Ninth Circuit Takes Expansive View of Dilution Act in Visa Trademark Case

06 July 2010 Publication
Authors: Andrew Baum

Legal News Alert: Trademark, Copyright & Advertising

In a decision that will be welcomed by owners of famous brands, the Ninth Circuit Court of Appeals recently affirmed summary judgment in favor of credit card giant Visa on its trademark dilution claim against use of "eVisa" for an Internet-based "multilingual education and information business" Visa Int’l Serv. Ass’n. v. JSL Corp., No. 08-15206 (9th Cir. June 28, 2010). In an opinion authored by Chief Judge Kozinski, the Ninth Circuit upheld the Nevada District Court’s finding that JSL’s use of "eVisa" constituted dilution as a matter of law of the famous "VISA" brand. In doing so, the Court found for Visa International on several disputed issues. 

First, the Court found that JSL’s mark was "effectively identical" to the plaintiff’s famous VISA mark, rejecting the argument that the additional letter "e" distinguished the marks. The Court indicated that because most consumers interpret that element as merely referring to the "electronic or online version of a brand," the "e" prefix was no more distinguishing than the addition of a generic corporate identifier such as "Corp." or "Inc." 

Second, the Court rejected the argument that the word "visa," as a common English word, was less entitled to protection from dilution than other famous marks based on coined or invented marks. JSL had argued that its use of the "eVisa" mark for a "multilingual education and information business" directly referred to the common English meaning of "visa." According to JSL, its "eVisa" mark was suggestive of this common usage of the word, and did not bring to mind the plaintiff’s mark or introduce a further association with the plaintiff’s mark. 

The Ninth Circuit acknowledged that it may be difficult for a trademark plaintiff to demonstrate the distinctiveness of a word found in the dictionary. Nevertheless, the Court found that where the defendant is not using the term "for its literal dictionary definition," but instead as its own trademark, that use can constitute dilution by blurring if the effect is that "there are now two products, and not just one, competing for association with that word." This, the Court found, is the "quintessential harm addressed by anti-dilution law." 

Further while recognizing that "JSL’s allusions to international travel were more obvious and heavy-handed than Visa’s," the Ninth Circuit rejected the defense. According to the Court, the fact that JSL used Visa’s famous mark in commerce to identify a good or service in a new and different context made it liable for blurring the distinctiveness of Visa’s mark. The relationship between the term’s common meaning and defendant’s business (helping businesses deal with international issues), was disregarded because of the strong level of recognition inherent in Visa’s mark. 

The expansive interpretation of trademark dilution by the Ninth Circuit is particularly striking given the procedural posture of the case. The district court had found that Visa’s mark was diluted by JSL as a matter of law, despite JSL disputing the validity of the survey evidence on which Visa relied. In refusing to deny summary judgment on this ground, the Court stated that "a plaintiff seeking to establish a likelihood of dilution is not required to go to the expense of producing expert testimony or market surveys; it may rely on the characteristics of the marks at issue." In addition, this was not a case where the defendant acted with any obvious bad faith. The mark "eVisa" derived from "Eikaiwa Visa," a language program which the company’s principal claimed to have run while temporarily living in Japan. "Eikaiwa" means "English conversation" in Japanese, and JSL asserted that the use of the English word "visa" was meant to suggest the ability to travel. JSL’s good faith is one of the factors to be considered in determining likelihood of dilution under Section 43(c) of the Lanham Act. Nevertheless, the Court granted summary judgment without enumerating each of these factors, relying "entirely on the characteristics of the marks at issue."

The Court’s construction of the scope of Visa’s rights in its famous mark also is noteworthy. It acknowledged the argument that broad claims of dilution based on famous marks that also are common words could make a dilution action overly burdensome to third-party users of the word. Indeed, the Court seemed to balance its holding by acknowledging that a trademark owner cannot "deplete the stock of useful words" by using dilution claims against third parties that seek to use an English word in its commonly-understood, dictionary sense. However, this distinction is of little use to most dilution defendants, since the Ninth Circuit held that the pertinent inquiry is whether the defendant used the plaintiff’s mark as a trademark, and not how closely the defendant’s usage hewed to the term’s common dictionary definition. If the defendant uses the subject mark as an indicator of origin and plaintiff’s mark is otherwise subject to protection under a dilution theory, it seems to matter little whether the meaning of the defendant’s mark is highly related to the common meaning or not at all. 

To illustrate this point, the Court provided: "There are, for instance many camels, but just one Camel; many tides, but just one Tide. Camel cupcakes and Tide calculators would dilute the value of those marks." Thus, under Visa, a finding of dilution is very likely regardless of what defendant’s trademark means, so long as plaintiff’s mark is so famous that any third party use is likely to dilute the distinctiveness of that mark in the minds of consumers.

The Visa decision continues the trend, both in the Ninth Circuit and elsewhere, of broadly interpreting federal trademark dilution claims since Congress passed the Trademark Dilution Revision Act in 2006. Most recently, the Trademark Trial and Appeal Board, which has been skeptical of dilution claims in the past, sustained an opposition to THE OTHER RED MEAT brought by the owner of THE OTHER WHITE MEAT, solely on dilution grounds. National Pork Board and National Pork Producers Council v. Supreme Lobster and Seafood Co., Opp. No. 91166701 (T.T.A.B. June 11, 2010). See also, Perfumebay.com Inc. v. eBay Inc., 506 F.3d 1165, 1181 (9th Cir. 2007) (reversing denial of eBay’s dilution clai0m against online perfume vendor Perfumebay); Jada Toys, Inc. v. Mattel, Inc., 496 F.3d 974 (9th Cir. 2007) (finding that similarity of plaintiff’s HOT WHEELS and defendant’s HOT RIGZ marks was sufficient to support a dilution claim, reversing summary judgment awarded to defendant); Horphag Research Ltd. v. Garcia, 475 F.3d 1029 (9th Cir. 2007) (affirming summary judgment on dilution claim against former dealer’s misuse of the mark in connection with a competing product); Super Duper, Inc. v. Mattel, Inc., 2010 U.S. App. LEXIS 11853 (4th Cir. June 10, 2010) (upholding trial court’s post-trial award of increased profits and attorneys’ fees to owner of SEE ‘N SAY marks based on dilution claim); Starbucks Corp. v. Wolfe's Borough Coffee, Inc., 588 F.3d 97 (2nd Cir. 2009) (reversing summary judgment granted to defendant user of CHARBUCKS marks on Starbucks’ trademark dilution claim) .

These decisions should give encouragement to owners of famous brands who seek to stop use of similar or identical marks on unrelated goods and/or services. Likewise, these decisions should be kept in mind by those adopting new marks. Even where the proposed mark is not identical to an existing famous mark and is used for unrelated goods and/or services, the new use may be at risk. 

A copy of the decision can be found at the following link: http://www.jurisnote.com/Cases/jsl206.pdf 


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James E. Griffith
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jgriffith@foley.com

Jeffrey A. Kobulnick
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Los Angeles, California
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Andrew Baum
Partner
New York, New York
212.338.3527
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Andrew Baum

Retired Partner

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