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.

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