On May 21, 2008, more than five years after the US Supreme Court's seminal (and then congressionally abrogated) ruling in V Secret Catalogue, Inc. v. Moseley, and more than ten years since evidence was taken, the US District Court for the Western District of Kentucky issued its final decision in the case.

The decision wraps up the most important of the first wave of litigations concerning the original federal trademark dilution statute. It is also a significant application of the successor federal dilution statute, which was enacted in the wake of widespread dissatisfaction with the state of the law following the Supreme Court ruling in the case. Applying that successor statute, the Trademark Dilution Revision Act of 2006 (TDRA), the district court held that the defendants' use of the marks VICTOR'S SECRET and VICTOR'S LITTLE SECRET in connection with the sale of adult-oriented products is not likely to cause dilution by blurring, but is likely to cause dilution by tarnishment, of the plaintiff's famous mark VICTORIA'S SECRET. The court is expected to issue a permanent injunction by separate order.

I.          Background

The plaintiff operates a well known lingerie and clothing business under the mark VICTORIA'S SECRET, which it has spent enormous sums promoting. In 1998, the year in which it filed the action, the plaintiff had spent over $55 million promoting its brand, distributed 400 million copies of its catalogue, and sold more than $1.5 billion in products. As of 2003, it operated more than 750 retail stores prominently displaying the mark. It brought suit to enjoin the defendants' use of the marks VICTOR'S SECRET and VICTOR'S LITTLE SECRET in connection with their sale of adult-themed products, including adult videos and sex toys.

Trademark dilution law is intended to protect especially strong or well known trademarks from harm to their uniqueness or reputation, regardless of whether the defendant's conduct also threatens to confuse consumers. At the time the plaintiff brought suit in Moseley, the original federal trademark dilution law, the Federal Trademark Dilution Act of 1996 (FTDA) was in effect. Paramount among the plaintiff's evidence of trademark dilution was evidence of an army colonel who had seen an advertisement for the defendants' store and was offended by what he perceived as their use of the plaintiff's trademark to promote “unwholesome, tawdry merchandise.” The district court granted summary judgment to the plaintiff on its FTDA claim, finding that the defendants' marks had a tarnishing effect on the plaintiff's mark — that is, an effect that tended to cast plaintiff's mark in an unsavory light and thus harms its reputation.

The defendants appealed to the US Court of Appeals for the Sixth Circuit, which affirmed but amplified the lower court's ruling, holding that the FTDA did not require proof that the defendants had caused actual dilution of the plaintiff's mark. That holding, essentially interpreting the FTDA in a manner consistent with the Lanham Act's provisions governing trademark infringement claims (which require the claimant to prove merely a “likelihood of confusion,” not actual confusion), added to a growing circuit split on that core question under the still-young anti-dilution statute. 

The defendants filed a petition for certiorari with the US Supreme Court, which decided to resolve the circuit split. In its 2003 decision, the Supreme Court reversed the Sixth Circuit's decision and held that the FTDA required the plaintiff to prove actual dilution, not merely a likelihood of dilution, to prevail on a federal dilution claim. At the same time, the Court offered little guidance on quality or quantity of evidence that would be necessary or sufficient to satisfy the “actual dilution” standard.

The ruling was criticized by many industry groups and academics, and a large-scale lobbying effort to modify the applicable federal dilution standard ensued. That effort culminated in 2006, when Congress passed and President George W. Bush signed into law the TDRA, which expressly requires plaintiffs to prove merely a likelihood of dilution in order to prevail on a claim for trademark dilution under federal law. The TDRA also clarified that only truly famous trademarks — specifically, those that are widely recognized by the general consuming public of the United States as a designation of source of the goods or services of the mark's owner — are entitled to the extraordinary protections that the federal dilution standard offers. Specifically, the statute prohibits the use of trademarks that are so similar to a famous mark as to be likely to cause dilution by blurring (impairment of the distinctiveness) or dilution by tarnishment (injury to the reputation) of such famous mark. Injunctive relief, and in some cases damages, are available to remedy violations of the TDRA.

II.        The May 21, 2008 Ruling

In its ruling in Moseley, the Supreme Court remanded the case to the Sixth Circuit, which in turn sat on the case for over four years without action before itself remanding to the district court for further proceedings. Faced with a new legal landscape — abrogation of the Supreme Court decision by passage of the TDRA — the district court stepped into the still-developing contours of the new statute. Some of the key points of its ruling are as follows:

• The TDRA — not the FTDA — applies to the plaintiff's claim on remand because the plaintiff's were seeking only prospective (i.e., injunctive) relief. This ruling is consistent with several other district and circuit courts' interpretations of the TDRA.
• Only the original ultimate findings concerning “actual dilution” under the FTDA were obviated by the changed legal landscape. The underlying evidence and factual findings on which the Court's original summary judgment ruling were based remained applicable on remand under the TDRA. But the new statutory provisions nevertheless required a fresh application of fact to law.
• The plaintiff's mark VICTORIA'S SECRET is famous within the meaning of the TDRA.
• Despite finding that all of the specific factors set forth in the TDRA to guide courts' analysis of “blurring” claims supported the plaintiff's position that the defendants' mark was likely to cause blurring, the Supreme Court concluded there was insufficient evidence that blurring was in fact likely to occur.
• The evidence that the army colonel was offended by what he perceived as the defendants' unsavory use of the plaintiff's mark supported both a finding that dilution by tarnishment was likely and an award of injunctive relief.

III.       Conclusions

From an historical perspective, this new district court decision in Moseley is largely symbolic as the end of the first era in federal trademark dilution law. As an application of the TDRA in the currently developing second era, the decision offers little guidance. Particularly puzzling is the court's judgment that the mark VICTOR'S LITTLE SECRET was not likely to cause dilution by blurring of the famous mark VICTORIA'S SECRET notwithstanding its finding that each of the statutorily enumerated factors supported a contrary conclusion. This counterintuitive result is all the more surprising given the court's finding of likely tarnishment based apparently on a single instance of tarnishing association. The decision thus offers little solace for owners of famous brands and trademark practitioners who have been struggling since the Supreme Court decision in this case (and before) with the vexing evidentiary problems inherent in trademark dilution claims.

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