9th Circuit Rules "Identical or Nearly Identical" Trademark Dilution Standard Did Not Survive TDRA

On February 8, the Ninth Circuit decided Levi Strauss & Co. v. Abercrombie & Fitch Trading Co., Case No. 09-16322, in favor of Levi Strauss & Co., ruling that a district court erred when it applied the legal standard of the Federal Trademark Dilution Act ("FTDA") requiring that a junior mark be "identical or nearly identical" to the senior one in order to prevail on a claim of trademark dilution. The Ninth Circuit panel found that this standard did not survive Congress's adoption of the Trademark Dilution Revision Act ("TDRA") of 2006, and that instead, "degree of similarity" is but one of several factors that a court must consider when determining whether a junior mark is likely to impair the distinctiveness of the famous mark. The case is an important victory for established brand owners and provides wider protection for their most famous marks.

Background

Since 1873, Levi has sold jeans with a back pocket stitching design consisting of two arches that connect in the center of the pocket. Levi holds a federal trademark registration for this "Arcuate" design. In 2006, Abercrombie began using a stitching design on the back pockets of its "Ruehl" jeans consisting of two less-pronounced arches sitting lower on the pocket and connected by a "dipsy doodle" resembling the infinity sign. Levi sued Abercrombie for trademark infringement, unfair competition and dilution.

The District Court's Decision

In 2009, Judge Jeffrey S. White of the Northern District of California entered judgment in favor of Abercrombie on Levi's federal dilution claim, finding that although Levi had proved that the Arcuate mark was distinctive and widely recognized, the Arcuate and Ruehl designs were not "identical or nearly identical." Levi appealed, asserting that the district court erred in the application of this standard because nowhere in the text of 15 U.S.C. § 1125(c) is the language "identical or nearly identical," and instead, "degree of similarity" is but one of several factors that a court must balance to determine whether dilution has occurred.

Ninth Circuit Reverses, Holding That "Identical or Nearly Identical" Standard Does Not Apply Under the TDRA

The Ninth Circuit panel noted that its adoption of the "identical or nearly identical" standard was "rooted in the language of the FTDA, the legislative history and purpose of that statute, our prior interpretation of the FTDA, and the policies we believed were embodied in that statute." In response to the Supreme Court's decision in Moseley v. V Secret Catalogue Inc., 537 U.S. 418 (2003) requiring a showing of "actual" dilution, Congress replaced the FTDA with the TDRA in 2006. The TDRA provides relief for likely—as opposed to actual—dilution, and explicitly defines dilution by "blurring" (where a famous mark loses distinctiveness when a second similar mark identifies products in other marks, such as "Kodak shoes") and by "tarnishment" (the weakening of a mark through unsavory or unflattering associations).

Abercrombie pointed to three Ninth Circuit decisions that appeared to apply the "identical or nearly identical standard" even after the TDRA passed: Visa International Service Association v. JSL Corp., No. 08-15206 (9th Cir. June 28, 2010); Jada Toys Inc. v. Mattel Inc., 518 F.3d 628 (9th Cir. 2008); and Perfumebay.com Inc. v. eBay Inc., 506 F.3d 1165 (9th Cir. 2007). However, the panel found that none of these cases squarely addressed whether the "identical or nearly identical" standard had survived the TDRA and concluded that it was the first panel to do so.

The panel held that the standard did not survive the TDRA. First, it noted that 15 U.S.C. §1125(c)(1) authorizes an injunction against another person who commences use of "a" mark that is likely to cause dilution. By using "a" instead of "the," Congress indicated that any number of unspecified junior marks may be likely to dilute a senior mark. Second, dilution by blurring is defined as "the association arising from the similarity between a mark or a trade name and a famous mark that impairs the distinctiveness of the famous mark." 15 U.S.C. §1125(c)(2)(B) (emphasis added). "Identical" is not used. Finally, in the non-exhaustive list of blurring factors provided, the first factor is "degree of similarity" between the marks—not near identity or substantial similarity. Noting that its interpretation was compatible with the Second Circuit's recent decision in Starbucks Corp. v. Wolfe's Borough Coffee Inc., 588 F.3d 97 (2d Cir. 2009), the court concluded that the plain language of 15 U.S.C. § 1125(c) does not require that a plaintiff establish that the junior mark is identical, nearly identical or substantially similar to the senior mark in order to obtain injunctive relief. "Rather, a plaintiff must show, based on the factors set forth in § 1125(c)(2)(B), including the degree of similarity, that a junior mark is likely to impair the distinctiveness of the famous mark."

Concluding that it could not be certain that the district court would have reached the same result absent its application of the incorrect standard, the Ninth Circuit reversed the judgment with respect to Levi's claim under the TDRA, and remanded the case for further proceedings.

Implications of the Decision For Brand Owners

This decision should make it easier for owners of famous brands to pursue dilution claims against users of similar but non-identical marks. Historically, it has been relatively rare for the owner of a famous mark to succeed on a claim of dilution where there was not also a finding of infringement due to likelihood of confusion. If the owner of a famous brand could not prove a likelihood of confusion, the owner had no way to prevent junior users from developing brands that were merely similar—but not "nearly identical"—to its famous marks. The Ninth Circuit's decision could change that. The elimination of the "identical or nearly identical standard," and the resulting reduction of "degree of similarity" to just one of six factors that courts will consider, is likely to provide wider protection to owners for their most famous marks.

If you have questions about any of the issues raised in this alert, contact Carole F. Barrett at 415.677.6290, Deborah Davis Han at 415.677.6530, Sarah J. Givan at 415.677.6552 or your usual Howard Rice attorney.