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Jack Daniel’s, Dior Cry ‘Dilution’ as Toys, Porn Star Copy Marks

Dec. 14, 2022, 10:05 AM

Attacks by Jack Daniel’s and Christian Dior on non-competing uses of their marks invoke questions about the reach of famous brands—and by extension the core purpose of trademark law.

Christian Dior Courture SA filed an opposition to the registration of a trademark for “Gigi Dior,” an adult film star’s stage name. Meanwhile Jack Daniel’s Properties LLC has reached the US Supreme Court with its case against a whiskey bottle-shaped, pun-laden “Bad Spaniels” dog toy.

Both companies cite trademark dilution, a concept codified into federal law in the 1990s that protects owners of famous brands well beyond their product lines. Rightsholders can block registrations and others’ uses that “blur” their trademarks by impairing their distinctiveness or “tarnish” them by creating an association with a disreputable product. Neither requires consumer confusion, typically the core concern of trademark law.

Some attorneys argue the separate cause of action is a combination of superfluousness—most dilution claims come alongside infringement claims—and overreach. Trademark professor Mark McKenna of UCLA said trademark law was designed to combat fraud and protect consumers, not to protect brands’ reputations. Several companies use identical marks in far-flung fields like Delta Airlines and Delta Faucet, he said, with no evidence of harm from such non-confusing uses.

“It’s not an empirical concept. It’s not a real thing. It’s not how people think,” McKenna said. “No one says ‘United’ in a vacuum. If you get in a cab and say ‘United,’ you’re going to the airport. People don’t shop and work in abstract, context-free areas.”

But many attorneys do see harm in letting newcomers free-ride on the goodwill of a household name that a company poured money into building—inevitably chipping away at its distinctiveness.

“In my view it’s clearly not superfluous. It addresses something that likelihood of confusion doesn’t,” trademark attorney Naresh Kilaru of Finnegan, Henderson, Farabow, Garrett & Dunner LLP said. “Let’s say somebody were to come out with Coca-Cola cars. That would be clearly riding on the goodwill Coca-Cola has.”

Origins of Dilution

The intellectual seed of dilution traces to a 1927 Harvard Law Review article by scholar Frank Schecter, “The Rational Basis of Trademark Protection.” The notion lay dormant for years amid the ultimately successful push to expand trademark law beyond clear fraud within a narrow industry, a push that instead focused on a broadened framework of consumer confusion.

But Schecter’s ideas started filtering into state laws by the 1940s and reached an apex in the Federal Trademark Dilution Act of 1995. A decade later a revision clarified and restrained what qualifies as a “famous” mark to those well known by the general public—not just consumers of that particular product.

“There was no empirical evidence for Schecter’s claim that singular trademarks had magic to them, a magical commercial appeal,” McKenna said. “It’s just kind of an assertion.”

Trademark attorney Dyan Finguerra-Ducharme of Pryor Cashman LLP also pointed back in history, but said the essence of dilution law lies in unfair competition law. She said in the 1920s, unfair competition law was focused on not allowing someone to “trade on the fruits of somebody else’s labor.” But that evolved in trademark contexts to largely duplicate infringement analyses, she said.

“It became about confusion, only confusion. Dilution makes up for the failure of unfair competition case law,” Finguerra-Ducharme said. “It goes back to the idea that the brand owner should be able to protect its intellectual property, and no one else should be able to benefit from the fruits of that labor. You can’t have a Nike Swoosh on a bag of chips.”

Tarnished Law?

Jack Daniel’s will primarily argue before the Supreme Court that courts have over-extended a judicial doctrine protecting trademark use in expressive works. But their counterclaim also included dilution-by-tarnishment claims. The liquor company’s complaint said associating its trade dress with the “gross and disgusting imagery” of the poop jokes printed on the dog toy harms its reputation.

Christian Dior’s opposition, filed in October at the Trademark Trial and Appeal Board, also argued that a “Gigi Dior” trademark covering adult content and “porn star appearances” would both blur and tarnish its brand. Allowing the entertainer (whose legal name is Stephanie Hodge) to register the mark would irreparably injure Dior’s reputation, it said.

“Of course the harm there is clear. The Christian Dior case is a perfect example,” Kilaru said. “The theory is if someone is using your trademark in connection with something unsavory or that you believe tarnishes your goodwill, that’s a different type of harm.”

But some argue those claims—and the dilution-by-tarnishing provision of the law itself—won’t sustain constitutional scrutiny. McKenna pointed to the recent trademark Supreme Court decisions of Matal v. Tam in 2017 and Iancu v. Brunetti in 2019. The high court struck down statutory bars on registering purportedly disparaging or vulgar marks—in Tam, “The Slants,” and in Brunetti, “FUCT"—as unconstitutional viewpoint-based discrimination.

“Dilution by tarnishment is entirely viewpoint discrimination,” McKenna said.

He said Tam and Brunetti rejected a distinction between source identification—trademarks’ purpose—and speech: “It would have been easy to say, ‘It’s just regulating commercial use, not preventing someone from speaking.’ But the court just didn’t do that. Having swept them all in, I think they’re stuck with that.”

Finguerra-Ducharme, despite her defense of dilution by blurring, agreed on tarnishment. She said if Gigi Dior’s case reached higher courts, they may well find that provision unconstitutional.

“I 100% agree that, in light of Tam and Brunetti, dilution by tarnishing is going to be hard to prove now,” Finguerra-Ducharme said.

Chipping Away

Attorney Tiffany D. Gehrke of Marshall, Gerstein & Borun LLP said the “way to look at dilution” is to consider, “What if everybody did that?”

“If users are going to chip away at trademark owners’ rights over time, it could ultimately prove problematic for the brand,” Gehrke said, though she acknowledged giving a broad monopoly over a term raised free speech issues. “It’s hard to figure out where the line is. You don’t want to stifle everything.”

There’s one aspect of dilution on which people on all sides generally agree: Claims rarely succeed in practice where likelihood of consumer confusion claims fail. Usually, complaints from big companies include both, yet practitioners and academics struggle to point to non-infringing, dilution judgments.

Further eating into the rare non-confusing dilution overlap, companies today engage in wide-ranging business lines and partnerships far more often than in Schecter’s time. That expands what a consumer may perceive to indicate an affiliation or endorsement, bringing traditional confusion-based infringement into play.

“Nowadays, with so much sponsorship and licensing, you can always make the argument that people might infer, ‘This is a licensed use,’” Kilaru said.

It’s also difficult to qualify as a famous brand, further limiting application, attorneys note.

But many still turn to dilution claims because “it’s a big hammer, or they think it’s a big hammer”—particularly in cease and desist letters—McKenna the UCLA professor said.

“A lot of brand owners think of uses of trademarks by other parties in terms of free-riding and value, not in terms of actual harm.”

To contact the reporter on this story: Kyle Jahner in Washington at kjahner@bloomberglaw.com

To contact the editors responsible for this story: Adam M. Taylor at ataylor@bloombergindustry.com; Tonia Moore at tmoore@bloombergindustry.com; Jay-Anne B. Casuga at jcasuga@bloomberglaw.com