Trademark Dilution: The Protection of Reputed Trademarks Beyond Likelihood of Confusion

By Amir Friedman

The world has changed materially since the foundation of traditional trademark laws, according to which the purpose of a trademark was to serve as a differentiating source indicator, preventing source confusion in the marketplace. Traditionally, trademarks protected the public from likelihood of confusion, assisted in consumer decisions and reduced search costs.
The need to award a special scope of protection to famous trademarks from use on non-competing goods was first discussed in Kodak in 1898, holding that the use of the word Kodak for a bicycle company does not mislead consumers but takes unfair advantage of reputation. However, the most significant point in the evolution of dilution, in its early stages, was the case of Odol decided in 1924, which was the first to acknowledge the need to protect the advertising power of trademarks from being diluted, even in the absence of a likelihood of confusion.
This book will provide that dilution is a ‘sui generis’ brand remedy applicable to reputed trademarks in accordance to their aggregated inherent and acquired strength. The book will address the non-harmonised nature of dilution, which reflects a problem in an age of borderless trade and cyber commerce and emphasises the need to answer the question: To what extent should reputed trademarks be protected by dilution beyond the traditional trademark protection from likelihood of confusion?
The book includes a proposal for an operative legal framework based on conclusions and distinctions derived from the comparison of dilution, as adopted and interpreted in different areas of the world, comparative case studies and comparison with neighbouring legal rights, such as Tort Law, Unfair Competition, Moral Rights, Equitable Rights, Publicity Rights and Unlawful Enrichment.

• Language: English
• Publisher: Austin Macauley Publishers
• Release date: May 31, 2022
• ISBN: 9781528987370

Amir Friedman

The author, Amir Friedman, is an intellectual property attorney from Israel who has been practising, teaching and engaging in the intellectual property sphere, with exciding expertise in trademark law, during the last 25 years. The author’s previous publications include Trademark Law (3 editions), Patent Law and various articles in the intellectual property domain.

Book preview

Trademark Dilution

The Protection of Reputed Trademarks

Beyond Likelihood of Confusion

Amir Friedman

Austin Macauley Publishers

Trademark Dilution

About the Author

Dedication

Copyright information ©

Basic Definitions

Abbreviations

Introduction

Chapter 1: The Evolution of Trademark Law

1.1 The Traditional Functions of Trademarks

1.2 Important Developments in Trademark Law

1.2.1 The Informational Role of Trademarks

1.2.2 Trans-Border Reputation

1.2.3 The Property Nature of Reputation

1.2.4 Brand Loyalty

1.3 Freedom of Competition Considerations

1.4 Freedom of Speech Considerations

1.5 Concluding Observations

Chapter 2: The Roots, Essence and Definition of Dilution

2.1 Introduction

2.2 Historic Overview

2.2.1 The Paris Convention (1883)

2.2.2 The Judicial Roots of Dilution

2.2.3 The Theoretical Roots of Dilution

2.3 The Trips Agreement (1994)

2.4 Comparison Between the Paris Convention and the TRIPS Agreement

2.5 Dilution and Neighbouring Legal Rights

2.5.1 Dilution and Tort Law

2.5.2 Dilution and Unfair Competition

2.5.3 Dilution and Unjust Enrichment

2.5.4 Dilution and Passing Off

2.5.5 Dilution and Moral Rights

2.5.6 Dilution and Publicity Rights

2.5.7 Conclusions

2.6 The Economic Definition of Dilution

2.7 Criticism Towards Dilution

2.8 Justifications in Favour of Dilution

2.9 Conclusions, Distinctions and Claims

2.9.1 The Rationale of Protection from Dilution

2.9.2 Dilution and Likelihood of Confusion

2.9.3 Protectable Trademarks

2.9.4 Concluding Remarks

Chapter 3: Dilution in the EU and US

3.1 Dilution in the EU

3.1.1 Historic Overview

3.1.2 First Council Directive 89/104/EEC

3.1.3 Important Decisions of the ECJ and CJEU

3.1.4 Member States National Laws

3.1.5 The EU Trademark Law Reformed Directive 2015

3.1.6 Scope of Protection under EU Law

3.1.7 Due Cause

3.2 Dilution in the US

3.2.1 Historic Overview

3.2.2 The Federal Trademark Dilution Act, 1995 (FTDA)

3.2.3 The Supreme Court Decision in Victoria’s Secret

3.2.5 Blurring

3.2.6 Tarnishing

3.2.7 Exclusions from Liability

3.3 Comparison between EU, US and TRIPS Anti-Dilution Frameworks

Chapter 4: Other Approaches towards Dilution

4.1 Preface

4.2 Jurisdictions with a Wide Approach to Dilution

4.2.1 England and Wales

4.2.2. India

4.2.3 Israel

4.3 Jurisdictions Limiting Dilution to Famous Trademarks

4.3.1 Australia

4.3.2 Canada

4.3.3 Singapore

4.3.4 South Africa

4.4 Dilution Within the Cyber Sphere

4.5 Conclusions, Distinctions and Claims

4.5.1 The Different Perceptions of Dilution

4.5.2 Categories of Dilution

4.5.3 Exclusions from Liability

4.5.4 Concluding Remarks

Chapter 5: Classification of Reputed Trademarks

5.1 The Proposed Classification

5.2 Fanciful Famous Trademarks

5.3 Arbitrary Famous Trademarks

5.4 Weak Famous Trademarks

5.4.1 Preface

5.4.2 Famous Designs, Get-Ups and Patterns

5.4.3 Famous Geographical Terms and Indications

5.4.4 Famous Colour Trademarks

5.4.5 Famous Surnames Used as Trademarks

5.4.6 Famous Trademarks That Have Become Generic

5.5 Famous National Trademarks

5.6 Niche-Reputed Trademarks

5.7 Trademarks with a Basic Reputation

5.8 Supporting Case Studies

5.8.1. Adidas

5.8.2 Apple

5.8.3 Coca Cola

5.8.4 McDonald’s

5.8.5 Microsoft

5.9 Conclusions, Distinctions and Claims

5.9.1 The Wide Protection of Strong Famous Trademarks

5.9.2 The Narrow Protection of Weak Famous Trademarks

5.9.3 Clarifying Victoria’s Secret, Intel and L’Oréal

5.9.4 Comparative Table

5.9.5 Statistical Analysis

5.9.6 Concluding Remarks

Chapter 6: Conclusions and Proposals

6.1 Preface

6.2 The Proposed Scopes of Protection

6.3 The Proposed Method

6.4 Addressing Possible Obstacles

6.5 Concluding Remarks

6.6 Proposal for Action

Annex ‘A’

Bibliography

Annex ‘B’

Legal Decisions Worldwide

Annex C

Statistical Analysis

About the Author

The author, Amir Friedman, is an intellectual property attorney from Israel who has been practising, teaching and engaging in the intellectual property sphere, with exciding expertise in trademark law, during the last 25 years.

The author’s previous publications include Trademark Law (3 editions), Patent Law and various articles in the intellectual property domain.

Dedication

Dedicated with love and thankfulness to my beloved wife, Liat,

and my children – Ella, Libby and Evyatar.

Copyright information ©

Amir Friedman 2022

The right of Amir Friedman to be identified as author of this work has been asserted by the author in accordance with section 77 and 78 of the Copyright, Designs and Patents Act 1988.

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior permission of the publishers.

Any person who commits any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages.

A CIP catalogue record for this title is available from the British Library.

ISBN 9781528926843 (Paperback)

ISBN 9781528987363 (Hardback)

ISBN 9781528987370 (ePub e-book)

www.austinmacauley.com

First Published 2022

Austin Macauley Publishers Ltd®

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E14 5AA

Basic Definitions

This book focuses on trademark law and specifically on the appropriate margins of trademark protection beyond likelihood of confusion, under the doctrine of dilution, and therefore it is helpful to first read the following definitions:

Abbreviations

A. General Abbreviations

B. Global Courts and Legal Decisions

C. Legal Publications and Law Journals

Introduction

The traditional function of trademarks is to serve as differentiating source indicators, preventing source confusion in the marketplace. Trademarks protect the public from likelihood of confusion, assist in consumer decisions and reduce search costs.

The need to protect famous trademarks from use on non-competing goods was first discussed in Kodak¹ in 1898, where it was held that the use of the word Kodak for selling bicycles does not mislead consumers, but takes unfair advantage of reputation.

However, the most significant point in the evolution of dilution, in its early stages, was the German case of Odol² decided in 1924, which was the first to acknowledge the need to protect the advertising power of trademarks from being diluted (‘Verwässerung’), even in the absence of a likelihood of confusion.

Dilution emphasises the protection and preservation of the reputation, positive image, advertising power and overall image of a reputed trademark, as opposed to protection from likelihood of confusion, passing off and other forms of commercial torts.

Other important legal and academic developments, further observed in Chapter 2, led to recognition of the need to protect well-known trademarks reputation by the Paris Convention (1883) and, consequently, by the Agreement on Trade Related Aspects of Intellectual Property Rights (1994), (Hereinafter: ‘TRIPS’)³, designed to create a common international free market based on fair and consistent international trading rules within the WTO member states.

TRIPS left a vast space open for interpretation. Some countries require the trademark to be famous and known by the public at large in order to be eligible to protection from dilution (as in the US), while other countries have adopted Article 16 (2) of TRIPS wide definition, awarding protection from dilution to trademarks well known in a specific market or even to trademarks with a basic reputation (as in the EU).

The global comparative study conducted in Chapters 3 and 4 provides that TRIPS did not achieve harmonisation regarding the threshold requirements of dilution and the scope of protection beyond likelihood of confusion.

The global mix of contradicting approaches regarding the threshold requirements for claiming dilution, the definition of dilution and the extent to which trademarks should be protected beyond likelihood of confusion, led to numerous contradicting decisions regarding similar facts and disputes, as presented in Chapter 5.

The non-harmonised nature of dilution reflects a problem in an age of borderless trade and cyber commerce and emphasises the need to address the research major question.

This book will address and attempt to answer the question: To what extent should reputed trademarks be protected by dilution beyond the traditional trademark protection from likelihood of confusion?

This book will provide that dilution is a ‘sui generis’ brand remedy applicable to reputed trademarks in accordance to their aggregated inherent and acquired strength. This book includes a proposal for an operative legal framework based on conclusions and distinctions derived from the comparison of dilution as adopted and interpreted in different areas of the world, comparative case studies and comparison with neighbouring legal rights, such as Tort Law, Unfair Competition, Moral Rights, Equitable Rights, Publicity Rights and Unlawful Enrichment.

The book begins with two introductory chapters addressing the evolution of trademark law, the recognition of the advertising capacity of a trademark, the recognition of reputation as property and the evolution of dilution from the early days of Odol (1924) until TRIPS (1994).

Chapter 2 compares dilution with neighbouring legal rights and with the economic definition of dilution, in order to sharpen the theoretical rationalisation of the final conclusions, distinctions and observations. In Chapters 1 and 2, the book will show how dilution entered trademark law and address the differences between dilution and traditional trademark infringement or passing off.

Chapter 3 commences with a basic comparative analysis between the differences in the EU and US threshold levels for claiming dilution. This comparative analysis will show that the EU and the US have developed their independent perspectives of dilution. The US requires the trademark to be famous, known by the public at large. The EU, on the other hand, developed a wider definition, protecting trademarks possessing of a basic reputation.

Chapter 4 continues with a comparative study of a few more WTO member states, which were chosen on the basis of their different approaches towards dilution, in order to show that some jurisdictions followed the path set by TRIPS, while other jurisdictions embraced different threshold levels for raising a claim of dilution. The countries selected are all members of the WTO and their domestic legal framework of dilution could be compared to TRIPS.

The comparative step conducted in chapters 3 and 4, which regards the threshold levels for raising a claim for protection from dilution, shows a mixture of contradicting threshold levels worldwide, that can be presented by the table below:

The focus will be on the commonalities, on the common core of the compared legal systems and on the possible ways of erasing differences⁴.

In order to inquire into the scope and boundaries of dilution, the book classifies, in Chapter 5, the different categories of trademarks with a reputation, which is the definition anchored in Articles 5(3)(a) and 10(2)(c) of the EU Reformed Trademark Directive 2015, as the level for claiming dilution in the EU.

Chapters 5 and 6 include comparative case law studies, which provide that the division between different categories of reputed trademarks is highly important for examining the existence of dilution and deciding the desired scope of protection beyond likelihood of confusion.

The different types of comparative case studies performed show that the scope of protection is dependent on the overall strength of the reputed trademark. Fanciful and arbitrary famous trademarks will usually receive a wider scope of protection from dilution than weak famous trademarks.

Chapter 6 includes a proposal for an applicable method for deciding the extent of protection of reputed trademarks beyond likelihood of confusion, including levels of reputation, evidentiary proof and level of creativeness or originality. Chapter 6 concludes with a call for legal action, offering a narrow entry point to weak famous trademarks, and a wider entry point, combined with possible protection from misappropriation, unfair advantage, free riding or image leeching, to creative famous trademarks.

This book claims that dilution is a ‘sui generis’ brand remedy applicable to reputed trademarks in accordance to their aggregated inherent and acquired strength. This book includes a proposal for an operative legal framework based on conclusions and distinctions derived from the comparison of dilution as adopted and interpreted in different areas of the world, comparative case studies and comparison with neighbouring legal rights, such as Tort Law, unfair competition, moral rights, equitable rights, publicity rights and unlawful enrichment.

The core of the research begins by classifying reputed trademarks into different categories of reputation and inherent strength, accompanied by statistical and comparative analysis that will be implemented into a legal tool for determining the appropriate scope of protection beyond ‘likelihood of confusion’ that should be awarded to different categories of reputed trademarks, in accordance with their overall aggregated strength.

This book offers a global appreciation, comparison and statistical analysis of dilution, providing transparency and legal certainty, while encouraging commercial creativeness and acknowledging the increasing social value and role of reputation in the world today. The book includes a proposal for an easily applicable legal tool and method for determining the appropriate scope of protection beyond likelihood of confusion, which can serve as a foundation for a global harmonisation of dilution.

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¹ Eastman Photographic Materials Co v. John Griffith Cycle Co, [1898] 15 RPC 105, [H Ct, Ch D, England].↩︎

² Landgericht Elberfeld, 11th September 1924, Juristische Wochenschrift 1925, 502.↩︎

³ TRIPS was negotiated and adopted within the framework of the General Agreement on Tariffs and Trade at the end of the Uruguay Round in 1994.↩︎

⁴ The comparative study followed the benchmarks for conducting comparative studies, articulated in: M Van Hoecke (ed.), Epistemology and Methodology of Comparative Law, Oxford: Hart Publishing 2004, p.165-195; H Glenn, ‘The Aims of Comparative Law’, in: J M Smits (ed.), Elgar Encyclopedia of Comparative Law, Cheltenham: Edward Elgar 2006, 57-65; M Reimann & R Zimmermann (eds.), The Oxford Handbook of Comparative Law, Oxford: Oxford University Press 2006; E Örücü, ‘Developing Comparative Law’, in E Örücü & D Nelken (eds.), Comparative Law: A Handbook, Oxford: Hart Publishing 2007, p. 62; M Adams & J Bomhoff, Practice and Theory in Comparative Law, [2012] Cambridge University Press; K Mohamed, ‘Combining methods in legal research’, [2016] The social Science J 11 (21) 5191.↩︎

Chapter 1

The Evolution of Trademark Law

1.1 The Traditional Functions of Trademarks

Traditional trademark law protected trademarks function as source indicators, safeguarding the public from ‘likelihood of confusion’.

The purpose of a trademark was to create an identity badge serving as a source indicator⁵, so that the public seeing the trademark will associate it with a specific source⁶.

According to traditional trademark law, the trademark’s registration secured the right to prevent an unauthorised use of the trademark or of a similar trademark, likely to cause confusion, which is used for the same category of goods or services⁷.

Other traditional functions of trademarks include facilitating and enhancing consumer decisions⁸, reducing search cost and creating incentives to produce products of desirable quality.

Trademark Law, like Tort Law in general, can be explained according to the hypothesis of economic efficiency. In the presence of uncertainty relating to the quality of goods, and in the absence of adequate and credible information, the consumer search costs in purchase decisions would escalate, while commercial entities would have a greater incentive to mislead consumers as to the quality of the goods produced.

The trademark makes it easier for the consumer to orient himself in the market. Trademarks reduce consumer search costs by providing a concise source of goods. Trademarks reduce both the information costs and the transaction costs within a market, promoting commercial efficiency.

As will be explained in the next section, the traditional function of trademarks has evolved to protect their reputation and advertising power⁹, in addition to the traditional protection from likelihood of confusion.

1.2 Important Developments in Trademark Law

1.2.1 The Informational Role of Trademarks

Traditionally, trademark law did not govern the informational aspect of trademarks.

Leading scholars¹⁰, as well as courts, developed the informational role, noticing that trademarks create valuable information that is not itself the good being exchanged. Accordingly, a trademark that has gained public awareness and acquired distinctiveness is a valuable economic, informative and commercial asset.

Nowadays, trademarks are used as a merchandising shortcut which induces a purchaser to select what he wants, or what he has been led to believe he wants. Nowadays, a trademark is a commercial signature and a vehicle for carrying a product’s reputation. The trademark wraps together the product’s reputation and image and thereby helps reinforce prior satisfactory purchases, encourage future selections, and promotes economic efficiency and consumer loyalty.

The owner of the trademark aims to convey through the use of the trademark, in the minds of potential customers, the desirability of the commodity upon which it appears. Once this is attained, the trademark owner has something of value¹¹.

The informative role of trademarks contributes in facilitating an efficient marketplace, because the trademark conveys information relating to the quality of products and therefore facilitates and enhances consumer purchase decisions, while at the same time leveraging reputation and creating an incentive to produce goods or services of desirable quality, to the benefit of consumers and markets.

Trademarks create information for the benefit of markets, consumers and social welfare¹².

By connecting information to products, trademarks help consumers express their preferences for the varying mix of product features, quality and prices. Even if a trademark does not communicate origin, it communicates that the consumer is getting the specific product desired¹³.

Trademark law, as explained above, has evolved from mere badges of origin to protect the informative function, offering sufficient information regarding the source, origin or quality of products.

1.2.2 Trans-Border Reputation

Another development in trademark law was the acknowledgement of the need to protect the acquired reputation of famous trademarks¹⁴.

In England and Wales, a few courts prevented the use of trademarks similar to famous trademarks which were currently not used or had a minimal scope of national use, but were considered to be famous, through the tort of ‘offensive association’, which protects reputation¹⁵.

In addition to the recognition of the need to protect spill-over reputation many courts