# Amicus Curiae Brief — Ty Inc. v. Perryman

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386015_1096%3A2

## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 2003
- **Citation:** 538 U.S. 971

## Text

MOTION FILED

I
MAR 6 = 2005 | / ou)
Y
No. 02-1142
IN THE

Supreme Court of the Anited States

TY INC.,
Petitioner,
V.
RUTH PERRYMAN,
Respondent.

On Petition For a Writ of Certiorari
to the United States Court of Appeals
for the Seventh Circuit

MOTION FOR LEAVE TO FILE AND BRIEF OF
AT&T CORP. AS AMICUS CURIAE

IN SUPPORT OF PETITIONER

LAURA A. KASTER CARTER G. PHILLIPS

FRANK L. POLITANO ALAN CHARLES RAUL*

MICHELE A. FARBER JOSEPH V. JEST

AT&T Corp. EDWARD R. MCNICHOLAS

One AT&T Way SIDLEY AUSTIN BROWN &

Bedminster, N.J. 07921 WOOD LLP

(908) 532-1860 1501 K Street, N.W.
Washington, D.C. 20005
(202) 736-8000

Counsel for Amicus Curiae
March 6, 2003 * Counsel of Record

EET AT CT TTT TENT TAAL ERE EDERAL NREL
WILSON-EPES PRINTING Co., INC. — (202) 789-0096 -— WASHINGTON, D. C. 20001

IN THE
Supreme Court of the Anited States

No. 02-1142

TY INC.,
Petitioner,
V.
RUTH PERRYMAN,
Respondent.

On Petition For a Writ of Certiorari
- to the United States Court of Appeals
for the Seventh Circuit

MOTION OF AT&T CORP. FOR LEAVE
TO FILE BRIEF AS AMICUS CURIAE
IN SUPPORT OF PETITIONER

Pursuant to Rule 37.3 of the Rules of this Court, AT&T
Corp. (“AT&T”) hereby requests leave to file this brief as an
amicus curiae in support of the Petitioner. Petitioner Ty, Inc.
has consented to this brief as well as all other briefs offered
by potential amici. Respondent Ruth Perryman has, however,
withheld her consent from the filing of this brief in support of
the Petition.

AT&T offers this brief because it believes that the decision
below seriously threatens to erode the existing antidilution
protections for famous marks. AT&T has spent more than a
century and hundreds of millions of dollars building one of
the world’s most recognized and trusted brands for
telecommunications. The decision below threatens to erode

the value of this massive investment and to deprive
consumers of confidence in the meaning of all famous marks

AT&T offers this brief to explain the violence that the
decision does to the rights Congress accorded owners of
famous trademarks and to identify several of the well-settled
principles that the Seventh Circuit’s decision upsets. By
placing this case into its broader context, AT&T desires to
assist the Court’s resolution of this Petition and thus
respectfully requests leave to file this brief.

For the foregoing reasons, the motion of AT&T for leave to
file this motion as an amicus curiae in support of the
Petitioner should be granted.

Respectfully submitted,
LAURA A. KASTER CARTER G. PHILLIPS”
FRANK L. POLITANO ALAN CHARLES RAUL*
MICHELE A. FARBER JOSEPH V. JEST
AT&T CORP. EDWARD R. MCNICHOLAS
One AT&T Way SIDLEY AUSTIN BROWN &
Bedminster, N.J. 07921 WOOD LLP
(908) 532-1860 1501 K Street, N.W.

Washington, D.C. 20005
(202) 736-8000

Counsel for Amicus Curiae

March 6, 2003 * Counsel of Record

TABLE OF CONTENTS

TA ee FFG e Ie ven vinnie ensceseenvsvensserenreeseenetenss

INTEREST OF THE AMICUS CURIAE ................0.-+

SUMMARY OF THE ARGUMENT ....................65

I.

Il.

THE SEVENTH CIRCUIT’S WEAKENING OF
PROTECTION FOR FAMOUS MARKS CON-
FLICTS WITH THE CONGRESSIONAL MAN-
DATE AND UNDERMINES THE VALUE OF
SE ons cenivinscunsvderoasateincanesteveedens coven

A. Antidilution Law Protects The “Uniqueness”
TS octed cerca savcaieatysecatbaseses

B. Congress Sought To Preclude “Free Riding”
On Famous Marks, Including On The
rcs cc suawepsaesunbeneneree

C. The Seventh Circuit Decision Undermines
Investment In Famous Marks Contrary To The
IIR i fs0iSyesnsssncciserssivenensinesensons

THE SEVENTH CIRCUIT TREATS TRADE-
MARK RIGHTS AS IF THEY WERE MONOP-
OLY RIGHTS OF THE KIND ACCORDED
COPYRIGHTS AND EXTENDS “FAIR USE”
SAFEGUARDS BEYOND WHAT CONGRESS
iia. ca teanth boidecsbon endinehsidstnessaetescesre

Famous Marks Can Lose Their Protection
After Abandonment Or Upon Becoming
se .deagancdilbniwecosstteckess

B. Congress Stipulated A Narrow Range Of “Fair
Use” Rights Allowing Limited Third Party Use
Be I TN ss scrncasssnncenssncessesmestosesssrevss

12

13

14

ii
TABLE OF CONTENTS - continued

Page

Ili. “PERCOLATION” IN THIS AREA IS PAR-
TICULARLY DESTRUCTIVE .........................0 17
IIIT hxc sssisoscrsansievumnnsraretens SAORI 18

TABLE OF AUTHORITIES

CASES Page

Amstar Corp. v. Domino’s Pizza, Inc., 615 F.2d
I aN I peccicctadvcdbekncicibinscccncsesiverts 15

AT&T Corp. v. Direct Wired Domains, LLC, No.
1:02-CV-1835-ODE (N.D. Ga. July 23, 2002)... 11

Ashley Furniture Indus., Inc. v. SanGiacomo N.A.

Lid., 187 F.3d 363 (4th Cir. 1999) 00... 15
Brookfield Communications, Inc. v. West Coast

Entm't Corp., 174 F.3d 1036 (9th Cir. 1999)..... 1]
Car-Freshener Corp. v. S.C. Johnson & Son, Inc.,

FOO Oe Ce TO Gitainveide neues jetnannsdisncess 16
Clorox Co. v. Sterling Winthrop, Inc., 117 F.3d

FO RG nS nth. Woe. 14
E.I. Du Pont de Nemours & Co. v. Yoshida Int'l,

Inc., 393 F. Supp. 502 (E.D.N.Y. 1975)............. 15
Eldred v. Ashcroft, 123 S. Ct. 769 (2003).............. 13

General Motors Corp. v. E-Publications LLC,
No. CIV.A. 01-72819, 2001 WL 1798648,

(E.D. Mich. Nov. 26, 2001).........0...0..cceeeeees 1]
Moseley v. V Secret Catalogue, Inc., No. 01-1015

186 & ES: Raper earecay yan mnee >, 6, 7, 13
Mishawaka Rubber & Woolen Mfg. Co. v. S.S.

Kresge Co., 316 U.S. 203 (1942)... 7

PACCAR, Inc. v. TeleScan Techs., L.L.C., 319
F.3d 243 (6th Cir. 2003), available at 2003 WL

PR iiscciisnissotiepedruuetcar vet nkdsodepdccas. ae a Oe
Panavision Int’l, L.P. v. Toeppen, 141 F.3d 1316

PE Sate, I Bh chiro lake rosteevebeb batidteseod totes 10, 11
Pegram v. Herdrich, 530 U.S. 211 (2000)............. 17
People for the Ethical Treatment of Animals v.

Doughney, 263 F.3d 359 (4th Cir. 2001)........... 10, 11
Petro Stopping Ctrs., L.P. v. James River

Petroleum, Inc., 130 F.3d 88 (4th Cir. 1997) ..... 14

Pharmaceutical Research & Mfrs. of Am. v.
Concannon, No. 01-188 (U.S. June 28, 2002)... 17

Ee NES SAE Dene Ee SE ae ee Ee NT ee RTE

iv
TABLE OF AUTHORITIES -— continued
Page
Playboy Enters., Inc. v. Welles, 279 F.3d 796 (9th

ee Sn ciccectistthdcdisidiaeisliniadieeiiitadaliwenbis: 16
Sony Corp. of Am. v. Universal City Studios, Inc.,

OE Be 0 Fe tivtgter enh eusidtntineinrns 13
In re Trade-Mark Cases, 100 U.S. 82 (1879) ........ 18
U.S. Search, LLC v. U.S. Search.com Inc., 300

FO Fe Se eres, ie isiciemsnneneetitemahareteneee 15
United Drug Co. v. Theodore Rectanus Co., 248

ee I secdcindeieilecesdvnnbictieecenhciieiaidtis as 13

CONSTITUTION AND STATUTES
a. GE, G0: SE BE Bikssdicdicledisd tindiiin. 4
Federal Trademark Dilution Act of 1995, Pub. L.

104-98, 109 Stat. 985 (codified at 15 U.S.C.

$6 1125, 1227)............: Ma sbiiishvoubastatediteaces Dies venl 3
BS TG Paks vc owsctddecavsaccodbecbacendbeccacess 14
RS SE. FH ROIITD snitvevsevs vsucsssccevidecbutidensesadeds 16
1S UBS. 5 FR asi ean ines 6, 9, 14, 16
1S UA BAIR a ai UR 14

COURT RULE
TIN, Se Pe Saidasisdases aus: enktenesveciarouiag enna |
LEGISLATIVE HISTORY
H.R. Rep. No. 104-374 (1995) ..........0..ccee 3, 9, 18
S. Rep. No. 100-515 (1988), reprinted in 1988

U.S.C.O.Ai SRIF. 655.500. ORR. BR 8,9
134 Cong. Rec. $5868 (daily ed. May 13, 1988)... 8
141 Cong. Rec. $19312 (daily ed. Dec. 29,

RODE). csieiisicnrsssinvesecbsnbuns usdRitondes s MUA Macs dtNN 8, 10
145 Cong. Rec. S15019 (daily ed. Nov. 19,

RODD... ia. .: sédi Rakes inns eaieachadach eee alae 2

Vv

TABLE OF AUTHORITIES - continued
OTHER AUTHORITIES

The Top 100 Brands, Bus. Wk., Aug. 5, 2002 .......
Thomas L. Friedman, 7he Lexus and the Olive
REE EN SCT em apne ce NE
USTA Trademark Review Comm’n, Report and
Kecommendations on the United States
Trademark System and the Lanham Act, 77
Trademark Rep. 375 (1987), reprinted in
Trademark Law Revision Act of 1987: Hearing
on S. 1883 Before the Subcomm. on Patents,
Copyrights, and Trademarks of the Senate
Comm. of the Judiciary, 96th Cong. (1988).......

SCHOLARLY AUTHORITIES :

Colossus: How the Corporation Changed Amer-
ica (Jack Beatty ed., 2001)...
2 J. Thomas McCarthy, McCarthy on Trademarks
and Unfair Competition (4th ed. 2001)..............
4 J. Thomas McCarthy, McCarthy on Trademarks
and Unfair Competition (4th ed, 2001)..............
Frank Schechter, Zhe Rational Basis of Trade-
mark Protection, 40 Harv. L. Rev. 813 (1927)...

Page
2,12

10

8, 10

7

IN THE
Supreme Court of the Gnited States

No. 02-1142

TY INC.,
Petitioner,
Vv. a
RUTH PERRYMAN,
Respondent.

On Petition For a Writ of Certiorari
to the United States Court of Appeals
for the Seventh Circuit

BRIEF OF AT&T CORP. AS AMICUS CURIAE
IN SUPPORT OF PETITIONER

INTEREST OF THE AMICUS CURIAE

AT&T Corp. (“AT&T”) is one of the world’s premier voice
and data communications companies, serving more than 50
million customers, including consumers, businesses and
governments.’ AT&T runs one of the largest and most
sophisticated communications networks, providing data,
Internet and managed services for the public and private
sectors. AT&T also offers local, long distance and Internet
services, as well as transaction-based services like prepaid
cards, collect calling and directory assistance. With

' Pursuant to Rule 37.6 of the Rules of this Court, amicus states that no
counsel for a party has authored this brief in whole or in part, and that no
person or entity, other than the amicus or its counsel, has made a monetary
contribution to the preparation or submission of this brief

iia i tial |

2

approximately $37 billion in revenues, AT&T has
relationships with about 50 million consumers and 4 million
business customers, who depend on AT&T communications
and technologies.

AT&T has built its reputation by ensuring that the
telecommunication services associated with its name
consistently reflect quality and reliability. The AT&T brand
signifies the source of the services and connotes a
commitment to quality and earned trust. To publicize and
build the value of this brand, AT&T engaged in what one
commentator notes was “the first, most persistent, and most
celebrated of the large-scale institutional advertising
campaigns of the early twentieth century.” See Colossus:
How the Corporation Changed America 180 (Jack Beatty ed.,
2001). This campaign was one of the first organized efforts
to create a public image of a corporation that extended
beyond its products or services and created a reputation
embodied in the company brand.

As reported annually in Business Week, AT&T has
consistently been ranked among the most valuable brands in
the world by Interbrand, a leading independent brand
consultancy. AT&T has been ranked the most valuable
telecommunications brand, and the 2002 survey values the
AT&T brand at more than $16 billion dollars. See The Top
100 Brands, Bus. Wk., Aug. 5, 2002, at 95, 96. It is no
exaggeration to say that AT&T’s brand remains one of its
most valuable corporate assets.

AT&T has brought numerous actions under the Lanham
Act, Federal Trademark Dilution Act, Anticybersquatting
Consumer Protection Act, and under the Uniform Domain
Name Dispute Resolution Policy issued by the Internet
Corporation for Assigned Names and Numbers to police and
protect its trademarks against misuse in domain names or
website content. See, e.g., 145 Cong. Rec. $15019 (daily ed.
Nov. 19, 1999) (statement of Sen. Hatch documenting cyber-
squatters’ unlawful use of AT&T’s marks). Therefore,

3

AT&T has a direct and tangible stake in the development of
the proper legal standards under the FTDA, as well as in the
efficacy of the remedies available to defend the company’s
trademarks.

SUMMARY OF THE ARGUMENT

The ruling of the Seventh Circuit substantially undermines
the expansive antidilution protections provided for famous
marks by the Federal Trademark Dilution Act of 1995, Pub.
L. 104-98, 109 Stat. 985 (codified at 15 U.S.C. §§ 1125,
1127) (“FTDA”). The court below formulated a radical
approach to trademark dilution that favors ready conversion
of famous marks into generic terms in conflict with the true
purpose of the antidilution law. Congress designed the FTDA
to preclude “the unauthorized use of a famous mark [when it]
reduces the public’s perception that the mark signifies
something unique, singular, or particular.” H.R. Rep. No.
104-374, at 3 (1995). The FTDA thus protects famous marks
from the attempts of free riders “to trade upon the goodwill
and established renown of [famous] marks.” /d

The Seventh Circuit decision adopts the opposite policy,
favoring widespread use of famous marks to permit them to
become generic words. The opinion below states: “arming
trademark owners to enjoin uses of their mark that, while not
confusing, threaten to render the mark generic may therefore
not be in the public interest.” Pet. App. 10a. The court
actually extols the “social benefit” gained when a mark
becomes generic -— “namely an addition to ordinary
language.” Jd. at 9a. Based on this analysis, the Seventh
Circuit endorses the use of Petitioner Ty, Inc.’s famous mark
by a reseller who has no connection to Ty, and it permits such
use not merely on the branded products the reseller offers for
sale, but in the name of the business itself. This dramatic
narrowing of the rights of those who own famous trademarks
is in direct conflict with the extensive antidilution protection
that Congress provided.

Sn ee a ee

4

The decision below also departs from mainstream analysis
of the “fair use” doctrine — the statutory doctrine that permits
marks to be used without license from the trademark owner
only under limited circumstances. Under the opinion below,
the limited fair use exception swallows the rule itself. The
opinion’s fundamental error is to treat trademarks as
analogous to copyrights, which (like patents) reward
creativity (and with patents, invention) by providing exclusive
rights, but only for a finite period before committing the
works to the public domain for the common good. Indeed,
whereas the temporal limitations of copyright (and patent)
protection are constitutionally mandated, U.S. Const. art. I,
§ 8, cl. 8, trademarks are not so limited by either the
Constitution or Congress. Trademarks may be maintained so
long as they identify a unique source. The public does not
gain by the release of trademarks for general use because their
entire purpose is to signify the unique, proprietary origin or
sponsorship of private goods. The present case is a strong
candidate for review because it posits an approach to
trademark rights that is in stark conflict with the wishes of
Congress. Review is also warranted to assure national
uniformity in the protection of nation-wide marks.

ARGUMENT

This case arises on appeal from the district court’s grant of
summary judgment in favor of Petitioner Ty, Inc. on the
ground that Respondent Perryman’s use of Ty’s famous
“Beanies” mark in the name of her business and in her
domain name diluted Ty’s mark in violation of the FTDA.
The Seventh Circuit reversed. The court recognized that the
FTDA protects against “blurring” and “tarnishment” of
famous marks, but then characterized this case as falling in a
distinct, third category of “free ride[r]” cases involving a
supposed extension of antidilution law. Pet. App. 4a-S5a. The
court below analyzed the question before it- as whether the
FTDA precludes unauthorized resellers of genuine articles

5

from using the famous marks associated with those goods,
even in the name or domain of the reseller’s business. See id.
at 3a. The court held that the FTDA does not “forbid [such]
commercial uses” even if they “accelerate the transition from
trademarks (brand names) to generic names (product names).”
Id. at 8a. Indeed, there is a “social benefit, namely an
addition to ordinary language” which occurs when marks are
made generic. /d. at 9a.

This Court’s recent decision in Moseley v. V Secret
Catalogue, Inc., No. 01-1015 (U.S. Mar. 4, 2003), does not
resolve or address the issue in this case. In Moseley, the
Court held that the FTDA requires proof of actual dilution,
rather than a mere “likelihood.” Jd at 14. The question
presented in the Petition at_issue here does not involve the
standard of proof for dilution; it concerns whether unlicensed
resellers of goods bearing famous trademarks have the right,
as a matter of law, to incorporate the famous marks into the
reseller’s business name and Internet domain name. See Pet.
i. Moreover, the district court below found actual injury,
awarding summary judgment to Petitioner on its dilution
claim based on a “clear{] lessen[{ing of] the capacity of the
plaintiff [Ty, Inc.] to distinguish its goods from competitors.”
Pet. App. 55a. Thus, this is not a “mere mental association”
case like Moseley. See Moseley, No. 01-1015, slip op. at 15
(“the mere fact that consumers mentally associate the junior
user’s mark with a famous mark is not sufficient to establish
actionable dilution”).

If the Seventh Circuit’s decision is not reversed, resellers
will have acquired a new legal right in famous marks that the
FTDA does not allow, and the owners of famous marks will
be denied their express statutory right to enjoin resellers from
“lessening . . . the capacity of [the] famous mark to identify
and distinguish goods or services.” fd at 15 (requiring
evidence of any such lessening) (quoting 15 U.S.C. § 1127).
Although the FTDA clearly is designed to expand the
protection of famous marks, the Seventh Circuit's

—_

eel ——_ —s

6

interpretation of that statute will make it more, not less,
difficult to protect famous marks in the future.

I. THE SEVENTH CIRCUIT’S WEAKENING OF
PROTECTION FOR FAMOUS MARKS CON-
FLICTS WITH THE CONGRESSIONAL MAN-
DATE AND UNDERMINES THE VALUE OF
SUCH MARKS.

In the FTDA, Congress empowered the owners of famous
marks to enjoin the commercial use of a mark where such use
causes dilution of the mark’s distinctive quality.? 15 U.S.C.
§ 1125(c)(1). The Seventh Circuit construed Petitioner’s
claim as seeking to extend “antidilution law to forbid
commercial uses that accelerate the transition from
trademarks . . . to generic names”; and it concluded that doing
so would be inconsistent with “the public interest.” Pet. App.
8a-10a. The Seventh Circuit elaborated its unusual thesis that
the FTDA does not permit trademark owners to police their
marks to prevent their trademarks from becoming generic. /d
at 8a-9a. Instead, the court was of the view that there would
be a “social benefit” derived from adding famous marks “to
ordinary language.” Jd. at 9a-10a. The proposition that a
“social benefit” is gained when a famous brand is rendered
generic, however, conflicts with the law enacted by Congress,
and denies the owners of famous marks — as well as
consumers — the protections and benefits Congress intended.

As this Court recently noted, “[nJeither the absence of any
likelihood of confusion nor the absence of competition”
provides a defense to dilution, and the prohibitions against
dilution “are not motivated by an interest in protecting
consumers.” Moseley, No. 01-1015, slip op. at 10. Thus, the
Seventh Circuit mistakenly elevates a nebulous “public
interest,” Pet. App. at 10a, above the express rights Congress

? Damages are available for trademark dilution only to the extent the
unauthorized user “willfully” intends to trade on the owner’s reputation or
cause dilution to the famous mark. 15 U.S.C. § 1125(c)(2).

J

7

granted famous trademark owners. This conflicts with the

ee

teaching of Moseley that “‘the preservation of the uniqueness
of a trademark should constitute the only rational basis for its
protection.” Moseley, No. 01-1015, slip op. at 10 (quoting
Schechter, 7he Rational Basis of Trademark Protection, 40
Harv. L. Rev. 813, 831 (1927)).

The Seventh Circuit’s decision warrants review and
reversal because it undermines the very ability of the owner
of a famous mark to preserve the uniqueness of that mark by
enjoining an unauthorized, unrelated reseller from using the
famous mark as the reseller’s own business and domain name.
See Pet. App. at 10a. The ruling thereby materially weakens
the FTDA and precludes its intended use when there is a
“clear[] lessen[ing of] the capacity of the [trademark owner]
to distinguish its goods.” /d. at 55a.

A. Antidilution Law Protects The “Uniqueness” Of
Famous Marks.

Efforts to protect the investments of trademark holders
against dilution date back as far as 1927, as brand advertising
was beginning. Professor Frank Schechter argued then that
coined or unique trademarks should be protected from the
“gradual whittling away or dispersion of the identity and hold
upon the public mind.” Frank Schechter, The Rational Basis
of Trademark Protection, 40 Harv. L. Rev. 813, 825 (1927).
As this Court recognized in Moseley, adopting Schechter’s
seminal theory, was that the true injury against which
antidilution law protects is an attack upon ““the uniqueness of
a trademark.”” Moseley, No. 01-1015, slip op. at 10.

Famous marks are powerful tools to identify and inspire
confidence in products, both old and new, from the same
identifiable source. As Justice Frankfurter noted, “(t]he
protection of trade-marks is the law’s recognition of the
psychological function of symbols.” Mishawaka Rubber &
Woolen Mfg. Co. v. S.S. Kresge Co., 316 U.S. 203, 205
(1942). They achieve a “psychological grip” on consumers

8

that generates “loyalty and good will.” USTA Trademark
Review Comm’n, Report and Recommendations on the
United States Trademark System and the Lanham Act, 77
Trademark Rep. 375, 455 (1987) (“USTA Trademark
Review”), reprinted in Trademark Law Revision Act of 1987:
Hearing on S. 1883 Before the Subcomm. on Patents,
Copyrights, and Trademarks of the Senate Comm. on the
Judiciary, 96th Cong. 177 (1988) (“Trademark Hearing’).

As the USTA study recognized, while famous marks are
“enormously valuable” they are also “fragile assets,
susceptible to irreversible injury from promiscuous use.” See
id. at 455, reprinted in Trademark Hearing 177. This study
formed the modern scholarly basis for the FTDA and
synthesized the views of hundreds of trademark practitioners,
numerous eminent scholars and more than 50 organizations,
which included the United States and foreign governments.
See 134 Cong. Rec. $5868 (daily ed. May 13, 1988)
(statement of Sen. DeConcini); S. Rep. No. 100-515, at 2-3
(1988), reprinted in 1988 U.S.C.C.A.N. 5577, 5578-79.

The FTDA, adopted in 1996, is the direct descendent of the
1987 proposal of the USTA’s Trademark Review
Commission. After years of debate, the antidilution
recommendations of the Commission were embodied in the
FTDA, which enjoyed the support of the U.S. Patent and
Trademark Office, the Department of Commerce, and the
International Trademark Association. See 141 Cong. Rec.
$19312 (daily ed. Dec. 29, 1995) (statement of Sen. Leahy).

* Professor McCarthy has noted the usefulness of the legislative history
from the 1987 USTA Commission Report and the 1988 Senate Judiciary
Committee report in understanding the FTDA. See 4 J. Thomas
McCarthy, McCarthy on Trademarks and Unfair Competition § 24:87, at
24-142 (4th ed. 2001). The United States Trademark Association (USTA)
is now known as the International Trademark Association (INTA).

9

B. Congress Sought To Preclude “Free Riding” On
Famous Marks, Including On The Internet.

In adopting the FTDA, Congress did not seek-to equate
dilution with infringement, but rather to recognize an
independent protection that “applies when the unauthorized
use of a famous mark reduces the public’s perception that the
mark signifies something unique, singular, or particular.”
H.R. Rep. No. 104-374, at 3. The FTDA thus protects
famous marks from attempts of free riders “to trade upon the
goodwill and established renown of [the famous] marks.” /d.

the FTDA’s detailed criteria.‘

The FTDA’s criteria for distinguishing whether a mark is
sufficiently “distinctive and famous” to warrant antidilution
protection expressly envision that the value of a brand varies
directly with the amount of effort put into generating
awareness and recognition of the brand. The Seventh Circuit,
however, took the opposite approach: the more well known
the mark, the less it is entitled to protection from being
absorbed into common language.

The USTA Review Committee specifically considered and
rejected the policy concerns regarding _ potential
“monopolization of language” that are at the heart of the

“The FTDA requires consideration of the distinctiveness of the mark.
the extent of its use, the extent of the advertising of the mark, the
geographical coverage of the mark, the channels of trade in which it is
used, the nature of similar marks, and whether it is a registered mark. See
15 U.S.C. § 1125(c)(1).

SES eR oy ETE ae a

10

Seventh Circuit’s decision. USTA Trademark Review, supra,
at 457, reprinted in Trademark Hearing 179. As the
Committee noted, “[t]hird parties have an infinite number of
trademark choices available. Confining dilution protection to
famous trademarks will have little or no impact on other
businesses. All new entrants need to do is compete fairly
using marks which cause neither likelihood of confusion nor
dilution.” Jd.

Moreover, the FTDA was passed with a view to the precise
Internet free-riding that the Seventh Circuit did not find
worthy of meaningful protection. As Senator Leahy stated,
“this antidilution statute [the FTDA] can help stem the use of
deceptive Internet addresses taken by those who are choosing
marks that are associated with the products and reputations of
others.” 141 Cong. Rec. $19312 (daily ed. Dec. 29,1995)
(statement of Sen. Leahy). Indeed, globalization and the
Internet have heightened the value of a strong brand
identification to enable consumers around the world to
discern the source of products and services offered for sale.
As consumers now seek products from well beyond their
local markets, “having a strong brand that conjures up a
strong image with customers is essential.” See Thomas L.
Friedman, 7he Lexus and the Olive Tree 243 (2000).

The Seventh Circuit particularly failed to recognize the new
realities of the Internet. As was clear to the Sixth Circuit in
PACCAR, Inc. v. TeleScan Technologies, L.L.C., domain
names essentially function as trademarks and “can and do
communicate information as to the source or sponsor of the
web site.” 319 F.3d 243 (6th Cir. 2003), available at 2003
WL 244803, at *4; see also People for the Ethical Treatment
of Animcls v. Doughney, 263 F.3d 359, 366 (4th Cir. 2001).
As a result of the vast popularity of the Internet, consumers
expect to find a company on the Internet at a domain name
address comprised of the company’s name or mark. See
Panavision Int'l, L.P. v. Toeppen, 141 F.3d 1316, 1327 (9th
Cir. 1998) (“We reject [the] premise that a domain name is

1]

nothing more than an address. A significant purpose of a
domain name is to identify the entity that owns the web
site.”).” In short, “domain names communicate information
as to source.” Brookfield Communications, Inc. v. West
Coast Entm’t Corp., 174 F.3d 1036, 1055, 1066 (9th Cir.
1999).

Thus, a company’s use of another party’s marks in her own
domain name creates uncertainty about who is affiliated with
whom, and undermines the actual value of the mark by
diverting the initial interest of the consumer away from the
trademarked goods and services of the owner of the famous
mark. This risk is not hypothetical. There is a significant, and
highly pernicious, phenomenon on the Internet where domain
names are registered in bad faith for the purpose of exploiting
famous trademarks and their associated goodwill in order to
divert Internet traffic to the registrants’ own websites. See
People for the Ethical Treatment of Animals, 263 F.3d at 367-
69.

Although the Seventh Circuit below acknowledges this
danger, Pet. App. 8a, its decision diminishes the ability of
mark holders to protect against it. Indeed, the Seventh
Circuit's approach could complicate what district courts have
viewed as a straightforward application of law. For example,
in General Motors Corp. v. E-Publications LLC, No. Civ. A.
01-72819, 2001 WL 1798648, at *3 (E.D. Mich. Nov. 26,
2001), the court prohibited the use of “Restore GM” and
“Restore GM Muscle” in the business name and domain
names of an unauthorized third party specializing in GM
parts, including on dilution grounds under the’ FTDA.
Similarly, in AT&T Corp. v. Direct Wired Domains, LLC, No.

* In Panavision, the Ninth Circuit stated: “A customer who is unsure
about a company’s domain name will often guess that the domain name is
also the company’s name. [A] domain name mirroring a corporate name
may be a valuable corporate asset, as it facilitates communication with a
customer base.” 141 F.3d at 1327 (alteration in original) (citation and
internal quotation marks omitted).

12

1:02-CV-1835-ODE (N.D. Ga. July 23, 2002), amicus AT&T
challenged, on FTDA and other grounds, the right of an
unauthorized reseller to use the Internet domain name to market prepaid AT&T phone cards. That case
resulted in the entry of a permanent injunction by consent.
The Seventh Circuit’s decision, however, runs counter to
these and many other examples, and it will make future
protection of famous marks on the Internet more difficult.
The law simply does not support such undercutting of the
rights of famous mark holders.

C. The Seventh Circuit Decision Undermines
Investment In Famous Marks Contrary To The
Intent Of Congress.

- The powerful statutory protection Congress provided for
famous marks is entirely commensurate with the staggering
size of the investment that business makes in such marks.
According to the August 2002, Business Week survey of the
Top 100 Brands, the top 10 brands alone were valued at a
total of more than $350 billion dollars. See 7he 1/00 Top
Brands, Bus. Wk., Aug. 5, 2002, at 95, 95-96.

The Seventh Circuit’s decision, however, would produce a
legal regime in which a trademark owner — unable to control
the operations of third partes — is powerless to prevent the
public from coming to associate the third party with the
famous mark. This approach attacks the source-identifying
power of famous marks, foments greater marketplace
uncertainty, imposes higher information transaction costs, and
renders advertising expenditures less effective. While the
opinion below contends that forbidding the respondent from
using “Beanies” in her “business name and advertising” is
like “forbidding a used car dealer who specializes in selling
Chevrolets to mention the name in his advertising,” Pet. App.
7a (emphasis added), the analogy fails. The Respondent here
has used Ty’s marks not just to identify products, but in the
very business name and Internet domain name by which she
holds herself out to the public.

13

Il. THE SEVENTH CIRCUIT TREATS TRADE-
MARK RIGHTS AS IF THEY WERE MONOPOLY
RIGHTS OF THE KIND ACCORDED COPY-
RIGHTS AND EXTENDS “FAIR USE” SAFE-
GUARDS BEYOND WHAT CONGRESS SPECI-
FIED.

The Seventh Circuit’s rationale misapprehends the
protections afforded under the FTDA by equating them with
the monopolistic or exclusionary rights provided by copyright
law. See Pet. App. 8a. These fears are unfounded and do
not apply to trademark rights. Trademark law simply does
not create monopoly rights.’ In Moseley, this Court
recognized that the law of trademarks is grounded in an
entirely different concern; it is part of a broader law of unfair
competition. Moseley, No. 01-1015, slip op. at 9. Moreover,
this Court recognized well prior to the Lanham Act’s
enactment in 1946 that: “In truth, a trademark confers no
monopoly whatever in a proper sense, but is merely a
convenient means for facilitating the protection of one’s
good-will in trade by placing a distinguishing mark or
symbol — a commercial signature — upon the merchandise or
the package ... .” United Drug Co. v. Theodore Rectanus

* Copyrights enjoy monopoly privileges that, while not as broad as
under patent law, see Eldred v. Ashcroft, 123 S. Ct. 769, 787 (2003), are
“intended to motivate the creative activity of authors and inventors by the -
provision of a special reward, and to allow the public access to the
products of their genius after the limited period of exclusive control has
expired.” Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417,
429 (1984),

” Trademarks, unlike patents and copyrights, are not restricted by the
“limited Times” provision of the Constitution. U.S. Const. art. I, § 8, cl.
8, and are not subject to the same balancing of incentives that is
appropriate “[t]o promote the Progress of Science and useful Arts.” Jd.
See generally Eldred v. Ashcroft, 123 S. Ct. 769 (2003); see also Sony
Corp., 464 U.S. at 439 & n.19 (discussing “historic kinship” between
copyright and patent law and noting that this Court has “consistently
rejected the proposition that a similar kinship exists between copyright
law and trademark law”).

14

Co., 248 U.S. 90, 98 (1918). This remains true today. “As
other courts and commentators have observed, trademarks are
by their nature non-exclusionary. A trademark, unlike other
intellectual property rights, does not confer a legal monopoly
on any good or idea; it confers rights to a name only.” Clorox
Co. v. Sterling Winthrop, Inc., 117 F.3d 50, 56 (2d Cir. 1997).
And thus under trademark law a rose may go by another
name.

The radical regime forged by the court below is neither
consistent with law, nor even necessary to preserve the ability
of competitors and consumers to use language freely.
Trademark law already protects generic words from
acquisition or control; marks also become publicly available
if they are abandoned; and they are always available for fair
use.* To be sure, the FTDA does not permit “producers [to]
own their aftermarkets,” Pet. App. 8a, nonetheless and
contrary to the Seventh Circuit’s ruling, a central purpose of
the Act is to permit trademark owners to prevent the improper
use of their marks by others, including those who seek to
resell their goods or services.

A. Famous Marks Can Lose Their Protection After
Abandonment Or Upon Becoming Generic.

A primary. limitation on trademark protections is that a
mark may be abandoned or lost through non-use, uncontrolled
licensing or insufficient enforcement by the trademark owner,
or through use of the mark as 2 generic term by the public or
by the trademark owner itself.” Thus, for example, the public

-* Non-commercial and journalistic usage of famous marks is also not
actionable under the FTDA. 15 U.S.C. § 1125(c)(4\(B) &(C).

® See, e.g., Petro Stopping Ctrs., L.P. v. James River Petroleum, Inc.,
130 F.3d 88, 93-94 (4th Cir. 1997) (registered, “incontestable” marks
deemed weak in light of third-party use); 15 U.S.C. § 1127 (a mark may
be “abandoned” through the owner’s “acts of omission as well as
commission”), see also 15 U.S.C. §§ 1064(3) (registration may be
cancelled [a}t any time” if it has become the generic name for all or some
of the goods or services for which it is registered) and 1127 (a mark may

15

has an “inherent right to call a product or service by its
generic name,” U.S. Search, LLC v. U.S. Search.com, Inc.,
300 F.3d 517, 523 (4th Cir. 2002).

In contrast to the treatment of negligent trademark owners
who inadequately police the use of a mark, see, e.g., Amstar
Corp. v. Domino's Pizza, Inc:, 615 F.2d 252, 259-60 (Sth Cir.
1980), the law — at least before the decision below — rewards
owners of famous marks who are vigilant in monitoring and
deterring generic and unauthorized use. See, e.g., EJ. Du
Pont de Nemours & Co. v. Yoshida Int'l, Inc., 393 F. Supp.
502, 512 (E.D.N.Y. 1975) (“[S}trength is primarily a question
of degree . . . including an appraisal of the owner’s policing
efforts to ensure that whatever distinctiveness or exclusivity
has been achieved is not lost through neglect, inattention, or
consent to infringing uses.”). This clear mandate for policing
and investing in a mark is completely eviscerated by the
Seventh Circuit’s view that third parties are permitted to
hasten the “genericide” of a famous mark with impunity
while free riding on that very mark to promote their own
business identity. Whereas traditional genericism is deter-
mined by public use, the Seventh Circuit improperly allows

impairment of trademark rights at the hands of competitors
and unauthorized resellers.

B. Congress Stipulated A Narrow Range Of “Fair
Use” Rights Allowing Limited Third Party Use

Of Famous Marks.
The Seventh Circuit’s interest in providing for an expanded

range of words available for public use is already fully
addressed in the statute under the rubric of “fair use.” ”Fair

be “abandoned” when, inter alia, “any course of conduct of the owner,
including acts of omission as well as commission, causes the mark to
become the generic name for the goods or services on or in connection
with which it is used or otherwise to lose its significance as a mark”);
Ashley Furniture Indus., Inc. v. SanGiacomo NA. Ltd., 187 F.3d 363, 376 -
(4th Cir. 1999) (trade dress rights terminate if abandoned or if the trade
dress becomes generic through public usage).

16

use” includes unlicensed use of marks to describe or identify
the goods or services one offers for sale. “Classic fair use”
involves use by a third party of a descriptive “name, term, or
device .. . otherwise than as a mark . . . fairly and in good
faith only to describe the goods or services of [the defendant],
or their geographic origin.” 15 U.S.C. § 1115(b)(4). The
mark that is the subject of “fair use” is not used for its source-
identifying, or secondary meaning, sense, but merely to
describe the attributes or characteristics of a product or
service. See id.'°

“Nominative fair use” is also permitted. This entails use of
a mark in a trademark — source-identifying — sense for
comparative advertising or the bona fide resale of branded
goods or services. See Playboy Enters., Inc. v. Welles, 279
F.3d 796, 801 (9th Cir. 2002). For example, the FTDA
provides that “[flair use of a famous mark by another person
in comparative commercial advertising or promotion to
identify the competing goods or services of the owner of the
famous mark” is not actionable. 15 U.S.C. § 1125(c)(4). But
the parameters of nominative fair use are carefully
circumscribed: No more of the owner’s mark may be used
than is necessary, nor may it be used in any way to suggest
authorization, sponsorship or affiliation. See, e.g., PACCAR,
2003 WL 244803, at *10.

Under the doctrine of “fair use,” federal law provides that
the reseller of a product has the limited right fairly and in
good faith to inform consumers of the product that he or she
is selling, and indicate the brand of the product being re-sold.

10 See, e.g., Car-Freshener Corp. v. S.C. Johnson & Son, Inc., 70 F.3d
267, 269 (2d Cir. 1995) (“although trademark rights may be acquired in a
word or image with descriptive qualities, the acquisition of such rights
will not prevent others from using the word or image in its descriptive
sense, and not as a trademark”), 2 McCarthy, supra, § 11:45, at 11-79 (“A
ee
Seen . in the interest
of free competition.”).

17

See id. If the Seventh Circuit’s opinion were so limited,
Respondent would be able to identify and describe the
products she offers for sale without violating the FTDA. But
fair use rights cannot and do not permit use of the mark by a
third party as its own mark or name. The Seventh Circuit
improperly turned a limited statutory exception into the
controlling rule.

til. “PERCOLATION” IN THIS AREA IS PARTICU-
LARLY DESTRUCTIVE.

This Court often enjoys the luxury of being able to allow
issues to “percolate” among the courts of appeals in order to
ensure that each case heard by the Court properly frames a
particular question and that the issues will be aired fully for
the Court’s consideration. But the Court routinely hears cases
even if the precise issue has not been considered by more than
one court of appeals. See, e.g., Pharmaceutical Research &
Mfrs. of Am. v. Concannon, No. 01-188 (U.S. June 28, 2002)
(order granting petition for a writ of certiorari); Pegram v.
Herdrich, 530 U.S. 211, 217-18 (2000). This is because the
adverse consequences of delay outweigh the marginal role of
“percolation.” This is such a case. The question presented in
the Petition should not remain unresolved. Its rationale is
inconsistent with the rulings of numerous circuit courts, see
Pet. 7-15, and the case is ripe for this Court’s review now.
Famous marks, by the very nature of their fame, operate
without respect to the boundaries of the circuit courts, and the
dilution of a mark in one circuit erodes the distinctiveness of
that same mark in other circuits. This is especially true, of
course, with famous marks conveyed on Internet websites and
domain names.

Congress adopted the FTDA explicitly because it saw state
variance in the protections afforded to trademarks causing
“unpredictable and inadequate results for the trademark
owner,” and thereby impeding productive investment and
creating unfounded danger to multi-billion dollar assets. See

18

H.R. Rep. No. 104-374, at 3. The FTDA thus expressly
promoted “uniformity and consistency” in the protection of
famous marks, because the opposite “simply encourages
forum-shopping and increases the amount of litigation.” Jd.
at 4. Indeed, for more than a century, this Court has recog-
nized that trademarks “not only admit, but in order to [ensure]
their efficiency require, uniformity of regulation.” Jn re
Trade-Mark Cases, 100 U.S. 82, 87 (1879). The unique
theory of the Seventh Circuit, threatens to undo the work of
Congress, which this Court and other circuit courts of appeals
have preserved.

CONCLUSION

The petition for a writ of certiorari to the United States
Seventh Circuit for the Seventh Circuit should be granted.

Respectfully submitted,
LAURA A. KASTER CARTER G. PHILLIPS
FRANK L. POLITANO ALAN CHARLES RAUL*
MICHELE A. FARBER JOSEPH V. JEST
AT&T Corp. EDWARD R. MCNICHOLAS
One AT&T Way ; SIDLEY AUSTIN BROWN &
Bedminster, N.J. 07921 WOOD LLP
(908) 532-1860 1501 K Street, N.W.
- Washington, D.C. 20005
(202) 736-8000

Counsel for Amicus Curiae
March 6, 2003 * Counsel of Record

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386015_1096%3A2. Public record. Not legal advice.