The Honorable Howard Coble
2468 Rayburn House Office Building
Washington, DC 20515-3306
The Honorable Howard L. Berman
2330 Rayburn House Office Building
Washington, DC 20515-0526
Re: Oversight Hearing on The Federal Trademark Dilution Act
Mr. Chairman and Ranking Member Berman:
Thank you for this opportunity to present our views on the Federal Trademark Dilution Act (FTDA). Because amending the FTDA to impose liability for mere "likelihood of dilution" would prohibit trademark use that is protected by the First Amendment, we oppose the proposed bill.
Trademark law provides an important tool for preventing confusion or deceptive marketing, but trademark laws should not be used as a pretext to stifle criticism, parody or legitimate competition when there is no reasonable likelihood of confusion and no actual dilution caused by use of the trademark.
Background
Courts and commentators have long recognized that trademark liability implicates the First Amendment. "Because the trademark law regulates the use of words, pictures, and other symbols, it can conflict with values protected by the First Amendment. The grant to one person of the exclusive right to use a set of words or symbols in trade can collide with the free speech of others." The Restatement (Third) of Unfair Competition noted in a comment that the "use of another's trademark, not as a means of identifying the user's own goods or services, but as in incident of speech directed at the trademark owner, . . .raises serious free speech concerns."
Noting the conflict between trademark law and free speech, the Fourth Circuit Court of Appeals stated in CPC International, Inc. v. Skippy Incorporated:
- It is important that trademarks not be "transformed from rights against unfair competition to rights to control language." . . . Such a transformation would diminish our ability to discuss the products or criticize the conduct of companies that may be of widespread public concern and importance. . ."Much useful social and commercial discourse would be all but impossible if speakers were under threat of an infringement lawsuit every time they made reference to a person, company or product by using its trademark."
The fact that the communication carries a commercial component should not automatically deprive the communication of First Amendment protection. In many cases, the commercial component is what makes the communication viable. "A social satire is no less effective or communicative if sold than if given away, and the costs of printing and distributing the message. . .can generally be recouped through sales of the item in question."
Despite these concerns, Congress passed the FTDA in 1995 to provide protection from trademark dilution. "Dilution" is defined as the "lessening of the capacity of a famous mark to identify and distinguish goods or services, regardless of the presence or absence of -- (1) competition between the owner of the famous mark and other parties, or (2) likelihood of confusion, mistake or deception."
There are two commonly recognized forms of dilution: blurring and tarnishment. "Blurring involves the gradual whittling away or dispersion of the identity and hold upon public mind of the mark or name by its use upon noncompeting goods." "Tarnishment results when one party uses another's mark in a manner that tarnishes or appropriates the goodwill and reputation associated with the mark."
The FTDA provides, in part, that the owner of a famous mark is entitled to relief against another's commercial use in commerce of a mark, "if such use begins after the mark has become famous and causes dilution of the distinctive quality of the mark." [Emphasis added.] Because of the "causes dilution" language, the Fourth and Fifth Circuits have required there be actual proof of dilution. The First, Second, Sixth, and Seventh Circuits, however, adopted a "likelihood of dilution" standard, as they believed actual dilution would be impossible to prove.
The government interest in protection of trademarks arises when the use of a trademark diminishes its distinctiveness. Trademarks are valuable as identifiers of the source of goods. "To the degree this effect is hindered, the public is harmed." The use of a mark to identify the source of a product is central to dilution actions. Consider the example used in the original article in 1927 to justify dilution statutes, the example used during debates on the FTDA in 1995, and the example used during testimony before this committee on February 14, 2002: the use of the name Kodak on pianos. Where the use of a trademark leads to confusion as to the source of the product, the government may have a "substantial interest" in preventing dilution. After all, slapping the brand name "Kodak" on a piano has little expressive purpose and leads to consumer confusion.
Where, however, a trademark is used for parody, commentary, or criticism of a product or service, confusion is far less likely, and the government's interest in protecting a trademark over free speech is minimal. As noted above, empowering trademark owners to quash criticism merely because it involves the use of a trademark transforms the trademark owner into a monitor of the spoken and written English language.
The idea that trademark owners would use the FTDA to stifle criticism is far from a fanciful notion. It is occurring now, particularly in the Second Circuit, which already interprets the FTDA to require only a "likelihood of dilution." The proposed bill would amend the FTDA to conform with the First, Second, Sixth, and Seventh Circuits' interpretation and overrule the Fourth and Fifth Circuits' "actual dilution" requirement.
Instances of Using the FTDA to Stifle Criticism
To allow actions for "likelihood of dilution" would broaden dilution to permit injunctive relief against speech that is not confusing or deceptive and has not yet caused harm. Since dilution can occur either by blurring or tarnishment, this broadening would include the "likelihood of tarnishment." Thus, under the "likelihood of dilution" standard, speech critical of a company could be enjoined, even if true, because it is likely to result in tarnishment.
An example of this comes from the Second Circuit, which already follows the "likelihood of dilution" standard. In WWF v. Bozell, the World Wrestling Federation (WWF) sued individuals for defamation and dilution of the WWF mark. The defendants had embarked on a public relations campaign claiming that the WWF was in part responsible for the deaths of several children killed by teenage wrestling fans who claimed to be mimicking WWF wrestling moves. The court held that the public relations campaign qualified as "commercial use in commerce" as required by section 43(c) of the Lanham Act because defendants attempted to raise money for their cause ("commercial use") and posted their statements on the Internet ("in commerce"). The court rejected defendants' motion to dismiss. The court also rejected defendants' claims that the First Amendment required dismissal.
It is important to note that, unlike defamation claims, a dilution claim permits the court to order preliminary injunctive relief. The anti-violence/anti-WWF campaign could be enjoined pending trial in order to protect WWF from the "likelihood" that the campaign would tarnish its mark.
In another case from the Second Circuit, Scholastic Inc. v. Stouffer, the author and publisher of the hugely popular Harry Potter books sought a declaratory judgment that they had not infringed on Stouffer's copyrights or trademarks. Stouffer counterclaimed, alleging, among other things, dilution and defamation. The defamation claim was based on plaintiffs' alleged portrayal of Stouffer as a "golddigger" whose claims were "absurd," "ridiculous" and "meritless." The court dismissed the claim "to the extent it asserts a claim for defamation, but declines to dismiss this claim to the extent it asserts a claim for dilution under federal or state law."
By using trademark dilution as a claim, companies would now have an additional potent weapon to silence their critics. Unlike defamation claims, the company need not demonstrate falsity or malice - only the "likelihood of tarnishment." To the extent any critic is successful, companies may be able to establish that their trademark is "likely to be tarnished." Preliminary injunctive relief would silence the critics pending trial, even though the company has proven no actual harm to its trademark, and the court has made no final ruling that the critic's speech is unprotected..
Rather than expanding the FTDA to impose liability upon proof of a mere "likelihood of dilution," we encourage Congress to enact legislation that would clarify that the FTDA requires proof of actual dilution. Such action would preserve the careful balance between the rights of trademark holders and the First Amendment.
Sincerely,
Laura W. Murphy
Director
Marvin J. Johnson
Legislative Counsel