May 2010 Issue
V Secret Catalogue, Inc. v. Moseley,
2010 WL 1979429 (6th Cir. May 19, 2010)
The Court of Appeals for the Sixth Circuit affirmed the permanent injunction against defendants’ use of the name “Victor’s Little Secret” for their sex toys and apparel shop. The Sixth Circuit explained that under the Trademark Dilution Revision Act of 2006, which was intended expressly to overrule the Supreme Court’s decision in this same case, defendants did not rebut plaintiff Victoria’s Secret’s dilution−by−tarnishment claim. The Sixth Circuit held that a potentially dilutive mark used to sell sex−related products creates a strong inference of dilution by tarnishment of a famous mark.
In 1998, plaintiff V Secret Catalogue (“Victoria’s Secret”), owner of the VICTORIA’S SECRET trademark and hundreds of Victoria’s Secret stores nationwide, objected to defendants Victor and Cathy Moseley’s (“the Moseleys”) operation of a lingerie and adult novelty store called “Victor’s Secret” in Elizabethtown, Kentucky. The store was brought to Victoria’s Secret’s attention by an army colonel stationed at Fort Knox, Kentucky, who saw an advertisement for the store and was personally offended by what he perceived as an attempt to “use a reputable company’s trademark to promote the sale of ‘unwholesome, tawdry merchandise.’” In response to a demand letter from Victoria’s Secret’s counsel, the Moseleys changed the name of their store to “Victor’s Little Secret.”
Victoria’s Secret responded by filing suit, claiming that the new name infringed its famous VICTORIA’S SECRET trademark and diluted it by blurring its distinctiveness and tarnishing its reputation by linking it to unsavory adult themes. The U.S. District Court for the Western District of Kentucky had granted Victoria’s Secret’s motion for summary judgment on its dilution claim, and the Sixth Circuit affirmed in 2001, holding that “consumers who hear the name ‘Victor’s Little Secret’ are likely automatically to think of the more famous store and link it to the Moseleys’ adult−toy, gag gift, and lingerie shop.” In 2003, the Moseleys appealed the case to the Supreme Court, which reversed the injunction because Victoria’s Secret did not prove actual dilution by tarnishment. According to the Supreme Court, under the federal dilution law then in effect, Victoria’s Secret had to show an actual “lessening of the capacity of the VICTORIA’S SECRET mark to identify and distinguish goods sold in Victoria’s Secret stores or advertised in its catalogs.”
In response to the Supreme Court’s decision, Congress revised the federal anti−dilution provisions. The Trademark Dilution Revision Act of 2006 (“TDRA”) was expressly intended to overrule the Supreme Court’s “actual harm” standard for dilution, which Congress deemed “an undue burden for trademark holders who contest diluting users.” The new language in the TDRA provided that the standard for proving a dilution claim is now a “likelihood of dilution” and that both dilution by blurring and dilution by tarnishment are actionable claims. On remand from the Supreme Court after the 2003 reversal, the district court reconsidered the case based on the new dilution standard in the TDRA. The Moseleys did not introduce any evidence to disprove a probability of tarnishment, and so the district court concluded that the connection between the “Victor’s Little Secret” mark and the sexual goods sold under it disparaged and reduced the positive associations and selling power of the VICTORIA’S SECRET mark. The district court again issued a permanent injunction against the Moseleys’ use of the name “Victor’s Little Secret.” The Moseleys renamed their store “Cathy’s Little Secret” and appealed to the Sixth Circuit.
The Sixth Circuit affirmed the injunction against “Victor’s Little Secret” and ruled that Congress’s decision to pass the TDRA supported its finding of dilution by tarnishment. The court described the issue on appeal as whether the “Victor’s Little Secret” name, with its association with lewd sex toys, creates a likelihood of dilution by tarnishment of the VICTORIA’S SECRET mark. According to the court, there is a “clearly emerging” consensus in trademark dilution case law that the creation of an association between a famous mark and “lewd or bawdy” sexual activity disparages and harms the famous mark and its commercial value. The court observed that at least eight federal cases in six jurisdictions have concluded that a famous mark is tarnished when it is semantically associated with a mark used to sell sex-related products or services, and this case should be no exception. The combined weight of this case law, legal treatises, and Congress’s intent in the TDRA to reduce trademark owners’ burden of proof in dilution cases compelled the Sixth Circuit’s conclusion.
The court ruled that if a mark with a clear semantic association to a famous mark is used to sell sex−related products, there is “a kind of rebuttable presumption, or at least a very strong inference,” that the mark is likely to tarnish the famous mark. This presumption or inference gives the owner of the new mark the burden of producing evidence that there is no likelihood or probability of tarnishment. In the present case, the Moseleys did not present any evidence to show the absence of a probability that “Victor’s Little Secret” tarnishes VICTORIA’S SECRET. Without any evidence to the contrary, the court had no basis to reverse the district court’s injunction.
The court rejected the Moseleys’ arguments that they should have the right to use Victor Moseley’s first name, and that the effect of the association with VICTORIA’S SECRET was de minimis. Rather, the Moseleys did not have the right to use the word “secret” in their mark, and only used it in order to create an association with VICTORIA’S SECRET. The court did note that the tarnishing effect of “Victor’s Little Secret” was “somewhat speculative,” but then stated that the TDRA was designed to protect trademarks from any unfavorable sexual associations. As such, any new mark with a lewd or “offensive-to-some” sexual association raises a strong inference of tarnishment. This inference must be overcome by evidence rebutting the likelihood that consumers will find the new mark offensive and harmful to the famous mark’s reputation, and such evidence was absent here.
The Moseleys had also argued that the TDRA should not apply to them, because it is not retroactive. The court rejected this argument noting that new statutes may be applied to pending cases where prospective relief is sought for ongoing conduct.
This decision underscores the “likelihood of dilution” standard set forth in the TDRA and affirms its application in the very case that led to the passage of the TDRA in the first place. The Sixth Circuit also sets forth what appears to be a new standard for dilution by tarnishment for famous marks associated with sexual products—if a mark with a clear semantic association to a famous mark is used to sell sex−related goods or services, there is a strong inference that the junior mark is likely to tarnish the famous mark. The owner of the new mark thus bears the burden of producing evidence that there is no probability of tarnishment to rebut the presumption of dilution.
*Dana Nicoletti is a Trademark Law Clerk with Finnegan.