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Trademark Dilution

Introduction:

Trademark dilution is a relatively controversial concept which has its roots from 1920s and has proved to be a hot topic for both lawyers and academics. If trademark law protects trademarks for goods and services in all sectors, then trademark dilution law mostly protects very well-known marks. This essay will elaborate on trademark dilution by giving background information and history, explaining different criteria and subsections related to trademark dilution as well as debate whether trademark dilution is a potential growth catalyst for capitalism or unfair system for exclusive protection rights for very well-known marks. Both UN, WTO and other international organizations have rules in place to control trademark dilution, however, the implications have both positive and negative sides, which will be discussed later. The connection between international law and trademark dilution is of great significance not only for global trade and reputations of international corporations, but also for international intellectual property law as trademark dilution plays an important part in development of trademark and IP law.

History and Background:

The origin of dilution is referenced back to 1924 decision of the ‘Landesgericht Elberfeld’ in Germany[1], which allowed the owner of the well-known trade mark ‘Odol’ to obtain cancellation of registration of the same mark for steel products, on the ground that the complainant had ‘the utmost interest in seeing that its mark is not diluted and it would lose in selling power if everyone used it as the designation of his goods’[2]. The Supreme Court of the German Empire granted anti-dilution protection based on section 1 of the German Unfair Competition Act (“UCA”) where dilution doctrine was already well in place[3].

This decision influenced the American author Frank Schechter in 1927 to write his article ‘The Rational Basis of Trademark Protection’[4]. In his article he argued that a brand’s value rests essentially in its ‘uniqueness’, which he also called its ‘individuality’, ‘identity’ and ‘singularity’. According to that he addressed that the unauthorized dilution of this class of uniqueness should be prohibited[1]. Schechter was especially concerned with the progressive harm that would result from multiple uses of a formerly unique marks[2]. He explained this in his famous statement: ‘if you allow Rolls Royce restaurants and Rolls Royce cafeterias, and Rolls Royce pants, and Rolls Royce candy, in 10 years you will not have the Rolls Royce mark any more’[3].

Additionally, Article 6bis of Paris Convention reinforces the idea that the countries can, if their legislation so permits, prohibit, refuse or to cancel the registration of a trademark which constitutes a reproduction, imitation or translation, liable to create confusion when compared to a well-known mark.[4]

Furthermore, article 16 (3) of TRIPS extends protection guaranteed by the article 6bis of Paris Convention by stating that Article 6bis of the Paris Convention (1967) shall also apply to goods or services which are not similar to those in respect of which a trademark is registered, provided that use of that trademark shows connection between goods in relation to those goods the initial trademark was registered, especially if interests of the trademark owner would likely be damaged.[5]

However, there is a possibility for members to provide limited exceptions to the rights conferred by a trademark and these rights include things such as fair use of descriptive terms, provided that such exceptions take account of the legitimate interests of the owner of the trademark and of third parties.[6]

What is Dilution:

Dilution has been defined in the Federal Trademark Dilution Act of 1995 as ‘the lessening of the capacity of a famous mark to identify and distinguish goods or services, regardless of the presence or absence of competition between the owner of the famous mark and other parties, or likelihood of confusion, mistake, or deception’[7]. In addition, UK case law doctrine on the dilution mentions ‘Dilution, ….., such detriment is caused when that mark’s ability to identify the goods or services for which it is registered and used as coming from the proprietor of that mark is weakened, since use of the later mark leads to dispersion of the identity and hold upon the public mind of the earlier mark. That is notably the case when the earlier mark, which used to arouse an immediate association with the goods and services for which it is registered, is no longer capable of doing so’[1].

Trademark Dilution Criteria:

Dilution is generally introducing protection for the advertising function of the trademark by protecting the mark against various forms of non-confusing associations between an earlier mark with reputation and a subsequent mark[2].

The scope of protection include the distinctiveness of the mark by its use on the goods of another; the reputation of the mark when using it in connection with products of an unsavory quality or as a consequence of being portrayed in an unwholesome context; and the prevention of free-riding by another trader on the repute of the mark[3].

The first requirement for a mark to fall in the dilution scope of protection is that it has to be shown that the earlier trademark has a reputation in the United Kingdom and the European Union[4], which involves ‘sufficient degree of knowledge threshold, so that a mark would have a reputation where it was known by a significant part of the public concerned by the products or services covered by the trademark’[5]. In addition, other criteria are included when assessing the reputation of the earlier mark such as the market share held by the trademark, the intensity geographical extent, duration of it use and the financial investment of the mark[6].

The second requirement is for the marks to be identical or similar[7]. However, the concept of similarity should be interpreted in the light of the purpose of each provision by looking at the mark as a whole, taking into account their dominant and distinctiveness components, and is required to assess similarity from a visual, aural, and conceptual viewpoint[1]. Thus, the similarity between marks will influence the average consumer to make a link between them[2], even though there is no likelihood of confusion[3].

The existence of a link between an earlier mark with a reputation and a later mark must be assessed globally in regards to multiple factors which includes; degree of similarity of the marks, the similarity of the goods and services, the strength of the earlier mark’s reputation, the distinctive character of the mark and the existence of a likelihood of confusion on the public[4].

The third requirement is that the use of the later mark should accuse injuries to the earlier trademark which are detrimental to the distinctive character of the earlier trademark or are detrimental to the reputation of the earlier trademark, or it takes unfair advantage of the earlier trademark, and these injuries should be assessed globally[5].

Damage to the distinctive character of the earlier trademark is usually equated with blurring[6], which is defined as: ‘the gradual whittling away or dispersion of the identity and hold upon the public mind of the mark or name by its uses upon non-competing goods’[7]. In other words, the unauthorized use of a mark on similar or dissimilar goods and services may undermine the uniqueness of an established trademark and thus the economic behavior of it, which is required to prove dilution[8]. Although, there is not enough evidence that blurring expressively harms distinctiveness, however, there is a possibility that the junior mark is free riding on the exclusiveness of a senior trademark[9].

The second form of injury which is detrimental to the reputation of the earlier trademark is referred to as tarnishment[10], which is defined as ‘detriment that is caused when the goods or services for which the identical or similar sign is used by the third party may be perceived by the public in such a way that the trade mark’s power of attraction is reduced. The likelihood of such detriment may arise from the fact that the goods or services offered by the third party possess a characteristic or a quality which is liable to have a negative impact on the image of the mark’[1].  However, there is two situations in which tarnishment can be established; 1) where the proposed use on the applicant’s goods and services would reflect badly on the opponent reputation[2]; 2) tarnishment could occur where the later mark modifies the earlier sign in a denigrated way or a way  which evokes undesirable or questionable associations which conflict with the image generated by the trademark[3].

The last requirement is the unfair advantage which occurs where a trader uses a sign which is similar to a registered trade mark which has a reputation, and that sign is not confusingly similar to the initial trade mark, in such way that the trader gets a commercial advantage from the use of his sign by reason of its similarity to the registered mark[4]. This is also known as ‘parasitism’ or ‘free-riding’ on the reputation of the earlier trademark[5].

The main debate:

Trademark dilution is a controversial area of IP law because it generates both positive and negative impact worldwide. The dilution laws rely on justification that trademark is an asset and dilution doctrine provide incentives for trademark owners to invest in their brands and in order for protection the trademark law does not necessarily protect the consumer.[6] However, anti-dilution doctrine advocates argue that expansion of dilution rights give monopolies not only for trademark itself but also for the ideas in the abstract.[7] This means that there is privilege for well-known marks and the law protects the private interests of these well-known marks diminishing freedom of expression and competition in the field of trade and commerce.[8] Taking into account this information, two main questions arise:

  1. Is trademark dilution a discrimination for smaller and not very well-known marks and entitlement for capitalism?
  2. Is it possible that trademark dilution doctrine drifts away from IP rights to support private interests and reputation of international corporations, or, in other words, famous vs non-famous trademarks?

These issues will be further debated in the individual part of this essay below.

The skeptical view:

From beginning of times, scholars had criticized trademark dilution law mostly because it over reached the scope of legal protection offered by trademark law, some intellectual property academics had expressed that trademark dilution is a very exclusive version of trademark in entitlement even more than the classic likelihood of confusion scenario[1]. this results in famous mark owners having rights a lot closer to property rights than to standard trademark rights. Some judges have described dilution as unwarranted expansion of trademark rights[2].

Trademarks functions is one of the main justifications for anti-dilution protection[3]. The trademarks perform at least three functions: the identifying function, the quality function and the advertising or investment function[4]. However, the identifying function serves to inform the consumer of the source of goods, by enabling him without any possibility of confusion to distinguish that product from products which have another origin[5]. The quality function of the mark provides assurance to the consumer that the owner of the mark followed the necessary quality control standards when producing the product bearing that mark[6]. Finally, the advertising function serves to both inform and persuade the public, which are the consumers[7]. Ironically, all these functions are related to the consumer, but the consumer confusion is not a condition to establish a dilution case![8]  Which rise the following question, why should trademark law protect goodwill and selling power in the absence of consumer confusion?

Dilution doctrine expanded to the extent of intrusive the right of traders to access shared marketing language and affect the consumer opportunities to criticize the brands regarding to personal and collective expression[1]. In addition, anti-dilution law impacts interference the freedom competition and expression which it could be considered as’ the most vilified doctrine within contemporary trade mark law’[2], which was supported from corporations that own famous marks and their representatives, based on the need to provide strong protection for brand investment[3]. In other words, the debate in order to dilution protection manifested as a dichotomy between the interests of major rights owners and those of everybody else[4].

Moreover, Dilution doctrine is often criticized as a form of corporate censorship and control over meaning, empowering private entities to ‘consecrate their symbols and images, allowing for a particularly robust form of incontestability’[5], which empower the owner of a famous mark to withhold a word or device from markets that are completely unrelated to its business and in which it never intends to participate[6]. In other words, the new competitor in the trade and commerce field must work harder to compete[7].

In the light of the freedom of expression, the case law of the European Court of Human Rights (ECHR) establish a guarantee of freedom of expression contained in Art 10(1) European Convention of Human Rights, which applies to any type of message, including commercial advertising[8] and trade mark application[9], which been evidenced in Report of the Committee on the Judiciary, which considered recent amendments to US antidilution legislation[10]indicates that the parody defense to a dilution claim was expressly “adopted … to address the First Amendment and free speech issues that were raised at the hearing”[1].

Also, some scholars stated that one of the ways to curb the expansion of trade mark law is by strengthen freedom of expression principles[2], due to that one of the main reason of the conflict between trade mark law and freedom of expression is relying on the expansion of the rights which is protected by anti-dilution law[3], which been supported by the courts in the US which accepted that actions for dilution pose a more significant risk to expressive freedom than traditional infringement actions[4].

One of the key problems with dilution is ‘that it provides a remedy without a supportable theorization of the harm’[5]. However, it should be noted that not all dilutive uses cause the same forms of reaction and that these are static over time, which mean that establishing a regulation to anti-dilution will not be sufficient enough because the assessing procedures will change case by case[6].

In addition, the conflict between trademarks and freedom of expression could arise regarding to such factors. Firstly, when the aspiring trademark holders had restrictions in order that the mark is considered contrary to public order, policy, or morality[7]. Secondly, conflicts might arise when it used by a third party by using it ‘in the course of trade includes parasitic free-riding and comparison while use outside trade is often of artistic or political nature’[8]. Freedom of expression may serve as a justification for “infringement”. The modification clarifies that comparative advertising contrary to Article 4 of MCA Directive (2006/114/EC) ‘could be prohibited while the MPI Study and the recommendation promote express guarantees for parody, critique, and news reporting, among other referential use’[1].

Conclusion

In conclusion, the legal scope of protection for trademark dilution has becoming constraint more than protection criteria. with expansion to the accent of the trademarks which been addressed by the ECJ as ‘essential functions to distinguish goods from one another’ and even bigger accent on the endorsing the advertising and investing function of the trademarks by granting expanded rights and treating trademarks as property regardless to any restrictions to protect the SMEs, making it as entitlement for capitalism. In other words, the scope of the Anti-dilution protection is not about IP rights anymore, but it is about the conflict between famous v. non-famous trademarks.

In order to the huge development of advertising criteria, the legislators must find a coherent legislations which establish a balance between the famous or well-known trademarks and other that still growing; which could be famous in a very short time, in light to the tremendous evolution of technology, specifically with the enormous role of the internet intermediates in commerce and marketing factors.

Written by Odai Kallab “Senior Legal Consultant“

References :

[1] Odol case (1924, decision of the Landesgericht Elberfeld, Germany). [1] Eleanor Sharpston, opinion on case C-252/07 Intel Corporation Inc v. CPM United Kingdom Limited (delivered on 26 June 2008)  <https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:62007CC0252&from=EN> accessed 20 April 2019. [1] Mathias Strasser, ‘The Rational Basis of Trademark Protection Revisited: Putting the Dilution Doctrine into Context’ (2011) 10 Fordham IP Media & Ent. L.J 375, 405. [1] Frank Schechter, ‘The Rational Basis of Trademark Protection’ (1927) Harvard Law Review, 813. [1] Ibid, p 810-831. [1] Sarah Lux, ‘Evaluating Trade Mark Dilution from the perspective of The Consumer’ (2011) 43(3) UNSW Law Journal 1053, 1054. [1] Frank I Schechter, ‘Hearings Before the House Committee on Patents’ (Speech delivered at the United States House of Representatives, 72nd Congress, 1932). [1] Paris Convention for the Protection of Industrial Property (20 March 1883, amended 28 September 1979) 828 U.N.T.S. 305, Article 6bis. [1] Trade-Related Aspects of Intellectual Property Rights (1 January 1995), article 16 (3). [1] Ibid, article 17. [1] Federal Trademark Dilution Act of 1995 (Public Law 104–98, 109 Stat. 985), Section 4. [1] Intel Corporation Inc v. CPM United Kingdom Limited C-252/07 [2009] RPC 15, para 29. [1] Lionel Bently and others, Intellectual Property Law (5th edition, OUP, 2018) p1052. [1] Comic Enterprises v. Twentieth Century Fox Film Corp [2016] EWCA Civ 41, para 107-123. [1] Trade Marks Act 1994 (n.10) section 5 (3), TMD 2015 (n.11) Article 5 (3). [1] General Motors Corporation v. Yplon C-375/97 [1999] ECR I-5421, para 22-23. [1] Ibid, para 27. [1] Trade Marks Act 1994, (n.10) Section 5 (3)(a). [1] Adidas v Fitnessworld C-408/01 [2003] ECR I-12537, para 27. [1] Ibid. [1] Intel Corporation Inc v. CPM United Kingdom Limited C-252/07 [2008] ECR I-8823, para 60. [1] Ibid, para 41. [1] Lionel Bently and others, (n.13). P 1060. [1] Premier Brands UK Ltd v. Typhoon Europe Ltd [2000] FSR 767. Para 787. [1] Frank Schechter, (n.4). p 825. [1] SIGLA SA v. OHIM, Case T-215/03 [2007] II-711. [1] David J Franklyn, ‘Debunking Dilution Doctrine: Toward A Coherent Theory of The Anti-Free-Rider Principle In American Trademark Law’ (2004) 56 Hasting Law Journal 117. [1] Interflora Inc v. Marks and Spencer, Case C323/09 [2011] [2012] F.S.R. 3. Para 124. [1] Ibid, para AG 92. [1] Intel Corp v Sihra [2003] RPC 44, para 789. [1] Hollywood S.A.S. v Souza Cruz S.A [2001] E.T.M.R. 64. Para 707. [1] L’Oréal SA v Bellure NV [2010] R.P.C. 1. Para 3. [1] Adidas v Fitnessworld, (n.18). AG 39. [1] Neil Wilkof,’ The Consumer Protection Function of Trade Marks: Just so?’ (IPKat, 21 November 2014) < http://ipkitten.blogspot.com/2014/11/the-consumer-protection-function-of.html> accessed 23 April 2019. [1] Irina Pak, ‘The Expansion of Trademark Rights in Europe’ (2013) 3 (2) IP Theory 158,166 <https://www.repository.law.indiana.edu/cgi/viewcontent.cgi?article=1026&context=ipt> accessed 23 April 2019. [1] Lionel Bently (n 13) p1164. [1] Clarisa Long, The Political Economy of Trademark Dilution, in Trademark Law and Theory: A Handbook of Contemporary Research 135 (Graeme B. Dinwoodie & Mark D. Janis eds., 2008). [1] Clarisa Long, ‘DILUTION’ (2006) 106 Columbia Law Review 1029. [1] Irina Pak, (n.38) 159. [1] Mark D. Janis and Graeme B. Dinwoodie, ` DILUTION’S (STILL) UNCERTAIN FUTURE` (2006) <http://law.scu.edu/wp-content/uploads/tmdilution/Dinwoodie_Janis_Dilution_s_Still_Uncertain_Future.pdf> accessed 16 May 2019. [1] Hoffman-La Roche v Centrafarm   C-102/77 {1978} E.C.R. 1139,  7. [1] Schechter, supra note 9, at 824. [1] Ralph S. Brown, Jr., Advertising and the Public Interest: Legal Protection of Trade Symbols, 57 Yale L.J. 1165, 1189 (1948). [1] Intel Corporation Inc v. CPM United Kingdom Limited (n.23). [1] Sonia K Katyal, ‘Semiotic Disobedience’ (2006) 84 Washington University Law Review 489. [1] Ilanah Simon Fhima, ‘Dilution by Blurring: A Conceptual Roadmap’ [2010] Intellectual Property Quarterly 44 [1] Barton Beebe, ‘A Defence of the New Federal Trademark Antidilution Law’ (2005) 16 Fordham Intellection Property, Media and Entertainment Law Journal 1143, 1155. [1] Jason Bosland and Megan Richardson, ‘Competing Discourses of “Rights” and “Harms” in Trade Mark Law’ in Kathy Bowrey, Michael Handler and Dianne Nicol, Emerging Challenges in Intellectual Property (Oxford University Press, 2011) 103. [1] Sonia K Katyal, ‘Semiotic Disobedience’ (2006) 84 Washington University Law Review 489, 491. [1] Sarah Lux, (n.6), p 1056. [1] John J Ohala, Leanne Hinton and Johanna Nichols (eds), Sound Symbolism (Cambridge University Press, 1995 [1] Casado Coca v. Spain, appl. no. 15450/89, paras. 35–37. [1] Dor v. Romania, appl. no. 55153/12, para. 43. [1] The Trade Mark Dilution Revision Act H.R. 683, 109th Cong. (2006). [1] “Report on the Trade Mark Dilution Revision Act”, HR Rep No 109-023 (17 Mar. 2005) 25. [1] GULASEKARAM, “Policing the Border Between Trade Marks and Free Speech: Protecting Unauthorized Trade Mark Use in Expressive Works”, 80 Wash L Rev 887 (2005); RAMSEY, “Increasing First Amendment Scrutiny of Trade Mark Law”, 61 Southern Methodist UL Rev 381 (2008). [1] Dreyfuss, Rochelle Cooper, Reconciling Trademark Rights and Expressive Values: How to Stop Worrying and Learn to Love Ambiguity. TRADEMARK LAW AND THEORY: A HANDBOOK OF CONTEMPORARY RESEARCH, Graeme B. Dinwoodie and Mark D. Janis, eds., Edward Elgar Press, 2007; NYU, Law and Economics Research Paper No. 06-39; NYU Law School, Public Law Research Paper No. 06-30. Available at SSRN: https://ssrn.com/abstract=929534 page 263. [1] Mattel v. MCA Records, 296 F.3d 894 (9th Cir. 2002) [1] HAIGHT FARLEY, “Why We Are Confused About the Trade Mark Dilution Law”, 16 Fordham IP Media & Ent LJ 1175,1184 (2006). [1] Robert Burrell and Dev Gangjee, ‘Trademarks and freedom of expression – a call for caution’, page 4. [1] Rahmatian Andreas ‘Trade Marks and Human Rights’ (2008) 13 KLI, 419. Available at SSRN: https://ssrn.com/abstract=1923803  Alison L Young, ‘In Defence of Due Deference’ (2009) 72 MLR 554 [1] Mattel v. MCA Records, 296 F.3d 894 (9th Cir. 2002) [1] Anette Alén-Savikko, ‘Conflict Between Freedom of Expression And Trademark – Reality Or Fiction?’ (IPR Info 1 March 2015)<https://iprinfo.fi/artikkeli/conflict_between_freedom_of_expression_and_trademark_reality_or_fiction_1/> accessed 16 May 2019.

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