Exempt Organizations Advisory - Trademark Act Clarifies Issue of Proof in Dilution of Trademark Cases

On October 6, the President signed into law the Trademark Dilution Revision Act of 2006 (H.R. 683) to amend the Federal Trademark Dilution Act of 1946 (15 U.S.C. 1125), as amended in 1995, with respect to dilution of trademarks by blurring or tarnishment.

The Trademark Dilution Revision Act (TDRA), which is meant to clarify Congress’ intentions on the issue of proof, explicitly states that the owner of a famous mark may claim relief against another person who uses a mark or trade name in commerce that "is likely to cause dilution by blurring or dilution by tarnishment of the famous mark, regardless of the presence or absence of actual or likely confusion, of competition, or of actual economic injury."

Trademark dilution happens when there is "a lessening of the capacity of a famous mark to identify and distinguish goods or services," 15 U.S.C. 1127. The TDRA explicitly names two methods of dilution, "dilution by blurring" and "dilution by tarnishment," and, thus, incorporates them into the Federal Trademark Dilution Act (FTDA).

Under the FTDA, the owner of the trademark, in order to establish trademark infringement, must show that the defendant is its competitor in terms of geography and the goods and services that it is offering. For those trademark holders whose marks have achieved the status of "famous mark," trademark dilution allows for additional protection; a famous mark can be protected without consideration of whether the junior user is a competitor of the senior user.

The Act is meant to reverse the Supreme Court ruling in Moseley v. V Secret Catalogue Inc., 537 U.S. 418, 126 S. Ct. 1115 (2003), which required that owners of famous trademarks demonstrate actual, rather than likely, trademark dilution.

The Act includes an express fair use exemption covering "a nominative or descriptive fair use, or facilitation of such fair use," as well as a liability exclusion for "non-commercial uses" of a mark. Also included in the Act is a section which establishes the burden of proof in a dilution action involving an unregistered trade dress.

The Exempt Organization Advisory is a general summary of the law and is not intended as specific legal advice for any organization.

Internal Revenue Service - Circular 230 Disclosure: As provided for in Treasury regulations, advice (if any) relating to federal taxes that is contained in this communication (including attachments) is not intended or written to be used, and cannot be used, for the purpose of (1) avoiding penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any plan or arrangement addressed herein.

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