More from my trademark attorney friend on the Franken case:

I wanted to follow up on my last comment in my earlier post regarding “actual dilution.” First I’ll note that 15 U.S.C. § 1125 (c)(4)(C) states a cause of action for dilution is unavailable if the mark is used in “news reporting and news commentary.” It remains to be seen whether Franken’s use of “fair and balanced” falls within this section. However, if it does, the following discussion is moot.
Assuming that Franken’s use does not fall within 15 U.S.C. § 1125 (c)(4)(C), then Fox News still has a difficult task ahead of it to get an injunction through its dilution claims and statements made at this point by right-wing commentators that Fox News’ dilution case is “strong” and likely to succeed are likely far off of the mark. The cause of this “difficult task” lies in the March 2003 decision of the Supreme Court, Moseley v. V Secret Catalogue, Inc.. The lingerie company, Victoria’s Secret, claimed that the defendant’s use of the mark “Victor's Little Secret” diluted or, rather, “"blur[red] and erode[d] the distinctiveness" of their mark. In the Supreme Court’s unanimous decision, they stated that the Federal Trademark Dilution Act of 1995 ("FTDA") required a showing of “actual dilution, rather than a likelihood of dilution.” The case was reversed and remanded, giving Victoria’s Secret the opportunity to show “actual dilution.”

Quoting the FTDA, the court defined “dilution” as:

“The term ‘dilution’ means 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.” [15 U.S.C.] §1127.

Up until this point, there were two competing views on whether the aggrieved party had to show “actual dilution.” On the “actual dilution” side stood Ringling Bros.-Barnum & Bailey Combined Shows, Inc. v. Utah Division of Travel Dev., 170 F.3d 449 (4th Cir. 1999) where the court required proof of an “actual consummated harm.” On the other side stood Nabisco, Inc. v. PF Brands, Inc., 191 F.3d 208 (2d Cir. 1999) in which the court stated, “[t]o require proof of actual loss of revenue seems inappropriate.”

The decision in Mosley settled this conflict generally in favor of Ringling Bros requirement of “actual dilution,” however, the Supreme Court added,

that does not mean that the consequences of dilution, such as an actual loss of sales or profits, must also be proved. To the extent that language in the Fourth Circuit’s opinion in the Ringling Bros. case suggests otherwise, see 170 F.3d, at 460—465, we disagree. We do agree, however, with that court’s conclusion that, at least where the marks at issue are not identical, the mere fact that consumers mentally associate the junior user’s mark with a famous mark is not sufficient to establish actionable dilution. As the facts of that case demonstrate, such mental association will not necessarily reduce the capacity of the famous mark to identify the goods of its owner, the statutory requirement for dilution under the FTDA.

So while not giving unequivocal support to Ringling Bros, it was clear that the Supreme Court was making it substantially harder for plaintiff’s to succeed on a dilution claim.
Showing actual dilution is not an easy task, as the Second Circuit described in PF Brands and explained their reasoning for not requiring it:

To require proof of actual loss of revenue seems inappropriate. If the famous senior mark were being exploited with continually growing success, the senior user might never be able to show diminished revenues, no matter how obvious it was that the junior use diluted the distinctiveness of the senior. Even if diminished revenue could be shown, it would be extraordinarily speculative and difficult to prove that the loss was due to the dilution of the mark. And as to consumer surveys, they are expensive, time-consuming and not immune to manipulation. If a junior user began to market Buick aspirin or Schlitz shellac, we see no reason why the senior users could not rely on persuasive circumstantial evidence of dilution of the distinctiveness of their marks without being obligated to show lost revenue or engage in an expensive battle of surveys.

The Second Circuit went on to predict the difficulties, under an “actual dilution” standard, of obtaining a preliminary injunction:

The broader reading of the Fourth Circuit's "actual, consummated" dilution element would require not only that dilution be proved by a showing of lost revenues or surveys but also that the junior be already established in the marketplace before the senior could seek an injunction. … Notwithstanding the use of the present tense in "causes dilution," it seems plausibly within Congress's meaning to understand the statute as intending to provide for an injunction to prevent the harm before it occurs.
To read the statute as suggested by the Ringling opinion would subject the senior user to uncompensable injury. The statute could not be invoked until injury had occurred. And, because the statute provides only for an injunction and no damages (absent willfulness), see 15 U.S.C. § 1125(c)(2), such injury would never be compensated.

The difficulty with Mosley is that the Court not only established the “actual dilution” standard, but gave parties very little guidance on what would be sufficient to establish it. In his concurrence, Justice Kennedy stated:

If a mark will erode or lessen the power of the famous mark to give customers the assurance of quality and the full satisfaction they have in knowing they have purchased goods bearing the famous mark, the elements of dilution may be established. … Diminishment of the famous mark's capacity can be shown by the probable consequences flowing from use or adoption of the competing mark. …

And added, regarding the situation facing those seeking injunctive relief,“[a] holder of a famous mark threatened with diminishment of the mark's capacity to serve its purpose should not be forced to wait until the damage is done.”

So what does this all mean for the Fox News suit against Al Franken? First, it means that Fox News is going to have to demonstrate that the use of “Fair and Balanced” in the title of Franken’s book causes “actual dilution.” How they will do it is uncertain and the Supreme Court has not provided much guidance as to what will be a sufficient showing. I’ll go out on a limb and predict that Denny Chin (a very good judge and a really nice guy) of the S.D.N.Y. will be reluctant to hold that the showing has been made without clear and strong evidence of “actual dilution.” Indeed, as the Ringling Bros. court noted above, Fox News will be under a heavy financial burden to show “actual dilution” through survey evidence (it will be interesting to see how far Fox News is prepared to go; the amount spent on survey evidence will be a good barometer).

Second, it stands as evidence that Fox News’ dilution claim is not “strong” or likely to succeed at this time. In fact, the Mosley decision made it more likely that Fox News will not succeed on its dilution claim. From my perusal of right-wing sites, it appears that none of the commentators appear aware of the burdens facing Fox News in succeeding on its dilution claims and therefore, their conclusions ignoring the need for “actual dilution” are fundamentally flawed. This is not to say it is impossible, but it should be clear that Fox News is not possession of a slam-dunk case.

Of course, this discussion leaves out Fox News’ infringement claims. For that, I’ll be turning to Yankee Publishing, Inc. v. News America Publishing, Inc., 809 F. Supp. 267 (SDNY 1992), which as far as I can tell, is not available online for free. If anyone can find it, I’d appreciate a link. But that discussion will have to wait for a day or two.

posted by A_B at 12:10 AM