Saturday, May 31, 2008

Secret sharer: Moseley and V's Secret are still at it

V Secret Catalogue, Inc. v. Moseley, 2008 WL 2152189 (W.D. Ky.)

It’s baaaaack! And it has a surprise twist. The Supreme Court reversed the Sixth Circuit and remanded on April 3, 2003. Six days later, the Moseleys filed a motion to vacate the injunction. Sixteen days after that, V Secret replied.

On July 26, 2007, the Sixth Circuit remanded the case to the district court for proceedings “consistent with” Moseley. In the interim, of course, came the TDRA and its new likelihood of dilution standard. Because the case was pending when the TDRA was enacted, and because V Secret didn’t seek damages, the district court correctly determined that the TDRA (and not, in fact, Moseley) applied, as is plain from the statute itself. In other words: the dilatoriness of the court of appeals in carrying out its ministerial task negated the Supreme Court’s ruling as to the Moseleys. And then, when the court of appeals did manage to issue its one-line order, it was blatantly wrong.

Because Moseley no longer governed, the court looked at the Sixth Circuit’s original holding that consumers would “link” a store called “Victor’s Little Secret” to Victoria’s Secret and would likely “automatically” think of the latter after seeing the former. This, the court of appeals had held, was a “classic” tarnishing use. But then again, that was FTDA analysis; the district court determined to start over with the TDRA.

There was no dispute over the fame of Victoria’s Secret. As you may recall, under the TDRA’s blurring factors, the court is invited to consider (1) mark similarity; (2) the distinctiveness of the famous mark; (3) substantially exclusive use of the famous mark; (4) the degree of recognition of the famous mark; (5) intentional association with the famous mark; and (6) actual association.

On similarity, the marks must be “identical” or “nearly identical” or “substantially similar” for dilution to apply at all. The original name, Victor’s Secret, was nearly identical, and the addition of “Little” in small type was not much of a change. Substantial similarity was present.

On distinctiveness, the court adopted the analysis of the court of appeals, which looked to the Abercrombie spectrum to analyze distinctiveness apart from fame (secondary meaning). Victoria’s Secret is arbitrary and thus highly distinctive. The company is engaged in substantially exclusive use of the mark. There is also a high degree of consumer recognition, as shown by the brand’s marketplace success.

The court had previously held that the Moseleys’ innocent explanation for choosing the name—that they were referring to Victor Moseley’s decision to keep his plans to open a store secret from his previous employer—was not credible, and that they intended to create an association in consumers’ minds. The court relied on “the notable similarity between the two marks alone” to discredit this explanation, but also pointed out that Moseley testified that he was unemployed before he opened the store.
The similarities in font (I'm not sure I see those) and the fact that both stores sell lingerie “is too remarkable a coincidence” to accept the claim that the Moseleys didn’t know about Victoria’s Secret.

What, then, of actual association? An army colonel complained to Victoria’s Secret about Victor’s Secret, which was evidence of one person’s actual association. As Moseley said, association is not necessarily blurring, but in assessing likely dilution rather than actual dilution it is still probative. (When does association make dilution more likely, and when doesn’t it matter? Sadly and predictably, courts use the “likelihood” standard to ignore questions about what the heck dilution actually would be, if it existed.)

Given that the only evidence of association came from one offended army colonel (why do discussions of Moseley always talk about his profession? Is it because he’s a man? If the person who complained had been a woman, do you think she’d be a “consumer”?), the court concluded that the association between the marks had not been shown to be likely to impair the distinctiveness of Victoria’s Secret. Though the colonel “readily associated” the two marks, he didn’t “link” Victor’s Secret to the Victoria’s Secret brand. There was “no question in his mind” that Victoria’s Secret was not Victor’s Secret. His outrage was evidence of tarnishment, but not blurring.

Thus, though the factors mostly favored blurring, the evidence of actual reception showed no blurring of the mark’s distinctiveness. Victoria’s Secret chose not to submit any other evidence of actual blurring (and, as a large corporation, could readily have done so if such evidence existed). Victoria’s Secret argued that the court of appeals found dilution by blurring when it concluded that consumers would “automatically” link the two. But the district court concluded that the old court of appeals opinion lacked any factual analysis, and was inconsistent with the Supreme Court’s holding that association could be distinguished from blurring, because association doesn’t necessarily reduce the capacity of a famous mark to identify the trademark owner.

But it wasn’t over: The court also considered tarnishment, which is defined as “association arising from the similarity between a mark or trade name and a famous mark that harms the reputation of the famous mark.” Tarnishment generally occurs when the plaintiff’s trademark is linked to shoddy products or is portrayed in an unwholesome or unsavory context. And here, Victoria’s Secret finally won. The brand “scrupulously avoids” sexually explicit goods, limiting itself to a “sexy and playful” image, and Victor’s Little Secret sold “unwholesome, tawdry merchandise.” (This has to be the one instance in which someone looked at Victoria’s Secret and thought “Hey, that’s a wholesome mark!”)

Bonus link: What is Victoria's Secret parody (images of bulimia).

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