Dilution claim limited by prior use in limited area

In Enterprise Rent-a-Car Co v Advantage Rent-a-Car Inc, the US Court of Appeals for the Federal Circuit has affirmed a Trademark Trial and Appeal Board decision to reject an opposition to the registration of the phrase 'we'll even pick you up'. The court ruled that the owner of a famous mark cannot oppose registration based on dilution where its mark did not achieve fame prior to the applicant's use in a limited geographic area.

In 1990 Advantage Rent-a-Car began using the slogan 'we'll even pick you up' for rental services in San Antonio, Texas. In 1994 Enterprise Rent-a-Car began using the slogans 'pick Enterprise, we'll pick you up' and 'pick the company that picks you up' for rental services, and registered both in 1996. It also began using the slogan 'we'll pick you up' in 1995 and obtained a registration for that mark in 1997.

In 1998 Advantage sued Enterprise in a US district court in Texas alleging unfair competition under Section 1125 of the Federal Trademark Dilution Act (FTDA). It asked the court to cancel Enterprise's three federal registrations. Enterprise counterclaimed for unfair competition and for trademark dilution.

The FTDA provides that:

"[t]he owner of a famous mark shall be entitled [...] 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."

While the district court suit was pending, Advantage applied to register 'we'll even pick you up' at the US Patent and Trademark Office, claiming first use in 1990. Upon publication, Enterprise filed an opposition. The Trademark Trial and Appeal Board suspended the opposition pending resolution of the district court suit. The parties then entered into a partial consent judgment that disposed of all claims except the trademark dilution counterclaim. After a bench trial, the district court held that Enterprise was not entitled to relief because the slogan at issue was not sufficiently famous or distinctive to receive protection under the FTDA. On appeal, the Fifth Circuit Court of Appeals affirmed.

Following the Fifth Circuit litigation, the board reinstated and dismissed Enterprise's opposition and held that Enterprise's claim of dilution under the FTDA was barred by res judicata because the courts had already decided that Enterprise's mark was not famous. The board further held that a party seeking to invoke dilution as grounds for cancellation must establish that its mark became famous prior to the applicant's first use of its mark.

Enterprise then appealed the board's decision to the Federal Circuit, which affirmed. Judge Dyk pointed to the plain language of the FTDA and wrote that "any prior use, even in a limited geographic area, defeats an injunction under Section 1125(c) and, therefore, bars a claim of dilution as grounds for opposition".

Brian E Banner, Banner & Witcoff Ltd, Washington DC