In a case which resolved conflicts among the Circuits related to the Federal Trademark Dilution Act ("FTDA"), the U.S. Supreme Court held in March 2003 that a claimant under that Act must provide proof that the junior users mark does, in fact, cause actual dilution, without evidence of which a claim cannot be sustained. Resolving a split in the Circuits, the Court held that "at least where the marks at issue are not identical, the mere fact that consumers mentally associate the junior users mark with a famous mark is not sufficient to establish actionable dilution," and thus either direct evidence of dilution or circumstantial evidence must be provided. Moseley v. V. Secret Catalog, Inc., 537 U.S. 418 , 123 S.Ct. 1115 (2003).

In this case, the Supreme Court was asked to examine Lanham Act Section 43(c), which had been enacted in 1995 to protect well-known marks from persons using similar names where there is no connection between the product lines. It noted that the purpose of this section differed from the traditional trademark infringement claim, and quoted the legislative record which reflected that it was enacted to "protect famous trademarks from subsequent uses that blur the distinctiveness of the mark or tarnish or disparage it, even in the absence of a likelihood of confusion." Id. at 1123. A trademark dilution plaintiff would need to show that the senior mark is both famous and distinctive, that the junior use is in commercial use, that it is used after the senior mark becomes famous, and that it causes dilution of the distinctive quality of the senior mark. As a consequence, an FTDA plaintiff must demonstrate that the senior mark is both famous and distinctive.

"Famousness," under the FTDA is defined as having the capacity to identify and distinguish goods or services; the Act includes "guideline" factors, 15 U.S.C. 1125(c)(1), but the Circuits have split regarding whether these are exclusive or whether to accord "fame" a more "ordinary" meaning . Compare "Distinctiveness," in contrast, has run against a more established body of case law arising in trademark infringement, although one Circuit (the Second) has held that an FTDA claim cannot be brought unless it is shown that the mark is inherently distinctive. TCPIP Holding Co. v. Haar Communications, Inc., 244 F.3d 88 (2d Cir. 2001); but see I.P. Lund Trading v. Kohler Co., 163 F.3d 27 (1st Cir. 1998); Time Mirror Magazines v. Las Vegas Sports News, L.L.C., 212 F.3d 157 (3d Cir. 2000); Advantage Rent-A-Car, 238 F.3d at 378; Avery Dennison Corp. v. Sumpton, 189 F.3d 868 (9th Cir. 1999).

Dilution is defined in the statute as "the lessening of the capacity of a famous mark to identify and distinguish goods or services, regardless of the presence or absence of competition between the owner of the famous mark and other parties, or the likelihood of confusion, mistake or deception. 123 S.Ct. at 118.

The issue before the court was whether the plaintiff was required to show actual harm. The Fourth and Fifth Circuits had held that to state a claim under the Act, the plaintiff was obliged to show that it had suffered actual harm. Ringling Bros.-Barnum Bailey Combined Shows, Inc. v. Utah Div. of Travel Dev., 170 F.3d 449 (4th Cir. 1999); Westchester Media v. PRL USA Holdings, Inc., 214 F.3d 658 (5th Cir. 2000) and Advantage Rent-A-Car v. Enterprise Rent-A-Car, 238 F.3d 378 (5th Cir. 2001). In contrast, the Second Circuit rejected this requirement, holding in a case involving "Goldfish" crackers that there could be dilution without proof of actual harm where there is similarity in the marks and the uses are in close proximity. Nabisco, Inc. v. PF Brands, Inc., 191 F.3d 208 (2d Cir. 1999).

In V. Secret v. Moseley, Victoria Secret Catalog sued Victor and Cathy Moseley, who had opened a lingerie and adult novelty store originally under the name of "Victor's Secret," and even name changes to "Victor's Little Secret" and eventually "Cathy's Little Secret" did not pacify the senior purveyor of ladies' undergarments. The Sixth Circuit joined the Second Circuit in rejecting the Fourth and Fifth Circuit s' requirements of actual harm, and held that because the Victoria Secret mark was so distinctive and there were so many similarities between the marks, there was clear evidence of dilution, despite its belief that "no consumer is likely to go to the Moseleys' store expecting to find Victoria's Secret's famed" garments, because it was "a classic instance of dilution by tarnishing . . . and by blurring . . .." Id. at 477.

After hearing from such a diverse group as INTA, the Justice Department, the ABA, and "Public Knowledge," the Supreme Court concluded that, in fact, the Fourth and Fifth Circuits were correct, and that the text of the Act "unambiguously requires a showing of actual dilution, rather than a likelihood of dilution." 123 S.Ct. at 1124. It cited the definition of the act to confirm its conclusion, Id., but further noted that this did not mean that actual loss of sales or profits was required. Id. Even where there is evidence of a mental association between the junior and senior marks, and even if there are difficulties in proof, the court held that direct or circumstantial evidence of actual dilution is "an essential element of a statutory violation." Id. at 1125.

This decision is a continuation of the Court's continuing retrenchment from its broad-reaching trademark decisions, such as Two Pesos v. Taco Cabana, Inc., 505 U.S. 763 (1992). It reflects that it recognizes the need to reign in plaintiffs who had over-extended the reach of their trademarks and trade dress. What the court did not do, however, is describe the degree of proof which would satisfy a showing of "actual dilution" (except to state that mental associations would not suffice where the marks are not identical), nor it take any steps to better define "fame" or resolve the Circuits' conflicts regarding acquired distinctiveness. As a result, while this decision will discourage some potential dilution claimants who either cannot show or could not afford to prove (through survey, e.g.) the existence of actual dilution, it leaves many issues to be addressed in future cases.