thereby takes unfair
  advantage of its distinctive character and
  repute.

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THANK YOU

• Ilanah.simon_at_brunel.ac.uk