Amicus Curiae Brief — Moseley v. v. Secret Catalogue, Inc.

No. 01-1015 AUG 23 202

CRNACE UF PME CLERK

—_—-+- ~ J

IN THE

Supreme Court of the United States

VICTOR MOSELEY., et a/..

Petitioners.

v.

V SECRET CATALOGUE, INC.., et al.

Respondents.

On Writ of Certiorari to the

United States Court of Appeals for the

District of Columbia Circuit

BRIEF FOR AMICUS CURIAE

THE INTELLECTUAL PROPERTY OWNERS

ASSOCIATION IN SUPPORT OF THE RESPONDENT

JOHN K. WILLIAMSON LAURENCE R. HEFTER *

President ELIZABETH MCGOOGAN

RONALD E. MYRICK MAGNUSON

Chair, Amicus Brief FINNEGAN, HENDERSON, FARABOW,

Committee GARRETT & DUNNER, LLP

INTELLECTUAL PROPERTY 1300 I Street, N.W.

OWNERS ASSOCIATION Washington, D.C. 20005-3315

1255 Twenty-Third Street, N.W. (202) 408-4000

Suite 200

. Counsel for Amicus Curiae

patent ey 20037 INTELLECTUAL PROPERTY

OWNERS ASSOCIATION

* Counsel of Record

— (202) 789-0096 — WASHINGTON, D.C. 20001

WILSON-EPES PRINTING CO.., INC.

tc

ver

QUESTION PRESENTED

TABLE OF CONTENTS

QUESTION PRESENTED...

rABLE OF AUTHORITIES ...........

INTEREST OF AMICUS CURIAE.........

INTRODUCTION o.oo.

SUMMARY OF THE ARGUMENT...

ee

lL ACTLAL ECONOMIC HARM IS) NOT

REQUIRED TO PROVE DILUTION..... 7

ll. A “LIKELIHOOD” OF DILUTION IS NOT

irl ctierrnretierteaanannnnananeanenveceses |

lil. CONGRESS CLEARLY STATED THAI

DILLTION MAY BE PROVEN IN A

LL )

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(iit)

Page

V

TABLE OF AL THORITIES

CASES

hid & ( Vatu lnswers, 233 F.3d 456

th ¢ ON)

Hormel | Corp Jim Henson Prod... l

73 F.3d 497 (2d Cir. 1996

Mattel, In MCA Records. Inc., 296 F.3d 894

th Cir. 2002

Vortellito v. Nina of Califorma, Inc., 335 |

Supp. 1288 (S.D.N.Y 1972

Nabis PF Brands, Inc., 191 F.3d 208 (2d

Cir. 1999

Park N’ Fly. Inc. v. Dollar Park and Fly. b

469 US. 189 (1985)

Ringling Bros.-Barnum & Bailey Combined

Shows, Im Utah Div. of Travel De 1/70

F.3d 449 (4th Cir. 1999 ert. denied, 528

L §. 92371999)

6th Cir. 2001)

STATUTES

IS U.S.C. § 1125(c 4.

15 U.S.C. § 1127

OTHER AUTHORITIES

3 McCarthy on Trademarks and Unfair Com

petition § 24.13{[1]}[a}[i] (3d ed. 1995). :

H.R. Rep. No. 104-374 (1995), reprinted in 1995

Fe dt Re ee

Kathleen B. McCabe, Note, Dilution by Blurr

ine: A Theory Caught in the Shadow of Trade-

mark Infringement, 68 Fordham L. Rev. 1827

od

Pave

H.

+-

4\

IN THI

Supreme Court of the United States

On Writ of Certiorari to the

L nited States Court of Appeals for the

District of Columbia Circuit

BRIEF FOR AMICUS CURTAE

THE INTELLECTUAL PROPERTY OWNERS

ASSOCTATION IN SUPPORT OF THE RESPONDENT

INTEREST OF AMICUS CURIAE

Amicus Intellectual Property Owners Association (IPO) ts a

nonprofit, national organization of nearly- 100 large and

midsize companies and more than 200 small businesses,

universities, inventors, authors, executives, and attorneys who

own or are interested in patents, trademarks, copyrights, and

other intellectual property rights. Founded in 1972, IPO

represents the interests of all owners of intellectual property

The members of IPO’s Board of Directors are listed in

the appendix.

This brief was not authored in whole or in part by counsel tor erther

party. No person or entity, other than amicus Intellectual Property

SE IP REN TOT MOC. Neen | | A

+

IPO and its members have a strong interest in this case

because it represents the Supreme Court's first opportunity to

review and interpret the FTDA. Federal trademark dilution ts

an important new tool that assists trademark owners in

protecting the distinctiveness, value, and usefulness of their

marks. The appellate courts evaluating dilution cases have

come to vastly different conclusions regarding the statute's

scope, meaning, and purpose. Hence, the Court's choice in

this case between the very different interpretations will set

the tone for this statute's future application, determine its

relevance to trademark owners, and provide a guide to those

selecting new trade names and trademarks. [PO submits this

amicus brief to present its view on how the statute should be

properly interpreted.

INTRODUCTION

Relief under the FTDA should not hinge on whether the

owner of a famous and distinctive trademark can prove tan-

gible economic loss or harm at the hands of an unauthorized

user. Such a requirement would impose a daunting standard

that could be rarely met and 1s not supported by the statutory

language. The incalculable value of famous and distinctive

trademarks eligible for protection under the FTDA lies in

their singular uniqueness. Dilution occurs, and should be

enjoined, whenever a famous and distinctive mark (or color-

able imitation), as defined by the statute, is commercially

used without authorization. Whether or not an unauthorized

use inflicts direct and provable economic loss, it inherently

impairs the mark and damages its intrinsic value. It does so

by lessening or “blurring” the mark's capacity to carry out the

central trademark function of identifying a single and unique

source of goods or services.

Owners Association, its members, or its counsel, made a monetary

contribution to the preparation or submission of this brief. The Parties

have consented to the filing of this brief amicus curiae.

3

The very first commerctal use of a famous mark by an

unauthorized third party erodes the famous mark by making it

less unique. Such erosion inflicts an injury on the trademark

owner far more pernicious than mere loss of sales or other

economic injury. Furthermore, allowing the diluting mark to

remain in use invites others to feast on a famous mark's

tremendous value by employing similar uses for their own

benefit at the expense of the originator. Through such

incremental blurring. a mark that was once unique and

famous devolves into the commonplace.

The FTDA was intended to prevent just such progressive

impairment of the intrinsic value of famous and distinctive

trademarks. The Act's remedy, accordingly, should apply

without regard to whether direct economic harm can

he shown.

SUMMARY OF THE ARGUMENT

The FTDA provides a new and unique federal cause of

action that applies whenever the commercial use of a mark

lessens the capacity or ability of a famous and distinctive

mark to serve as a unique identifier of source or lessens its

distinctive quality. The right of relief under the Act does not

require proof of actual economic harm to the trademark

owner. Rather, the Act focuses on the harm to a mark's

intrinsic capacity or ability to distinguish goods or services,

which does not necessarily translate into provable economic

harm to the mark’s valuation. Harm of this nature can

be proven through a variety of methods, such as proof of

contextual factors, circumstantial evidence, or anecdotal

evidence. In some instances, proof of dilution merely

requires proof that the mark used by the defendant is so

similar to the plainuff's famous mark, that i calls the

plaintiff's mark to mind and creates an association. In other

words, commercial activity associating the famous mark with

something other than the right holder, ipso facto dilutes the

mark's distinctive nature.

seen Te eT

4

ARGUMENT

In 1995, Congress created a new and different federal

cause of action when it passed the Federal Trademark

Dilution Act, which became law on January 16, 1996. The

FTDA’s purpose, as shown in its legislative history, was

“to protect famous trademarks from subsequent uses that blur

the distinctiveness of the mark or tarnish or disparage it, even

in the absence of likelihood of confusion.” H.R. Rep.

No. 104-374, at 2 (1995), reprinted in 1995 U.S.C.C.A.N.

at 1029.

This Act represents a clear departure from the traditional

trademark-infringement analysis, which is based on a

likelihood of contusion, deception, or mistake. /d. at 3, 1995

U.S.C.C.A.N. at 1030. Rather, the new dilution statute was

intended to apply “when the unauthorized use of a famous

mark reduces the public’s perception that the mark signifies

something unique, singular, or particular.” /d. As examples

of actions that would dilute famous marks, the legislative

history stated that “the use of DUPONT shoes, BUICK

aspirin, and KODAK pianos would be actionable under this

legislation.” /d.

I. ACTUAL ECONOMIC HARM IS— NOT

REQUIRED TO PROVE DILUTION

As this Court has noted, “Statutory construction must begin

with the language employed by Congress and the assump-

tion that the ordinary meaning of that language accurately

expresses the legislative purpose.” Park N’ Fly, Inc. \

Dollar Park and Fly, Inc., 469 U.S. 189, 194 (1985). The

“language employed by Congress” reads:

The owner of a famous mark shall be entitled, subject to

the principles of equity and upon such terms as the court

deems reasonable, to an injunction against another

5

person's commercial use in commerce of a mark or trade

name, if such use .. . causes dilution of the distinctive

quality of the mark.

1S U.S.C. § 1125(cV 1). The Act further defines “dilution” as

the lessening of the capacity of a famous mark to

identify and distinguish goods or services, regardless ot

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.

a)

1S U.S.C. § 1127.

Nothing in this statutory text indicates that the capacity or

ability of a mark to identify and distinguish goods and

services is not lessened until proof of a tangible, economic

harm is available. To the contrary, the Act provides that the

owner of a famous mark shall be entitled to an injunction of a

third party's commercial use of a marx if the use causes

dilution of the mark's distinctive quality—not its economic

value. Furthermore, dilution occurs when the capacity of a

famous mark to distinguish the goods or services it identifies

is lessened. That is all a trademark owner need prove under

the Act. A trademark is an intangible asset, and it 1s logical

that damage to it could be intangible as well. Indeed, the Act

specifically contemplates that a noncompeting use of the

famous mark can dilute its distinctive quality. IS U.S.C.

$1127. If two products do not directly compete with one

another, it is not likely that the dilutive use will siphon sales

away from the trademark holder, leading to direct financial

harm. Yet the statute clearly contemplates that such a use can

in fact dilute the strength and significance of a famous mark.

Even the Fourth Circuit, which first advanced the argument

that proof of actual harm was required, conceded that the

requirement “does not leap fully and immediately from the

statutory text.” Ringling Bros.-Barnum & Bailey Combined

pp

6

Shows, Inc. v. Utah Div. of Travel Dev., 170 F.3d 449, 453,

(4th Cir. 1999), cert. denied, 528 U.S. 923 (1999). Thus, the

statutory language itself does not support a claim that proof of

actual injury to the economic value of the famous mark

preconditions any and all relief under the Federal Trademark

Dilution Act.

Petitioners (and some commentators) have suggested that,

unless proof of actual economic harm is read into the FTDA,

it would create a “right in gross” or lead to some kind of

“patent on words,” unlimited in time, that will harm com-

petition and violate the First Amendment of the Constitu-

tion. But such suggestion is misplaced. Under the statutory

scheme, dilution protection requires a three-step process. The

first step determines whether a mark even qualifies for

dilution protection, by focusing on the consumers’ perception

of the mark as a famous and unique indicator of goods and

services. If the trademark owner cannot prove that the mark

is famous and distinctive to the consuming public, then the

mark is not entitled to protection under the statute. 15 U.S.C.

§ 1125(c)(1). Thus dilution protection exists only so long as

a mark is “famous and distinctive” in the minds of the

consuming public.

The second step determines whether the use is in fact

dilutive of the famous mark, while the third step applies

certain statutory exemptions designed to protect the fair use

of the famous mark and First Amendment concerns. 15

U.S.C. § 1125(c)(1), (3). See also, Mattel, Inc. v. MCA

Records, Inc., 296 F.3d 894, 902-07 (9th Cir. 2002) (finding

use of the famous BARBIE trademark in the song “Barbie

Girl” dilutive because it caused consumers to associate two

different products with the mark (the doll and the song), but

protected by the statutory exception for noncommercial (i.e.

constitutionally protected) use.) This fundamental tying of

dilution protection to consumer perception and the specific

exceptions for fair use and constitutionally protected speech

7

limit the scope of protection afforded by the FTDA. As

clearly seen in the Mattel case, a trademark owner cannot

control every use of the mark by third parties. The FTDA

does not create a “patent on words,” but simply protects a

famous trademark by preventing third parties from riding on

its coat-tails, instead of making their own way. Thus, the

statutory scheme set forth by Congress, taken as whole,

balances the protection of consumers, competition, trademark

owners, and free speech—without requiring proof of an

economic injury.

ll. A “LIKELIHOOD” OF DILUTION IS NOT

SUFFICIENT

Some appellate courts appear to advocate that a “likeli-

hood” of dilution is ali that is necessary to receive relief

under the FTDA. Eli Lilly & Co. v. Natural Answers, 233

F.3d 456 (7th Cir. 2000); V Secret Catalogue v. Moseley, 259

F.3d 464, 474-76 (6th Cir. 2001). This suggestion should

be rejected as well. The statutory language is unambig-

uous—the mark’s use must “cause dilution.” 15 U.S.C.

§ 1125 (c)(1). But this language does not suggest that causa-

tion can only be proven through an economic calculation or

an empirical measurement rathe> than from common sense,

an understanding of the natural consequences of an action, or

other types of logical proof or market evaluations.

Use of the term “likelihood” of dilution in the above deci-

sions is really an unfortunate choice of words. In both cases,

the circuit courts correctly understood and applied the

concept of “dilution” per se. Eli Lilly recognized that

“{d]ilution by blurring, the injury at issue here, occurs when

consumers ‘see the plaintiff's mark used on a plethora of

different goods and services,’ . . . ‘raising the possibility that

the mark will lose its ability to serve as a unique identifier of

the plaintiff's product.’” 233 F.3d at 466 (quoting Hormel

Feods Corp. v. Jim Henson Prod., Inc., 73 F.3d 497, 506 (2d

Cir. 1996), which quotes 3 McCarthy on Trademarks and

8

Unfair Competition § 24.13[1][a][i] (3d ed. 1995))). Simi-

larly, the Sixth Circuit understood that unauthorized commer-

cial use of a famous mark causes actual dilution when it

concluded that “[t)his, then, is a classic instance of dilution by

tarnishing (associating the Victoria’s Secret name with sex

toys and lewd coffee mugs) and by blurring (linking the

chain with a single, unauthorized establishment). V Secret

Catalogue, 259 F.3d at 477.

But in describing the new concept of dilution, these courts

clung to the familiar by using the language of trademark

infringement. This unfortunate choice of words is not unus-

ual in dilution analyses. See Kathleen B. McCabe, Note,

Dilution-by-Blurring: A Theory Caught in the Shadow of

Trademark Infringement, 68 Fordham L. Rev. 1827, 1850-54

(2000) (discussing how “[clourts frequently decide dilution

claims using the language of infringement standards, resulting

in a miscommunication of the court’s analysis of the law”).

However, the courts’ use of the words “likelihood of —the

flagship words of infringement analysis—does not neces-

sarily suggest that their underlying analysis was incorrect.

Indeed, in each case, dilution of the famous mark was

actually present and occurring. The courts simply used cir-

cumstantial and contextual factors rather than proof of

tangible economic harm to determine whether or not the

alleged activity caused dilution of the famous mark. See

Nabisco v. PF Brands, Inc., 191 F.3d 208 (2d Cir. 1999) (“If

a junior user began to market Buick aspirin or Schlitz shellac,

we see no reason why the senior users could not rely on

persuasive circumstantial evidence of dilution of the

distinctiveness of their marks without being obligated to show

lost revenue or engage in an expensive battle of surveys.

Plaintiffs are ordinarily free to make their case through

circumstantial evidence that will justify an ultimate inference

of injury. ‘Contextual factors’ have long been used to

establish infringement. We see no reason why they should

not be used to prove dilution.”).

9

Ill. CONGRESS CLEARLY STATED THAT DILU-

TION MAY BE PROVEN IN A NUMBER OF

WAYS

Dilution is a concept that courts have struggled with since

it was first described, because it differs significantly from

traditional trademark analysis. But once one accepts that

dilution provokes the need for a different remedy, and was

enacted to guard against a different harm, the concept

becomes quite simple.

In adopting the dilution statute, Congress accepted the

proposition that, absent some mitigating or equitable factors,

the actual and inevitable result of a third party’s use of a

famous mark on different goods or services is the lessening of

that mark’s capacity to serve as a unique identifier of source.

This approach to the proof of dilution is shown by several

statements made throughout the legislative history. First, the

legislative history noted that passage of the FTDA “would ...

create a federal cause of action to protect famous marks from

unauthorized users that attempt to trade upon the good will

and established renown of such marks and, thereby, dilute

their distinctive quality.” See H.R. Rep. No. 104-374, at 3

(1995), reprinted in 1995 U.S.C.C.A.N. 1029, 1030 (em-

phasis added). The legislative history went on to note that

“{t]he concept of dilution recognizes the substantial invest-

ment the owner has made in the mark and the commercial

value and aura of the mark itself, protecting both from those

who would appropriate the mark for their own gain.” /d.

This interpretation is reinforced by the legislative history's

listing of “DUPONT shoes, BUICK aspirin, and KODAK

pianos” as actual examples of dilutive uses. /d. Indeed, the

language used in the report—that “DUPONT shoes, BUICK

aspirin, and KODAK pianos would be actionable under this

legislation,” underscores Congress’s acceptance of the prop-

osition that the third party’s unauthorized commercial use of

a mark itself blurs, and thus dilutes, the distinctive quality of

10

the mark. /d. (emphasis added.) These examples were not

listed as ones that might be actionable if the trademark owner

could prove actual economic harm; they were listed as

examples of dilution itself.

Furthermore, Congress provided for injunctive relief,

which is intended to prevent irreparable harm, if the

unauthorized use of a famous mark causes dilution of its

distinctive quality. 1I5 U.S.C. §1125(c)(1). Requiring

proof of actual economic harm is_ inconsistent with

Congress’s intent when it selected injunctive relief as the

primary remedy.

Finally, the legislative history’s clearest explanation of

dilution comes from its quotation of Mortellito v. Nina of

California, Inc., which stated:

Dilution is an injury that differs materially from that

arising out of the orthodox confusion. Even in the

absence of confusion, the potency of a mark may be

debilitated by another’s use. This is the essence of

dilution. Confusion leads to immediate injury, while

dilution is an infection, which if allowed to spread, will

inevitably destroy the advertising value of the mark.

335 F. Supp. 1288, 1296 (S.D.N.Y 1972). These explana-

tions of dilution make clear that proof of immediate and

quantifiable harm is not required to establish that an

unauthorized use of a famous mark causes dilution. Rather,

dilution occurs when a set of facts takes place, namely, the

commercial use of a mark by another, which lessens the

ability of a famous mark to serve as a unique identifier of

source. Indeed, dilution of a mark’s “distinctive quality” is

diminished immediately upon commercial use by an unre-

lated third party—regardless of how imperceptible or seem-

ingly inconsequential the initial effect may be.

1]

CONCLUSION

The plain language of the statute’s text, the legislative

history (which reflects Congress’s intent), and the underlying

rationale for dilution all clearly show that proof of actual

economic harm to the famous mark is not required to prove

dilution. Rather, dilution occurs, and may be enjoined,

whenever a third party commercially uses a famous and dis-

tinctive mark (or colorable imitation) without authorization.

For the reasons set forth above, amicus curiae Intellectual

Property Owners Association respectfully requests that the

Court affirm the judgment of the Court of Appeals.

Respectfully submitted,

JOHN K. WILLIAMSON LAURENCE R. HEFTER *

President ELIZABETH MCGOOGAN

RONALD E. MYRICK MAGNUSON

Chair, Amicus Brief FINNEGAN, HENDERSON,

Committee FARABOW, GARRETT

INTELLECTUAL PROPERTY & DUNNER, LLP

OWNERS ASSOCIATION 1300 I Street, N.W.

1255 Twenty-Third Street, N.W. Washington, D.C. 20005-3315

Suite 200 (202) 408-4000

preg gn a 20037 Counsel for Amicus Curiae

(202) 406- INTELLECTUAL PROPERTY

* Counsel of Record OWNERS ASSOCIATION

la

APPENDIX

Members of Board of Directors,

Intellectual Property Owners Association *

Marc §. Adler Stephen P. Fox

Rohm and Haas Co. Hewlett-Packard Co.

Robert A. Armitage Scott M. Frank

Eli Lilly and Co. BellSouth Corp.

Frederick T. Boehm Gary C. Ganzi

IBM Corp. U.S. Filter Corp.

Eduardo M. Carreras

Coca-Cola Co.

Angelo N. Chaclas

Pitney Bowes, Inc.

Howard N. Conkey

General Motors Corp.

William J. Coughlin

Ford Global

Technologies, Inc.

Dan Crouse

Microsoft Corp.

Gerald V. Dahling

Aventis Pharmaceuticals

Inc.

Frampton E. Ellis, Ill

Bernard J. Graves, Jr.

Eastman Chemical Co.

Gary L. Griswold

3M Innovative Properties Co.

John M. Gunther

EMC Corporation

Jack E. Haken

Koninklijke Philips

Electronics N.V.

Harry J. Gwinnell

Cargill, Inc.

J. Jeffrey Hawley

Eastman Kodak Co.

Stephen D. Harper

Anatomic Research, Inc. Henkel Corp.

Marc D. Foodman Robert P. Hayter

Sun Microsystems, Inc. United Technologies Corp.

* IPO procedures require approval of positions in briefs by a three-

fourths majority of directors present and voting.

William B. Heming

Caterpillar, Inc.

Dennis H. Hoerner, Jr.

Monsanto Co.

Philip S. Johnson

Johnson and Johnson

Wayne A. Jones

SAP, A.G.

Mark P. Kesslen

JP Morgan Chase & Co.

Charles M. Kinzig

GlaxoSmithKline

Michael K. Kirschner

Amgen, Inc.

Richard F. Lemuth

Shell Oil Co.

Edward L. Levine

Alcoa, Inc.

Michael L. Lynch

Micron Technology, Inc.

William F. Marsh

2a

Steven W. Miller

Procter & Gamble Co.

Raghunath S. Minisandram

Seagate Technology, LLC

Ronald E. Myrick

General Electric Co.

Wallace L. Oliver

BP America, Inc.

Richard F. Phillips

ExxonMobil Corp.

Marcia D. Pintzuk

FMC Corp.

Thomas C. Reynolds

Intel Corp.

Vernon R. Rice

E.1l. DuPont de Nemours

& Co.

Peter C. Richardson

Pfizer, Inc.

Allen W. Richmond

Phillips Petroleum Co.

Robert R. Schroeder

Air Products & Chemicals, Inc. Mars Incorporated

Jonathan P. Meyer

Motorola, Inc.

Mark T. Starr

Unisys Corp.

Brian W. Stegman

BASF Corp.

Graham &. Taylor

Dow Chemical Co.

3a

Herbert C. Wamsley

Intellectual Property Owners

Assoc.

John K. Williamson

PPG Industries, Inc.