by Diane Hong
Advertisement plays an integral role in the success of any business. Large corporations allocate significant budgets annually to promote their products and services to customers. The rationale behind this investment is that even a minor impression can lead to an actual purchase. Therefore, the key to effective advertising lies in implanting brand awareness in potential customers.
What would be an easy, reliable, yet effective method of advertising? There are several options, but comparing products and services with others, especially those of well-known brands, proves convenient. If I sell a similar product or offer a similar service, drawing a comparison to renowned companies allows customers to easily understand what I am selling.
Nevertheless, is it legally permissible to compare ourselves with these industry giants without their permission? In this article, we will delve into the definition and types of Trademark Dilution and explore the exceptions.
Trademark Dilution
A trademark is a legal protection that grants exclusive rights to its owner for a specific mark. Given this characteristic, trademark-related concerns primarily revolve around the “likelihood of confusion.” A trademark gives its owner the exclusive right to use that mark, eliminating any possibility of confusing customers. Trademarks ensure owners can safeguard their mark’s exclusivity and keep its reputation intact.
When someone utilizes an established mark without proper authority or approval, it can cause harm to the true owner of the mark. Such unauthorized use can lead to customer confusion, resulting in a customer accidentally purchasing alternative products or services. In more severe cases, it can generate a negative perception of the products or services. In legal terminology, this situation is called trademark dilution.
Trademark dilution can cause two types of harm: (1) blurring and (2) tarnishment. Both forms exist in the Federal Trademark Dilution Act, specifically under 15 U.S.C. § 1125(c), which allows for legal action, regardless of one’s location, within the United States.
Blurring
Blurring occurs when the distinctiveness of a famous mark becomes impaired. For instance, let’s consider the scenario where Jane has established a successful business selling her hot sauce. If John uses the same bottle design as Jane to sell his sauce, customers may associate the sauce bottle less strongly with Jane. The presence of the same design for John’s sauce weakens the exclusive connection between the bottle and Jane’s brand. Consequently, Jane’s mark loses its distinctiveness.
Tarnishment
Tarnishment, on the other hand, occurs when the reputation of a famous mark is impaired. Building upon the previous example, let’s assume that John sells an inferior-quality sauce in an identical bottle design to Jane’s. Customers who purchase John’s sauce may notice its subpar quality and associate it with Jane’s sauce due to its shared design. Consequently, Jane’s company’s reputation suffers as a result.
To protect individuals like Jane, Congress enacted the Federal Trademark Dilution Act. However, given the sheer number of trademarks registered annually in the United States, protecting every mark is challenging. To address this issue, Congress introduced a limitation to trademark dilution known as the “fame requirement.” The “fame requirement” ensures the protection of marks that are recognizable by the general public across the United States. Trademark dilution laws do not protect marks failing to meet this standard.
Exceptions to Trademark Dilution
Even if someone uses a famous mark without authorization or approval, they may not be liable for its use in certain exceptional situations. Recognized defenses to Trademark Dilution include comparative advertisement, fair use, and parody. Let’s explore each defense with illustrative examples.
Comparative Advertisement
One can utilize a famous mark to compare their products or services without causing any misrepresentation or likelihood of confusion. An example would be advertising a fragrance as a close match to a specific well-known fragrance.
Fair Use
It may be permissible for someone to use a famous mark in a descriptive or nominative manner to indicate the source of their products or services. For instance, a local mechanic offering services for Hyundai vehicles can use the Hyundai mark to advertise their services. Similarly, a second-hand shop specializing in Swarovski products can advertise using the Swarovski mark.
Parody
Using a famous mark may be allowed if the use is a successful parody. A successful parody occurs when the use of the famous mark does not impair its distinctiveness, cause confusion for customers, or fail to incorporate elements of satire. For example, if someone opens a pet toy store and sells products labeled as the “Chewy Vuitton” series, they might be permitted to sell and advertise these “Chewy Vuitton” items. Customers would have little difficulty distinguishing between “Chewy Vuitton” and “Louis Vuitton.” Plus, everyone can enjoy the pleasing satirical element involved.
Conclusion
If you intend to advertise your Bluetooth earbuds by comparing them to Apple’s AirPods, be aware that this could potentially lead to Trademark Dilution lawsuits. However, there are three exceptional circumstances when you may use Apple’s marks: comparative advertisement, fair use, or parody.
This post has been reproduced and updated with the author’s permission. It was originally authored on January 31, 2023 and can be found here.
Diane Hong, at the time of this post, is a 3L at Penn State Dickinson Law. She is from Seoul, South Korea where she received a Bachelor’s degree in Law. She is interested in practicing business law and cyber security & data privacy law. During her free time, she likes to play tennis and listen to classical music.
Sources:
Intellectual Property Law: Cases & Materials, Lydia Pallas Loren and Joseph Scott Miller, 2021
Trademark Dilution (Intended for a Non-Legal Audience)
15 U.S.C. § 1125