The Trademark Trial and Appeal Board is Not "Bullish" On Dilution

In 1999, the Trademark Amendments Act revised the Lanham Act to add dilution as a ground for opposing an application or canceling a registration before the Trademark Trial and Appeal Board (TTAB) of the United States Patent and Trademark Office. Dilution has been a federal cause of action for owners of famous marks since the enactment of The Federal Trademark Dilution Act of 1995 (FTDA).

On December 12, 2001, the TTAB issued its first substantive decision involving dilution in a trademark opposition or cancellation proceeding. In the case Toro Co. v. ToroHead Inc., 61 USPQ2d 1164 (TTAB 2001), the TTAB analyzed a dilution claim in an opposition proceeding and found no dilution. The decision establishes guidelines that trademark owners will have to satisfy to be successful in subsequent dilution claims before the TTAB.

Toro Company is the owner of numerous trademark registrations for the mark TORO, which is used with such goods and services as lawn mowers, golf cars, underground sprinkling systems, tires, trucks, lubricating oils and greases, ground maintenance, fertilizers, and computerized consulting services. The applicant, ToroHead, Inc., applied to register the mark ToroMR and a bull's head design to be used with magnetic reading and writing heads for computers. Toro Company opposed ToroHead's application on the basis that it was likely to cause confusion with Toro's marks and it diluted Toro's famous marks.

After finding no likelihood of confusion between the applied-for mark and Toro's previously registered marks, the Board considered for the first time the merits of a dilution claim. The FTDA defines "dilution" as "the lessening of the capacity of a famous mark to identify and distinguish goods or services, regardless of the presence or absence of (1) competition between the owner of the famous mark and other parties, or (2) likelihood of confusion, mistake, or deception." 15 U.S.C. § 1127.

In order to succeed in a claim of dilution, the owner of a famous mark must present sufficient evidence in a judicial proceeding to demonstrate that (1) the other party's use of the mark is in commerce; (2) the other party adopted its mark after the first user's mark became famous; (3) the first user's mark is famous; and (4) the other party's use has diluted the mark. In addition to these four factors, some courts, such as those within the Second Circuit, require proof of a fifth factor: distinctiveness of the first user's mark.

Before analyzing how these factors apply to a dilution claim in a TTAB proceeding, the Board agreed with prior court decisions that dilution is an "extraordinary remedy" and, as such, the Board would not "resolve doubts in favor of the party claiming dilution." 61 USPQ2d at 1173-74. With that view towards dilution and after recognizing the factors considered by courts in a dilution analysis, the TTAB proceeded to identify four factors that it would consider in a dilution claim: (1) the use-in-commerce requirement; (2) when a mark becomes famous; (3) the fame and distinctiveness of the mark; and (4) any actual dilution of the mark.

First, relating to use of the mark in commerce, the Board noted that often trademark applications are filed on an intent-to-use basis, thus an opposition proceeding may be initiated against a mark that has not yet been used in commerce. If actual use were required before a dilution claim could be recognized before the Board, the result would be that most dilution claims would be brought as cancellation proceedings or in district court, not as opposition proceedings. Believing such an outcome would be contrary to what was intended when the FTDA was made applicable to TTAB proceedings, the Board concluded that "an application based on an intent to use the mark in commerce satisfies the commerce requirement of the FTDA for proceedings before the Board." 61 USPQ2d at 1174.

The second factor required a consideration of when the opposer's mark became famous as compared to when the applicant first adopted or used its mark. Again, consideration of this factor was complicated by the fact that many applications are filed on an intentto- use basis, thus the applicant may not have begun using the applied for mark. Recognizing this issue, the Board asked "by what date must an owner of an allegedly famous mark prove that its mark has become famous?" Id. The Board concluded that with respect to an intent-to-use application, the owner of the allegedly famous mark must establish that its mark has become famous prior to the filing date of the trademark application or registration that it now seeks to oppose or cancel. However, if the case involves a use-based application, the party alleging fame must prove that its mark has become famous prior to the applicant's use of the mark.

For the third factor, the Board considered fame and distinctiveness at the same time. Relying on statutory construction, the Board found fame and distinctiveness to be separate requirements, both of which must exist to have a successful dilution claim. The Board stated that "a mark must be not only famous, but also so distinctive that the public would associate the term with the owner of the famous mark even when it encounters the term apart from the owner's goods or services." 61 USPQ2d at 1177.

Toro Company lost its case for dilution because the Board found that Toro's mark had not become famous and distinctive outside of its specific trading fields. While the Board felt Toro Company had established that its marks had achieved public recognition and renown, factors considered in a likelihood-of-confusion analysis, the evidence did not establish that "when the public encounters opposer's mark in almost any context, it associates the term, at least initially, with the mark's owner." 61 USPQ2d at 1181. In essence, the Board was looking for evidence to support a finding that the English language has changed, that the mark's owner has demonstrated that common or proper-noun uses of the mark and third-party uses of the mark have been eclipsed by the dominant association of the term with the mark owner.

So, what evidence did Toro Company present and why was it insufficient to establish the fame and distinctiveness of the mark? Toro provided evidence of its use of the mark TORO since 1914; that it has 3,000 dealers worldwide; and that it has annual sales of $1.3 billion. Toro also provided proof that it spends $35-40 million annually on advertising in a variety of formats such as television commercials, newspapers, magazines, and sponsorships of sporting events. Even with all of this evidence, the Board felt Toro had not presented evidence of widespread recognition outside of a specific trading field. The Board reasoned that general advertising, sales figures, and unsupported assertions of fame are not sufficient to establish fame for dilution purposes.

Thankfully for future litigants, but unfortunately for Toro, the TTAB did offer some guidance as to what evidence may be sufficient to show the transformation of a term into a famous mark. Such evidence should consist of proof of recognition of the mark by the other party, intense media attention, and surveys.

The fourth and final factor considered by the TTAB was whether or not Toro's mark was capable of being diluted by ToroHead's use of the ToroMR mark. As Toro had claimed that ToroHead's use of a similar mark would blur its famous marks, the Board considered whether or not a substantial percentage of consumers, upon seeing ToroHead's use of its mark on the claimed goods, would immediately be reminded of Toro's allegedly famous marks, even if they do not believe that the goods came from Toro.

To support a finding of blurring, the Board noted that marks in question must be identical or substantially similar. Here, the Board concluded that the marks were not "essentially the same." 61 USPQ2d at 1183. Furthermore, since the Board had already concluded under the third factor that Toro's mark was not famous, the Board stated that it "cannot say that opposer has shown that the public in general associates the term ‘Toro' with opposer to the point that it is now a mark with a singular identification even when it is considered separate from the goods and services with which it is associated." 61 USPQ2d 1183-84. Finally, because the Board did not see any evidence supporting a finding that potential buyers of ToroHead's goods would make any association between the parties' marks when used with their respective goods and services, the Board concluded that Toro's mark would not be diluted by ToroHead's mark.

In the first substantive proceeding concerning dilution heard by the TTAB, Toro Company became the unfortunate victim of the Board's "bearish" approach to analyzing dilution claims. However, Toro Company's experience has paved the way and will aid trademark owners around the world in their ability to predict their likelihood of success in a future dilution claim before the TTAB. It is now clear that a party who initiates a cancellation or opposition proceeding based on dilution will need to provide extensive evidence through public recognition, surveys, and intense media attention that potential purchasers link the two marks in their minds, even when the marks are used on noncompetitive goods and services.