Moseley V. V Secret Catalogue, Inc.: Redefining the Scope of the Federal Trademark Dilution Act

Article excerpt

The doctrine of trademark dilution traces its origin to a thesis by Frank I. Schechter,1 who suggested that the contemporary trademark law would not provide sufficient protection to trademarks in the future.2 He proposed to abandon the old model of legal trademark safeguards and recognized that "the preservation of the uniqueness of a trademark . . . constitute[s] the only rational basis for its protection."3 This protection came in the form of preventing "dilution" of the mark, which Schechter defined as depreciation of the "uniqueness" of the senior mark resulting from junior use of a substantially similar mark.4 Schechter's proposals drastically departed from the traditional legal doctrine protecting trademarks.5 Although trademark dilution protection was never adopted exactly as Schechter envisioned it, Massachusetts passed the first antidilution statute in 1947.6 By the time the Federal Trademark Dilution Act (FTDA)7 was passed in 1995, twenty-five states had their own antidilution statutes.8 For the first time, the FTDA allowed a mark owner to bring a dilution action in federal court.9 In addition, the FTDA promised to provide much needed uniformity to the diverse landscape of antidilution jurisprudence that developed since its first codification.10 Unfortunately, the FTDA has sown confusion and doubt among the courts of appeals, which has resulted in many varying interpretations and applications of the statute.11 Controversy has focused upon whether or not the plaintiff needs to show actual harm in order to demonstrate dilution of its mark.12 In 1999, Congress tried to alleviate the problem by passing the Trademark Amendments Act (TAA).13 Although the legislation attempted to silence the confused voices of the judiciary,14 the statute failed to resolve whether a showing of actual harm was necessary to state a claim.

Recently, the United States Supreme Court confronted the issue of actual harm in Moseley v. V Secret Catalogue, Inc.,15 on appeal from the Court of Appeals for the Sixth Circuit. Prior to Moseley, the circuits were split. The Court of Appeals for the Fourth Circuit, in Ringling Brothers-Barnum & Bailey Combined Shows, Inc. v. Utah Division of Travel Development,16 held that a plaintiff needed to demonstrate "actual economic harm to the famous mark's economic value;"17 however, the Court of Appeals for the Second Circuit disagreed and held in Nabisco, Inc. v. PF Brands, Inc.18 that actual harm was not a requirement.19 The Sixth Circuit, in V Secret Catalogue, Inc. v. Moseley,20 followed the Second Circuit and its decision in Nabisco.21 The Sixth Circuit held that the plaintiff did not need to show actual harm and decided the case in favor of V Secret by applying a more lax standard.22 In Moseley v. V Secret Catalogue, Inc.,23 the Supreme Court reversed the decision of the Sixth Circuit and held that the FTDA required actual harm.24 The importance and historical significance of Moseley lie in the fact that the case finally resolved the doctrine of the federal antidilution legislation after almost five years of diverging views among the circuits.

In 1998, the defendant in Moseley opened a store called "Victor's Secret" in Elizabeth Town, Kentucky, and began selling a variety of goods, such as lingerie, adult videos, and novelties.25 One of the plaintiffs, however, V Secret Catalogue, Inc. owned the "Victoria's Secret" mark, which was registered in 1981.26 V Secret Catalogue, Inc. licensed this mark to its subsidiaries who sold women's lingerie, clothing, and other accessories under that mark27 through a variety of trade channels and spent over fifty-five million dollars on marketing every year.28 The plaintiffs also operated over 750 stores, distributed over 400 million copies of its catalogue each year, and sold its products over the Internet.29 In the local area surrounding the defendant's store, the plaintiffs distributed 39,000 copies of its catalogue yearly and owned and operated two stores. …