ELIZABETHTOWN, Ky.—All it took was an Army colonel who likes classy intimate apparel to spark a trademark dilution case that, over its decade-long existence, has been to the Supreme Court and back again—but now the Sixth Circuit Court of Appeals has weighed in on the controversy once again, with a majority finding that the world-famous Victoria's Secret brand had been damaged by a local interloper, originally calling itself "Victor's Secret."
The controversy began shortly after Feb. 12, 1998, when the unnamed colonel saw an ad in an advertising giveaway publication distributed to residents at the military base at Fort Knox, Ky., which advertised the "GRAND OPENING just in time for Valentine's Day" of the strip-mall store Victor's Secret. The ad said the store offered "Intimate Lingerie for every woman," "Romantic Lighting," "Lycra Dresses," "Pagers" (?) and "Adult Novelties/Gifts." But something about the ad offended the colonel, who perceived the store's name as an attempt to use the Victoria's Secret trademark as a means to promote the sale of "unwholesome, tawdry merchandise"—so he sent a copy of the ad to Victoria's Secret headquarters, who in turn contacted store owner Victor Moseley to complain about the trademark ripoff.
In response, Moseley changed the store's name to "Victor's Little Secret" (VLS), but that didn't satisfy the Victoria's Secret (VS) people, who sued Moseley in the U.S. District Court for the Western District of Kentucky. That court found no evidence of actual confusion between the VS and VLS marks and ruled in VLS's favor on VS's infringement and unfair competition claims, but upheld VS's claim under the Federal Trademark Dilution Act (FTDA) and ordered VLS to stop using the infringing name—a ruling the Sixth Circuit affirmed. Eventually, the case wound up in the U.S. Supreme Court.
"Noting that petitioners [VLS] did not challenge Victoria Secret's claim that its mark is 'famous,' the only question it had to decide was whether petitioners' use of their mark diluted the quality of respondents' mark," Justice John Paul Stevens wrote for a unanimous court. "Reasoning from the premise that dilution 'corrodes' a trademark either by '"blurring its product identification or by damaging positive associations that have attached to it,"' the court first found the two marks to be sufficiently similar to cause dilution, and then found 'that Defendants' mark dilutes Plaintiffs' mark because of its tarnishing effect upon the Victoria's Secret mark.'"
Trouble is, VS didn't present any evidence that VLS had actually caused financial or any other type of actual harm to VS's trademark, and based on its reading of the FTDA and a variety of cases brought under it, the high court ruled that even a showing of "likelihood of harm" by VLS's use of its name was insufficient to allow VS to prevail in its dilution suit.
"Noting that consumer surveys and other means of demonstrating actual dilution are expensive and often unreliable, respondents and their amici argue that evidence of an actual 'lessening of the capacity of a famous mark to identify and distinguish goods or services' may be difficult to obtain," the high court concluded. "It may well be, however, that direct evidence of dilution such as consumer surveys will not be necessary if actual dilution can reliably be proven through circumstantial evidence—the obvious case is one where the junior and senior marks are identical. Whatever difficulties of proof may be entailed, they are not an acceptable reason for dispensing with proof of an essential element of a statutory violation. The evidence in the present record is not sufficient to support the summary judgment on the dilution count."
On that basis, the high court remanded the case.
But the Supreme Court's ruling caught the attention of Congress—it's unclear how much VS's attorneys and/or publicists and/or lobbyists had to do with catching Congress' attention—and in 2006, they changed the law to allow for the possibility that harm could arise even through the likelihood of trademark dilution.
"The Moseley standard creates an undue burden for trademark holders who contest diluting uses and should be revised," a House Judiciary Committee Report stated. "The new language in the legislation [provides] ... specifically that the standard for proving a dilution claim is 'likelihood of dilution' and that both dilution by blurring and dilution by tarnishment are actionable." [Emphasis in original; citations removed here and below]
Armed with this new legislation, VS went back to district court, even though the infringing business had been known since 2000 as "Cathy's Little Secret," to secure its trademark rights—this time, specifically to its trademark rights to the use of the word "secret."
Based on the new statute, the district court ruled entirely in VS's favor, and on appeal by VLS, the Sixth Circuit reviewed that decision (.pdf), ruling that, "The phrase 'likely to cause dilution' used in the new statute significantly changes the meaning of the law from 'causes actual harm' under the pre-existing law. The word 'likely' or 'likelihood' means 'probably'. It is important to note also that the Committee Report quoted above seeks to reduce the 'burden' of evidentiary production on the trademark holder. The burden-of- proof problem, the developing case law, and the Restatement (Third) of Trademarks in §25 (particularly subsection g) should now be interpreted, we think, to create a kind of rebuttable presumption, or at least a very strong inference, that a new mark used to sell sex-related products is likely to tarnish a famous mark if there is a clear semantic association between the two. This res ipsa loquitur-like effect is not conclusive but places on the owner of the new mark the burden of coming forward with evidence that there is no likelihood or probability of tarnishment. The evidence could be in the form of expert testimony or surveys or polls or customer testimony. In the present case, the Moseleys have had two opportunities in the District Court to offer evidence that there is no real probability of tarnishment and have not done so..."
"We do not find sufficient the defendants' arguments that they should have the right to use Victor Moseley's first name and that the effect of the association is de minimis," The Sixth Circuit majority continued. "The Moseleys do not have a right to use the word 'secret' in their mark. They use it only to make the association with the Victoria's Secret mark. We agree that the tarnishing effect of the Moseley's mark on the senior mark is somewhat speculative, but we have no evidence to overcome the strong inference created by the case law, the Restatement, and Congressional dissatisfaction with the burden of proof used in this case in the Supreme Court. The new law seems designed to protect trademarks from any unfavorable sexual associations. Thus, any new mark with a lewd or offensive-to-some sexual association raises a strong inference of tarnishment. The inference must be overcome by evidence that rebuts the probability that some consumers will find the new mark both offensive and harmful to the reputation and the favorable symbolism of the famous mark."
VLS argued, among other points, that Congress' revamping of the FTDA should not apply retroactively to VLS, but the Sixth Circuit overruled those objections as well.
So, adult retailers, beware: If you decide to name your sexually oriented business in such a way that it too closely resembles the name of a more famous similar business—even if only one word is similar—you may find yourself involved in a very long and expensive court battle that, at least in the Sixth Circuit, you're likely to lose.