Opinion ID: 786737
Heading Depth: 3
Heading Rank: 3

Heading: The Dilution Claim

Text: 43 AutoZone also contests the district court's grant of summary judgment on its dilution claim. AutoZone principally argues that the district court erred as a matter of law because it employed the wrong test in assessing AutoZone's dilution claim. While we decline to rule definitively on the propriety of the test used by the district court, we affirm the district court's grant of summary judgment as proper because AutoZone failed to present any evidence of actual dilution.
44 The law governing dilution is independent from the law attendant to claims of trademark infringement. Kellogg Co. v. Exxon Corp., 209 F.3d at 576. Dilution law, unlike traditional trademark infringement law ... is not based on a likelihood of confusion standard, but only exists to protect the quasi-property rights a holder has in maintaining the integrity and distinctiveness of his mark. Kellogg Co. v. Toucan Golf, Inc., 337 F.3d at 628. Courts recognize two principal forms of dilution: tarnishing and blurring.... Dilution by blurring, the injury at issue here, occurs when consumers see the plaintiff's mark used on a plethora of different goods and services ... raising the possibility that the mark will lose its ability to serve as a unique identifier of the plaintiff's product. Eli Lilly & Co. v. Natural Answers, Inc., 233 F.3d 456, 466 (7th Cir.2000) (quotations and citation omitted) (second alteration in original). 45 The Federal Trademark Dilution Act of 1995 (FTDA), Pub.L. No. 104-98, 109 Stat. 985 (1995), seeks to prevent both of these forms of dilution by protecting the trademark owner from the erosion of the distinctiveness and prestige of a trademark caused by ... a proliferation of borrowings, that while not degrading the original seller's mark, are so numerous as to deprive the mark of its distinctiveness and hence impact. Id. (quotations omitted) (alteration in original). Section 43(c) of the amended Lanham Act provides, 46 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, and to obtain such other relief as is provided in this subsection. 47 15 U.S.C. § 1125(c)(1). Dilution is defined by the FTDA as 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. The Tennessee state dilution statute is similar to the federal dilution statute. It reads, 48 The owner of a mark which is famous in this state 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 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, and to obtain such other relief as is provided in this section. 49 Tenn.Code Ann. 47-25-513(a). There are no Tennessee cases that analyze this statute, and in the past we have interchangeably analyzed the Tennessee and federal antidilution statutes. Kellogg Co. v. Exxon Corp., 209 F.3d at 577.
50 We have repeatedly employed a five-part dilution test. To succeed in a federal dilution claim: 51 [T]he senior mark must be (1) famous; and (2) distinctive. Use of the junior mark must (3) be in commerce; (4) have begun subsequent to the senior mark becoming famous; and (5) cause dilution of the distinctive quality of the senior mark. 52 Kellogg Co. v. Toucan Golf, Inc., 337 F.3d at 616; see also Kellogg Co. v. Exxon Corp., 209 F.3d at 577; Nabisco, Inc. v. PF Brands, Inc., 191 F.3d 208, 215 (2d Cir.1999) (creating the test adopted by the Sixth Circuit); 4 McCarthy § 24:89, at 24-146 (outlining a similar test for a prima facie case of trademark dilution). Neither party disputes the application of the first, third, and fourth factors: AUTOZONE is famous, Radio Shack uses the junior mark POWERZONE in commerce, and Radio Shack commenced its use of POWERZONE after AUTOZONE attained widespread recognition. 53
54 In the court below, Radio Shack disputed the distinctiveness of the AUTOZONE mark, but the district court held that the mark was distinctive. AutoZone, 174 F.Supp.2d at 736. Radio Shack has not appealed this ruling, and an evaluation of the eight statutory factors of distinctiveness, see 15 U.S.C. § 1125(c)(1)(A)-(H), demonstrates that the district court reached the correct conclusion. The extent of AutoZone's use of the mark, the pervasive and geographically widespread advertising of the mark, the high recognition of the mark, and AutoZone's registration of its mark, which entitles AutoZone to a presumption of distinctiveness, all highlight the distinctive nature of the AUTOZONE mark. However, a finding that the mark was distinctive does not address the degree of distinctiveness, which is part of the test for determining whether the use of a junior mark causes dilution. 55
56 The central dilution issue in this appeal is how to analyze the fifth and final factor, which measures whether the junior mark caused actual dilution of the distinctive quality of the senior mark. The district court, acting properly at the time, relied on our opinion in V Secret Catalogue, Inc. v. Moseley, 259 F.3d 464 (6th Cir.2001) ( V Secret ), rev'd, 537 U.S. 418, 123 S.Ct. 1115, 155 L.Ed.2d 1 (2003). In V Secret, we applied a ten-factor, nonexclusive test to determine whether dilution had occurred. Id. at 476; see Nabisco, Inc. v. PF Brands, Inc., 191 F.3d at 217-22. The ten factors are: 57 distinctiveness; similarity of the marks; proximity of the products and the likelihood of bridging the gap; interrelationship among the distinctiveness of the senior mark, the similarity of the junior mark, and the proximity of the products; shared consumers and geographic limitations; sophistication of consumers; actual confusion; adjectival or referential quality of the junior use; harm to the junior user and delay by the senior user; and the effect of [the] senior's prior laxity in protecting the mark. 58 V Secret, 259 F.3d at 476 (quotations omitted) (alteration in original); see also PACCAR, Inc. v. TeleScan Techs., L.L.C., 319 F.3d 243, 257-58 (6th Cir.2003) (referencing the ten-factor test, but declining to employ it because the issuance of an injunction was proper for other reasons). The district court proceeded through the analysis and held that [a]fter concluding that the AUTOZONE and POWERZONE marks are not sufficiently similar given the heightened similarity requirement in the dilution context, the other factors weighing in favor of dilution are inadequate to preclude summary judgment on AutoZone's dilution claim. AutoZone, 174 F.Supp.2d at 739. 59 On appeal, AutoZone asks us to reject the district court's holding and its application of the Nabisco test. AutoZone criticizes the Nabisco test for erroneously duplicating several factors of the likelihood-of-confusion test and for incorrectly shifting the burden of proving several affirmative defenses onto the plaintiff. In assessing AutoZone's arguments, we must initially determine whether V Secret incorporated the Nabisco test into the law of this circuit such that we are bound by the decision of a prior panel. It is only if V Secret adopted the Nabisco test that we must assess what effect the Supreme Court's reversal of V Secret has upon our application of the ten Nabisco factors.
60 AutoZone contends that we never expressly adopted the Nabisco test, instead preferring to leave the issue open for further explication on a `case-by-case' basis. AutoZone Br. at 12. AutoZone is partially correct. This court stated in V Secret: 61 We find that these factors effectively span the breadth of considerations a court must weigh in assessing a claim under the FTDA, from the inherent qualities of the marks themselves, to the behavior of the corporate entities in introducing a mark into commerce, to the highly practical and subjective considerations of the effect of the marks on the actual consumers who will consider them, and find them persuasive to our analysis. 62 V Secret, 259 F.3d at 476. We agreed with the Second Circuit's statement that the ten-factor list was nonexclusive and was intended to develop gradually over time and with the particular facts of each case. Id. (quotation omitted). V Secret was decided on the basis of only two Nabisco factors (distinctiveness and similarity). The other factors were not discussed in any depth thus leaving further explication for later development gradually over time, on a case-by-case basis. Id. at 477 (quotation omitted). Therefore, AutoZone is correct that V Secret did not evaluate and apply all ten Nabisco factors. The opinion simply noted that the ten Nabisco factors represent a broad array of inquiries that can help a court assess whether dilution has occurred. 63 AutoZone is incorrect, however, when it claims that V Secret did not adopt the Nabisco test. V Secret explicitly adopted the general framework and thrust of the Nabisco inquiry, but it did so with the recognition that the test is variable and subject to both maturation and refinement. We imported the Nabisco test with the expectation that it would evolve. As the Nabisco court itself exhorted, We make no suggestion that the factors we have focused on exhaust the test of what is pertinent. New fact patterns will inevitably suggest additional pertinent factors.... [N]o court should, at least at this early stage, make or confine itself to a closed list of the factors pertinent to the analysis of rights under the new antidilution statute. Nabisco, 191 F.3d at 228.
64 The Supreme Court's reversal of V Secret calls into doubt the continued vitality of the Nabisco test. Between the district court's grant of summary judgment and the parties' oral argument before us, the Supreme Court reversed V Secret. See Moseley v. v. Secret Catalogue, Inc., 537 U.S. 418, 123 S.Ct. 1115, 155 L.Ed.2d 1 (2003) ( Moseley ). To resolve a circuit split, the Supreme Court addressed the discrete issue of whether a dilution claim required proof of actual dilution or whether proof of a likelihood of dilution would suffice. Id. at 428, 123 S.Ct. 1115; see v. Secret, 259 F.3d at 476 (adopting likelihood of dilution standard); Nabisco, 191 F.3d at 223-24 (adopting likelihood of dilution standard); Ringling Bros.-Barnum & Bailey Combined Shows, Inc. v. Utah Div. of Travel Dev., 170 F.3d 449, 464 (4th Cir.1999) (requiring proof of actual dilution). Analyzing the text of § 1125(c)(1), the Court held that the statute unambiguously requires a showing of actual dilution, rather than a likelihood of dilution. Moseley, 537 U.S. at 433, 123 S.Ct. 1115. Actual dilution does not mean that the consequences of dilution, such as an actual loss of sales or profits, must also be proved. Id. However, 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 ... [because] 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 [antidilution act]. Id. The Court recognized that proof of actual dilution may be difficult to obtain, although it noted that circumstantial evidence can be used to show actual dilution under certain circumstances, such as the obvious case when the marks are identical. Id. at 434, 123 S.Ct. 1115. The Supreme Court reversed because the evidence was not sufficient to support summary judgment given the stricter standard adopted by the Court. Id. 65 Nothing in the Supreme Court's opinion in Moseley addressed the efficacy of the ten-factor test; the Supreme Court did not criticize the Second Circuit for creating the test or the Sixth Circuit for adopting it. The Supreme Court in essence made it more difficult for dilution claims to succeed because plaintiffs face a much higher hurdle of demonstrating actual dilution, but the Court was silent as to the manner in which courts must evaluate plaintiffs' success in overcoming that hurdle. This silence could imply that a test designed to measure likelihood of dilution may not be appropriate to evaluate actual dilution, but we are left without firm guidance on the issue. 66
67 We need not resolve whether the Nabisco factors may be useful in future cases because AutoZone here has presented no evidence of actual dilution. 3 However, we note that several of the Nabisco factors are particularly unhelpful in cases such as this one. Given that the FTDA authorizes dilution claims no matter whether there exists competition between the owners of the respective marks or whether there is a strong likelihood of confusion between the marks, the factors measuring proximity of the products, Nabisco, 191 F.3d at 218-19, shared consumers and geographic limitations, id. at 220, and actual confusion, id. at 221, seem irrelevant to the dilution analysis. 4 Even Radio Shack conceded at oral argument that actual confusion is not a pertinent consideration. 68 No matter the remaining vitality of the Nabisco test, the district court properly granted summary judgment because AutoZone has not presented enough evidence of actual dilution such that there exists a genuine dispute of material fact for a jury to resolve. Coupled with AutoZone's failure to provide any evidence that the PowerZone mark blurred the distinctiveness of the AutoZone mark, the dissimilarity between the two marks by itself demonstrates why AutoZone's claim cannot succeed. The similarity test for dilution claims is more stringent than in the infringement milieu: 69 The ... test of similarity used in the traditional likelihood of confusion test cannot be the guide [for dilution], for likelihood of confusion is not the test of dilution. For blurring... to occur, the marks must at least be similar enough that a significant segment of the target group of customers sees the two marks as essentially the same. Blurring is one mark seen by customers as now identifying two sources. But two different marks identifying two different sources is not blurring and will not cause dilution. 70 4 McCarthy § 24:90:2, at 24-160. In V Secret, we considered it important that the two marks in questions are highly similar.  V Secret, 259 F.3d at 476 (emphasis added); see also id. at 476-77 (finding that Victoria's Secret and Victor's Little Secret are semantically almost identical and graphically similar as well.). In Jet, we stated, The purpose of anti-dilution laws is to provide a narrow remedy when the similarity between two marks is great enough that even a noncompeting, nonconfusing use is harmful to the senior user.... The degree of similarity required for a dilution claim must be greater than that which is required to show likelihood of confusion. 165 F.3d at 425. We held that because JET and AEROB-A-JET were not similar enough even to satisfy the likelihood of confusion test, the plaintiff's dilution claim could not succeed. 5 Despite AutoZone's contention that the level of similarity required is not higher in the dilution context, every federal court to decide the issue has ruled that a high degree of similarity, ranging from nearly identical to very similar, is required for a dilution claim to succeed. See Playboy Enters., Inc. v. Welles, 279 F.3d 796, 806 (9th Cir.2002) (stating that marks must be identical or nearly identical); Eli Lilly, 233 F.3d at 469 (holding that HERBROZAC and PROZAC were highly similar); Ringling Bros., 170 F.3d at 458 (requiring a sufficient similarity between the junior and senior marks to evoke an instinctive mental association of the two (quotation omitted) and affirming lower court's factual finding that GREATEST SHOW ON EARTH and GREATEST SNOW ON EARTH were not similar enough to sustain dilution claim); Luigino's, 170 F.3d at 832 (LEAN CUISINE and LEAN `N TASTY are not similar enough because the sight and sound of the marks are different and the common use of the word lean does not make the marks similar); Nabisco, 191 F.3d at 218 (stating that [t]he marks must be of sufficient similarity so that, in the mind of the consumer, the junior mark will conjure an association with the senior, but not requiring that marks be completely identical); I.P. Lund Trading ApS v. Kohler Co., 163 F.3d 27, 50 (1st Cir.1998) (adopting the standard that customers must view the marks as essentially the same). Following our precedent and the guidance of other circuits, we require a plaintiff to demonstrate a higher degree of similarity than is necessary in infringement claims in order to prove that actual dilution has occurred. 71 AutoZone's dilution claim must fail because the absence of a high degree of similarity between AUTOZONE and POWERZONE underscores AutoZone's failure to provide any evidence of actual dilution. Given that there is not even enough similarity between the two marks to demonstrate a likelihood of confusion, the marks are certainly not highly similar or nearly identical such that AutoZone can prove that actual dilution has occurred. The two marks look different; they are written in different fonts and colors. They utilize different designs (slanted versus nonslanted tradename) and are meant to convey different messages. They also sound different because there is little acoustic similarity between AUTO and POWER. As a comparison, AUTOZONE and a hypothetical AUDIOZONE would have a higher level of acoustic similarity. Additionally, the common word between AUTOZONE and POWERZONE is pronounced second and is consequently deemphasized. 72 Because we hold that AUTOZONE and POWERZONE are not similar enough to pass the higher threshold required to prove actual dilution, and because AutoZone has produced no other evidence of actual dilution, AutoZone cannot demonstrate that Radio Shack's use of POWERZONE caused dilution of the distinctive quality of the senior mark. Kellogg Co. v. Toucan Golf, Inc., 337 F.3d at 628. 73
74 In sum, we affirm the district court's grant of summary judgment because there are no genuine issues of material fact regarding AutoZone's dilution claim. AutoZone failed to present evidence satisfying the fifth and ultimate factor in our five-part test for dilution. AutoZone also contends that because the Supreme Court altered the standard for dilution claims we must remand the case so that the district court can reevaluate its decision in light of Moseley. AutoZone's argument falls wide of the mark. Moseley raised the bar for dilution claims. If AutoZone failed in its efforts to show dilution under the more generous likelihood of dilution standard, it will not find success under a more stringent test. See Kellogg Co. v. Toucan Golf, Inc., 337 F.3d at 628-29 (refusing to remand on account of Moseley's change in the standard because we considered plaintiff's proffered empirical evidence insufficient even to meet the lesser standard). Furthermore, because we analyze the federal and Tennessee dilution claims in the same manner, AutoZone's failure to succeed in its federal claim also extinguishes its state dilution claim.