On March 4, 2003, the U.S. Supreme Court delivered a blow to famous trademarks. In a unanimous ruling against Victoria Secret in its claim against a mom and pop Kentucky store selling lingerie and adult novelties under the brand "Victor's Little Secret", the court required a showing of actual damage from "blurring and eroding the distinctiveness" of the famous mark. The court's statutory interpretation may have made foreclosed causes of action for "tarnishing" a famous trademark under the current federal Trademark Act. The case is Moseley v. V Secret Catalogue, Inc., 537 U.S. (2003)
The following is a summary of the facts and case history. Victor and Cathy Mosley own a retail store named "Victor's Little Secret" which sells lingerie and adult novelties and adult videos. Victoria Secret sued claiming trademark infringement and dilution under the Federal Trademark Dilution Act, which has been law since January 1, 1996.
At trial, the District Court held that there was no trademark infringement, or likelihood of confusion of the two marks, as a matter of law, but also held that the Victor's Little Secret mark diluted Victoria's Secret's mark by "tarnishing" it (associating a famous mark with unsavory products), but did not "blur" the mark (lessen the impact or value of a famous mark over time).
The Court of Appeals then heard the case, and affirmed the District Court decision. It added the observation that "secret" is an ordinary word used by hundreds of lingerie concerns, but said the entire mark was "arbitrary or fanciful" and therefore deserving of a high level of trademark protection. The Court of Appeals relied on both tarnishment and blurring to establish its finding of dilution.
The Supreme Court heard a further appeal and held that actual dilution had to be established, not merely a likelihood of dilution. Since there was no evidence of dilution in the record, and remanded the case to the original court to hear and make such findings.
Interestingly, relevance of tarnishment was not disputed, but the Supreme Court questioned whether it was prohibited by the language of the statute. A showing of actual dilution must exist, not mere mental association between the junior mark with the famous mark because "blurring" is not a necessary consequence of mental association. In obiter dicta, the Supreme Court indicated that direct evidence of dilution might be proven by circumstantial evidence, such as in the obvious case where junior and senior marks are identical. It may be that legislative action by Congress will be necessary to clarify whether tarnishment is prohibited under the statute, or to alter, if that is Congress' intention, the standard from one requiring actual dilution and probably requiring a showing of actual economic harm, to a mere showing of a likelihood of dilution with no economic harm required. The latter position has been much propounded in academic circles since the Ringling Bros. case where the Fourth Circuit Court of Appeals held that there was no economic harm and no dilution by Utah's slogan "Greatest Snow on Earth" as against the circus' older and famous slogan "The Greatest Show on Earth."