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Hearing of House Subcommittee on Courts, the Internet, and Intellectual Property: Trademark Dilution Revision Act of 2005

Location: Washington, DC


February 17, 2005


Mr. Smith. The Subcommittee on the Courts, the Internet, and Intellectual Property will come to order.

Let me make a couple of announcements at the outset. First, I want to thank everyone for coming a little earlier than we expected. Originally, this Committee was set for 10:00, but because of the Judiciary Committee and Members being on the House floor for the class action bill, we are having to meet a little bit early. And, in fact, the class action bill's rule is expected to come up at 10:20. I don't expect it to be a problem, but just so you know, we are facing a little bit of a deadline when it comes to time. I still think we will be able to accommodate all Members and their questions and be finished by 10:20 or 10:30.

Unfortunately, Professor Lemley, who is one of our witnesses, was not able to be contacted about the time change, so don't be surprised when he walks in and is a little bit surprised at 10:00, but we still expect to hear his testimony. We don't know where he is staying and haven't been able to make contact with him.

This is our first hearing of the year and it is an important subject and I appreciate the interest of those who are in attendance in the audience as well as the Members who are here, too.

Let me say at the outset what I think watchers of this Subcommittee already know, and that is that we intend to be just as active this year as we have been the last 2 years, which is to say that every week we are in session and there is no conflict with the full Judiciary Committee, we hope to have a hearing or a markup. Two weeks from now, for example, when we are back in session, we are scheduled to mark up four bills at that point. I have handed out to Members the schedule for the month of March and we will be on course and have an active Subcommittee during that time, as well.

I am going to recognize myself for an opening statement, then the Ranking Member, and then we will proceed to hear from the witnesses.

The foundation of trademark law is that certain words, images, and logos convey meaningful information to the public, including the source, quality, and good will of a product or service. Unfortunately, there are those in both commercial and non-commercial settings who would seize upon the popularity of a trademark for their own purposes and at the expense of their rightful owner and the public.

Dilution refers to conduct that lessens the distinctiveness and value of a mark. This conduct can debase the value of a famous mark and mislead the consuming public.

The Supreme Court's decision in the Mosley case, which largely focused on the standard of harm in dilution suits, compelled our Subcommittee last spring to review the FTDA and a Committee Print to amend it. The contents of the bill before us, H.R. 683, were largely culled from that Committee Print.

For the most part, I do not believe the bill breaks new precedential ground. Rather, H.R. 683 represents a clarification of what Congress meant when it passed the dilution statute almost a decade ago.

Enactment of this bill is a necessary need because it will eliminate confusion on key dilution issues that have increased litigation and resulted in uncertainty among the regional circuits. The primary components of H.R. 683 include the following.

Subject to the principles of equity, the owner of a famous, distinctive mark is entitled to an injunction against any person who commences use in commerce as a source designation of that person's goods or services, a mark that is likely to cause dilution by blurring or tarnishment.

A mark may only be famous if it is widely recognized by the general consuming public in the United States as a source designation of the goods or services of the mark's owner. In determining whether a mark is famous, a court is permitted to consider all relevant factors, in addition to prescribed conditions set forth in the print, including the duration, extent, and geographic reach of advertising and publicity of the mark.

H.R. 683 defines dilution by blurring as association arising from the similarity between a source designation and a famous mark that impairs its distinctiveness. Again, a court is permitted to consider all relevant factors in determining the presence of blurring. Specific factors that provide guidance in this regard include the degree of similarity between the source designation and the famous mark, the degree of inherent or acquired distinctiveness of the famous mark, and the degree of recognition of the famous mark.

H.R. 683 further defines dilution by tarnishment as association between a source designation and a famous mark arising from their similarity that harms the reputation of the famous mark.

The bill enumerates specific defenses to a dilution action: Fair use and comparative commercial advertising or promotion to identify the competing goods, non-commercial use of source designation, and all forms of news reporting and news commentary.

Finally, the owner of a famous mark is only entitled to injunctive relief under H.R. 683 unless, in an action based on dilution by blurring, the defendant willfully intended to trade on the famous mark's recognition, or in an action based on dilution by tarnishment, the defendant willfully intended to trade on the famous mark's reputation. In either case, the owner may also seek damages, costs, and attorneys' fees, as well as destruction of the infringing articles under separate Lanham Act provisions.

As a practical matter, H.R. 683 represents a tweak to the Committee Print from last year, which was largely based on the existing dilution statute.

That concludes my opening statement and I will recognize the gentleman from California, Mr. Berman, for his.


Mr. Smith. I was just told by the full Committee 10:30.

In any case, Professor Lemley, I like your answers except that I always wince when I hear you cite the Ninth Circuit---- [Laughter.]

--but we will take confirmation wherever we can find it.

Professor Lemley and Ms. Gundelfinger and also Mr. Barber, thank you for your strong support of the bill at hand. I know, Mr. Barber, you have a couple of suggestions, and what I want to do is ask Professor Lemley and Ms. Gundelfinger to respond to those two suggestions. Professor Lemley has already done so to a large extent, but if you have anything else to add, Professor Lemley, feel free to do so. We will start with Ms. Gundelfinger.

You may not have seen the testimony ahead of time, Ms. Gundelfinger, so let me read to you part of what Mr. Barber said. He said he strongly supports H.R. 683 and then he mentions these two exceptions. First, a proposed restriction in section 43(c)(1) to limit relief only to situations where a person uses the diluting mark as a designation of source for the person's goods or services is unnecessary and inappropriate and should be omitted. And second, the definition and factors for determining dilution by blurring in section 43(c)(2)(B) should be modified to properly focus on impairment of consumers' association between the famous mark and a single source as opposed to the mark's distinctiveness.

Would you comment on those changes that he would like to see made?

Ms. Gundelfinger. Of course. I will start with the distinctiveness issue. I actually think our differences at this point are really very narrow. I think we are in agreement regarding what it is we are trying to protect and we just have some disagreement on what the right statutory language ought to be.

In my view, focusing only on single source association, first, it raises the same sorts of proof problems we have today. The harm is not measurable in expert survey or otherwise until long after the damage is done if a plaintiff is required to show there has been a disruption between the mark and its association with a single source.

Moreover, I think focusing on the association with a single source is misguided because it first ignores also the mark's association with certain brand attributes. Every mark has a set of brand attributes, and once others start using that same mark on other goods and services, you are going to muddy the brand attributes of the famous mark.

And then finally, I think, I fear that if you were to use the language proposed by the AIPLA, some courts may interpret it something fairly close to a confusion standard. Requiring a showing of a disruption of the source, the source association, gets darn close to showing a likelihood of or actual confusion. So that is why I think it is the wrong language.

Now, going to your second point on the designation of source language, you know, I have been sitting here thinking. The AIPLA thinks the designation of source language is too loose and they predict catastrophe for trademark owners if we adopt it. The ACLU thinks it is not tight enough. I am a trademark owner. I represent trademark owners. I think it is an acceptable balance. It is an acceptable tradeoff that resolves the most important issues that are faced by trademark owners.

In order to get a judicially accepted, consistently enforced statute that is helpful in providing guidance to business decision makers, we are going to have to make a tradeoff here. I think the designation of source language makes the statute so much clearer. It gets us out of the muddy analyses that we have seen in a lot of the cases cited by the AIPLA. And it protects marks where they need protection most.

Mr. Smith. Thank you. I happen to agree. I appreciate your testimony.

Professor Lemley, do you have anything to add to that, in the interest of time?

Mr. Lemley. Just one brief thing. Mr. Barber suggested dilution laws have never had anything like this. That is not exactly right. The Trademark Dilution Act used the rather inartful phrase, ``commercial use in commerce'' to describe what it was that would be diluting. The legislative history to that act suggests that the commercial use part of that term was, in fact, designed to bring in the commercial speech distinction, that is, to make illegal only speech that proposes a commercial transaction.

Now, that has not actually turned out to be terribly successful in the courts because the courts have not understood it, and so some people have said, well, if you make any money from a use and the use involves a trademark, that might be diluting.

I think the designation of source rule actually adopts what this body was trying to reach in 1995 in a clearer form.

Mr. Smith. Thank you, Professor Lemley.

Mr. Johnson, Mr. Barber suggested on your concerns about freedom of speech amending the defense set forth to say fair use of a famous mark by another person, including for purposes of comparative commercial advertising or promotion to identify the competing goods or services of the owner of the famous mark. Would that help you out with your concerns on free speech, or not necessarily?

Mr. Johnson. Well, I think it helps a little bit in the sense that it essentially broadens fair use. I am not sure that we need anything after ``fair use of a famous mark by another person,'' necessarily, but by broadening fair use, I think it does help significantly address some of the concerns.

Mr. Smith. Mr. Barber, you have been the source of a lot of these questions. Let me ask you very, very quickly, and Ms. Gundelfinger, do you think that this bill will have an adverse impact on the small business owner, the independent vendor, inventor? You know what I am talking about. Do you think any adverse consequences for that kind of an individual?

Mr. Barber. No, I really don't. This is a very narrow statute. It only applies to famous marks, and small business owners, you know, there is an infinite supply of marks that they can choose from. They don't have to select somebody else's famous mark.

Mr. Smith. Thank you. Ms. Gundelfinger?

Ms. Gundelfinger. I would just note that, if anything, it helps small businesses because the legislation finally clearly defines what a famous mark is and it puts everyone on notice.

Mr. Smith. Which is an improvement over the current statute.

Ms. Gundelfinger. Exactly.

Mr. Smith. Okay. Thank you all very much.


Mr. Smith. Thank you, Mr. Inglis.

Mr. Berman and I have a final quick question and that is this. What if we added as a defense for the free speech that if a famous mark was used for parody or criticism or commentary, if we added that as a defense, would that solve the problem or not? Or would that go too far or not far enough?

Mr. Barber. If I could address that----

Mr. Smith. Yes.

Mr. Barber.--that is exactly what AIPLA has proposed, but the designation of source requirement needs to come out.

Mr. Smith. Do you think we need to do that, Professor Lemley?

Mr. Lemley. I think if you keep designation of source in, it is probably redundant, although it wouldn't do any harm to do it. It would probably be a good thing. I would not replace the designation of source requirement because I think there are uses of a mark that ought to be legitimate that wouldn't necessarily fit in that particular defense.

Mr. Smith. Ms. Gundelfinger?

Ms. Gundelfinger. And I would only add that I agree that adding the defenses at this point with the designation of source language would be redundant. I would also caution against using the fair use language that we currently have in the Lanham Act because it is going to create a loop language-wise with the designation of source and the redundancy is going to confuse the courts.

Mr. Smith. Fair enough. Thank you all for your testimony. This has been very, very informative. I am sorry for the slightly truncated hearing today, but better this hearing than no hearing at all, which was the alternative. Thank you again.

We stand adjourned.


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