Trademark dilution at Santa Clara

Santa Clara School of Law Symposium, Trademark Dilution: Theoretical and Empirical Inquiries

Introductory Keynote

J. Thomas McCarthy, University of San Francisco School of Law
A Confession: How I Became Disillusioned with Trademark Dilution

McCarthy discussed various cases, including a case many years ago by McDonald’s against Arch Computers who used a single golden arch as a logo. At trial, there were reams of consumer survey evidence, but barely a word about dilution; the trial brief contained only one page about likely dilution. The trial court found no likelihood of confusion, but a violation of the state’s dilution law and enjoined the color. The judge viscerally felt that the computer company was taking a free ride on McDonald’s, and her only legal avenue for granting relief was dilution.

He rejects the early cases under the FTDA that found that prevailing on a dilution claim was easy. Similarity to a famous mark alone shouldn’t be enough to win, but early courts were content to assume that dilution’s allegedly evil effects would occur, without any evidence. People with legitimate rights caved in to TM owners’ demands. Once the Supreme Court stepped in, no one was able to prove dilution of a famous mark, and a significant question is: why hasn’t anyone been able to prove that? (Could it be that there’s no there there?)

Now we’ve started all over again, with a clean slate. The challenge is to fill in the blank spaces. Antidilution law should be a unique, sparingly used tool. Too many TM owners viewed it as a hammer, and too many courts allowed this; thus McCarthy’s disillusionment. He’s so skeptical about the ability of the courts to cabin the scope of the right that he doesn’t like it at all, even though he is willing to concede that relief should be available if the mark is coined and truly famous and defendant’s trademark use actually is likely to cause a definite harm. But it’s so damned hard to explain what that harm is; you get blank stares or, worse, nods of understanding which mask total misunderstanding.

A conference on TM dilution is like a conference on Bigfoot: there’s a lot of speculation about its existence and contours, but no one has incontrovertible evidence. There’s just some blurry footage of a form in the forest. Maybe that’s why dilution is such a hot topic. No one is ever really wrong when talking about dilution.

Q from Intel lawyer: Why should the mark have to be coined?

A: That is what Schecter was talking about; the problem is that dilution started with Schecter and TM owners thought, “hey, that’s a good idea; I want that too.”

Eric Goldman: How do we fix it, then?

A: Academics have to do a better job explaining the limits of theory and the lack of evidence behind dilution to the judiciary (and to practicing lawyers). District court judges are overworked and a TM dilution case is an irritation; the attorneys don’t explain it very well, and it’s just something different from what they understand, which is confusion. They’re our primary audience; courts of appeals have more opportunity to sit back and think. This explains the back-and-forth of the past ten years, with courts of appeals largely reining in expansive district court interpretations. The TDRA offers us a fundamental opportunity for education.

Q: The new statute adds many more exceptions. Most courts had construed the exceptions to exclude anything that isn’t commercial speech. What are your views on this new language?

A: It will cause headaches because there’s a lot of overlap in the exceptions, because the creative community was rightfully concerned and didn’t want to have to raise First Amendment defenses all the time. If anything, the new exceptions are likely to be interpreted more expansively; most district judges are offended by some arguments made by TM owners, such as “you can’t mention Barbie in a funny song.”

Q: For TM selection, how do you advise clients? It seems so risky, and it’s easier just to avoid all famous marks.

A: True, it’s a wild card in TM clearance, which de facto creates this wide swath of protection. Hopefully the courts will be more precise in defining fame and require household word status, so that you can rely on your own recognition. It won’t help on the scope of protection, though, because we don’t know how courts will interpret that.