MOSELEY v. V SECRET CATALOGUE, INC.
V Secret Catalogue, Inc., the affiliated corporations that own the Victoria's Secret trademarks, filed suit, alleging that the name Victor's Little Secret contributed to "the dilution of famous marks" under the Federal Trademark Dilution Act (FTDA). The law defines "dilution" as "the lessening of the capacity of a famous mark to identify and distinguish goods or services." The District Court granted V Secret summary judgment on the FTDA claim. The Court of Appeals affirmed, finding that V Secret's mark was distinctive and that the evidence established dilution even though no actual harm had been proved.
Does the Federal Trademark Dilution Act require objective proof of actual injury to the economic value of a famous mark for relief?
Legal provision: 15 U.S.C. 1125
Yes. Justice John Paul Stevens delivered the opinion for a unanimous Court with respect to parts I, II, and IV of the opinion, which held that the FTDA requires proof of actual dilution. The Court reasoned this standard, as opposed to a presumption of harm arising from a subjective "likelihood of dilution" standard, controlled. "There is a complete absence of evidence of any lessening of the capacity of the Victoria's Secret mark to identify and distinguish goods or services sold in Victoria's Secret stores or advertised in its catalogs," wrote Justice Stevens. Justice Antonin Scalia did not join the portion of the Court's opinion that discussed legislative intent. Justice Anthony M. Kennedy filed a concurring opinion.
Argument of James R. Higgins, Jr.
Chief Justice Rehnquist: We'll hear argument next in Number 01-1015, Victor Moseley and Cathy Moseley doing business as Victor's Little Secret versus V. Secret Catalogue, Inc.--
Mr. Higgins: Mr. Chief Justice and may it please the Court, counsel:
We are here today to obtain a construction of the Federal Trademark Dilution Act, FTDA, that will keep Federal trademark law in its proper bounds.
We submit that can be accomplished by choosing objective proof over supposition and inference to guide future FTDA cases.
This case from the Sixth Circuit involves a nonidentical, nonconfusing trademark operating in the remote reaches of the economy that was nevertheless enjoined under the FTDA, and demonstrates the dangers of an unchecked FTDA.
Justice Kennedy: You mean Tennessee is remote, or this particular business is?
Unknown Speaker: [Laughter]
Justice Ginsburg: Kentucky.
Mr. Higgins: Your Honor, this case actually came from Kentucky, and--
Justice Kennedy: Oh, well, Kentucky--
Mr. Higgins: --I suppose that's even more remote than Tennessee in some cases.
Justice Kennedy: --Was there a Victoria's Secret in this town?
Mr. Higgins: There was not at the beginning of this case.
The closest one was 60 miles away.
We say that the result--
Justice Kennedy: In Tennessee?
Unknown Speaker: [Laughter]
Mr. Higgins: --We say that the result below is contrary to the actual words that Congress used in the FTDA, namely the plain words, causes dilution.
If this result stands, the FTDA threatens to usher in an anticompetitive expansion of trademark law into patent-like realm.
Perhaps the best example of that is the Second Circuit's Nabisco decision, urged in part here by respondents, which involved a goldfish-shaped cracker, and it... the court there applied the FTDA to grant exclusionary rights in an unpatented, uncopyrighted design of a product to enjoin a product that they said diluted.
That is contrary to this Court's two most recent decisions involving Federal trademark law, the Wal-Mart decision and the TrafFix Devices decision.
Justice Breyer: Before you... just would you spend one minute... it would help me a lot if you explained to me what dilution is, and I'll be specific.
It seems to me what you have here is a case of what's called tarnishment, and what tarnishment... what I think of is this, is it like this, that... that... imagine some small shop wants to start a bug spray business.
It's a funny example, but it comes from an actual case, and they decide to call themselves Bugwiser Bug Spray, and their slogan is, Where there's life, there's bugs, all right.
Unknown Speaker: [Laughter]
Justice Breyer: Now, Budweiser is not going to enter the bug spray business.
Nobody thinks Budweiser, in fact, is the source of the bug spray, but Budweiser has an interest because the people who see this ad are going to think Budweiser, Yuck, and they don't want people to think that.
Now, is dilution encompassed?
Does dilution encompass that, and my reason for thinking maybe it doesn't is, the words of the statute refer to distinctiveness of mark.
They don't refer to tarnishment.
But... is it... so I want some explanation of what dilution here refers to.
Mr. Higgins: There's a lot of people who want explanation of what dilution is, and their tarnishment aspect of dilution is part of the legislative history.
It is not expressed in the words that Congress used to define dilution.
Congress defined dilution as the lessening of the capacity of a famous mark to identify and distinguish the goods or services to which the famous mark--
Justice Breyer: But you believe--
Justice Scalia: --Which wouldn't include tarnishment.
Which wouldn't include tarnishment.
I mean, it can still identify Budweiser beer very, very well.
Mr. Higgins: --Well, it could identify Budweiser beer, but the... the... our point about this case is that there needs to be objective evidence that consumers, in fact, identify the accused mark with the famous mark.
In other words, we say that section 43(c)(1) of the FTDA in its words causes dilution, imposes a causal connection between the accused mark and the beneficiary.
Justice Breyer: All right, excuse me, before you go back to cause, which is your main point which I want to hear, I do... I'm assuming now that for purposes of this case anyway, you concede that tarnishment is part.
If you don't concede that, or even if you do, will you please explain as well what this... what it is, what the injury is where you're talking about a lessening of capacity to identify and distinguish, what injury is that, if it is not tarnishment?
Mr. Higgins: Okay.
The injury in a dilution case is focused, the courts agree, on the selling power of the famous mark and the way that the cases go is that everyone agrees that that selling power is the hook that the famous mark--
Justice Breyer: Okay, then please explain, putting tarnishment to the side... there is no tarnishment, assume... how does the fact that you have a tiny, totally separate product with the same name ever, ever hurt the selling power of the big famous name?
Mr. Higgins: --The question becomes, again, one of consumer protection.
All of that is tied up into the gist of the FTDA.
What is being protected is the selling power of the famous mark... which the Fourth Circuit in Ringling Brothers referred to as the economic value of a trademark... and I would agree with you, Justice Breyer, that if there is no injury there should be--
Justice Breyer: No, I don't understand conceptually how there ever could be an injury.
I've got to understand that first, and the reason is, I can imagine an injury through tarnishment.
I can imagine an injury where the big product, Kodak, intends to enter the small area, the Kodak... whatever, monkey wrench... and it is intending to enter and draw on the selling power of, everyone thinks Kodak is good, so I can think of those two things, but where they don't intend to enter, where there's no tarnishment, what, in principle, is the harm that you say we have to show really exists?
Unless I know what that is in principle, I can't tell if you're right.
Mr. Higgins: --It... it would show whether or not consumers would now identify a single mark with two different sources, and... and that is the essence of what trademark dilution by the circuit court--
Justice Breyer: All right, and that is harmed because?
Mr. Higgins: --The theory is... with which we don't totally agree... the theory is that consumers are used to seeing only one Kodak, and now they see two, and the theory is that that is the... among a number of metaphors, that is the first of a thousand cuts that will lead to harm.
Now, our difficulty with that is that not every, even identical use of the same trademark ultimately leads to the dilution--
Justice O'Connor: Well, do you say that actual confusion is relevant to the dilution analysis?
Mr. Higgins: --Actual confusion is primarily a... a Lanham Act infringement concept.
Justice O'Connor: So it's not, in your view, relevant to the dilution?
Mr. Higgins: If there were actual confusion, it might be relevant, but this case--
Justice O'Connor: In this case, the other... the Lanham Act was thrown out, in effect.
Mr. Higgins: --That's the main point of this case, is that the Court has ruled as a matter of law that these accused marks by our clients are not going to lead to confusion.
Justice O'Connor: And you say that actual confusion doesn't matter, then, for purposes of this statute, the dilution statute, or it could?
Mr. Higgins: --I say that it could in some circumstances.
It's not involved in this case at all.
Justice O'Connor: All right, now--
Justice Kennedy: --You... you... go ahead.
Justice O'Connor: Then what about actual economic harm?
Is that a requirement, in your view, under this statute--
Mr. Higgins: We think that--
Justice O'Connor: --for the plaintiff?
Mr. Higgins: --We think that the plaintiff in a dilution case needs to show objective proof of dilution, and that necessarily has an economic component with it.
Justice O'Connor: Well, but the statute does not, in defining dilution, speak in terms of economic harm, does it?
Mr. Higgins: The statute does not mention economic harm per se, but it does say, the lessening of the capacity of the famous mark to identify and distinguish and, focusing on the selling power of the mark, we say the best evidence that would be adduced in a case of dilution is surveys of consumer perceptions of the impact of--
Justice Ginsburg: That's the best evidence.
That's the best evidence, but let's go back to what is... causes dilution?
One can distinguish what the Patent and Trademark Office does.
That is, it considers marks before they're in use, so one might say, oh, the distinction between causes dilution and likely to cause is, likely, you're looking at the thing before it's ever used.
Once it's used, you're into the causes territory.
That would be a nice clean line to say that all that it means, all that the difference in phraseology, causes dilution as opposed to likely to cause, is, did it have... a causation case, you have to have a junior mark that's in use, so why isn't that a satisfactory line between what's... what causes dilution as opposed to what is likely to cause dilution?
Mr. Higgins: --We think that is not a completely satisfactory distinction because of the language of the statute that authorizes the Patent and Trademark Office to look at a mark before it begins.
Justice Ginsburg: Yes, well, that's likely to.
They can't judge it, because it's not... it's not in use.
Mr. Higgins: And the statute actually says that.
Justice Ginsburg: But I'm asking you, getting out of that territory, it can look at things before they're in use, and now that... now the junior mark is in use, why isn't that enough to satisfy the dilution act?
Mr. Higgins: --Well, we would agree that the mark, the junior mark has to be in use, but we would not agree that just by merely using a mark that is semantically similar to the famous mark, that dilution will inevitably result, which is the position of the respondents here.
Justice Souter: But the one thing I think you're asking for beyond Justice Ginsburg's example is, to take the Kodak wrench and the Kodak camera, you're asking for some proof that somebody heard the word Kodak and said, was it the camera or the wrench +/?
and if that proof exists you've got your objective proof, and why do you have to go to the point of saying that... proving that Kodak lost a sale as a result?
Mr. Higgins: We don't suggest that we have to prove that Kodak lost sales.
Justice Souter: But you're... you're asking for proof of some kind of--
--That's the point of this, for heaven's sake.
Unknown Speaker: --of economic consequence, and--
Mr. Higgins: We think--
Justice Souter: --I... that's the point that I don't see.
If I understand it, the dilution occurs when... or that dilution is the process of lessening the capacity of Kodak to identify the camera rather than to identify the wrench.
If... if it is shown that that process has begun... that it is occurring... why do you... what is the point of your argument that it has got to be carried forward to the point of an economic loss of some sort?
Mr. Higgins: --Well, first of all we believe that consumer surveys do have evidence of economic impact, and we don't say that economic damage is required.
That takes our position too far.
The actual question that is certified is whether the plaintiff must show objective evidence of harm to the economic value of the famous mark, not that it must show economic harm per se.
I realize that's subtle distinction--
Justice Souter: Well, isn't there... under the terms of the statute, isn't that shown simply by the fact that the consumer stops for a second and says, is it the camera, or is it the wrench when the consumer hears the word, Kodak?
Mr. Higgins: --I don't--
Justice Souter: What further proof of loss of... what further economic proof is required to come within the statute?
Mr. Higgins: --That is not a complete economic proof.
What we say is that not every, even identical use leads to dilution in the minds of consumers.
Think of... as we put in our brief... Delta Airlines, Delta Faucets.
Think of Apple Records, Apple Computers.
Justice Ginsburg: Maybe because those are names that are generic, like apple.
Mr. Higgins: Well then, how about Ford Motor Company and Ford Modeling Agency?
You know, that's the same result.
Unknown Speaker: How about Kodak Pianos?
Mr. Higgins: Kodak Pianos is in the legislative history as--
Justice Ginsburg: Or Dupont Shoes, or Buick Aspirin?
Mr. Higgins: --All of those are identical marks, and we say that this case presents a nonidentical mark.
There are semantic differences and there are gender differences.
Justice Ginsburg: Well, there is evidence... or, at least, how did this all get started?
Someone sees Victor's Secret and writes to Victoria's Secret and says, you want to stop these people, so we know that one consumer, although he wasn't confused, said, they're diluting your mark.
Now, suppose you had 12 of those who said, yeah, I passed this shop, Victor's Secret, and I thought immediately of Victoria's Secret.
Would that proof be sufficient and if not, why not?
Mr. Higgins: We say it is not sufficient, because the... but that is essentially the analysis that the Sixth Circuit put in there.
The Sixth Circuit said at page 27a of the petition, the appendix to the petition, that they are focusing on what a consumer is, quote, "likely automatically to think", unquote, and then link that to the famous mark.
Justice Scalia: And what's your answer?
Mr. Higgins: What our position is, that that requires a court to guess whether the association that the consumer thinks of is--
Justice Scalia: --What do you want?
What do you want in place of that?
Mr. Higgins: --What we would like--
Justice Scalia: What do you want the plaintiff to show?
Mr. Higgins: --We want the plaintiff to show that there is objective proof of consumer perceptions that it causes dilution, exactly what the statute says.
Justice Scalia: I don't know... what does that mean, of consumer perceptions that causes dilution?
Objective proof that a particular consumer, when he saw Victoria's Little Secret... or Victor's Little Secret... had in mind, gee, you know, that's like Victoria's Secret.
Is that enough?
Mr. Higgins: No, that's not enough.
Justice Scalia: What is enough?
What is enough?
What does dilution consist of?
Mr. Higgins: --Dilution consists of a consumer's... the... general consumers, not a single consumer, but general consumer perception that there used to be one Victoria's Secret and now, in their minds, there are at least two.
Chief Justice Rehnquist: Well, how many consumers do you need?
You say one isn't enough, and you say general consumer perception.
I mean, if you had 20 people would that be enough?
Mr. Higgins: Well, the... the record and the briefs reveal some articles by trademark scholars who discussed--
Chief Justice Rehnquist: Yes, but I was asking you a particular question.
Would 20 be enough?
Mr. Higgins: --I don't think so, Your Honor.
You know, this... we live in an age when consumer surveys, voter surveys, public opinion surveys are done over a weekend, and in this situation that is the kind of survey that we would suggest.
Chief Justice Rehnquist: And what do you ask these consumers?
How many Kodaks are there?
Is that what you want to ask them?
Mr. Higgins: No, Your Honor.
Chief Justice Rehnquist: What?
Mr. Higgins: You ask them the scientifically designed question.
Chief Justice Rehnquist: Which is?
Mr. Higgins: Which is, you know, do you think of another famous mark, and do you believe... as the law review article suggests... do you believe such things as whether or not the new entrant had to get permission from the famous mark in order to market this product.
Chief Justice Rehnquist: Well, that... most consumers wouldn't even understand that question.
Unknown Speaker: [Laughter]
Mr. Higgins: And that's... that's part of our point, Your Honor.
Chief Justice Rehnquist: This sounds like a lawyer's dream.
Unknown Speaker: [Laughter]
Justice Kennedy: But it seems to me that the owner of the senior mark is entitled to more protection than that.
I... I just want to make clear, you do not contest that tarnishment is a... a basis for the respondent to prevail in this case?
Mr. Higgins: --We do not.
Justice Kennedy: All right.
Mr. Higgins: As... per se.
What we say is that there is--
Justice Kennedy: I... I don't know why you need sophisticated, so-called sophisticated polls to determine whether there's tarnishment.
Mr. Higgins: --Because, remember, this case is a statute that is wholly different than the common law.
It has no common law antecedent.
It is granting property rights through Congress' action under the alleged use of the Commerce Clause, and we say those property rights that are being granted by this statute create rights that go well beyond any trade area--
Justice Breyer: It's not just beyond, I would have thought that... you don't make a point of it, so I might be wrong... there's a pretty significant speech interest on... on your side of the case.
That is, if this statute gets out of hand, advertising is part of... whether we like it or not... our children's, anyway, daily communications, and all of a sudden, if there's no real harm you're going to cut off what people can say in commercial contexts.
Now, you don't make much a point of that, so don't let me put words in your mouth.
Explain it to me.
Unknown Speaker: [Laughter]
Mr. Higgins: --We did mention that in our briefs, but the primary people who are positing that position here are the amici, who represent the public interest, and the main point about this FTDA is that, other than bumping up against the First Amendment, there really isn't a public interest that is being expressed or applied here.
Chief Justice Rehnquist: Well, why... why isn't there a public interest in not having some organization like yours simply copy another person's name?
Mr. Higgins: Well, we... if there is that situation, then that would be a case of trademark infringement or copyright infringement.
This case does not involve... this case does not involve--
Chief Justice Rehnquist: No, Congress has gone further here and said you can't simply copy someone else's name.
Now, you say there's no... maybe Congress shouldn't have done it, maybe it hasn't done it, but to say there's no public interest at all on that side doesn't make much sense to me.
I mean, you... you don't come... your client doesn't come off well in this case.
Mr. Higgins: --Well, there is a public interest, but that is addressed primarily on the free speech aspect of things.
We would agree with that.
The problem with this case is that it requires courts to speculate whether the beginning of a semantically similar mark is going to inevitably lead to dilution, and that's contrary to the words that Congress used.
Justice Scalia: You started off saying dilution, you... to show dilution, you had to show economic harm.
That I can understand.
You produce evidence that... of some harm.
That is now not your position.
I don't understand what your position is.
If it is not a showing of economic harm, you know, the... the mark is worth so much less than it was, what precisely do you want to show?
I truly don't understand.
Mr. Higgins: We do say there is an economic component, through the proof that we suggest be required under the causal relationship that is necessary, and the... we don't abandon the economic--
Justice Scalia: Okay, fine, what else do you demand?
What is it that you do demand.
Mr. Higgins: --We--
Justice Scalia: --I don't understand what it is that you do demand.
Mr. Higgins: --We do demand that the plaintiffs show that our mark is harming theirs in a dilution way, that it does lessen the capacity of that mark to identify and distinguish its goods or services, and that's best done by consumer surveys.
Your Honor, if I may reserve the balance of my time.
Argument of Lawrence G. Wallace
Chief Justice Rehnquist: Very well.
Very well, Mr. Higgins.
Mr. Wallace, we'll hear from you.
Mr. Wallace, our records reflect that this is your 157th argument before the Court in the 34 years you have been an attorney in the Office of the Solicitor General.
Some years ago, you eclipsed the 20th Century record of 140 arguments.
I understand that you will soon retire from Government service, so on behalf of the Court I extend to you our appreciation for your many years of quality advocacy and dedicated service in the Solicitor's Office... Solicitor General's Office... on behalf of the United States.
That doesn't mean we're going to rule in your favor.
Unknown Speaker: [Laughter]
Mr. Wallace: Thank you very much, Mr. Chief Justice, and may it please the Court:
What constitutes dilution, other than the abstraction of the statutory definition perhaps is reflected a bit in the examples we've given of consumer surveys that might be used to produce evidence in a case of this nature.
If consumers were asked what products do you associate with the name Victoria's Secret, and those who were aware of Victor's Little Secret answered it substantially differently and included items found only in that store and not in Victoria's Secret stores, or what attributes do you associate with Victoria's Secret, and those aware of Victor's Secret were more apt to say tasteless rather than tasteful, which would... might be the response from those familiar with Victoria's Secret.
Justice Souter: What if the answer was simply, I'm not sure any more?
Would that show that dilution had occurred?
Mr. Wallace: It... it might.
All of these... I mean, we don't take the position that a consumer survey is necessary in order to prove a case in the first place, but I think the way a survey would be designed and what the answers would show is illustrative of what constitutes dilution.
Justice Scalia: But you... you would get that answer from a consumer if you asked them about the word, Delta, what products do you associate with the word, delta, and the consumer would say, airplanes, or air... you know, air travel and faucets, and there wouldn't be any dilution there, would there?
Mr. Wallace: Not unless their... a conclusion could be drawn based on other factors that--
Justice Scalia: Right.
Mr. Wallace: --a mark had established a certain distinctiveness that is associated only with the particular mark, and now that is being blurred.
Justice Scalia: Well, I believe... are you saying that the Delta example is only good now, and that when the person who made Delta Faucets first came out with a faucet that he called Delta, or Delta Airline... I don't know who came first... the chicken or the egg, the airline or the faucet.
Whoever had the name first, are you saying that when somebody used the name Delta that the senior user of Delta could have excluded the faucet-maker from... from Delta?
Mr. Wallace: Only under the Federal dilution statute of '95 if the mark is a famous mark, and in the Toro case that we cite, the--
Justice Scalia: So I can't even have Delta Peanuts?
Once Delta is famous, just for air travel, I can't use Delta for anything else?
That would automatically violate the Federal statute?
Mr. Wallace: --Well, not automatically, but if--
Justice Scalia: All you have to do is find a consumer who knows of Delta Peanuts and says, you know, what do you associate the name Delta with, and he says, airlines and peanuts?
Mr. Wallace: --Well, that would involve an exact replication of the mark, which are the only examples given in the House report or in the legislative history, such as Kodak Pianos.
Most of the cases, however, are about similar marks rather than exact replications, and those are much more problematical to ascertain whether there is the kind of effect we're... the act is concerned with.
Justice Stevens: Mr. Wallace, at least in some of the circuits, I'm not sure in the cases of this Court, correct me if I'm wrong, I thought that in trademark infringement cases, that the circuit court said that they have certain de novo authority.
Historical facts are clearly erroneous, but the conclusions that you draw from the historical facts give them certain powers of de novo review.
That's the prevailing rule in many of the circuits, is it not--
Mr. Wallace: Yes.
Justice Stevens: --in infringement cases, and shouldn't that same rule be applied here?
I mean, judges have the capacity in the trademark area, I should think, to know what dilution is or is not if we have certain historical facts.
I don't know why you need to survey.
The Bugwiser-Budweiser example.
I mean, you don't have to be too tricky a judge to figure out that this is very harmful.
Mr. Wallace: It is very difficult.
We don't say that a survey is needed.
There are other factors that are looked to, including--
Justice Ginsburg: Mr. Wallace, may I ask you something to clarify the Government's position on this?
As I've been listening to the argument, Mr. Higgins says you look to see, he said, if before you thought there was one Victoria's Secret, now you thought there were two.
He's suggesting that the association... it's not what you think of when you see Victor's Secret.
When you see Victor's Secret, of course you're going to think of Victoria's, but what counts is, when you think of Victoria's Secret, do you think of Victor's.
That's... that's what dilution is, and if it's the latter, then it's... those are two very different things, aren't they?
Mr. Wallace: --Yes.
Dilution is about dilution of the famous mark and its capacity to distinguish the particular goods or services, but we think the court of appeals was wrong in saying that mere mental association of the two marks by consumers automatically results in dilution.
Justice Ginsburg: But the court of appeals was going on, when you think of Victor's you think of Victoria's.
I'm asking you, is the right question... is the necessary question of the customers... when you think of Victoria's, do you think of Victor?
Mr. Wallace: I think the... the question is not do you think of Victor's, but when you think of Victoria's, do you think of more than what Victoria's Secret--
Justice Ginsburg: Right.
Mr. Wallace: --itself has as its merchandise and image.
Is their name now associated with a different type of product that may change their renown or cachet with customers.
Justice Breyer: Is there... what is the extra... I'm not... if you're finished with that question, I'd like to... which I think there's a lot to.
Is... what is particularly the harm?
Is it just that the customer thinks... either customer... thinks of the other even if there's no specific tarnishment, and there's no general tarnishment?
That is, people associate Buick with a good car, and we can measure whether that's identical before and identical after, and it is, so there's no general tarnishment, there's no bug example tarnishment, there's nothing but the fact that on Justice Ginsburg's question, both sides say yes.
Now, is that harm under this statute?
Is that dilution, or isn't it?
Mr. Wallace: We don't believe that in itself constitutes dilution if there is none of the damage to the ability of the mark.
Justice Breyer: All right, so... so the ability of the mark consists either of my bug example, or some general weakening of the goodness that inheres in the name.
Mr. Wallace: --Well, yes... no, I think--
Justice Breyer: No, okay--
Mr. Wallace: --I think the Fourth--
Justice Breyer: --The answer's no.
Mr. Wallace: --The Fourth Circuit case of Ringling Brothers was very illustrative.
People might associate Utah's use of Greatest Snow on Earth with Ringling Brothers' use of Greatest Show on Earth, but if they keep the two distinct in their minds, even though they recognize that it's a play on the same words, but they think the trademarks refer to different products and services, then there... no harm is done to Ringling Brothers as the Fourth Circuit held, and the Fourth Circuit even suggested that perhaps they even benefit from having people think additionally of their mark.
That's a question on which the Patent and Trademark Office has not taken a view, but the harm has to be that consumers are... are diminished in their capacity to recognize the mark that is the famous mark that's being protected.
Justice Scalia: That's... but that's confusion.
I mean, if... if there's confusion, you don't need this new law.
I thought that it was the case that if you come out with a Kodak Piano, even if nobody in the world thinks that Kodak, the photography company has anything to do with Kodak Piano, the mark has nonetheless been diminished.
Isn't that right?
Mr. Wallace: That's true, at least when it's an identical mark, or one that's so confusingly similar--
Justice Scalia: But that goes to the very point you've just been talking about, and contradicts what you've said.
It doesn't matter whether there's any confusion or not, you can't use Kodak.
Mr. Wallace: --There... there has to be confusion as to the mark, rather than as to the source of the product.
Argument of Walter E. Dellinger, III
Chief Justice Rehnquist: Thank you, Mr. Wallace.
We'll hear argument from you now, Mr. Dellinger.
Mr. Dellinger: Mr. Chief Justice, and may it please the Court:
The question on which the Court granted certiorari was whether the plaintiff must demonstrate that it has already suffered economic injury as a precondition to any and all relief under the 1996 act.
The text of the act answers that question, and answers it no.
There's simply no such requirement included in the statute.
Justice Scalia: Well, it... I mean, that's to some extent a play on words.
It depends on what you mean, has actually suffered economic injury.
What your opposing counsel says now is that all he means by, has actually suffered economic injury, is, has suffered dilution, has actually suffered dilution of the mark, which, of course, entails economic injury.
If the mark is diluted, the mark was worth a lot, and it's now diluted, there's economic injury.
Mr. Dellinger: Justice Scalia, we agree that the act requires a showing of actual, present dilution, and that such a showing was, in fact, made below.
What is dilution?
A number of you have asked that question.
It's best understood in light of the fact that this is a very narrow statute that only protects a few very famous marks.
I do not think, for example, Justice Scalia, that Delta would qualify as a famous mark because it has been used so often in other third party uses.
Justice Souter: --But what about the first time it was used either for... what is it, the airline, and what's... faucets?
Whichever came first.
What about the first time it was used for the second product?
Mr. Dellinger: --Then it would not suffer the disqualification that would come as to what is present--
Justice Souter: Yes.
Mr. Dellinger: --about proliferating uses.
Whether it would otherwise satisfy that would remain to be seen.
I think that the Court can, and the courts can narrow the application of this statute by taking very seriously the requirement that it has to be a truly famous mark that has.
Take the example that was given to the House--
Justice Souter: Well, let's... and keep it so I can understand it.
Let's assume the first use was Delta Airlines.
Everybody recognizes Delta Airlines.
Somebody starts advertising Delta Faucets.
Was Delta Airlines famous enough--
Mr. Dellinger: --I don't know--
Justice Souter: --on your criterion?
Mr. Dellinger: --on those facts.
I'd have to know whether, if... as it is today, yes, I would think if it--
Justice Souter: All right.
Let's assume it's famous enough.
The ads start going out in the magazines for Delta Faucets.
There is no proof that Delta Airlines has suffered any tangible damage at this point, but there is proof, let's assume from a survey of magazine readers, that when they see the word, Delta, standing by itself, they're not sure who the source of the product is.
Is that dilution?
Mr. Dellinger: --If they're not sure who's the source of the product, it may be infringement, and the reason I resist the use of Delta is that a lot goes into a determination of whether... as it did in this case... as to whether a mark has those special qualities that mean that the second or junior user and the third, fourth, and fifth are lessening its capacity to communicate these very distinctive ideas.
The example used in the House report was Tiffany's, for example.
We all know that if another jewelry store starts as Tiffany's you've got an infringement claim, because consumers would be confused, but as the House was told, what about a Tiffany's Restaurant, and that means that Tiffany's used to stand for one thing, it now stands for two, but here's the absolute heart of the matter, where the FDA comes into play.
Justice Scalia: That was bad?
I mean, you see, I am so far behind understanding you that I don't know whether you have just asserted that that's obviously bad.
I think you have.
Tiffany's Restaurant is bad.
Mr. Dellinger: Yes.
Justice Scalia: Okay.
Mr. Dellinger: I have, and--
Justice Souter: And the difference between Tiffany's Restaurants and Delta Faucets is what?
Mr. Dellinger: There may be no difference.
I'm assuming that both... if you assume that both Delta and Tiffany's are famous marks.
Justice Souter: Okay.
Mr. Dellinger: But here's why Delta Faucets and Tiffany's... if the original marks are famous... both constitute the harm of dilution.
Justice O'Connor: You mean, just using the name?
Mr. Dellinger: --Just using the name--
Justice O'Connor: Is likelihood of dilution enough?
Mr. Dellinger: --No, not under the act, and... and nor is just using the name enough, nor is just semantic similarity.
You have to make out the statutory proof that it actually--
Justice O'Connor: That it causes dilution for everybody--
Mr. Dellinger: --It causes dilution, and dilution--
--It's creating a mental association.
Similarity is not enough.
But take an example that shows how critically important stopping the first use is.
If you can have a Tiffany's Restaurant, then you can also have a Tiffany Shoe Store, a Tiffany Pet Store.
Very soon Tiffany's no longer--
Justice Scalia: --Where will it all end?
Mr. Dellinger: --Where will it all end?
That is exactly--
Justice Breyer: Well, so what?
I mean, I don't say so what facetiously.
I say so what to get you to identify the harm specifically that that's likely to bring about to the first owner.
Mr. Dellinger: --Exactly.
The... what Congress saw as the harm, Justice Breyer, for truly famous marks, to quote from the House report itself, is that dilution applies when the unauthorized use of the famous mark reduces the public's perception that the mark signifies something unique, singular, or particular, so that Rolls-Royce, which once stood for one thing, once it's on 100 products or 1,000 products no longer identifies and distinguishes--
Justice Breyer: No longer identifies one thing.
It now identifies a thousand things, and that, of course, is true by definition, and what I'm trying to get at is, why is that bad?
--Congress determined that that was bad because--
Oh, no, go ahead.
Mr. Dellinger: --Congress determined that that was bad to the extent that the mark no longer stood for something singular or particular, no longer conveyed--
Justice Breyer: Then again, that's just another way of repeating the same thing, and the reason that I think it's important is, perhaps we can survive with only having one Tiffany's, but let's think of some slogans out of my youth, you know.
99 and 44/100th percent pure.
The beforehand lotion, whatever that meant.
I'm just repeating slogans from old radio programs, and the reason that I'm doing it is because I want you to see immediately, as soon as you depart from a word like Tiffany's, which is totally arbitrary or fanciful, and you get into actual advertising slogans, you will tie up free speech in lawsuits like mad, and that's what's worrying me.
Mr. Dellinger: --No, I do not... it is not at all the case.
Congress made it clear that safe harbors were to extend a wide--
Justice Breyer: Yes, the safe harbor is fair use.
Mr. Dellinger: --And it--
Justice Breyer: Fair use, and that's what's again worrying me, because those two words, fair use to me spell lawyers, lawsuits, uncertainty and confusion.
Mr. Dellinger: --If you lose distinctiveness, what you lose is the selling power of the mark.
Rolls-Royce stands for something important.
It conveys something that consumers... it signals to consumers.
Rolls-Royce is very careful about what products it allows to--
Justice Scalia: Chevrolet doesn't matter.
You can use Chevrolet, because that's--
Unknown Speaker: [Laughter]
Justice Scalia: Is that right?
Or Edsel, even easier... yes.
Unknown Speaker: [Laughter]
Mr. Dellinger: --Justice Scalia, it is... when you look at whether a mark is famous... and in this case, it's simply not contested.
This is a mark that comes in behind Levi's and ahead of Rolex on the... on the list, but when you contest that, you do look at a number of factors, so you can't stand here and pick out any one, and that's a... that's an important gatekeeping function to narrow this statute.
Justice Scalia: When you say it signifies something distinctive, you don't mean that Buick signifies cars, you don't mean that Tiffany's signifies jewelry, you don't mean that Rolls-Royce signifies sedans, right?
Mr. Dellinger: --Not just that, but a certain mark and quality and kind of product is exemplified, and that's what makes a mark famous.
It gives it this.
Now, if... we know that these marks have value.
When... when companies are acquired, often as much as four-fifths of the value may go to use that name.
That is something quite valuable, Justice Breyer, and its value is going to be lost--
Justice Breyer: Fine.
Mr. Dellinger: --if there are a thousand different ones.
Justice Breyer: --Why not require some proof of that?
That is, some proof that this mark... which not only identifies a wonderful car, but now has come to stand for wonderfulness in general... some proof that because somebody's using it on a tricycle, that people think it's a little less wonderful.
Now, that's not... that's hard to prove one way or the other, but not... I mean, requires some reason for thinking that.
Justice Scalia: So Pepsodent would lose, or, you know, just some... some product--
Mr. Dellinger: Yes.
Justice Scalia: --That's just a... you know, it's an ordinary product.
How can you have an absolutely wonderful toothpaste?
Justice Breyer: Oh, no, you can.
Justice Scalia: You can.
There's no Tiffany of toothpastes, right?
Unknown Speaker: [Laughter]
Mr. Dellinger: There is no--
Justice Scalia: So we're only talking about Tiffany's, Rolls-Royce, a couple of other really, really quality names.
Is that what the statute was directed at?
Mr. Dellinger: --I believe that is the case, Justice Scalia, that--
Justice Ginsburg: But you don't differentiate between Cadillac and Chevrolet, do you?
Chevrolet would have just much cachet--
Mr. Dellinger: --No, I think they would be on similar footing, and Chevrolet has its own kind of appeal.
It appeals to... for those of us who live in NASCAR country, there is sometimes a more appealing image to Chevrolet than to Cadillac.
I don't mean to make value judgments.
Justice O'Connor: --Well, Mr. Dellinger, why isn't it useful to think in terms of whether there's proof of some diminution of value of the mark?
Mr. Dellinger: That is a very good question, and that is Justice Breyer's question for--
Justice O'Connor: Yes.
Mr. Dellinger: --We believe that obviously the mark does suffer in value if you make out the finding of dilution.
The Fourth Circuit would require you show actual--
Justice O'Connor: Well, you... you wouldn't think we should just presume a diminution in value, would you, because the mark is similar?
Mr. Dellinger: --No, but what you... what you presume is that the economic injury that you're talking of may not be identifiable... often would not be identifiable... until it's too late to rectify the harm that has been done.
If you think of... we usually use as examples where there is one other competing user.
What faces the sort of in-house intellectual property counsel for a company with a famous mark is that there are users popping up all over the country all of the time, so that if the first user, say Victor's Little Secret, exists in Elizabethtown, Kentucky, and if you can't show that that alone produces the kind of harm you're looking... or that your question would imply one might be looking for... how can you stop the second, the third, the 500th use?
At what point... there's no privilege for the first user, so that by the... here's what would happen.
By the time you could show economic damage to the harm, first of all as a matter of law you might have lost the status as a famous mark because there are all those users out there.
Secondly, the... it is not clear why you would prohibit the 500th user of the mark, the 500th different kind of store when you allowed the first 499 to go on, so that... you ask the question of whether, at present, this use lessens the capacity of that mark to identify and distinguish.
Justice Kennedy: Focusing on the present, suppose I'm a trial judge, and this case comes to me in the pretrial conference stage, and I say, you know, it does seem to me that this second... this junior user is going to tarnish the image of... of the senior user.
Is that all I need to say, and then I... what do I put down when I write an opinion so that the circuit court can review my thinking?
I mean, what... what do I put down?
Mr. Dellinger: Well, I think this case is a very good example, because you have a court which goes through a list of factors to reach a conclusion.
The opinion is rather short, but that's because the conclusion in this case is so close to being a core example of the statute.
They... they mention the fact that it's a very distinctive mark, the degree of similarity, the proximity of the product lines helping to create that association, the shared customers... 39,000 catalogues distributed in Elizabethtown.
The suggestion is there are some--
Chief Justice Rehnquist: 39,000 in Elizabethtown?
Mr. Dellinger: --Yes.
There are 39,000 Victoria's Secret catalogues distributed in Elizabethtown, Kentucky in 1998.
Chief Justice Rehnquist: What's the population of Elizabethtown?
Unknown Speaker: [Laughter]
Mr. Dellinger: That is a good question, but I... four, he says, but I think that's his guess.
We don't know.
I... I... think it is substantial.
Now, once you have these other uses out there, particularly if it's a--
Justice Souter: So what do I... would this be appropriate for a summary... would you urge me to take this on summary judgment?
Unknown Speaker: I--
Mr. Dellinger: --Absolutely, just as I think you could, Justice Kennedy--
Justice Kennedy: --All I need to know is the number of catalogues, how well-known the mark is, and that's it?
Mr. Dellinger: --What you have to--
Justice Kennedy: And then my own judgment as to what tarnishment is?
Mr. Dellinger: --No, because here you have... here you have an actual association.
What you have in this case, for example, that the judge relies upon, is not a survey.
It's proved by actual consumers.
Justice Breyer: Well, but suppose right here, to take this case, that the people who go to Victor's who have ever heard of it honestly do not believe the less in any respect whatsoever of Victoria's Little Secret, and the people who use Victoria's Little... I mean, why should they +/?
and the people who use... go to Victoria's Little Secret have never heard of Victor's, so you... why... why suppose they come in and show that?
Justice Scalia: You're confusing the marks.
Justice Breyer: Now, why... I understand you're confusing the marks.
No, you're not confusing the marks.
I'm... he's saying I'm confusing the marks.
Unknown Speaker: [Laughter]
Justice Breyer: But I... did I have it backwards?
Justice Scalia: Yes, you did.
Justice Souter: Not Little... all right.
Justice Breyer: The people who go... no, the customers of Victor's do associate Victor's with Victoria, but they think nonetheless of Victoria.
They might even think more of Victoria.
I don't know what they think, but it's not negative in any respect, and the people who go to Victoria's, to use Justice Ginsburg's example, don't care, or don't know, or they've never heard of Victor's, so although there is... in a subset of people... an association of the name, there is no harm of any sort whatsoever, and they will prove that.
Should they not have the opportunity to prove it?
Mr. Dellinger: Justice Breyer, Congress simply did not agree that no harm has been done when the famous mark loses its singularity, and remember, if there can be one store under Victoria's... under Victor's Little Secret in Elizabethtown, Kentucky, there can be a thousand opening the Monday after Superbowl Sunday.
Justice Breyer: So then in your view, anyone who starts going around for a commercial reason and using the two words, it floats... it floats... where they want people to think of Ivory Soap, they are open to a lawsuit, and they have to rely on a fair use defense, or are there other defenses?
Mr. Dellinger: The--
Justice Breyer: Is my example wrong?
Mr. Dellinger: --Well, it's... your example is that there is a... you're suggesting a mere mental association.
I'm not sure your--
Justice Breyer: Well, in a commercial context... in a commercial context where people are polled--
Mr. Dellinger: --Secondly, I am not... by no means... it would take a lot to persuade me that it floats is a truly famous mark deserving of this protection, but Congress believed that the harm is that if you have a mark, and Congress identified marks like Buick Aspirin, but if you... the very harm Congress sought to prevent is, when a mark stands for one thing... this narrow set of truly famous marks... and you have replicating uses, it is no longer going to stand for anything in your mind, and Congress believed, and the market reflects, that that is a true loss.
Now, if you wait to try to... to where you could show, as the Fourth Circuit would require, an actual revenue loss, you can't unring the bell, particularly with tarnishment.
If someone opened up--
Justice Ginsburg: --Mr. Dellinger, can I just clarify, then, it doesn't make any difference that this particular shop happens to sell sex toys.
It could just as well... Victor's Secret could sell men's underwear and your argument would still be the same, am I right?
So we get out the tawdriness or the disparagement or the tarnishment.
It's just... it's a store, it sells underwear, men's underwear, and it's got the label, Victor's Secret.
Mr. Dellinger: --Justice Ginsburg, I don't entirely agree with that.
We do believe that the dilution of the Victoria's Secret name through blurring would be sufficient, but in this case, you don't have to rely upon that, because the court below did find that there was tarnishment when a name not only ceases to stand for one thing, but is associated--
Justice Stevens: But how does tarnishment fit the language of the statute?
--Yes, I'd like to know that, too.
I don't see how tarnishment... you know--
--Does that lessen the capacity of the mark to identify--
Mr. Dellinger: --Yes, it does, and the--
Justice Stevens: --I thought it just changed the reaction to the mark, rather than lessening... I mean, you know, you have an unfavorable reaction, rather than not knowing what you're talking about.
Mr. Dellinger: --Let me just quote you from the treatise, one sentence from the McCarthy treatise.
One of the classic functions of a trademark is to signify that all goods and services sold under the mark are of equal quality, or of a special quality.
That is part of identifying and distinguishing a mark.
It... the capacity is lessened.
It lessens the capacity to identify and distinguish a particular mark when that mark is tarnished by what the trial court found some customers would find to be an unsavory association.
Justice Scalia: I don't understand... you can say it, but I don't understand it.
I can still identify and distinguish Victoria's Secret, but I just think less of it.
Mr. Dellinger: Well,--
Justice Scalia: It... it doesn't... any... it isn't any less identifiable.
Mr. Dellinger: --Justice Scalia, I think you're misstating the statute.
Justice Scalia: Okay.
Mr. Dellinger: It's not whether you can identify and distinguish.
It's whether the mark's--
Justice Scalia: Yes.
Mr. Dellinger: --capacity to identify and distinguish is lessened, and if it no longer stands in one's mind--
Justice Scalia: I'll take that.
Mr. Dellinger: --If it no longer stands in one's mind, or in the mind and the public perception for the same connotation of quality as it did before the association with the unsavory image, its capacity to identify and distinguish that quality has lessened, but moreover--
Justice Stevens: But you have to add the word quality to the statute.
The statute doesn't contain that word.
Mr. Dellinger: --The statute uses dilution, Justice Stevens, as a term of art, and nothing could be clearer than that Congress thought that term of art, dilution, encompassed both blurring and tarnishment, as I think--
Justice Stevens: Well--
Mr. Dellinger: --I may not persuade Justice Scalia--
Justice Scalia: --Nothing could be clearer than that Congress adopted a definition of what... of what dilution consists of and, to my mind, that definition does not at all cover disparaging the other product.
Mr. Dellinger: --Well, it... Congress thought otherwise.
The House report says that the definition--
Justice Scalia: The House committee thought otherwise.
Mr. Dellinger: --Yes.
Justice Scalia: What Congress thought was the definition that Congress adopted.
Mr. Dellinger: And the definition of lessening the capacity encompasses that, but in any event, since blurring is still present, this is thought to be an easy case by the courts below, for... for good reason.
If you imagine hundreds of different users of the Victor's Little Secret mark, the uniqueness, the quality, the public's perception is going to be lessened.
Congress further... to go back to a question asked by Justice Breyer... made it absolutely clear that it wanted the safe harbors read as broadly as possible to ensure that there was no restriction on First Amendment rights, so the courts are warmly invited to create as large a safe harbor for parody.
This is a case in which we have blurring, we have tarnishment, which is a near subset of blurring, but the courts below looked at the direct customer testimony.
Colonel Baker, the Judge Advocate... Staff Judge Advocate at Fort Knox... looks at a Victor's Little Secret ad in the base newspaper and writes off to Victoria's Secret and says, they're using your name in an unfavorable way.
His... his deposition testimony remarks--
Justice Stevens: Well, he was concerned about the tarnishment aspect, and I still have to... I would like you to comment on the... on Justice Ginsburg's example, too, Would it diminish the capacity of the Victoria's Secret mark to identify its line of goods if some... somebody thought they also sold men's pajamas?
Mr. Dellinger: --Yes.
Someone else, I think you well... you begin to have the elements of the proof of dilution when you show that someone is using the same... or a name which reaches mental association because of a number of factors.
You have the elements of dilution.
You might not yet have, as you have proof in this case, of a really lessened capacity to identify and distinguish.
Now, another... the... nobody sought to introduce a survey in this case.
I would trust Federal judges more than sociology graduate students to make this kind of determination, and nobody sought to bring before this Court a fact-bound determination of whether all of the judges below were correct when they found that there was a strong association, and beyond that, that the use of the Victor's Little Secret mark to sell the kinds of goods it sells, which some customers find unsavory, and which Mr. Moseley himself testified some members of the public find... at least... extremely offensive, that that has the effect of lessening the capacity of a Victoria's Secret mark to identify and distinguish those famous goods and... and products, and that's--
Justice Souter: But the blurring, then, that you're describing now has no quality component to it?
That only comes when you get to the subset?
Mr. Dellinger: --That is correct.
Justice Souter: Okay.
Mr. Dellinger: It... it only affects the fact that it doesn't... no longer singularly stands for anything, that if Rolls-Royce were on 100 different products, it would no longer... it would no longer mean anything, and would no longer... they might as well call their car a Yugo if it's used on products hither and yon.
Tarnishment is a particular good example of why the lessening itself needs to be remedied, because once you've tarnished a product, it's hard to unring that bell in the public's mind, if someone had a national program.
Justice Souter: Of course, if you're dealing with Rolls-Royce, I suppose virtually any blurring is also going to be tarnishment, which you don't necessarily have even in other famous marks.
Mr. Dellinger: Tarnishment has generally been restricted so far in the case law to more unsavory associations, sex, drugs, and matters of that kind.
This is an act which is more limited than its critics suggest.
They... of course, whether it was a bad policy was a matter that should have been addressed to Congress, but it can be limited to a few very famous marks.
A safe harbor is read broadly.
People can use the term, Victoria's Secret, for any purpose they want in parody and commentary, on the steps of the courthouse.
They just can't make this one use of it, that is a commercial use in commerce that lessens the capacity of that mark to carry out its function that Congress so clearly had in mind when it passed the Federal Trademark Dilution Act.
That's why I think the courts below saw this, like Buick Aspirin and Kodak Shoes, as a core paradigm example of precisely what the statute was designed to prohibit, and why none of the--
Justice Kennedy: So, Mr. Dellinger--
Mr. Dellinger: --None of the most interesting questions arise.
Justice Kennedy: --is proof, then, submission?
If you've got a very famous, distinctive mark, and you've got a... a very similar use.
You have those two things, and then you get a few colonels to say yes, when they think of the junior mark they think of the senior, is that enough proof?
Mr. Dellinger: It is in this case, Justice Ginsburg, where the sufficiency of that I think was really not challenged.
Rebuttal of James R. Higgins, Jr.
Chief Justice Rehnquist: Thank you, Mr. Dellinger.
Mr. Higgins, you have 2 minutes remaining.
Mr. Higgins: Mr. Justice, and may it please the Court:
There's no evidence in this case that Colonel Baker was ever in petitioner's store, and his particular affidavit was challenged and disregarded by the trial court.
What we have here is a choice between two standards to interpret the FTDA.
Our choice is grounded in the actual use, words that Congress used, and the respondent's position is grounded in the academic theory of dilution which we say is way ahead of the law.
Our standard is objective and predictable.
Theirs is subjective, unpredictable, invites the courts to substitute its own judgment for consumer perceptions.
It's consistent with almost nothing.
Our standard focuses on measurable consumer perception.
Theirs focuses at the beginning on semantic similarity, and a presumption that dilution follows from that.
Our standard merely puts the famous mark owner to their proof to show that Congress' words, the lessening of the capacity, has been established as a matter of proof.
They should not get a national injunction without that.
Our standard keeps trademark law in its proper bounds.
Their standard merely rewards the achievement of fame.
Our standard, if applied in this case, should result in this Court reversing the injunction and directing that the petitioners be allowed to use Victor's given name in their business.
Chief Justice Rehnquist: Thank you, Mr. Higgins.
The case is submitted.
Argument of Justice Stevens
Mr. Higgins: The second case I have to announce is Moseley against Victoria's Secret Catalogue, No. 01-1015.
In 1995, Congress amended Cection 43 of the Trademark Act of 1946 to provide a remedy for the dilution of famous marks.
That amendment known as the Federal Trademark Dilution Act describes the factors that determine whether a mark is distinctive and famous and defines the term "dilution" as the lessening of the capacity of a famous mark to identify and distinguish goods or services.
The question we granted certiorari to decide is whether objective proof of actual injury to the economic value of a famous mark as opposed to a presumption of harm arising from a subjective likelihood of dilution standard is a requisite for relief under the statute.
Petitioners, Victor and Cathy Moseley own an operate a retail store named Victor's Little Secret in a strip mall in Elizabethtown, Kentucky.
They sell a variety of products including women's lingerie and adult novelties.
Respondents are affiliated corporations that own the Victoria's Secret trademark and operate over 750 Victoria's Secret stores, two of which are in Louisville, Kentucky, a short drive from Elizabethtown.
In 1998, they spent over $55 million advertising lingerie bearing the Victoria's Secret trademark.
They brought this action alleging the petitioner's use of the name Victor's Little Secret in a store-handling tawdry merchandise was likely to blur and erode the distinctiveness and tarnish the reputation of the Victoria's Secret trademark.
The District Court found that there was no likelihood of confusion between the marks but held that the two marks were sufficiently similar to cause dilution and enjoined petitioner from using the name Victor's Little Secret.
The Court of Appeals affirmed, expressly disagreeing with a case decided by the Fourth Circuit involving Barnum & Bailey's claim that the use by the state of Utah of the phrase, the "greatest snow on earth" on its license plates diluted the value of the phrase "the greatest show on earth."
The Fourth Circuit had held that the statute requires proof that the junior mark not only gave rise to a mental association with the senior mark but also cause some actual harm to the famous mark's economic value.
We granted certiorari to resolve the conflict.
Our examination of the text of the statute convinces us that it does require proof of actual dilution rather than just a likelihood of dilution.
In the language of the Act, there must be evidence of a "lessening of the capacity of the mark to identify and distinguish goods or services."
That does not mean that the plaintiff must prove an actual loss of profits or sales, but as the facts of the Utah case demonstrate, the mere fact that consumers mentally associate one mark with another does not necesarrily prove that there has been any reduction in the capacity of a famous mark to identify the goods of its owner.
There being no evidence in the record of this case of actual harm to Victoria's Secret mark.
The judgment of the Court of Appeals is reversed and the case is remanded for further proceedings.
Justice Kennedy has filed a concurring opinion.