[House Report 112-647]
[From the U.S. Government Publishing Office]
112th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 112-647
======================================================================
TO AMEND THE TRADEMARK ACT OF 1946 TO CORRECT AN ERROR IN THE
PROVISIONS RELATING TO REMEDIES FOR DILUTION
_______
September 10, 2012.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed
_______
Mr. Smith of Texas, from the Committee on the Judiciary, submitted the
following
R E P O R T
[To accompany H.R. 6215]
[Including cost estimate of the Congressional Budget Office]
The Committee on the Judiciary, to whom was referred the
bill (H.R. 6215) to amend the Trademark Act of 1946 to correct
an error in the provisions relating to remedies for dilution,
having considered the same, report favorably thereon without
amendment and recommend that the bill do pass.
CONTENTS
Page
Purpose and Summary.............................................. 1
Background and Need for the Legislation.......................... 2
Hearings......................................................... 3
Committee Consideration.......................................... 3
Committee Votes.................................................. 3
Committee Oversight Findings..................................... 4
New Budget Authority and Tax Expenditures........................ 4
Congressional Budget Office Cost Estimate........................ 4
Performance Goals and Objectives................................. 5
Advisory on Earmarks............................................. 5
Section-by-Section Analysis...................................... 5
Changes in Existing Law Made by the Bill, as Reported............ 6
Purpose and Summary
The purpose of H.R. 6215 is to correct a drafting error in
the Trademark Dilution Revision Act of 2006\1\ to ensure that
Federal registration of a trademark does not constitute a
defense to a claim of federal dilution asserted against that
trademark. This clarification will prevent the proliferation of
bogus diluting trademarks that otherwise cost legitimate
trademark owners time and money spent monitoring registrations
and other marks used in commerce.
---------------------------------------------------------------------------
\1\Pub. L. 109-312.
---------------------------------------------------------------------------
Background and Need for the Legislation
THE FEDERAL TRADEMARK DILUTION ACT (``FTDA''):\2\
ABRIDGED HISTORY, 1995-2005
---------------------------------------------------------------------------
\2\Pub. L. 104-98.
---------------------------------------------------------------------------
Trademark rights are unique because they are based on
Federal as well as state law. In fact, many states offer
trademark protection against ``dilution.'' Dilution is defined
as ``the lessening of the capacity of a famous mark to identify
and distinguish goods or services regardless of the presence or
absence of (a) competition between the owner of the famous mark
and other parties or (b) likelihood of confusion, mistake, or
deception.'' Courts have defined dilution as either the
blurring of a mark's product identification or the tarnishing
of the affirmative associations a mark has come to convey.
Dilution does not rely upon the standard test of
infringement; that is, likelihood of confusion, deception, or
mistake. Rather, it applies when the unauthorized use of a
famous mark reduces the public's perception that the mark
signifies something unique, singular, or particular. In other
words, dilution can result in the loss of the mark's
distinctiveness and, in worst-case scenarios, the owner's
rights in it.
In order to promote uniformity and certainty for trademark
owners, a Federal dilution statute was enacted in 1995. The
purpose of the FTDA is to protect famous trademarks, whether
registered or unregistered, from subsequent uses that blur the
distinctiveness of the mark or tarnish or disparage it, even in
the absence of a likelihood of confusion. The FTDA applies when
unauthorized users attempt to trade upon the goodwill and
established renown of such marks, and thereby dilute their
distinctive quality. It specifies a number of factors that a
court may consider, but is not limited to, in determining
whether a mark is distinctive and famous.
MOSELY V. V SECRET CATALOGUE, INC.,\3\ AND THE
TRADEMARK DILUTION REVISION ACT OF 2006
---------------------------------------------------------------------------
\3\537 U.S. 418 (2003).
---------------------------------------------------------------------------
Following passage of the FTDA, the circuit courts of
appeals split as to whether the statute required the owner of a
famous mark to prove actual harm as a prerequisite to
injunctive relief. This question was addressed by the Supreme
Court in the case of Mosely v. V Secret Catalogue, Inc. In a
dilution action between the lingerie company Victoria's Secret
and a small retail company (Victor's Little Secret) that sold,
among other items, adult ``novelties,'' the Court determined
that the FTDA ``. . . unambiguously requires a showing of
actual dilution, rather than a likelihood of dilution.''
The Mosely decision upset the American trademark community,
whose members argued that requiring a mark holder to
demonstrate actual damage in a dilution case would only
guarantee that the value of a mark would be compromised and
lost. In response, the 109th Congress enacted H.R. 683, the
Trademark Dilution Revision Act of 2006 (``Revision Act''). The
amendments to the FTDA clarify, in addition to other
refinements, that a mark holder need not prove actual dilution.
TECHNICAL ERROR IDENTIFIED
In 2011, two law professors identified a technical problem
with the FTDA as amended.\4\ During Senate consideration of
H.R. 683, a section providing a Federal registration defense to
a dilution action was reorganized, producing an unexpected and
unintended change to the law.
---------------------------------------------------------------------------
\4\See Timothy A. Lemper & Joshua R. Bruce, The Dilution Defense
Congress Never Meant to Create (And Needs to Fix), 101 Trademark Rep.
1580 (2011); and Lemper & Bruce, Beware of the Scrivener's Error:
Curing the Drafting Error in the Federal Registration Defense to
Trademark Dilution Claims, 19 Tex. Intell. Prop. L.J. 169 (2011).
---------------------------------------------------------------------------
As originally drafted in the House of Representatives, the
provision was designed to encourage Federal registration of
trademarks, a worthy policy goal that prevents state laws from
interfering with federally-protected marks and ensures that
registered marks are protected nationwide. The House draft
promoted this goal by barring a state action for dilution
against a federally-registered mark. However, and without
explanation, the Senate reformatted the House text in such a
way as to create a bar against state action for dilution as
well as a state or Federal action based on a claim of actual or
likely damage or harm to the distinctiveness or reputation of a
mark. This means the federal-registration defense is available
not only to state dilution claims, but Federal dilution claims
as well.
Congress could not have intended such an outcome. If all
dilution claims, including Federal claims, are barred by
registration, it becomes difficult to cancel a diluting mark
that is registered. This only encourages illegitimate mark
holders to register diluting marks, which forces legitimate
mark holders to expend greater resources monitoring
registrations as well as other marks being used in commerce.
Hearings
The Committee on the Judiciary held no hearings on H.R.
6215.
Committee Consideration
On August 1, 2012, the Committee met in open session and
ordered the bill H.R. 6215 favorably reported without
amendment, by voice vote, a quorum being present.
Committee Votes
In compliance with clause 3(b) of rule XIII of the Rules of
the House of Representatives, the Committee advises that there
were no recorded votes during the Committee's consideration of
H.R. 6215.
Committee Oversight Findings
In compliance with clause 3(c)(1) of rule XIII of the Rules
of the House of Representatives, the Committee advises that the
findings and recommendations of the Committee, based on
oversight activities under clause 2(b)(1) of rule X of the
Rules of the House of Representatives, are incorporated in the
descriptive portions of this report.
New Budget Authority and Tax Expenditures
Clause 3(c)(2) of rule XIII of the Rules of the House of
Representatives is inapplicable because this legislation does
not provide new budgetary authority or increased tax
expenditures.
Congressional Budget Office Cost Estimate
In compliance with clause 3(c)(3) of rule XIII of the Rules
of the House of Representatives, the Committee sets forth, with
respect to the bill, H.R. 6215, the following estimate and
comparison prepared by the Director of the Congressional Budget
Office under section 402 of the Congressional Budget Act of
1974:
U.S. Congress,
Congressional Budget Office,
Washington, DC, August 23, 2012.
Hon. Lamar Smith, Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 6215, a bill to
amend the Trademark Act of 1946 to correct an error in the
provisions relating to remedies for dilution.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Susan Willie,
who can be reached at 226-2860.
Sincerely,
Douglas W. Elmendorf,
Director.
Enclosure
cc:
Honorable John Conyers, Jr.
Ranking Member
H.R. 6215--A bill to amend the Trademark Act of 1946 to correct an
error in the provisions relating to remedies for dilution.
As ordered reported by the House Committee on the Judiciary
on August 1, 2012.
CBO estimates that implementing H.R. 6215 would have no
significant cost to the Federal Government. Further, enacting
H.R. 6215 would not affect direct spending or revenues;
therefore, pay-as-you-go procedures do not apply.
H.R. 6215 would amend provisions of trademark law that
relate to a trademark owner's ability to be sued for diluting
another trademark. Under current law, the owner of a famous
trademark can bring a suit against another trademark owner
alleging dilution when the other trademark impairs the
distinctiveness or harms the reputation of the famous
trademark. For example, the owner of a trademark for a famous
handbag could sue another company that begins using the
trademark to refer to laundry detergent. However, certain
dilution claims are disallowed in both Federal and State courts
if the person being sued holds a registered trademark. H.R.
6215 would continue the prohibition of those claims in State
courts, but allow the claims to go forward in Federal court.
Based on information from the Patent and Trademark Office, CBO
estimates that implementing H.R. 6215 would have no significant
cost to the Federal Government because of the small number of
cases likely to be affected.
H.R. 6215 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act and
would not affect the budgets of State, local, or tribal
governments.
The CBO staff contacts for this estimate are Susan Willie
(for Federal costs) and Paige Piper/Bach (for the private-
sector impact). The estimate was approved by Peter H. Fontaine,
Assistant Director for Budget Analysis.
Performance Goals and Objectives
The Committee states that pursuant to clause 3(c)(4) of
rule XIII of the Rules of the House of Representatives, H.R.
6215 clarifies that Federal registration of a trademark does
not constitute a defense that bars a claim of Federal dilution
against that trademark.
Advisory on Earmarks
In accordance with clause 9 of rule XXI of the Rules of the
House of Representatives, H.R. 6215 does not contain any
congressional earmarks, limited tax benefits, or limited tariff
benefits as defined in clause 9(e), 9(f), or 9(g) of Rule XXI.
Section-by-Section Analysis
The following discussion describes the bill as reported by
the Committee.
Sec. 1. Remedies for dilution. Subsection (a) cures the
scrivener's error regarding Federal registration of a mark as a
defense to a claim of Federal dilution. It reformats Section
43(c)(6) of the Lanham Act\5\ to clarify that Federal
registration only constitutes a complete bar to a state claim
based on dilution, or actual or likely damage or harm to the
distinctiveness or reputation of a mark.
---------------------------------------------------------------------------
\5\15 USC 1125(c)(6).
---------------------------------------------------------------------------
Subsection (b) applies the fix to any action commenced on
or after the date of enactment of the Act.
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italic, existing law in which no change is
proposed is shown in roman):
ACT OF JULY 5, 1946
(Commonly referred to as the ``Trademark Act of 1946'')
AN ACT To provide for the registration and protection of trademarks
used in commerce, to carry out the provisions of certain international
conventions, and for other purposes
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
* * * * * * *
TITLE VIII--FALSE DESIGNATIONS OF ORIGIN, FALSE DESCRIPTIONS, AND
DILUTION FORBIDDEN
Sec. 43. (a) * * *
* * * * * * *
(c) Dilution by Blurring; Dilution by Tarnishment.--
(1) * * *
* * * * * * *
(6) Ownership of valid registration a complete bar
to action.--The ownership by a person of a valid
registration under the Act of March 3, 1881, or the Act
of February 20, 1905, or on the principal register
under this Act shall be a complete bar to an action
against that person, with respect to that mark, that--
[(A)(i) is brought by another person under
the common law or a statute of a State; and
[(ii) seeks to prevent dilution by blurring
or dilution by tarnishment; or
[(B) asserts any claim of actual or likely
damage or harm to the distinctiveness or
reputation of a mark, label, or form of
advertisement.]
(A) is brought by another person under the
common law or a statute of a State; and
(B)(i) seeks to prevent dilution by
blurring or dilution by tarnishment; or
(ii) asserts any claim of actual or likely
damage or harm to the distinctiveness or
reputation of a mark, label, or form of
advertisement.
* * * * * * *