Author(s): Robert D. Goldstein, Timothy J. Jordan

COMMFAX is a newsletter devoted to commercial law issues and published by Garan Lucow Miller, P.C.
Garan Lucow Miller, P.C.’s Commercial Law Department has broad experience in defending a variety of com- mercial law-related claims including those involving real estate, the Uniform Commercial Code, intellectual property (copyright and trademarks), and corporate related matters.

This issue of CommFax examines a recent case addressing trademark dilution claims. By way of background, Garan Lucow Miller’s intel- lectual property practice group handles trademark infringement, trade dress infringement, copy- right infringement and unfair competition cases.

TRADEMARK DILUTION CLAIMS UNDER THE FEDERAL LANHAM ACT

In the recent decision of General Motors Corp. v Autovation Technologies, Inc., 2004 WL 914 646 (United States District Court for the Eastern District of Michigan), GM sued an automobile foot pedal seller for, among other things, trademark infringement and dilution. General Motors sought to enjoin the defendant from advertising and selling foot pedals bearing counterfeits of GM trademarks. GM alleged Federal trademark counterfeiting and infringement and Federal trademark dilution and false designation of origin under the United States Trademark Act of 1946 as amended, (otherwise known as the Lanham Act) 15 USC §§ 1114(1), 1125(c) and 1125(a) as well as trademark infringement under Michigan common law. (A trademark does not have to be registered Federally or with the State of Michigan to receive protection; but such registration will allow certain Federal rights to automatically attach and provides conclusive evidence of the registrant’s’ right to use the mark on the type of goods in question subject to certain defenses under the Federal statutes.) The District Court found that the defendant was in the business of marketing and selling parts, products and services for GM vehicles on the internet and through other means such as catalogs, telephone and mail order.

In marketing their parts, common products and services, defendant was found to have violated GM’s trademark’s rights by advertising and selling products that were loaded with counterfeits of the GM trademarks.

The District Court found that GM was entitled to judgment in its favor under both the trade- mark infringement claim and trademark dilution claim.

In analyzing the trademark counterfeiting and infringement claim, the Court stated that GM’s case turned on “its ability to show that defendant’s use of counterfeits of the GM trademark on its pedals is likely to cause confusion as to source, sponsorship, affiliation, or endorsement. Under GM’s claim for federal counterfeiting and trademark infringement, likelihood of confusion is the central element.” The Court found that GM established a likelihood of confusion on the claims. First, the Court held that likelihood of confusion was presumed where an identical trademark is intentionally copied by the infringer on competing goods. Second, application of the traditional factors for determining likelihood of confusion to the undisputed facts lead the court to the only possible conclusion – the confusion was inevitable.

As the District Court noted under the applicable test, a likelihood of confusion is presumed when a defendant intentionally copies a trademark design “with the intention to derive a benefit from the reputation of another.”
Where the likelihood of confusion is not presumed, the following factors are considered:

  1. Strength of the senior mark;
  2. Relatedness of the goods or services;
  3. Similarity of the marks;
  4. Evidence of actual confusion;
  5. Marketing channels used;
  6. Likely degree of purchaser care;
  7. The intent of defendant in selecting the marks; and,
  8. Likelihood of expansion of the product lines.

Under this test, the Court also found the result was the same. The Court found that even though it was unnecessary to apply the eight factors, given the presumption in light of intentional copying by the defendant, the Court nonetheless concluded that under the eight factors, there was a likelihood of confusion.
Turning to GM’s claim regarding trademark dilution, the Court examined the Federal Trademark Dilution Act (FTDA) which defines the term “dilution” to mean “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 disception.” 15 USC § 1127. The Court then analyzed the factors for plaintiff to succeed under a federal claim of dilution:

“(1) the senior mark must be famous; (2) it must be distinctive; (3) the junior use must be a commercial use in commerce; (4) it must begin after the senior mark has become famous; and (5) it must cause dilution of the distinctive quality of the senior mark.”

The District Court found that GM had met all five of the factors to establish trademark dilution. The Court approved the following analysis regarding the goal of dilution law:

“The purpose of the [dilution] law is ‘to protect famous trade- marks from subsequent uses that blur the distinctiveness of the mark or tarnish or disparage it, even in the absence of a likelihood of confusion.’ Genovese Drug Stores, Inc. v TGC Stores, Inc., 939 F.Supp. 340, 39 (D.N.J. 1996) (quoting Ringling Bros. Barmum & Bailey Combined Shows, Inc. v B.E. Windows Corp., 937 F.Supp. 2024, 208 (S.D.N.Y. 1996), reh’g denied, 1996 WL 438174 (S.D.N.Y. 1996)). As Professor McCarthy has concluded in describing the theory of dilution:

The theory of dilution by blurring is that if one small user can blur the sharp focus of the famous mark to uniquely signify one source, then another and another small user can and will do so. Like being stung by a hundred bees, significant injury is caused by the cumulative effect, not by just one.
. . .This is consistent with the classic view that the injury caused by dilution is the gradual diminution or whittling away of the value of the famous mark by blurring uses by others. It is also consis- tent with the rule in the likelihood of confusion cases that even a small infringer will not be permitted to ‘nibble away’ at the plaintiff’s reputation and goodwill.
4 McCarthy § 24-94.”

If you have any questions regarding the case or any questions regarding intellectual property issues, contact either Robert D. Goldstein, Garan Lucow Miller, P.C. – Grand Blanc office, 810-695-3700; or Timothy J. Jordan, Garan Lucow Miller, P.C. – Detroit Office, 313-446-1530.