March 4, 2003, was a dark day for big business. On that date the Supreme Court handed down its decision in Moseley v. V. Secret Catalogue Inc., a ruling that gutted one of companies' main bulwarks for protecting well-known trademarks: the Federal Trademark Dilution Act (FTDA).
The FTDA gives special legal protection to owners of famous marks. Ordinary trademark law protects a mark only against activity that's likely to confuse consumers. By contrast, the FTDA protects a famous mark against anything that may impair the distinctiveness of the mark--even if there is no danger of consumer confusion. The protection it
"No one has ever shown Congress that something has caused dilution and by the time I could do something about it, my mark was irretrievably diluted," says Jessica Litman, who teaches trademark law at University of Michigan Law School in Ann Arbor. "No one has ever shown there's a real problem here."
Moreover, the likelihood-of-dilution standard has created problems for courts and litigants in the past. The standard was amorphous and created uncertainty for trademark owners. "The cases were incoherent," Litman says.
Proponents of the bill claim it will benefit everyone. "It provides greater certainty as to what is and is not permitted, thus deterring truly diluting uses while discouraging inappropriate litigation by mark owners," Bernstein says.
Opponents, however, fear that the bill will result in more, not less, litigation because the likelihood-of-dilution standard makes it easier for them to win. In addition, companies may bring dilution suits to hobble competition.