Tarnishment and the FTDA: Lessening the Capacity To Identify and Distinguish

Brigham Young University Law Review, 2004 by Smith, Layne T

I. INTRODUCTION

When Congress passed the Federal Trademark Dilution Act (FTDA) in 1995, it declared that the Act was "designed to protect famous trademarks from subsequent uses that blur the distinctiveness of the mark or tarnish or disparage it."1 Subsequently, lower federal courts have willingly applied the FTDA to extend trademark protection against tarnishment caused by junior uses2 of famous marks. In March 2003, however, the Supreme Court, in Moseley v. V Secret Catalogue, Inc., questioned whether the tarnishment of famous marks by junior uses "is actually embraced by the statutory text."3 The Court's suggestion "creates substantial doubt about whether tarnishment remains actionable under the FTDA."4

Because the Supreme Court's argument in Moseley that the FTDA does not encompass dilution by tarnishment was dicta,5 the door is still open for tarnishment claims under the federal Act.6 Nevertheless, whereas prior to Moseley the weight of precedent supported the inclusion of tarnishment under the FTDA, trademark holders who seek protection against tarnishing junior uses of their trademarks should now expect a heated debate over whether such claims fall within the scope of the FTDA. Thus, in addition to discussing the application of the "causes dilution" standard set forth in Moseley, it is also important to analyze the implications of the Court's brief comments regarding tarnishment. This Comment argues that the Supreme Court's limited analysis of the relevance of tarnishment under the FTDA yielded the wrong initial conclusion. The FTDA should be interpreted to encompass dilution by tarnishment. This interpretation has a textual basis and is consistent with congressional intent.

Tarnishment of a famous trademark occurs when a junior user links a mark similar or identical to the famous trademark to products of shoddy quality or of an unwholesome nature, such as association with drugs, pornography, or sexuality. A classic example of dilution by tarnishment occurred in Hasbro, Inc. v. Internet Entertainment Group, Ltd., in which the operator of "candyland.com," a sexually explicit website, was held to have diluted Hasbro's "Candy Land" trademark, which Hasbro used to identify a children's board game.7 Tarnishing junior uses of a trademark such as this threaten irreparable injury to the hard-earned reputation and goodwill associated with the trademark by causing consumers to associate the mark with items of unwholesome or inferior quality.

At first glance, a textual analysis of the FTDA supports "a narrower reading of the FTDA" to the exclusion of tarnishment, as the Supreme Court suggested.8 Many states have dilution statutes, most of which protect against "injury to business reputation" and thus clearly encompass tarnishment. The FTDA, however, contains no such language. Instead, the FTDA only prohibits the use of a mark that lessens "the capacity of a famous mark to identify and distinguish goods or services."9 This omission of any reference to injury to business reputation opens the door for the argument that tarnishment claims do not fall within the scope of the FTDA and should instead be addressed under state dilution statutes or common law doctrines.

The FTDA, however, should be read to encompass tarnishment for two reasons. First, tarnishment satisfies the FTDA's statutory language because tarnishing junior uses of a famous mark threaten to lessen the capacity of the famous mark to identify and distinguish the quality and image of the related goods or services.10 Second, the 1995 Congress undeniably intended the FTDA to encompass tarnishment.11 Therefore, despite the Supreme Court's dictum in Moseley regarding the relevance of tarnishment claims under the FTDA and despite the fact that the Trademark Review Commission (who originally drafted the legislation) may not have so intended,12 the FTDA should be interpreted as encompassing dilution by tarnishment.

This Comment discusses the validity of a tarnishment claim under the FTDA. Part II provides a brief background and description of dilution law and describes the two main types of trademark dilution: blurring and tarnishment. It also explains the need for a federal law that affords relief for tarnishment claims. Part III explores the evolution of dilution law- including the introduction of dilution into the legal arena, the passage of dilution statutes in state legislatures, and the adoption of the FTDA. This Part also explains that, while the original drafters of the language ultimately incorporated into the FTDA may not have intended it to encompass tarnishment, the legislative history surrounding the FTDA clearly demonstrates that the 1995 Congress did intend the Act to encompass tarnishment. Part IV discusses the proper interpretation of tarnishment under the FTDA, describing past judicial treatment of tarnishment and further describing how tarnishment fits within dilution theoiy. This Part also argues that the text of the FTDA should be interpreted to encompass tarnishment claims and, furthermore, that there is ambiguity in the definition of dilution, which necessitates looking to the legislative history of the Act. The legislative history clearly reveals that the FTDA should be interpreted to include tarnishment claims. Part V concludes that dilution by tarnishment should be actionable under the FTDA.