Opinion ID: 2443
Heading Depth: 2
Heading Rank: 2

Heading: Federal Trademark Dilution

Text: Under federal law, an owner of a famous, distinctive mark is entitled to an injunction against the user of a mark that is `likely to cause dilution' of the famous mark. Starbucks Corp. v. Wolfe's Borough Coffee, Inc., 477 F.3d 765, 766 (2d Cir.2007) (per curiam) (quoting 15 U.S.C. § 1125(c)(1)). Although the requirement that the mark be famous and distinctive significantly limits the pool of marks that may receive dilution protection, see Savin Corp. v. Savin Group, 391 F.3d 439, 449 (2d Cir.2004), that the Starbucks Marks are famous within the meaning of 15 U.S.C. § 1125(c) is not disputed by the parties in this case. Rather, the focus of this appeal is on dilution itself. As specified by statute, federal dilution is actionable in two situations: (1) dilution by blurring and (2) dilution by tarnishment. 15 U.S.C. § 1125(c).
Dilution by blurring is an association arising from the similarity between a mark or trade name and a famous mark that impairs the distinctiveness of the famous mark, 15 U.S.C. § 1125(c)(2)(B), and may be found regardless of the presence or absence of actual or likely confusion, of competition, or of actual economic injury, 15 U.S.C. § 1125(c)(1); see also Deere & Co. v. MTD Products, Inc., 41 F.3d 39, 43 (2d Cir.1994); Nabisco, Inc. v. PF Brands, Inc., 191 F.3d 208, 219 (2d Cir.1999). Some classic examples of blurring include hypothetical anomalies as Dupont shoes, Buick aspirin tablets, Schlitz varnish, Kodak pianos, Bulova gowns, and so forth. See Mead Data Cent., Inc. v. Toyota Motor Sales, U.S.A., Inc., 875 F.2d 1026, 1031 (2d Cir.1989) (internal quotation marks omitted); see also id. (stating that the primary concern in blurring actions is preventing the whittling away of an established trademark's selling power through its unauthorized use by others.). Federal law specifies six non-exhaustive factors for the courts to consider in determining whether there is dilution by blurring: (i) The degree of similarity between the mark or trade name and the famous mark. (ii) The degree of inherent or acquired distinctiveness of the famous mark. (iii) The extent to which the owner of the famous mark is engaging in substantially exclusive use of the mark. (iv) The degree of recognition of the famous mark. (v) Whether the user of the mark or trade name intended to create an association with the famous mark. (vi) Any actual association between the mark or trade name and the famous mark. 15 U.S.C. § 1125(c)(2)(B)(i)-(vi); cf. ITC Ltd. v. Punchgini, Inc., 482 F.3d 135, 168 (2d Cir.2007). The District Court found that the second, third, and fourth factors favored Starbucks, and those findings are not challenged in this appeal. With respect to the first factor  the degree of similarity between the marks  the District Court did not clearly err in finding that the Charbucks Marks were minimally similar to the Starbucks Marks. Although Charbucks is similar to Starbucks in sound and spelling, it is evident from the record that the Charbucks Marks  as they are presented to consumers  are minimally similar to the Starbucks Marks. The Charbucks line of products are presented as either Mister Charbucks or Charbucks Blend in packaging that displays the Black Bear name in no subtle manner, and the packaging also makes clear that Black Bear is a Micro Roastery located in New Hampshire. See Playtex Prods., Inc., 390 F.3d at 167-68 (considering the differences in the ways [the marks] are presented in determining similarity in dilution action); cf. Star Indus., 412 F.3d at 386 (In assessing similarity [in the infringement context], courts look to the overall impression created by the logos and the context in which they are found and consider the totality of factors that could cause confusion among prospective purchasers. (internal quotation marks omitted)). Moreover, Black Bear's package design for Charbucks coffee is different in imagery, color, and format from Starbucks' logo and signage. [2] For example, either a graphic of a bear or a male person is associated with Charbucks, and those marks are not comparable to the Starbucks graphic of a siren in pose, shape, art-style, gender, or overall impression. Indeed, the Starbucks siren appears nowhere on the Charbucks package. To the extent the Charbucks Marks are presented to the public through Black Bear's website, the dissimilarity between the marks is still evident as the Charbucks brand of coffee is accompanied by Black Bear's domain name, www. blackbearcoffee.com, and other products, such as shirts and cups, displaying Black Bear's name. Furthermore, we note that it is unlikely that Charbucks will appear to consumers outside the context of its normal use, since Charbucks is not directly identifiable with the actual product, i.e., coffee beans. Cf. Nabisco v. PF Brands, Inc., 191 F.3d 208, 213, 218 (2d Cir.1999) (observing that Pepperidge Farm's famous goldfish mark may be identified outside of the packaging because the goldfish cracker itself is the famous mark). The term Charbucks appears only on the packaging and on Black Bear's website  both mediums in which the Charbucks Marks' similarity with Starbucks is demonstratively minimal  and Starbucks has not identified any other method by which the Charbucks Marks likely would be presented to the public outside the context of its normal use. Cf. id. at 218 ([M]any consumers of [the defendant's] crackers will not see the box; they will find goldfish-shaped cheddar cheese crackers served in a dish at a bar or restaurant or friend's house, looking very much like the familiar Pepperidge Farm Goldfish product.). To be sure, consumers may simply refer to Mister Charbucks or Charbucks Blend in conversation; however, it was not clearly erroneous for the District Court to find that the Mister prefix or Blend suffix lessened the similarity between the Charbucks Marks and the Starbucks Marks in the court's overall assessment of similarity. [3] Inasmuch as Starbucks argues that the District Court clearly erred in concluding that Charbucks is not a stand-alone identifier of Black Bear's products, we find Starbucks' argument to be unpersuasive. Starbucks asserts that the District Court should have ignored the term Mister or Blend before or after Charbucks in assessing the degree of similarity factor because those terms are generic and too weak to serve a brand-identifying function. This argument to ignore relevant evidence is unfounded in the law. See 15 U.S.C. § 1125(c)(2)(B); accord H.R. Report No. 109-23, at 7 (2005), reprinted in 2006 U.S.C.C.A.N. 1091, 1096 (emphasizing that a court is permitted to consider all relevant factors in determining the presence of dilution by blurring). And in any event, even if the core term Charbucks were used to identify a product as a stand-alone term, such finding would not be dispositive of the District Court's overall assessment of the degree of similarity. See Playtex Prods., Inc., 390 F.3d at 167-68. In this case, the District Court's reasons for a finding of minimal similarity between the Charbucks Marks and the Starbucks Marks were well supported by the record, as explained above. Upon its finding that the marks were not substantially similar, however, the District Court concluded that [t]his dissimilarity alone is sufficient to defeat [Starbucks'] blurring claim, and in any event, this factor at a minimum weighs strongly against [Starbucks] in the dilution analysis. We conclude that the District Court erred to the extent it required substantial similarity between the marks, and, in this connection, we note that the court may also have placed undue significance on the similarity factor in determining the likelihood of dilution in its alternative analysis. Prior to the TDRA, this Court has held that [a] plaintiff cannot prevail on a state or federal dilution claim unless the marks at issue are `very' or `substantially similar.' Playtex Prods., Inc., 390 F.3d at 167. Notably, under the pre-TDRA law, the federal statute provided a remedy for dilution of famous marks but did not define dilution, much less inform the courts of the importance of similarity in the dilution analysis. The owner of a famous mark shall be entitled, subject to the principles of equity and upon such terms as the court deems reasonable, to an injunction against another person's commercial use in commerce of a mark or trade name, if such use begins after the mark has become famous and causes dilution of the distinctive quality of the mark.... 15 U.S.C. § 1125(c) (2000). Our adoption of a substantially similar requirement for federal dilution claims, see Playtex Prods., Inc., 390 F.3d at 167, can likely be attributed to the lack of guidance under the former federal statute and the existence of a substantially similar requirement under state dilution statutes, which were better defined, see generally Federal Express Corp. v. Federal Espresso, Inc., 201 F.3d 168, 174-76 (2d Cir.2000); Mead Data, 875 F.2d at 1028-29. The post-TDRA federal dilution statute, however, provides us with a compelling reason to discard the substantially similar requirement for federal trademark dilution actions. The current federal statute defines dilution by blurring as an association arising from the similarity between a mark ... and a famous mark that impairs the distinctiveness of the famous mark, and the statute lists six non-exhaustive factors for determining the existence of an actionable claim for blurring. 15 U.S.C. § 1125(c)(2)(B). Although similarity is an integral element in the definition of blurring, we find it significant that the federal dilution statute does not use the words very or substantial in connection with the similarity factor to be considered in examining a federal dilution claim. See 15 U.S.C. § 1125(c); Bonime v. Avaya, Inc., 547 F.3d 497, 502 (2d Cir.2008) (In determining the proper interpretation of a statute, this court will look first to the plain language of a statute and interpret it by its ordinary, common meaning. (internal quotation marks omitted)). Indeed, one of the six statutory factors informing the inquiry as to whether the allegedly diluting mark impairs the distinctiveness of the famous mark is [t]he degree of similarity between the mark or trade name and the famous mark. 15 U.S.C. § 1125(c)(2)(B)(i) (emphasis added). Consideration of a degree of similarity as a factor in determining the likelihood of dilution does not lend itself to a requirement that the similarity between the subject marks must be substantial for a dilution claim to succeed. See Bonime, 547 F.3d at 502. Moreover, were we to adhere to a substantial similarity requirement for all dilution by blurring claims, the significance of the remaining five factors would be materially diminished because they would have no relevance unless the degree of similarity between the marks are initially determined to be substantial. Such requirement of substantial similarity is at odds with the federal dilution statute, which lists degree of similarity as one of several factors in determining blurring. See United States v. Kozeny, 541 F.3d 166, 171 (2d Cir.2008) (Statutory enactments should ... be read so as to give effect, if possible, to every clause and word of a statute. (internal quotation marks omitted)); compare 15 U.S.C. § 1125(c)(2)(B)(ii) (providing [t]he degree of inherent or acquired distinctiveness of the famous mark as one of the factors to be considered in determining dilution), with Perfumebay.com Inc. v. EBAY, Inc., 506 F.3d 1165, 1180, 1181 n. 9 (9th Cir. 2007) (comparing post-TDRA federal dilution law with California's dilution law and noting that the similarity requirement [in a dilution action] may be less stringent in circumstances in which the senior marks is highly distinctive and the junior mark is being used for a closely related product. (internal quotation marks omitted)). [4] Accordingly, the District Court erred to the extent it focused on the absence of substantial similarity between the Charbucks Marks and the Starbucks Marks to dispose of Starbucks' dilution claim. We note that the court's error likely affected its view of the importance of the other factors in analyzing the blurring claim, which must ultimately focus on whether an association, arising from the similarity between the subject marks, impairs the distinctiveness of the famous mark. 15 U.S.C. § 1125(c)(2)(B); cf. Perfumebay.com, Inc., 506 F.3d at 1180-81; see supra note 4. Turning to the remaining two disputed factors  (1) whether the user of the mark intended to create an association with the famous mark, and (2) whether there is evidence of any actual association between the mark and the famous mark  we conclude that the District Court also erred in considering these factors. The District Court determined that Black Bear possessed the requisite intent to associate Charbucks with Starbucks but that this factor did not weigh in favor of Starbucks because Black Bear did not act in bad faith. The determination of an intent to associate, however, does not require the additional consideration of whether bad faith corresponded with that intent. The plain language of section 1125(c) requires only the consideration of [w]hether the user of the mark or trade name intended to create an association with the famous mark. See 15 U.S.C. § 1125(c)(2)(B)(v); see also Kozeny, 541 F.3d at 171 (We have stated time and again that courts must presume that a legislature says in a statute what it means and means in a statute what it says there. (internal quotation marks omitted)). Thus, where, as here, the allegedly diluting mark was created with an intent to associate with the famous mark, this factor favors a finding of a likelihood of dilution. The District Court also determined that there was not an actual association favoring Starbucks in the dilution analysis. Starbucks, however, submitted the results of a telephone survey where 3.1% of 600 consumers responded that Starbucks was the possible source of Charbucks. The survey also showed that 30.5% of consumers responded Starbucks to the question: [w]hat is the first thing that comes to mind when you hear the name `Charbucks.' In rejecting Starbucks' claim of actual association, the District Court referred to evidence supporting the absence of actual confusion  to conclude that the evidence is insufficient to make the ... factor weigh in [Starbucks'] favor to any significant degree. (internal quotation marks and original alteration omitted). This was error, as the absence of actual or even of a likelihood of confusion does not undermine evidence of trademark dilution. See 15 U.S.C. § 1125(c)(2)(B); accord Nabisco, 191 F.3d at 221 (stating that while a showing of consumer confusion is relevant in determining dilution by blurring, the absence of confusion has no probative value in the dilution analysis). Accordingly, in light of the foregoing, we remand to the District Court for consideration of Starbucks' claim of trademark dilution by blurring under 15 U.S.C. § 1125(c)(2)(B).
Dilution by tarnishment is an association arising from the similarity between a mark or trade name and a famous mark that harms the reputation of the famous mark. 15 U.S.C. § 1125(c)(2)(C). A trademark may be tarnished when it is linked to products of shoddy quality, or is portrayed in an unwholesome or unsavory context, with the result that the public will associate the lack of quality or lack of prestige in the defendant's goods with the plaintiff's unrelated goods. Hormel Foods Corp. v. Jim Henson Productions, Inc., 73 F.3d 497, 507 (2d Cir.1996) (internal quotation marks omitted). A trademark may also be diluted by tarnishment if the mark loses its ability to serve as a wholesome identifier of plaintiff's product. Id.; accord Chemical Corp. v. Anheuser-Busch, Inc., 306 F.2d 433 (5th Cir. 1962) (finding that use of exterminator's slogan where there's life, ... there's Bugs tarnished the use of beer company's slogan where there's life, ... there's Bud.); Steinway & Sons v. Robert Demars & Friends, 210 U.S.P.Q. 954 (C.D.Cal.1981) (finding that use of STEIN-WAY CO. to sell clip-on beverage handles tarnished high-end musical instrument company's use of its name of STEINWAY & SONS); Eastman Kodak Co. v. Rakow, 739 F.Supp. 116 (W.D.N.Y.1989) (finding that comedian's stage name Kodak tarnished the mark of the Eastman Kodak Company because the comedian's act includes humor that relates to bodily functions and sex ... and... uses crude, off-color language repeatedly (internal quotation marks omitted)); Dallas Cowboys Cheerleaders, Inc. v. Pussycat Cinema, Ltd., 467 F.Supp. 366 (S.D.N.Y.) (finding that pornographic depiction of a Dallas Cowboys Cheerleaderstyle cheerleader in an adult film tarnished the professional mark of the Dallas Cowboys Cheerleaders), aff'd, 604 F.2d 200 (2d Cir.1979). Starbucks argues that the District Court erred by failing to find that `Charbucks' damages the positive reputation of Starbucks by evoking both `Starbucks' and negative impressions in consumers, including the image of bitter, over-roasted coffee. Starbucks reasons that it has shown dilution by tarnishment because, pursuant to its survey, (1) 30.5% of persons surveyed immediately associated `Charbucks' with `Starbucks'; and (2) 62% of those surveyed who associated Charbucks with Starbucks indicated that they would have a negative impression of a coffee named `Charbucks.' We are unpersuaded by Starbucks' reasoning. To the extent Starbucks relies on the survey, a mere association between Charbucks and Starbucks, coupled with a negative impression of the name Charbucks, is insufficient to establish a likelihood of dilution by tarnishment. That a consumer may associate a negative-sounding junior mark with a famous mark says little of whether the consumer views the junior mark as harming the reputation of the famous mark. The more relevant question, for purposes of tarnishment, would have been how a hypothetical coffee named either Mister Charbucks or Charbucks Blend would affect the positive impressions about the coffee sold by Starbucks. We will not assume that a purportedly negative-sounding junior mark will likely harm the reputation of the famous mark by mere association when the survey conducted by the party claiming dilution could have easily enlightened us on the matter. Indeed, it may even have been that Charbucks would strengthen the positive impressions of Starbucks because it brings to the attention of consumers that the Char is absent in Starbucks, and, therefore, of the two bucks, Starbucks is the un-charred and more appealing product. Juxtaposition may bring to light more appealing aspects of a name that otherwise would not have been brought to the attention of ordinary observers. Starbucks also argues that Charbucks is a pejorative term for Starbucks' coffee, and, therefore, the Charbucks  name has negative associations that consumers are likely to associate with Starbucks' coffee. Although the term Charbucks was once used pejoratively during the so-called coffee-wars [5] in Boston, Massachusetts, Black Bear is not propagating that negative meaning but, rather, is redefining Charbucks to promote a positive image for its brand of coffee. Black Bear sells Charbucks as its own product, and, consistent with its intent on profiting from selling Charbucks, the Charbucks line of coffee is of [v]ery high quality. It's our life. We put everything into it. In short, Black Bear is promoting Charbucks and not referring to it in a way as to harm the reputation of Starbucks' coffees. Cf. Deere & Co., 41 F.3d at 45 (stating that the likelihood of dilution by tarnishment means the possibility that consumers will come to attribute unfavorable characteristics to a mark and ultimately associate the mark with inferior goods and services). Moreover, that the Charbucks line of coffee is marketed as a product of [v]ery high quality  as Starbucks also purports its coffee to be  is inconsistent with the concept of tarnishment. See Hormel Foods Corp., 73 F.3d at 507 (citing cases finding tarnishment where challenged marks were either seamy or substantially of lesser quality than the famous mark). Certainly, the similarity between Charbucks and Starbucks in that they are both [v]ery high quality coffees may be relevant in determining dilution, see 15 U.S.C. 1125(c)(2)(B), (c)(2)(C), but such similarity in this case undercuts the claim that Charbucks harms the reputation of Starbucks. See Deere & Co. v. MTD Prods., Inc., 41 F.3d 39, 43 (2d Cir.1994) (`Tarnishment' generally arises when the plaintiff's trademark is linked to products of shoddy quality, or is portrayed in an unwholesome or unsavory context likely to evoke unflattering thoughts about the owner's product.). Accordingly, we conclude that the District Court did not err in rejecting Starbucks' claim of dilution by tarnishment.
Even if its use of Charbucks constituted dilution by either blurring or tarnishment, Black Bear appears to argue in the alternative that Charbucks is a parody and thus falls under an exception to 15 U.S.C. § 1125(c). Section 1125(c)(3), which was added in 2006 pursuant to the TDRA, specifies that the following uses of a mark shall not be actionable as dilution by blurring or dilution by tarnishment: (A) Any fair use, including a nominative or descriptive fair use, or facilitation of such fair use, of a famous mark by another person other than as a designation of source for the person's own goods or services, including use in connection with  (i) advertising or promotion that permits consumers to compare goods or services; or (ii) identifying and parodying, criticizing, or commenting upon the famous mark owner or the goods or services of the famous mark owner. (B) All forms of news reporting and news commentary. (C) Any noncommercial use of a mark. 15 U.S.C. § 1125(c)(3) (emphasis added). As evident from the statutory language, Black Bear's use of the Charbucks Marks cannot qualify under the parody exception because the Charbucks Marks are used as a designation of source for [Black Bear's] own goods[, i.e., the Charbucks line of coffee]. See 15 U.S.C. § 1125(c)(3)(A). Although Black Bear cites to several cases in support of its argument that the parody exception may still apply even if the parody were used to identify the source of the defendants' goods, those cases were decided before the TDRA and are thus inapposite to the extent they are inconsistent with the amended section 1125(c)(3). See Louis Vuitton Malletier S.A. v. Haute Diggity Dog, LLC, 507 F.3d 252, 266 (4th Cir.2007). Inasmuch as Black Bear's argument may be construed as advocating for consideration of parody in determining the likelihood of dilution by blurring  such as is recognized by the Fourth Circuit, see id. at 267  we need not adopt or reject Louis Vuitton 's parody holding. We conclude that Black Bear's use of the Charbucks Marks is not a parody of the kind which would favor Black Bear in the dilution analysis even if we were to adopt the Fourth Circuit's rule. In the Fourth Circuit's Louis Vuitton case, Louis Vuitton Malletier S.A.  the famous maker of luxury luggage, handbags, and accessories  asserted, inter alia, a trademark dilution claim against Haute Diggity Dog, LLC, a manufacturer of pet toys that named its products to parody elegant high-end brands of products such as perfume, cars, shoes, sparkling wine, and handbags. Id. at 256, 258. Among its parodies, Haute Diggity Dog, LLC's Chewy Vuiton product was alleged by Louis Vuitton Malletier S.A. as infringing and dilutive of the Louis Vuitton mark. Id. at 256. Addressing the dilution claim, the Fourth Circuit initially noted that the fair use exception for parodies as specified in 15 U.S.C. § 1125(c)(3)(A) does not extend... to parodies used as a trademark.... [P]arodying a famous mark is protected by the fair use defense only if the parody is not `a designation of source for the person's own goods or services.' Louis Vuitton, 507 F.3d at 266. The Fourth Circuit then held, however, that the defendant's use of a parody may [still] be considered in determining whether the plaintiff-owner of a famous mark has proved its claim that the defendant's use of a parody mark is likely to impair the distinctiveness of the famous mark[, i.e., whether the plaintiff has proved a likelihood of dilution by blurring under 15 U.S.C. § 1125(c)(2)(B)]. Id. at 267. In justifying its consideration of a parody element in conducting the blurring analysis under section 1125(c)(2)(B), the Fourth Circuit explained: [F]actor (v) (whether the defendant intended to create an association with the famous mark) and factor (vi) (whether there exists an actual association between the defendant's mark and the famous mark) directly invite inquiries into the defendant's intent in using the parody, the defendant's actual use of the parody, and the effect that its use has on the famous mark. While a parody intentionally creates an association with the famous mark in order to be a parody, it also intentionally communicates, if it is successful, that it is not the famous mark, but rather a satire of the famous mark. That the defendant is using its mark as a parody is therefore relevant in the consideration of these statutory factors. Similarly, factors (i), (ii), and (iv)  the degree of similarity between the two marks, the degree of distinctiveness of the famous mark, and its recognizability  are directly implicated by consideration of the fact that the defendant's mark is a successful parody. Indeed, by making the famous mark an object of the parody, a successful parody might actually enhance the famous mark's distinctiveness by making it an icon. The brunt of the joke becomes yet more famous. Id. (internal citations omitted). The Fourth Circuit then concluded that Chewy Vuiton did not dilute Louis Vuitton primarily because Chewy Vuiton convey[ed] the ... message that it was not in fact a source of [Louis Vuitton] products.... [A]s a parody, it separated itself from the [Louis Vuitton] marks in order to make fun of them. Id. at 267-68 ([B]ecause [Louis Vuitton's] mark is particularly strong and distinctive, it becomes more likely that a [successful] parody will not impair the distinctiveness of the mark.). Here, unlike in Louis Vuitton, Black Bear's use of the Charbucks Marks is, at most, a subtle satire of the Starbucks Marks. Although we recognize some humor in Charbucks as a reference to the dark roast of the Starbucks coffees, Black Bear's claim of humor fails to demonstrate such a clear parody as to qualify under the Fourth Circuit's rule. As the owner of Black Bear affirmed during his testimony, [t]he inspiration for the term Charbucks comes directly from Starbucks' tendency to roast its products more darkly than that of other major roasters. The owner of Black Bear further testified that the Charbucks line of products is the darkest roasted coffee that we do and is of [v]ery high quality. Thus, the Charbucks parody is promoted not as a satire or irreverent commentary of Starbucks but, rather, as a beacon to identify Charbucks as a coffee that competes at the same level and quality as Starbucks in producing dark-roasted coffees. See Harley Davidson, Inc. v. Grottanelli, 164 F.3d 806, 813 (2d Cir.1999) ([P]arodic use is sharply limited in circumstances where an alleged parody of a competitor's mark [is used] to sell a competing product.); cf. Louis Vuitton, 507 F.3d at 260-61 (permitting parodic use where the parody marketed its products to a significantly different class of consumers than the famous mark); id. (The [Louis Vuitton] handbag is provided for the most elegant and well-to-do celebrity, to proudly display to the public and the press, whereas the imitation `Chewy Vuiton' `handbag' is designed to mock the celebrity and be used by a dog.). Therefore, because the Charbucks Marks do not effect an increase [in] public identification [of the Starbucks Marks with Starbucks], the purported Charbucks parody plays no part in undermining a finding of dilution under the Fourth Circuit's rule. See generally Hormel Foods Corp., 73 F.3d at 506; Louis Vuitton, 507 F.3d at 260 ([A] parody relies upon a difference from the original mark, presumably a humorous difference, in order to produce its desired effect. (internal quotation marks omitted)). Accordingly, we conclude that Black Bear's incantation of parody does nothing to shield it from Starbucks' dilution claim in this case.