Thursday, June 28, 2007

More on the literal reading of the Trademark Dilution Revision Act of 2006

The Trademark Dilution Revision Act of 2006, which modified the Trademark Act of 1946 by stipulating that the owner of a “famous mark” may obtain injunctive relief against another party that “at any time after the owner’s mark has become famous, commences the use of a mark or trade name in commerce that is likely to cause dilution by blurring or dilution by tarnishment of the famous mark, regardless of the presence of absence of actual or likely confusion, of competition, or actual economic injury.” The change, as often noted, is that the mark owner may file for pre-emptive injunctive relief before damage to the trademark occurs, upon reasonable expectation that it is likely to occur at an unspecified time in the future This is the “pre-emptive first strike” theory.

The last posting referred to some comments by various legal groups that anticipate widespread litigation. I’m not aware that this has occurred in the eight months since passage. Nevertheless, one of the major ways a name gets introduced into commerce, especially by “amateurs” is domain names.

I looked up the Uniform Domain Name Dispute Resolution Policy, here, of ICANN, the International Corporation for Assigned Numbers and Names. It does not appear to have changed. It specifies a low-cost administrative (rather than court-driven and litigious) manner to resolved domain name disputes. The main requirement is that the domain name owner not register the name in “bad faith” in order to disrupt another business. Examples of bad faith are intentional misspellings (which McAfee Site Advisor now catches and flags sites as yellow), and probably use of similar names with other .TLD’s to provide “parked domains” that will provide links and ad revenue, with no real content, trying to profit on typing errors by visitors seeking the original domain. This practice is very common, and usually it is not worth the trouble to try to stop it.

The text of the new Act does provide affirmative defense provisions as exclusions: “The following shall not be actionable as dilution by blurring or dilution by tarnishment”. Point (A) that follows is “fair use” that is somewhat analogous to fair use in copyright law. But point (B) says “all forms of news reporting and news commentary” and point (C) reads literally “Any noncommercial use of a mark.” Taken together, these provisions would seem to suggest that a domain whose name happens (especially unintentionally) to resemble the name of a company would be OK if it did not charge for content or seek advertising revenues (that is, was noncommercial) and/or provided only news, commentary and interpretation. Note that (B) and (C) are separated apart from the “fair use” provision (A). These “exclusions” seem to match, in spirit at least, what ICANN means by “good faith use” of a domain name.

There is one cultural aspect of the trademark dilution concept that creates concern, and that is the recent bashing of “amateur culture” on the web. This was demonstrated in the recent book by Andrew Keen, “The Cult of the Amateur”. The review is here. This Act, among other legal tactics, could conceivably be used for turf protection against the fear of dilutive competition from amateurs. However, if so, that concedes that amateur speech and commerce is effective, and makes one wonder what is wrong with larger, older, less nimble companies.

A link to the text of the Act appears in the June 7 post.

Thursday, June 07, 2007

Trademark Dilution Revision Act of 2006 passed in October 2006

I hadn’t seen this news before (I had searched repeatedly but not seen it until today), but President Bush signed into law, in early October 2006, the Trademark Dilution and Revision Act of 2006 (HR 683). Here is the final text of the law: The law is an amendment of the Trademark Act of 1946 and the two texts would have to be merged for a final interpretation.

Recall that this law allows commercial plaintiffs to sue and possibly recover damages if they reasonably can predict the “likelihood” future damages, particularly if plaintiffs can show that the defendant intended to tarnish the brand or commercial reputation of a famous mark. This bill was apparently motivated by Moseley v. Secret Catalogue, Inc., as is discussed by Weil, Gotshal and Manges here. It appears that the 2006 law is a slight rewrite of the 2005 bill and had separate tracking at Thomas LOC.

Eric Goldman does an analysis of this act in the Technology & Marketing Law Blog, here:
He provides a “good news, bad news” analysis. The good news is that addition kinds of dilution, including “niche dilution” will not be allowed. The law does appear to allow a “fair use” bill of criticism and comments. As I look at the Act, The bad news is that “use in commerce” is not defined completely, and Goldman claims that it should be limited 15 USC 1127 (Lanham Act Sect 45). He seems to feel that “blurring” and “tarnishment” are not clearly defined. He also warns that even “non-commercial actors” could face “life-altering” judgments, although the text of the law when read literally seems to minimize that risk. However, "non commercial" use is explicitly listed as a defense (presumably that means free content). The law does not allow a "newly famous" brand to take action against an older entity, however (just because the new entity is "bigger" -- again a philosophical concern).

There is another detailed analysis by Kaye Scholer here.

John C. Nishi has an analysis on an "Intellectual Property Client Alert" of Dickinson Wright LLP, at this link (pdf).

Apparently, the precise (and immediate) effective date is Oct. 6, 2006, according to Cowan, Liebowitz, & Latam, link here.

Companies have sued domain-name owners over trademark claims (such as the Epix and Clinton Street Theater in Oregon case around 1999). In some cases suits have come from companies that were slow (in the 1990s) to purchase domain names that matched their brand names (which all companies do now, which should reduce this kind of risk in practice.) There have been other bizarre trademark fights between national brands and local businesses.

One problem is simply a philosophical one: America is supposed to like entrepreneurs and individual initiative, but securities law puts a heavy fiduciary burden on public companies to defend even the appearance to tarnishment on their brands, and this law could add fuel to the fire. Another observation should be that it should be permissible to use the same name in different lines of business (there is a “Lowes” home improvement company and there used to be a “Loews Theaters” and that should not cause confusion for most consumers). Yet, sometimes claims get made across lines of business, because companies must assume that the “average consumer” is relatively uneducated or "commercially illiterate" outside of his own life. Perhaps the Internet itself, in combination with search engines and wikis will change this, but it’s necessary to make this into a legal concept. There is a way to go with this.

Update: Jan. 25, 2008

The Govtrack reference for this bill HR 683, which became law, is here.

Note that often (or usually) bill numbers change when they "die" in one Congress and are re-introduced in the next Congress with essentially the same language and provisions.