New federal dilution law supports finding of tarnishment in sex toy shop case

United States of America

In V-Secret Catalogue Inc v Moseley (Case 08-5793, May 19 2010), the US Court of Appeals for the Sixth Circuit has enjoined a sex toy shop from using the name Victor's Little Secret.

In 1998 the proprietors of the Victoria's Secret brand became aware of a sex shop owned by Victor Moseley, then called Victor's Secret. Victoria Secret sued for trademark dilution. After the district court enjoined Moseley's use of the store name, the case made it all the way to the US Supreme Court. The Supreme Court reversed the district court and ruled that actual harm, rather than a mere likelihood of harm, must be shown by a trademark holder in order to prevail in a dilution case (for further details please see "Federal Trademark Dilution Act requires proof of actual harm").

Congress, in response to the burden that the Supreme Court ruling placed on trademark holders, passed the Trademark Dilution Revision Act of 2006, which provided that the standard for proving a dilution claims is "likelihood of dilution".

Meanwhile, the case against Moseley was remanded to the district court, which reconsidered it based on the same evidence, but using the new dilution law. Again, the district court issued an injunction, and again Moseley appealed.

The issue on the second appeal was whether Victor's Little Secret created a likelihood of dilution by tarnishment by selling "lewd sexual toys". Surveying the circuit courts, the Sixth Circuit found that there was a consensus that associations between a famous mark and "bawdy sexual activity" was, in terms of the new federal law, "likely" to cause disparagement.

Although Moseley had an opportunity to do so, he failed to introduce evidence that tarnishment was unlikely. Consequently, the Sixth Circuit ruled that the new federal dilution law supported a finding of tarnishment in this case:

"The new law seems designed to protect trademarks from any unfavourable sexual associations. Thus, any new mark with lewd or offensive-to-some sexual association raises a strong inference of tarnishment. It seems clear that the new act demonstrates that Congress intended that a court should reach a different result in this case if the facts remain the same."

Judge Moore dissented, arguing that because Victoria's Secret had failed to present evidence that anyone was likely to think less of Victoria's Secret because of Moseley's store, the trademark dilution claim should fail. She also objected to the standard of tarnishment based solely on the sexual nature of the junior mark, which she said "sanctions an almost non-existent evidentiary standard".

Paul Devinsky, McDermott Will & Emery, Washington DC

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