The Theory of Dilution Crosses the Pond
By Gregory J. Krabacher, Epstein Becker Green.
The origin story for the cause of action of “dilution” in the United States begins with Frank Schechter’s 1927 Harvard Law Review article, Rational Basis of Trademark Protection. [i] Indeed the U.S. Supreme Court credits Mr. Schechter’s work as the “seminal discussion,” noting that “[u]nlike traditional infringement law, the prohibitions against trademark dilution are not the product of common-law development, and are not motivated by an interest in protecting consumers.”[ii]
Mr. Schechter based his theories, among other cases, on his study of the German Odol case.[iii] In that case, the court found harm to the selling power of a well-known brand for mouthwash through the use by another party for steel. Schechter notes in passing that if U.S. courts eventually adopt Odol’s holding, “it will not be the first time that they have gone to continental armories for the weapons with which to combat the commercial buccaneer.”[iv]
A belief that traditional U.S. trademark law principles and “orthodox definition[s]” require updating to better address the practical realities and complexities of modern commerce appears to explain Mr. Schechter’s interest in Odol and similar cases.[v] According to Mr. Schechter, the “vital” distinction between the simpler commerce of say, 400 years ago, and “now” is that trademarks no longer merely designate “the origin or ownership of the goods to which it is affixed”, but rather, designate that goods “bearing the same mark[] emanate from a single source.”[vi]
Moreover, in this modern age, “the trademark is not merely the symbol of good will but often the most effective agent for the creation of good will, imprinting upon the public mind an anonymous and impersonal guaranty of satisfaction, creating a desire for further satisfactions. The mark actually sells the goods. And, self-evidently, the more distinctive the mark, the more effective is its selling power.”[vii] Such distinctive marks, says Schechter, deserve protection from the “subtle and refined” “trademark pirates” of the modern age who “proceed circumspectly, by suggestion and approximation, rather than by direct and exact duplication of their victims’ wares and marks.”[viii]
And so, the rationale proceeds, the law must protect such distinctive marks even in cases where the goods of the parties do not compete and there is no diversion of sales. For example, in cases such as Kodak (cameras and bicycles), Aunt Jemima’s (pancake flour and syrup), Vogue (fashion magazines and hats), Rolls-Royce (automobiles and radio parts) and Beech-Nut (food products and cigarettes), Mr. Schechter postulates:
The real injury in all such cases can only be gauged in the light of what has been said concerning the function of a trademark. It is the gradual whittling away or dispersion of the identity and hold upon the public mind of the mark or name by its use upon non-competing goods. The more distinctive or unique the mark, the deeper is its impress upon the public consciousness, and the greater its need for protection against vitiation or dissociation from the particular product in connection with which it has been used.[ix]
It would take time, but Frank Schechter’s ideas would spread, both geographically and substantively. Some 20 years after the article, Massachusetts enacted the first state statute protecting trademarks from dilution.[x] As noted by the U.S. Supreme Court, this state statute went beyond Odol’s sole concern for the harm to selling power (what Schechter referred to as “whittling away” and what we today refer to as “blurring”), but also included “injury to business reputation”, i.e. “tarnishment.”[xi] Following in Massachusetts’s footsteps, at least 25 States passed similar laws in the decades before the Federal Trademark Dilution Action (FTDA) was enacted in 1995.[xii]
Before examining the 1995 FTDA and its successor, the 2005 Federal Dilution Revision Act (FDRA), we pause to observe, as does Professor McCarthy, that the U.S. protection of brand distinctiveness diverges in at least one key respect from similar European laws. European Union law explicitly prohibits both dilution and free-riding, while federal U.S. anti-dilution law solely prohibits the likelihood of dilutive injury.[xiii]
The difference between the two is that free-riding is shown by mere association between two marks.[xiv] Dilution, on the other hand, requires association that further impairs the distinctiveness (blurring) or harms the reputation (tarnishment) of the famous mark.[xv] Therefore, and as discussed below, when U.S. courts find a likelihood of dilution based on a finding of association, alone, they err by ignoring the statutory requirement of impairment/harm and are essentially adopting the European standard for free-riding.[xvi]
Moseleying Along to a Federal Standard
Moseley Act One: A New Hope for Smut
The first U.S. federal dilution statute enacted in 1995 (which, again, was known as FTDA), defined the term “dilution” (the statute didn’t separate out blurring from tarnishment) as “the lessening of the capacity of a famous mark to identify and distinguish goods or services.”[xvii]
In its review of the FTDA, the U.S. Supreme Court in Moseley v. V Secret Catalogue, Inc., focused on the particular text found in 15 U.S.C. § 1125(c)(1)—“causes dilution of the distinctive quality” of the famous mark—to unambiguously require a showing of actual dilution, rather than a likelihood of dilution.[xviii] Although actual dilution was required, the Court clarified that the standard for injunctive relief under the FTDA did not require, as the Fourth Circuit had found in the Ringling Bros. case, proof of the consequences of dilution such as actual loss of sales or profits.[xix] So actual (not a mere likelihood) of dilution must be shown but not necessarily proof of financial harm. Does association establish the necessary showing?
This is where it gets interesting for our consideration of harm. The Supreme Court proceeded to point out the distinction between mere association and the further showing necessary for actionable dilution.[xx] And it did so in some depth:
As the facts of [the Ringling Bros] case demonstrate, such mental association will not necessarily reduce the capacity of the famous mark to identify the goods of its owner, the statutory requirement for dilution under the FTDA. For even though Utah drivers may be reminded of the circus when they see a license plate referring to the “greatest snow on earth,” it by no means follows that they will associate “the greatest show on earth” with skiing or snow sports, or associate it less strongly or exclusively with the circus. “Blurring” is not a necessary consequence of mental association. (Nor, for that matter, is “tarnishing.”)[xxi]
Applying this standard on the record before it, the Supreme Court noted that while there was evidence of association, there was no evidence of tarnishment caused by this association:
The record in this case establishes that an army officer who saw the advertisement of the opening of a store named “Victor’s Secret” did make the mental association with “Victoria’s Secret,” but it also shows that he did not therefore form any different impression of the store that his wife and daughter had patronized. There is a complete absence of evidence of any lessening of the capacity of the VICTORIA’S SECRET mark to identify and distinguish goods or services sold in Victoria’s Secret stores or advertised in its catalogs. The officer was offended by the ad, but it did not change his conception of Victoria’s Secret. His offense was directed entirely at petitioners, not at respondents. Moreover, the expert retained by respondents had nothing to say about the impact of petitioners’ name on the strength of respondents’ mark.[xxii]
Mosely Act 2: Congress Strikes Back
Following the Supreme Court’s decision in Moseley, Congress amended the Laham Act again with the 2006 Trademark Dilution Revision Act (TDRA) to further revise the dilution standard. Among other changes, the 2006 TDRA now says “likely to cause dilution by blurring or dilution by tarnishment of the famous mark” in place of the 1995 FTDA’s phrase “causes dilution of the distinctive quality.”[xxiii]
The current statute defines these two forms of dilution as follows, both of which include an element beyond mere association by further requiring either that such association impairs or harms the famous mark:
(B) For purposes of paragraph (1), “dilution by blurring” is association arising from the similarity between a mark or trade name and a famous mark that impairs the distinctiveness of the famous mark. [setting forth six statutory factors]***
(C) For purposes of paragraph (1), “dilution by tarnishment” is association arising from the similarity between a mark or trade name and a famous mark that harms the reputation of the famous mark. [no statutory factors].[xxiv]
So, following the FTDA’s amendments, the text appears to require a proponent of a dilution claim to show there is a likelihood of two elements: (1) association between the famous mark and the junior mark and (2) impairment/harm caused by the association.
Mosely Act 3: Return of the European Free-Riding Standard for Dilution
The Sixth Circuit, in a later appeal in the same Moseley case, interpreted the new law in view of its legislative history, noting Congress’s intention to lessen the burden on proponents, noting:
The House Judiciary Committee Report states the purpose of the new 2006 legislation as follows:
The Moseley standard creates an undue burden for trademark holders who contest diluting uses and should be revised.
….
The new language in the legislation [provides] … specifically that the standard for proving a dilution claim is “likelihood of dilution” and that both dilution by blurring and dilution by tarnishment are actionable.[xxv]
From this legislative history, the Sixth Circuit made an inference. Not only did Congress mean to reduce the burden of proof from “actual” to “likelihood” but, per the Court, it actually intended to remove plaintiff’s burden of going forward in certain cases by presuming harm to reputation upon a showing of likelihood of association alone. As stated by the Court of Appeals: “In the new law Congress rejected the Court’s view that a simple ‘likelihood’ of an association in the consumer’s mind of the Victoria’s Secret mark with the sexually-oriented videos and toys of “Victor’s Secret” is insufficient for liability.[xxvi]
The Court of Appeals went still further. Logically, if a “likelihood of tarnishment” can be presumed upon a showing of association in connection with certain products, then, the Court reasoned, this implies more than a lessoning (nay elimination) of Plaintiff’s burden. It implies a reversal of the burden from the party asserting a dilution claim to the party defending it. The Court reasoned:
The burden-of-proof problem, the developing case law, and the Restatement (Third) of Trademarks in § 25 (particularly subsection g) should now be interpreted, we think, to create a kind of rebuttable presumption, or at least a very strong inference, that a new mark used to sell sex-related products is likely to tarnish a famous mark if there is a clear semantic association between the two. This res ipsa loquitur—like effect is not conclusive but places on the owner of the new mark the burden of coming forward with evidence that there is no likelihood or probability of tarnishment. The evidence could be in the form of expert testimony or surveys or polls or customer testimony.[xxvii]
Some have observed that the Sixth Circuit’s standard in Moseley appears to be in tension with how other Courts of Appeal have interpreted the TDRA. As noted by Circuit Judge Karen Nelson Moore, in her dissent of the Sixth Circuit’s Mosely decision:
As the Second Circuit recently noted in Starbucks Corp. v. Wolfe’s Borough Coffee, Inc., 588 F.3d 97 (2d Cir.2009):
That a consumer may associate a negative-sounding junior mark with a famous mark says little of whether the consumer views the junior mark as harming the reputation of the famous mark. The more relevant question, for purposes of tarnishment, would have been how a hypothetical coffee [with a negative-sounding name] would affect the positive impressions about the coffee sold by Starbucks.
***In fact, when reviewing the exact same evidentiary record, the Supreme Court explicitly noted that Victoria’s Secret’s offer of proof included no evidence that “Victor’s Little Secret” affected Baker’s positive impressions of Victoria’s Secret…[xxviii]
While there are plenty of notable commentators who strongly disagree with Mosely for a variety of reasons[xxix] and while the pace of adoption of the Sixth Circuit’s burden shifting standard has not been especially brisk nation-wide in the twenty years since it was decided, the decision remains the law of the land within the Sixth Circuit.[xxx] Moreover, and perhaps somewhat surprisingly to some, no reported decision appears to outright criticize the holding.
What’s a Brand to Do?
Outside of the Sixth Circuit, and for cases involving products unrelated to sex, owners of famous brands may feel it is a little risky to rely on the Mosely presumption and burden shifting. Even for a case on all fours within the Circuit, parties may be looking to bolster their claims with support of likelihood of tarnishment beyond mere association by also demonstrating a likelihood of harm to reputation caused by the association.
Why, you may ask? While it may seem “self-evident” to some that harm to the reputation of a mark would necessarily flow from its association with sex-related products, the U.S. Supreme Court, as noted above, did not find it so obvious. Moreover, those who have studied the question have struggled to find real world evidence of the “obvious” harm caused. Indeed, to the extent the association causes a change in consumer perception of a brand, it may just as easily point the other way. For example, in one recent study carried out by Jake Linford et. al., the investigators report the following:
Our studies produced surprising results, many of which may prove useful to scholars, litigants, courts, and policy makers examining the tarnishment doctrine. In both studies, and contrary to the underpinnings of the tarnishment doctrine, associating well-known marketplace brands with sex- and drug-related messaging produced not a tarnishment effect, but a small yet reliable burnishment effect. Our participants meaningfully and statistically preferred our target brands more when they were exposed to tarnishing stimuli than when they were not. Moreover, exposure to the test stimuli images counterintuitively led participants to perceive those brands as stronger, which influenced their preference for the brands in the tarnishment condition.[xxxi]
So, if a brand owner is not content to rest on association alone in a tarnishment case, and expensive surveys carry their own risks of backfiring, what options do they have? A recent decision in another famous dilution case may suggest a relatively safer and cost-effective option. There, the proponent seemed to follow a middle way – providing at least some basis to support a showing of harm without resorting to an expensive survey.
The case to which I refer is the latest decision in the saga that is the “Bad Spaniels” litigation between VIP Products and Jack Daniel’s. As factual set up, Justice Kagan, on this case’s recent trip up to the Supreme Court, succinctly quipped: “This case is about dog toys and whiskey, two items seldom appearing in the same sentence.”[xxxii]
Our interest here in the case is the method by which Jack Daniel’s supported its claim of tarnishmet with evidence of a likelihood of harm to reputation. It did so by using an expert but not for the usual purpose of conducting an expensive survey. Instead, Jack Daniels’ expert based his opinion on general literature and a methodology with a fancy title: “The Associative Network Model (“ANM”)”, which the District Court found “has been empirically tested and verified numerous times since the 1970’s.”[xxxiii] No survey questions or participant selection to attack. Just some “reliable” studies interpreted by a reliable guy to explain why associating dog poop with a food product is likely to trigger disgust in the minds of the consumer and thereby harm the reputation of the food product.
VIP attempted to challenge the expert’s report as “insufficient to show tarnishment because it merely amounts to Dr. Simonson’s subjective impression of the tarnishing effect of “Bad Spaniels.”[xxxiv] Furthermore, VIP argued that the expert’s conclusions are unsupported because he conducted no surveys or focus groups and failed to account for the fact that “Bad Spaniels” is a parody product.[xxxv]
This Court was having none of it, explaining:
VIP misconstrues and misstates the testimony provided by Dr. Simonson. In reaching his conclusions, Dr. Simonson evaluated consumer psychology research showing that the association of food of beverage with defecation generates disgust in the mind of the consumer. Based on well-documented research suggesting that such feces-related associations lead to negative consumer associations with food and drink products, Dr. Simonson concluded that “Bad Spaniels” was likely to create negative associations of Jack Daniel’s whiskey with feces and thereby undermine the positive associations that Jack Daniel’s has created with respect to its whiskey. (Doc. 234 at 172–74, 200). In weighing the testimony and evidence supplied by the parties’ experts, the Court has credited and given prevailing weight to Dr. Simonson’s conclusion that “Bad Spaniels” is likely to tarnish Jack Daniel’s trademarks by creating negative associations of Jack Daniel’s products with dog feces.[xxxvi]
Therefore, on the strength of an admittedly impressive expert employing the impressive sounding “The Associative Network Model” by taking general literature and applying these papers to the particular facts of this case, the Court found “Jack Daniel’s has demonstrated by a preponderance of the evidence all of the elements necessary for a claim of dilution by tarnishment: fame, similarity, and reputational harm, caused by the association of VIP’s use of “Bad Spaniels” with Jack Daniel’s trademarks and trade dress.”[xxxvii] Easy enough.
The Challenge Not Yet Heard
We’ll wrap up this Note with one to watch. In the “Bad Spaniels” case, VIP attempted, and was refused the opportunity, to raise a First Amendment challenge to the tarnishment provision of the Lanham Act.[xxxviii] VIP’s argument was that “the Supreme Court’s recent decisions in Matal v. Tam, 582 U.S. 218 (2017) and Iancu v. Brunetti, 588 U.S. 388 (2019) compel the conclusion that the statute amounts to unconstitutional viewpoint discrimination by enjoining the use of a mark that “harms the reputation” of a famous mark.”[xxxix] While this argument was raised a bit too late to be heard in this case, its bound to come up again in tranishment cases in the future. Consider too that consumer sentiment is not stagnant. Most consumers have different views about topics like sex and drugs than they did when Frank first put pen to paper 99 years ago. As such, so the argument goes, there is great risk of overbreadth and stifling of free speech if, as did the Sixth Circuit in Mosely, courts merely rely upon a “growing consensus” at a particular point in time to create a per se rule that an entire category of speech (and one of unclear boundaries) necessarily harms a brand’s reputation.
[i] Frank I. Schechter, The Rational Basis of Trademark Protection, 40 Harv. L. Rev. 813 (1927)
[ii] Moseley v. V Secret Catalogue, Inc., 537 U.S. 418, 429, 123 S. Ct. 1115, 1122, 155 L. Ed. 2d 1 (2003)
[iii] Schechter, supra note 1, at 831.
[iv] Id. at 832.
[v] See id. at 813–18 (1927)(quoting, among other sources, Hanover Star Milling Co. v. Metcalf, 240 U. S. 403, 412 (1916)).
[vi] Id. at 817.
[vii] Id. at 819.
[viii] Id. at 825.
[ix] Id.
[x] Moseley, 537 U.S. at 430 (citing 1947 Mass. Acts p. 300, ch. 307).
[xi] See id.
[xii] Id. (citing Restatement (Third) of Unfair Competition § 25, Statutory Note (1995).
[xiii] See § 24:68. Dilution: Free Riding Or Impairment Of Distinctiveness?, 3 McCarthy on Trademarks and Unfair Competition § 24:68 (5th ed.)
[xiv] Id.
[xv] See id; See also 15 U.S.C.A. § 1125(B)( defining of “dilution by blurring” and § 1125(C)(defining “dilution by tarnishment”).
[xvi] See McCarthy, note 13 supra, § 24:68 (citing criticism of such decisions).
[xvii] 15 U.S.C. § 1125(C)[1995]
[xviii] Moseley, 537 U.S. at 432–33.
[xix] Id. at 433 (overruling Ringling Bros.-Barnum & Bailey Combined Shows v. Utah Div. of Travel Dev., 170 F.3d 449, 460 (4th Cir. 1999).
[xx] Id. at 433–34.
[xxi] Id. (emphasis added).
[xxii] Id. at 434 (emphasis added).
[xxiii] Compare 15 U.S.C. § 1125(C)(1)[2006] to 15 U.S.C. § 1125(C))[1995]
[xxiv] 15 U.S.C.A. § 1125 (C)(1)(emphasis added).
[xxv] V Secret Catalogue, Inc. v. Moseley, 605 F.3d 382, 387 (6th Cir. 2010)(citing and quoting U.S. Code Cong. & Adm. News, 109th Cong.2d Sess.2006, Vol. 4, pp. 1091, 1092, 1097. Further noting: The drafters of the Committee Report also called special attention to the “burden” of proof or persuasion placed on “trademark holders” by the Supreme Court’s opinion in Moseley, suggesting a possible modification in the burden of proof.).
[xxvi] V Secret Catalogue, Inc., 605 F.3d at 387.
[xxvii] Id. at 388.
[xxviii] Id. at 392 (J. Nelson Moore, dissenting)(emphasis added)(quoting Starbucks Corp., 588 F.3d at 110); see also id. at 393 (“In short, Victoria’s Secret has presented no probative evidence that anyone is likely to think less of Victoria’s Secret as a result of “Victor’s Little Secret” and cannot therefore prevail on its claim of dilution by tarnishment”, citing Hormel Foods Corp. v. Jim Henson Prods., Inc., 73 F.3d 497, 507 (2d Cir.1996) (“Absent any showing that Henson’s use [of a puppet named Spa’am] will create negative associations with the SPAM mark, there [is] little likelihood of dilution.”).
[xxix] See, e.g, § 24:89. Dilution by tarnishment, 3 McCarthy on Trademarks and Unfair Competition § 24:89 (5th ed.)(“I agree with the position of Judge Karen Nelson Moore in her dissent. The majority’s creation of a presumption of dilution by tarnishment if there is use on “sex related products” is wildly misguided.”)
[xxx] V Secret Catalogue, Inc. v. Moseley, Rehearing and Rehearing En Banc Denied (Aug. 5, 2010); Moseley v. V Secret Catalogue, Inc., 562 U.S. 1179 (Jan 18, 2011)(denying certiorari).
[xxxi] Jake Linford et. al., Trademark Tarnishmyths, 55 Ariz. St. L.J. 609, 674 (2023)
[xxxii] Jack Daniel’s Props., Inc. v. VIP Prods. LLC, 599 U.S. 140, 144, 143 S. Ct. 1578, 1582, 216 L. Ed. 2d 161 (2023)
[xxxiii] VIP Prods. LLC v. Jack Daniel’s Props. Inc., No. CV-14-02057-PHX-SMM, 2025 WL 275909, at *6 (D. Ariz. Jan. 23, 2025)
[xxxiv] Id at *18.
[xxxv] Id.
[xxxvi] Id.
[xxxvii] Id. at *19.
[xxxviii] Id. at *12.
[xxxix] Id.
