Juntunen Akron Law LLM Thesis FINAL 5 4 2012

RETHINKING AND REDEFINING DILUTION AS DIVERTEDSALES:

A MORE RATIONAL BASIS FOR MODERN TRADEMARK LAW

Prepared by Roger D. JuntunenUniversity of Akron School of Law

Center for Intellectual Property Law and TechnologyIntellectual Property Master’s Thesis 9200:850

Prepared forProfessor Jeffrey M. Samuels, Director

University of Akron School of LawCenter for Intellectual Property Law and Technology

May 5, 2012

Because trademark law has an inseparable, dual-

function of protecting both consumer rights and owner

rights, a comprehensive trademark scheme should be

developed that clearly defines the injuries to both

consumers and owners. The respective protections and

proofs to receive remedies for injurious conduct

resulting in these injuries should flow from the

definitions of the injuries. This would make trademark

law better and would integrate the dual-function

policies of trademark law into a rational scheme.

Dilution should be defined only as the injury to

trademark owners in terms of diverted sales. The

respective injury to consumers should be defined as

purchasing from a different trademark owner than the

intended trademark owner because of the influence of

another’s trademark.

Upon initial review of the federal trademark

dilution scheme, an important question arises. What is

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trademark “dilution” in the context of the federal

Lanham Act trademark statute? Apart from its literary

statutory definition, what exactly does “dilution” mean?

What is really happening under the current federal

trademark scheme, which provides protection for both

trademark infringement and trademark dilution?

The concept of modern trademark dilution appears to

be inexorably linked to the historical concepts of

trademark protection as defined by Frank I. Schechter,1

although this linkage does not adequately explain either

the historical concepts of dilution, nor adequately

explain any of the modern legislative enactments of

dilution-related concepts in the Lanham Act’s amendment

of federal trademark dilution law.

Most legal commentary on the concept of trademark

dilution follows the historical definitions of dilution

1 See, e.g., Frank I. Schechter, The Rational Basis of Trademark Protection, 40 HARV. L. REV. 813 (1927) (advocating for a new definition of trademark law) (The Rational Basis).

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as a form of injurious conduct, defining dilution as

“dilution of the mark,” “dilution of the selling power

of the mark,” or another concept related to whether a

trademark itself can be diluted. Such a mark-related

definition infers that diluting a mark, or its selling

power, or its “commercial magnetism,” or any other

concept based on the dilution of the mark itself

directly affects the ability of the mark to function as

a source or product indicator, such that consumer

purchasing decisions are adversely affected by the

“dilution” of a mark.

Similarly, the historical definitions of trademark

dilution protection have resulted in the current

statutory definitions of “dilution by blurring” and

“dilution by tarnishment.” These modern types of

injurious conduct are also defined in terms of an

association between marks that “injures the

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distinctiveness” or “injures the reputation,” of the

mark itself.

The policy of trademark protection is to protect

people, whether individuals or corporations. Consumers

and owners benefit from trademark protections, and they

are protected from the injuries defined in the statute.

Defining dilution as harm to the mark itself does not

properly address the policy behind trademark protection

of protecting the consumer and the owner from injury.

Because it is an indirect way of recognizing this

dual-purpose policy, and because the concept of diluting

something really means to lessen its full effect,

defining dilution as lost sales and profits would help

clarify: (1) the person being protected is the consumer

relying on the mark, or the owner of the mark; (2) the

injurious conduct is what causes injury to the persons

being protected (however defined) and does not injure

the trademark itself; (3) the injury to consumers is

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purchasing from an unintended source because of an

unauthorized use of a mark by another (such that there

should be a requirement of a consumer purchasing from an

unintended owner as be a necessary prerequisite to a

trademark owner receiving trademark protection); and (4)

the injury to the owner is lost sales and profits

(resulting from diverted sales due to unauthorized use

of a mark).

A limited new definition of dilution would apply

only to the diverted sales and be defined as a result of

injurious conduct (to both consumers and owners).

Dilution would not be defined in terms of diluting the

consumer’s association between two marks, and dilution

would not be defined as being limited to an owner’s

intangible property rights. Dilution would be the

concrete injury of lost sales and profits because the

difference between expected sales and lost sales due to

injurious conduct better fits the standard definition of

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“diluting” something tangible instead of something

intangible.

The best choice for a new limited definition of

dilution is the economic result of lost sales (and

profits) caused by diverted sales. Dilution is related

to damages, not the cause of action. There are

overlapping concepts in trademark law history related to

dilution of the sales and profits, dilution of the mark,

dilution by blurring, and dilution by tarnishment,

distinctiveness, reputation, property rights, and other

concepts. The implication of limiting the definition of

dilution to the lost sales or profits as damages only

would drastically change, but substantively clarify and

improve the entire federal trademark law scheme.

Applying this limited definition of dilution as only the

damages of lost sales would apply equally to traditional

infringement analysis such that dilution would not be

defined as a cause of action. Traditional trademark

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owners would also be damaged by diverted sales such that

there would not be separate causes of action for

infringement and dilution.

Traditional concepts of trademark law include the

requirement to find trademark infringement by proving

consumer confusion, interpreting trademark law to

protect consumers from being misled, and protecting

producers from unfair competition.2 Importantly, it is

recognized at law that Congress can also grant a limited

property right in a trademark that purposely excludes

traditional trademark defenses.3

Frank I. Schechter should be acknowledged for

advancing trademark jurisprudence in the modern day.4

Business realities will undoubtedly evolve requiring

future review of trademark practices. Schechter’s

2 Moseley v. V Secret Catalogue, Inc., 537 U.S. 418, 428, 123 S.Ct. 1115, 115L.Ed.2d 1, 71 USLW 4126 (2003) (Moseley).

3 SFAA v. USOC, 530 (“The SFAA further argues that the reference in § 110 to Lanham Act remedies should be read as incorporating the traditional trademark defenses as well. See 15 U.S.C. § 1115(b). This argument ignores the clear language of the section.”).

4 See, e.g., Schechter, The Rational Basis.

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importance today is not his historical 1927 ideas of

dilution that have become interpreted as protecting

property rights. Schechter’s importance is his

contribution to the general understanding that trademark

protection is not limited to protecting consumers.

Instead, modern trademark law must function to

protect both trademark owners and the public.

Trademarks, as symbols representing many things,

function as symbols that the public relies on to make

informed choices. Trademarks also function,

simultaneously, as symbols that trademark owners rely

upon to represent their business, goodwill, reputation,

advertising investment, and many other intangible

assets. A trademark’s purpose cannot be split into

separate discrete functions. The whole mark or symbol

accomplishes different purposes simultaneously.

Robert G. Bone would argue:

. . . from today’s perspective, Schechter’s argument for dilution seems rather

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weak. It does not explain why existing practiceshould be accepted as a normative baseline. Nordoes it take explicit account of all the costs of dilution protection or explain carefully howdilution fits the policies of trademark law.5

Schechter’s idea of a rational basis for protecting

trademarks was that they should be limited to certain

marks based on factors he thought were important, such

as uniqueness in the marketplace of the early twentieth

century. Business has changed and in particular, modern

branding and advertising methods use trademarks on a

variety of goods and services not necessarily limited to

certain products or product lines. Understanding

dilution requires understanding Schechter, but

Schechter’s limited concept of protecting trademarks

does not provide a valid framework for drafting modern

trademark laws under the historical concepts of

infringement and dilution. Both infringement and

5 Robert G. Bone, Schechter’s Ideals in Historical Context and Dilution’s Rocky Road,24 SANTA CLARA COMPUTER & HIGH TECH L.J. 469, 470 (2008), fn. 5 (Schechter’s Ideals in Historical Context).

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dilution concepts protect the interests of consumers and

owners.

The modern trademark must not be separated into

infringing marks and diluting marks. Neither of these

dichotomies adequately addresses the fact that

trademarks, as symbols, cannot be infringed or diluted

or separated into different kinds of marks. Consumers

can be deceived. Owners’ sales can be diverted. But

trademarks cannot be infringed or diluted. They are just

physical symbols representing intangible things that

cannot be divided into separate things. Drafting

legislation based on the ultimate injury to the consumer

or to the owner seems more proper than drafting

legislation to protect marks or attributes of marks.

Instead of indirect recognition of the rights of

consumers and owners through the infringement or

dilution of marks, trademark law would be clearer if it

were drafted without trying to protect marks. Protecting

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against diverted sales protects both consumers and

owners automatically.

According to Barton Beebe, Frank Schechter’s

original theory of trademark dilution and antidilution

protection was “radical.” Beebe states that much

confusion could be avoided in the case law and

commentary by steering clear of the muddled term

“dilution” altogether.6 Defining dilution only as lost or

diverted sales and profits, and redefining trademark law

starting with this definition would accomplish this.

Beebe recognized the difficulties of attempting to apply

Schechter’s historical definitions to modern-day

trademark protections.

However, it is not necessary to entirely “steer

clear” of the “muddled term of ‘dilution’ altogether.”

It is only necessary to redefine modern dilution in

terms of the result of injurious conduct, rather than in

6 Barton Beebe, A Defense of the New Federal Trademark Antidilution Law, 17 FORDHAM INTELL. PROP. MEDIA & ENT. L.J., vol. 16:1143, 1174 (2006).

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the various definitions of injurious conduct related to

the trademark itself. The injurious conduct results in

diverted sales. The difference between expected sales

and diverted sales due to injurious conduct is the

diluted sales and profits.

Therefore, if there is no evidence that the

trademark owner’s sales will be diverted by a consumer

purchasing from an unintended owner, there is no proof

of likely damages to warrant trademark protection to

such an owner. To protect a property interest in a

trademark, in the form of protecting ownership rights

such as goodwill, reputation, and intangible rights

there should at least be some likelihood of diverted

sales. If the full strength of the expected sales is not

diverted by incorrect consumer purchase decisions, then

there would be no dilution when defined as lost sales

and profits. It does not seem rational to assume likely

diverted sales if consumers to not intend to purchase

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from the trademark owner and are not mislead into

purchasing from their intended trademark owner.

It is perfectly rational to discuss historical

definitions of dilution and its related concepts by

citing to Schechter’s historical concepts, if it is also

clarified that historical definitions of dilution

concepts do not define dilution strictly as the diverted

sales and lost profits. Historical dilution concepts

intended to provide for owner-based trademark

protections, while historical infringement concepts

provided for consumer-based protections.

A mark itself is not diluted. The mark remains what

it is – a symbol representative of many things. Dilution

of the mark itself would imply that the symbol was

changed – physically changed – into a symbol that no

longer represented the original symbol. It would be like

pouring acid onto the symbol and smearing or smudging

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the symbol such that it no longer resembled the true

original.

Schechter’s concepts in his 1927 The Rational Basis

article,7 later equated to and defined as dilution, may

have caused this train of thought to develop.

Schechter’s concept was that there was a lessening of a

trademark to function with its original strength when

the mark was allowed to be used on other products. The

German word for the concept is verwässert, and it was

discussed in the German trademark case Odol.8 This term

can be roughly defined as diluting a full strength

liquid solution, by the addition of water or some other

liquid that causes the liquid solution to be diluted to

a concentration, such that the diluted liquid is no

longer at its “full strength” concentration.

7 Schechter, The Rational Basis of Trademark Law.8 See, Sara Stadler Nelson, The Wages of Ubiquity in Trademark Law, 88 IOWA

L. REV. 731 (2003), p. 745, fn. 145 (discussing the origin of the term dilution from the German word verwässert in the Odol case) (The Wages of Ubiquity).

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The common dictionary definition of “dilution” means

something more like “watering” something down by adding

more to the original such that the original no longer

functions at its original 100% ability. The dictionary

defines the verb “dilute “as: (1) attenuate <reduced

especially in thickness, density, or force or tapering

gradually usually to a long slender point>; (2) to make

thinner or more liquid by admixture <diluted wine>; (3) to

diminish the strength, flavor, or brilliance of by

admixture <dilute a color>; and (4) to decrease the per

share value of (common stock) by increasing the total

number of shares.9 The adjective “dilute” is defined as:

(1) weak; or (2) diluted.10

There is a fallacy in defining dilution as any

“lessening” of the capacity of a trade mark to function

as a mark to identify goods and services. The real issue

with regard to unfair competition is whether another

9 “Dilute (verb).” Merriam Webster’s Collegiate Dictionary. 11th ed. 2008.10 “Dilute (adjective).”Merriam Webster’s Collegiate Dictionary. 11th ed. 2008.

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mark copies a trademark, or otherwise diverts consumers

from purchasing, such that consumers do not buy from the

owner.

The analogy would be that the “dilution” of a

trademark under a verwässert analysis equates to a change

in the physical trademark itself, as a symbol of

intangible rights a mark symbolizes. The trademark,

functioning as a word or symbol, does not lose its

ability to perform its trademark functions at full

strength. This concept is different than finding

genericness through extensive third-party use under

traditional trademark jurisprudence. The trademark

itself still functions properly and is not “diluted” but

because of another’s use of a mark, a consumer might

make an improper purchasing decision. The trademark does

not lose its ability to operate at “full strength” when

sales are diverted. Misleading consumers by

misrepresentation or confusing use due to another mark

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does not dilute the original mark; instead, such

misrepresentation steals sales that belong to the

original mark.

But to the extent a consumer does not purchase from

the intended trademark owner, diverted sales dilute the

owner’s expected profits. This is not dilution of a

mark. The marks of the owner, as well as the marks of

the unauthorized users, both function at full strength.

What is occurring in this form of trademark protection

is diverting sales from the intended owner, and it is

not dilution of the mark. The fallacy is in equating

dilution of a trademark to the concept of lessening the

concentration of a beaker of laboratory chemicals by the

addition of another substance. The only thing that gets

diluted is the owner’s sales and profits. Defining

dilution as these diverted sales helps explain this

concept.

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The Lanham Act11 does not define dilution as the

lost sales or profits of a trademark owner attributable

to injurious conduct. Instead, the Lanham Act defines

dilution in terms of the cause of action, rather than in

terms of the resulting damages or injury. The concepts

of trademark infringement and trademark dilution are

terms of art. Modern trademark dilution as codified in

federal trademark law is entirely different from the

historical antecedents and definitions of dilution

concepts.

The concept of trademark dilution is not clearly

defined in modern trademark law because, historically,

“traditional” trademark infringement jurisprudence was

intended to protect consumers, thereby only indirectly

protecting the rights of trademark owners. This is

evidenced by the requirement for a trademark owner to

first prove “consumer confusion” in order to obtain a

11 15 U.S.C. § 1051 et seq.

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Lanham Act remedy of injunction to stop use of another’s

trademark. The trademark owner’s rights in and through

its trademark could not be asserted directly by merely

proving damages caused by another’s use of a

“confusingly similar” mark.

Defining dilution as only the economic damages

resulting from injurious conduct would be all inclusive,

in that it would apply to all conduct resulting in lost

sales or profits. Dilution would only be defined as the

loss of expected sales as a form of recognized economic

injury only. Dilution would be defined as the result of

injurious conduct, whether that wrongful conduct was

defined in terms of consumer-based infringement or in

terms of owner-based rights.

A “dilution” scheme should be defined in terms of

its relationship to historical trademark concepts based

on consumer protection, rather than separated from

protecting consumers. Complicating this is the fact that

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the concepts of infringement and dilution have never

been adequately defined, even prior to enactment of the

1946 Lanham Act. These traditional concepts that

developed in trademark infringement law are related to

the new concept of dilution.

In the context of describing the development of

trademarks as property rights, William W. Fisher, III,

explained:

Gradually over the course of Americanhistory, this discourse was supplanted by onecentered on the notion that rights to controlthe use and dissemination of information areforms of ‘property.’ This transition can beseen most clearly in the context of trademarklaw. Until the middle of the nineteenthcentury, legal protection of trademarks wasjustified on the basis of the need to protectinnocent sellers against ‘fraud.’ In otherwords, the law in this field was understood tobe a branch of (what was gradually coming to becalled) tort law, not property law. In the 1849case of Amoskeag Manufacturing Company v. Spear, asharply different language appears: ‘thedoctrine of an exclusive property in trade-marks has prevailed from the time of the yearbooks.’ This new conception did not immediatelysweep the field; for many years, tort andproperty concepts coexisted uneasily in the

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many subdivisions of the law of trademarks andunfair competition. But slowly, propertydiscourse took precedence.

In the early twentieth century, aninfluential group of commentators lent theiraid to this trend. Led by Frank Schechter,these scholars argued that the true basis oftrademark protection was a property interest inthe mark itself (or in the goodwill of whichthe mark was a vehicle), and that the lawshould recognize and enforce that propertyright more fully than it already did. OliverWendell Holmes and a few like-minded scholarsdisagreed, but they were clearly in theminority.12

The property right protects the trademark owner

against lost sales and profits, and the consumer-based

protection protects the consumer against fraud. This is

the dual-purpose nature of trademark law.

All of this process can be realized in the earliest

definitions of unfair competition. As terms of trademark

art, dilution might be just infringement with a

12 William W. Fisher III, The Growth of Intellectual Property: A History of the Ownership of Ideas in the United States, in EIGENTUMSKULTUREN IM VERGLEICH (Vandenhoeck & Ruprecht, 1999), fns. 96-101 (available online at <http://cyber.law.harvard.edu/property99/history.html>) (accessed Apr. 22, 2012).

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different set of required proofs, and which applies only

to certain classes of marks (the famous marks). But the

modern definition of dilution seems to relate more to an

historical policy related to unfair competition instead

of a new form of recognizable injury separate from

consumer protection. Trademarks have always functioned

to protect both consumers and owners, instead of being

limited to one or the other.

The 1849 Amoskeag case said that he who affixed to

his own goods an imitation of an original trade-mark, by

which those of another were distinguished and owned,

seeks, by deceiving the public, to divert and

appropriate to his own use, the profits to which the

superior skill and enterprise of the other had given him

a prior and exclusive title. Such a person by false

representation endeavors to affect a dishonest purpose

by committing a fraud upon the public and upon the true

owner of the trademark. Perhaps there is no actual fraud

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upon the owner directly. By defrauding consumers who

purchase goods, owners are deprived of their rightful

expectations. The injury to the owner is like a form of

diverting, or stealing, property, and this is the result

of the fraud on the consumer.

The modern terms of art describing infringement and

dilution do not adequately describe this. Dilution would

make more sense being defined as the lost sales or

profits. The cause of action might need to be defined in

terms of the respective injury to both the consumer and

the owner, instead of injury to the mark. The mark

accomplishes its many recognized functions simply by its

existence and use in the marketplace. What is happening

is that another person is misrepresenting such a mark.

This is happening whether protection is drafted under

the traditional analysis of injury by infringement and

for nontraditional analysis of injury by dilution. But

the injury itself is not to the mark. The injured party

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is a consumer or owner. Modern dilution attempts to

provide to owners the dual-protection part of the

Amoskeag case’s language, that unauthorized use of a

trademark injures the trademark owner. To the extent

that traditional trademark law has protected the rights

of owners only indirectly through infringement and

consumer-based proofs of injury, it appears that the

owner-based protections were nonexistent. But,

protecting consumers indirectly protects owners as well

when consumers purchase from the owners. Perhaps there

is no need to try to separate the dual-function of a

mark, in terms of marks intended to protect only

consumers and marks intended to protect only owners.

Beverly Pattishall described trademark protection

as including confusion, dilution (roughly based upon

Schechter’s pre-Lanham Act concepts), and also

tarnishment, disparagement, or misrepresentation.13 13 Anne Gilson LaLonde, Karin Green & Jerome Gilson, GILSON ON

TRADEMARKS, rvsd. ed., vols. 8-10 (Legislative History) (New York: Lexis/Nexis, 1988), p. 43-45 (Gilson on Trademarks).

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Pattishall recognized trademark protection of the public

as distinct from property rights such as trespass.

Senator DeConcini also described property rights in a

mark.14

Pattishall observed in 1953 that:

Dr. Rudolph Callmann …, the mostvociferous advocate of the dilution theorywriting today … comments … that Schechter’sproposition goes too far, since the ‘Americanlaw of unfair competition and trademarks is toodeeply rooted upon the concept of passing offto attempt to divorce it completely from thedoctrine of confusion and public reaction tothe use of the contested mark.’”15

Dr. Callmann’s 1953 comment that Schechter’s

proposition went too far from the law of unfair

competition and trademarks should be balanced with the

fact that, as early as 1950, Congress enacted a cause of

action for exclusive trademarks that was not subject to

traditional trademark infringement law that required

14 Gilson, Gilson on Trademarks, p. 43-37. 15 Nelson, The Wages of Ubiquity, p. 745, fn. 85 (citing Pattishall).

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proving consumer confusion.16 In this respect,

Schechter’s ideas of nontraditional trademark

protection, not subject to confusion analysis, first

became a reality in federal law in 1950, rather than

later in 1996 when the Lanham Act itself was amended to

provide for a cause of action identified as dilution.

But Pattishall’s observation of Callmann, that the

concept of dilution was radically different from

traditional trademark protections based on confusion and

public protections, is one of the reasons why there has

been so much historical backlash against owner-based

protections in trademark law. Rather than divorcing the

concept of dilution from traditional doctrines, and

treating consumer-based protections and owner-based

protections separately, trademarks must be understood as

serving both purposes at once.

16 San Francisco Arts & Athletics, Inc. v. United States Olympic Committee, 483 U.S. 522, 529, 107 S.Ct. 2971, 97 L.Ed.2d 427, 55 USLW 5061 (1987) (“The relevant statute, in force since 1950, did not require the use to be confusing.”) (SFAA v. USOC).

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Rather than seeing dilution as divorced from

infringement, dilution should be seen as an integral

part of the trademark protection scheme, designed to

protect both consumers and owners. Defining dilution as

the lost sales and profits helps this understanding

because it applies equally to traditional infringement

and to owner-based protections. The dual-purpose of

trademark law protection (for consumers and owners) has

always functioned to protect both consumers and owners.

Trademark law functioned to protect both consumers and

owners even before modern dilution limited proof of

consumer injury. Trademark owners have always been able

to seek trademark infringement remedies to protect their

economic interests by proving consumer confusion.

Arguing about property rights vis-à-vis consumer fraud

fails to recognize that traditional infringement always

has also protected the property rights of trademark

owners.

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David W. Barnes described dilution law as

protecting rivalrous uses in his economic analysis of

trademarks. Barnes stated that, on the surface, the

dilution theory seems most directly aimed at protecting

private interests without concern for referential uses

or the public domain. Barnes stated that traditional

infringement actions protected both owners and consumers

by preventing confusion. Barnes stated:

That dilution law focuses on protectingreferential use is a somewhat remarkable claimbecause that theory is often viewed asprotecting only the private, proprietary rightsin marks, even to the extent of creating“property rights” in those marks.

It is generally accepted that infringementactions protect both the goodwill of markowners and competition by preventing confusion.The Lanham Act grants exclusive trademarkrights to “secure to the owner of the mark thegoodwill of his business and to protect theability of consumers to distinguish amongcompeting producers.” It is misleading,however, to think that the structure oftrademark law is directed towards protectingprivate interests.17

17 David W. Barnes, A New Economics of Trademarks, 5 NW. J. TECH. & INTELL. PROP. 22 (2006), p. 32 (available online at

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Under this analysis, there should be no need for

any separate action for dilution to protect an owner’s

goodwill. According to Barnes, modern dilution requires

an understanding of the “public goods nature of

trademarks” in order to establish proper boundaries for

marks. Proprietary use of trademarks by others who

compete in the same geographic and product market are

rivalrous, but proprietary use by others whose use is

unlikely to cause source confusion is only potentially

congestible.18

Infringement actions are designed to address those

rivalrous simultaneous uses. Dilution focuses on non-

confusing uses that might diminish the referential

utility of a mark in other ways. From a congestible

public goods perspective, the task of dilution law is to

determine which trademarks are susceptible to congestion

<http://scholarlycommons.law.northwestern.edu/njtip/vol5/iss1/2>) (accessed Apr. 22, 2012) (A New Economics).

18 Barnes, A New Economics, pp. 34-35, fns. 48, 49.

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and which other uses cause congestion. According to

Barnes, “Only by understanding the public goods nature

of trademarks can we properly establish the boundaries

of permissible uses of marks.”19

Barnes’ description of trademark law as protecting

both goodwill and competition by preventing confusion

recognizes the dual functions of trademark protections.

Goodwill, as a form of property rights protecting the

owner, is automatically protected through the protection

of consumers from confusion. Barnes stated that

infringement protection already accomplishes both of

these policies. As functionally defined, dilution by

blurring and dilution by tarnishment are both similar to

trademark infringement. This is because of the need for

an association, or a “referential” use between the

marks.

19 Barnes, A New Economics, pp. 34-35, fns. 48, 49.

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Without any association from the similarity of

marks, there should no need for protection of either the

consumer or the owner. In order to find either

traditional infringement or nontraditional dilution

protections, some association between marks is

necessary. This is evident in the definitions of

dilution by blurring and dilution by tarnishment

requiring an association between marks. Trademarks

protect both private and public rights, whether they are

defined as private or public goods. They protect the

interests of both consumers and owners. Defining

dilution as the lost sales and profits makes the concept

of dilution an economic harm to the owner.

As long as trademark law exists in order to protect

the public and trademark owners, there should be a

requirement to show some form of consumer injury to

obtain an injunction. If trademark law were redefined as

only protecting the property rights of owners, but not

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consumer rights, then it would be proper to provide

protection to owner without any analysis of the effect

on consumers. But, as long as trademark law performs its

dual-purpose function of protecting both consumers and

owners, protection for owners and protection for

consumers should accomplish both functions. Negating the

requirement of proving any effect on consumers (such as

providing for a cause of action without a consumer-based

analysis at all) attempts to separate the dual-purpose

of trademark law. Because the trademark itself serves

both purposes equally, and the trademark cannot be split

into performing only one of these functions, any cause

of action should be designed so that it protects both

consumers and owners. Modern dilution, to the extent

that it negates any requirement to perform a consumer-

based protection analysis, does not accomplish this

dual-purpose of trademark law. Modern dilution based on

protecting only owners without regard to protecting

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consumers, is the realization that trademark law exists

only to protect the rights of owners. This is a change

in the Amoskeag reasoning that trademark law exists to

protect both consumers and owners. Protecting consumers

indirectly protects owners, but protecting owners does

not necessarily protect consumers.

There is some question as to whether Schechter

actually used the term “dilution” to describe his

concept of trademark protection. Gilson states that

Schechter is quoted as having mentioned “marks that do

not confuse or dilute.”20 If Schechter did not use the

term “dilution,” it would be noteworthy. It is clear

that he did not use the term “dilution” in his version

of the 1932 statutory language.

Somehow, dilution became associated with protecting

property rights, while infringement became associated

with the historical tradition of protecting consumer

20 Gilson, Gilson on Trademarks, p. 43-25.

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rights. Dilution was not defined as the lost sales or

profits resulting from injurious conduct. Dilution came

to be defined as a form of injurious conduct to owners,

like infringement became defined as conduct injurious to

consumers. Defining dilution as the lost sales or

profits is a better use of the term, and makes more

sense in terms of the history of trademark policies and

protections. Infringing conduct is injurious conduct

that damages the rights of consumers. The rights of

consumers include the right to be free from deceptive

practices, and the right to purchase products from the

intended owner, if that matters to the consumer.

Rather than define dilution as another cause of

action, if dilution were defined only as the result, or

consequence, of injurious conduct, then injurious

conduct that damages the rights of trademark owners

would only be different from traditional infringement in

terms of the policy behind the particular form of

34

trademark protection. The resulting injury to consumers

is purchasing products they did not intend to purchase.

The resulting injury to the trademark owner is loss of

those sales – a true dilution of the expected sales and

profits from consumers purchasing the goods they

intended to purchase from the seller they intended to

purchase from. So, traditional trademark infringement

protection, designed and intended to protect consumers,

indirectly does protect trademark owners. Consumer-based

trademark protection and owner-based protections are

linked indirectly.

The earliest language in a trademark amendment bill

that included specific language to protect unauthorized

use of trademarks from both confusing the public, and

from injuring the rights of trademark owners, was

included in H.R. 7118, introduced by Congressman Vestal

in 1932.21 Congressman Vestal’s bill, written by

21 H.R. 7118, 72d Cong., 1st Sess. (1932).

35

trademark attorney Frank I. Schechter, would have

amended trademark law to include both traditional

trademark infringement based on consumer fraud, and

nontraditional trademark protections for owner rights in

the same section of the law, providing for the

registrability of trademarks.

Schechter’s 1932 language read:

When such previously used trade-mark (1)is applied to merchandise or services of thesame descriptive properties, or (2) is appliedto merchandise or services of such otherproperties, quality, or reputation or tomerchandise or services so distributed orconveyed to the purchasing public, or (3) wasat the time of its registration a coined orinvented or fanciful or arbitrary mark, so thatthe use of applicant's mark is likely to causeconfusion or mistake or to deceive purchasersor users thereof as to their source or originor otherwise to injure the good will,reputation, business, credit or securities ofthe owner of the previously used trade-mark, itshall constitute prima facie grounds for refusingregistration.22

22 Frank I. Schechter, Fog and Fiction in Trade-Mark Protection . Part I, 36 COLUMBIAL. REV. 1 (Jan. 1936), 84-85 (Fog and Fiction).

36

Schechter’s 1932 language would have recognized, in

addition to consumer-based confusion, the injury to the

“goodwill, reputation, business, credit or securities of

the owner of the previously used trade-mark,” and

Schechter would have refused a mark from federal

registration based on either confusion or direct injury

to the mark’s owner. Apart from Schechter’s narrow

definitions of what kinds of trademarks actually

qualified for protection, his 1932 definition would have

protected the rights of all trademark owners, not just

owners of famous marks. Modern “dilution” protects

owners of famous marks only.

Schechter included the concept of “goodwill” in his

definition of registrable trademarks as part of the

owner’s protections. Schechter described the true

function of marks as:

To describe a trademark merely as a symbolof good will, without recognizing in it anagency for the actual creation and perpetuationof good will, ignores the most potent aspect of

37

the nature of a trademark and that phase mostin need of protection. To say that a trademark‘is merely the visible manifestation of themore important business goodwill, which is the“property” to be protected against invasion’ orthat ‘the good will is the substance, thetrademark merely the shadow,’ does notaccurately state the function of a trademarktoday and obscures the problem of its adequateprotection . . . today the trademark is notmerely the symbol of good will but often themost effective agent for the creation of goodwill . . .23

Thus, Schechter seems to have changed the concept

of protecting the goodwill that a trademark represents

or symbolizes into protecting the mark itself as an

agent for creating the goodwill. This is not stated in

the 1932 definition. This may be where the concept of

diluting a mark came from, as opposed to injuring the

rights of consumers or the rights of owners.

Whether a trademark functions only as a symbol of

good will, or whether it functions as the agent for the

creation of good will, is unimportant to the definition

23 Bone, Schechter’s Ideals in Historical Context, p. 486, fn. 94.

38

of dilution. This is an unnecessary complication of a

much simpler definition of dilution as the lost sales

and profits to the trademark’s owner. Dilution is the

“concrete injury” of lost sales. The trademark performs

all of its functions without regard to the definition of

dilution. The diversion of sales occurs as a result of

consumer choices.

According to Bone:

The most important function in[Schechter’s] view was to perpetuate and creategoodwill. Retailers could build goodwill bytheir direct dealings with customers, butimporters, manufacturers, and other agents moreremote in the distribution chain had to relyalmost exclusively on marks. Moreover, themarks they used had to be distinctive enough tocompete with the retailer for attention: inSchechter’s metaphor, to “‘reach over theshoulder of the retailer’ and across thelatter’s counter straight to the consumer.” Itfollowed for Schechter that the law shouldprotect a mark’s distinctiveness even in theabsence of confusion or lost sales in order topreserve its goodwill-generating capacity.24

24 Robert G. Bone, Hunting Goodwill: A History of the Concept of Goodwill in Trademark Law, 86 BOSTON UNIV. L. REV. 547 (2005), p. 589 (Hunting Goodwill).

39

This passage states that Schechter would protect a

mark in the absence of both confusion and in the absence

of lost sales based on a retailer’s ability to obtain

more goodwill than the owner of the mark. This should

not matter if the consumer purchases the product. The

retailer and the mark owner both profit from this

transaction. In this respect, Schechter’s trademark

protection would treat mark owners differently, based on

whether they were retailers directly selling to

consumers, or further up in the supply and distribution

chain such that they did not sell directly to the

public. The argument seems misplaced, and does not seem

to recognize that trademarks do function as symbols of

goodwill of the mark’s owner. A retailer does not harm a

company’s goodwill by selling the product for the

company. Schechter’s idea of having no requirement to

prove confusion or to prove lost sales now seems to have

been codified as modern dilution applicable only to

40

famous marks. Schechter’s functional ground of

protecting trademarks based on this goodwill concept was

noted by the United States Supreme Court in its

interpretation of exclusive marks, recognizing that

Congress could protect a mark’s distinctiveness, even in

the absence of confusion or lost sales, and this

preserved a mark’s goodwill-generating capacity.25

Schechter’s 1932 definition also defined trademark

protection as injury to an owner’s reputation. According

to Sarah L. Burstein, dilution

is the legal theory that seeks to protect a trademark owner directly against the diminution of a trademark’s ‘commercial magnetism’ or selling power by unauthorized junior use of the same or substantially similarmark.26

25 SFAA v. USOC, 537-538 (“Congress' interests in promoting the USOC's activities include these purposes [creating international goodwill] as well as those specifically enumerated in the USOC's charter.”).

26 Sarah L. Burstein, Dilution by Tarnishment: The New Cause of Action, 98 THE TRADEMARK REPORTER 5 (Sept.-Oct. 2008), p. 1191, fn. 13 (Dilution by Tarnishment).

41

Footnote 13 in Burstein’s article states that the

new tarnishment type of action in the TDRA “owes nothing

to Schechter, but is a creature of state (and now

federal) law.”27 Burstein, however, seems partially

historically incorrect about Schechter and the concept

of injury to reputation because Schechter directly

included injury to reputation in his 1932 definition of

registrable marks.

Dilution by tarnishment is defined in the TDRA as:

. . . For purposes of paragraph (1),"dilution by tarnishment" is associationarising from the similarity between a mark ortrade name and a famous mark that harms thereputation of the famous mark.28

This definition and Schechter’s 1932 definition of

protectable injurious conduct both include injury to the

reputation of the trademark owner. However, defining

tarnishment as injury to the reputation of the mark,

instead of injury to the reputation of the mark’s owner,

27 Burstein, Dilution by Tarnishment, p. 1191, fn. 13.28 15 U.S.C. § 1125(c)(2)(c) (2006).

42

does not directly recognize that harm to reputation is

harms to the mark’s owner when consumers decide to not

purchase products. Again, defining dilution as the lost

sales and profits due to harm to the reputation of the

mark’s owner, symbolized by harm to the mark’s

reputation, and causing consumers to purchase from a

different source, clarifies these issues better.

Instead of defining owner-based protections and

integrating them into consumer-based protections,

closely following the historical, dual-purpose policies

of trademark law, modern trademark law has incorrectly

followed flawed historical reasoning and a subsequent,

flawed historical definition of dilution concepts.

Legal scholar Sara Stadler Nelson cited to the 1849

case of Amoskeag Manufacturing Company v. Spear, describing the

historical, dual-purpose of trademark law as deceiving

the public by committing a fraud on the public, and upon

the true owner of the mark:

43

He who affixes to his own goods animitation of an original trade-mark, by whichthose of another are distinguished and owned,seeks, by deceiving the public, to divert andappropriate to his own use, the profits towhich the superior skill and enterprise of theother had given him a prior and exclusivetitle. He endeavors, by a false representation,to effect a dishonest purpose; he commits afraud upon the public and upon the true ownerof the trademark. 29

The Amoskeag case, and others following its

reasoning, clearly states that the two injured classes

of parties when a trademark is misused are the public

and the owner. Going back to 1849, the Amoskeag case

stated this dual-purpose policy of trademarks clearly.

According to Nelson, Schechter had grown uncomfortable

with resting the protectability of a trademark on “the

judicial estimate of the state of the public mind.”30

There is no reason why the policies of consumer

protection against fraud and protection of trademark

owner’s rights could not have been developed together. 29 Nelson, The Wages of Ubiquity, p. 742, fn. 67 (quoting Amoskeag Mfg. Co.

v. Spear, 2 Sandf. (N.Y.) Super. 599, 605-606 (1849)).30 Nelson, The Wages of Ubiquity, p. 745, fn. 82.

44

There is also no reason why these policies cannot be

integrated now in a better way by defining the trademark

terms of art in a new statutory scheme.

The starting point for a new trademark scheme would

define dilution only in terms of the lost sales and

profits. The ultimate resulting injury of injurious

trademark conduct would be the diluted, or diverted,

sales and profits. In addition to direct injuries to

owners, consumers would still be protected through

traditional infringement based on protecting consumers,

but the ultimate injury for both traditional

infringement and injury to owners’ rights would be

diverted sales, as lost sales and profits. The new

scheme could include all the traditional trademark

infringement concepts, integrated with the modern owner-

based protections of blurring and tarnishment. Dilution

would mean something concrete.

45

Bone argued that Rudolph Callmann played an

important part in the development of trademark dilution

law, perhaps even more so than Schechter. According to

Bone, it was Callmann, not Schechter, who linked

dilution clearly to property rights in a mark, and it

was Callmann, not Schechter, who advocated dilution

protection for descriptive marks with strong secondary

meaning. Similar to Schechter, Callmann defined dilution

in terms of the injurious conduct designed to protect

the property rights of owners. Defining dilution as the

lost sales and profits would properly recognize that the

lost sales and profits are the result of the injurious

conduct that damages trademark owners, rather than their

marks. Callmann’s concept of dilution does not make this

distinction.

According to Bone, Callmann was such a fan of

dilution that he even suggested that dilution should be

used to protect newly minted and inherently distinctive

46

marks before they acquired popularity.31 Whether Callmann

or Schechter should be given the credit for the most

correct historical concepts of dilution, it seems that

Callmann’s broader recognition of dilution as protecting

property rights of owners for qualified marks appears to

be more closely directly linked to lost sales and

profits than Schechter’s concept of dilution of a mark

itself.

Schechter gave modern trademark dilution its birth.

Schechter is important for his strong support of

nontraditional trademark protection, for which he has

been cited by the nation’s highest court. But neither

Schechter nor Callmann truly defined dilution. Dilution

should not be defined in terms of diluting an intangible

aspect of a trademark, instead of harming a person or

corporation. Schechter’s dilution would give a mark or

symbol rights. At least Callmann’s dilution is related

31 Bone, Schechter’s Ideals in Historical Context, pp. 498-501, fn. 153.

47

to the property rights of owners, rather than property

rights of marks.

According to Nelson, Schechter wanted nothing less

than to redefine the modern trademark.32 However,

Schechter’s definitions have obscured the original dual-

purpose of protecting consumers and protecting owners by

making up a concept of protecting the marks themselves,

as if the mark has a cognizable injury it can be

protected from. Thus, Schechter’s historical concepts of

trademark protection were in fact radical and have

resulted in confusing the issue of protecting consumers

and protecting owners. Trademarks should not be equated

to consumers and owners and given protection from

injury. The dual-purpose protection of protecting

consumers from fraud and deception, and of protecting

owners from lost sales and profits, is sufficient

32 Nelson, The Wages of Ubiquity, p. 746.

48

without the concept of diluting a trademark or its

intangible representations.

Schechter’s 1927 approach was indeed radical.

Rather than focusing on a trademark as a referent

linking a product and its source, Schechter was

concerned about the associations between certain marks

and the products with which they were used.33 But this

distinction does not change the concept of injuring

consumers or owners. Trademarks serve multiple

functions. They do link products with the product’s

sources, and the also create associations between marks

and the products they are used with. However, these

multiple functions of trademarks do not result in injury

to the marks themselves. The marks are not diluted. The

associations between marks and products are not diluted.

Consumers make choices to purchase products, and if

they are truly confused and misled into purchasing from

33 Mark P. McKenna, Testing Modern Trademark Law’s Theory of Harm, 95 IOWA L. REV. 63 (2009), p. 6, fn. 40 (Testing Modern Trademark Law’s Theory).

49

an owner they really did not intend to purchase from,

the consumer is deceived. But the consumer still

associates an unauthorized mark with the product just as

they associate an authorized mark with the product. The

association itself is not diluted. They just purchase

from the wrong owner. These concepts relate to passing

off, but do not have to be part of the definition of

dilution in order to make sense as describing injurious

conduct.

Likely dilution, defined as likely diverted sales,

could occur even when consumers do not actually make

purchases. But in that case, in order to adhere to the

concept of dilution defined as diverted sales instead of

in terms of dilution of a mark, there would have to be

some way to measure likely lost sales. To the extent

that consumers make purchasing decisions, it would seem

that some type of consumer-based analysis must be

required in order to determine whether there is a

50

likelihood of diverting sales from owners. Otherwise,

diverted sales could be assumed without any proof of

likely diverted sales whatsoever. Under modern dilution

defined as dilution of the mark, there is no requirement

to prove that the consumer is likely to not purchase

from the owner. Dilution, instead of diluting a mark, or

an association with a mark, should be the result of a

consumer not purchasing the product from the intended

owner. Diverting sales from the intended owner dilutes

the owner’s expected sales.

Nelson noted that modern courts continue to

struggle with the question of “injury” in dilution

cases.34 Nelson attributed the relevancy of Schechter

today to the development of advertising, because

Schechter was writing at the beginning of a new

generation of advertising in America.35 Schechter was

mostly concerned with a negative consequence of

34 Nelson, The Wages of Ubiquity, p. 764.35 Nelson, The Wages of Ubiquity, p. 777.

51

disturbing both source and product signals. When

dilution, as Schechter conceived it, happens, it not

only disturbs the source signal broadcast by every

distinctive mark, but it also disturbs the product

signal—such as the product signal that links the Pepsi

mark to carbonated cola beverages.36

Nelson thought that Schechter was right when he

wrote that, without uniqueness, there can be no “selling

power”; and without selling power, there can be no

“dissociation from the particular product in connection

with which [the mark] has been used”; and without this

“whittling away,” there can be no dilution. According to

Nelson, there would be no dilution unless the mark was

“unique” as defined by Schechter. This concept of

uniqueness does not help define dilution. In part this

is because Schechter’s concepts were defined in terms of

diluting a mark. Selling power is not limited to unique

36 Nelson, The Wages of Ubiquity, p. 786.

52

marks used only on certain products. Modern day branding

uses marks on multiple products. Schechter’s historical

uniqueness requirement is not valid today, and it does

not define dilution as lost sales or profits.

To Nelson, traditional trademark infringement law

provides an adequate remedy to the extent the

distinctiveness of a mark alone is impaired (recognizing

that a traditional trademark owner must also prove that

consumer confusion is likely). Nelson would not find

dilution if a mark possessed mere distinctiveness and

addressed source, but did not address its connection to

a product. “When a mark does not possess uniqueness,

there simply is nothing to ‘dilute.’”37 This definition

of dilution assumes that dilution of the mark occurs,

and it is limited to unique marks used only on certain

products. However, defining dilution in terms of the

lost sales and profits rather than diluting the mark

37 Nelson, The Wages of Ubiquity, pp. 787-788.

53

negates Nelson’s reliance upon Schechter’s historical

definitions of uniqueness.

According to Barton Beebe, in Schechter’s view,

trademark uniqueness was worth protecting because it

generated “selling power.” Certain very strong marks

were not simply a means of identifying and advertising

source. In a new age of mass production, they were also

a means of endowing the goods to which they were

attached with the characteristic of uniqueness, a

characteristic for which consumers would pay a premium.38

Schechter would have found a limited property right

apart from traditional trademark protections for certain

very strong marks that functioned beyond mere source or

quality identifiers. Schechter would have protected

these marks that had what he defined as selling power.

According to Bone, the wrong that concerned Schechter

involved actual harm, and not mere appropriation. 38 Barton Beebe, A Defense of the New Federal Trademark Antidilution Law, 17

FORDHAM INTELL. PROP. MEDIA & ENT. L.J. 16 (2006), pp. 1143, 1145 (A Defense).

54

Dilution was a “concrete injury” to the owner resulting

from impairment of the mark’s selling power.39 This

concept of actual harm comes closer to describing what

dilution means. Dilution should be the actual harm in

the form of lost sales and profits to the true trademark

owner. The appropriation itself was not the wrong or

harm, but it caused the wrong or harm by diluting the

sales of the owner. Dilution is not the “impairment of

the mark’s selling power.” The mark’s selling power is

not diluted when another unauthorized mark causes the

consumer to purchase from an unintended owner.

If the requirement to prove causation of the lost

sales is deleted, then there is no proof that customers

intended to purchase from the wrong trademark owner. How

do you prove that selling power is lessened without

proving it indirectly through consumer confusion or

directly by lost sales? With no requirement to prove

39 Bone, Schechter’s Ideals in Historical Context, p. 486, fn. 93.

55

either consumer confusion or lost sales, there is no

cognizable injury to protect.

Modern dilution assumes damages based on no direct

or indirect proof of likely injury to consumers or

owners. No proof of likely injury to a party with

standing means that dilution is based on the traditional

basis of injunctive relief under equitable principles.

Basing trademark protection on proof of likely injury to

consumers or owners makes more sense under equitable

principles requiring a likelihood of harm, using

consumer confusion, and using diverted sales as

indicators of actual protectable harm.

Protecting marks with a special kind of selling

power is also not dilution. Selling power is related to

consumer recognition. Protecting a mark based on its

selling power without requiring proof of likely injury

to consumers or owners seems to be adverse to the

historical trademark policy of protecting consumers and

56

owners. To the extent there is a cause of action against

unauthorized use of a mark with selling power, the owner

and the consumer receive protection from injury. But

this “selling power” itself is not diluted; only the

sales and profits resulting from an unauthorized use of

a mark with selling power would be diluted.

Barton Beebe considered Nelson’s The Wages of Ubiquity

article “an important alternative reading of Schechter,”

that asserted Schechter sought to provide “antidilution”

protection only to marks which were “synonymous with a

single product or product class.”40 Defining dilution

only as lost sales and profits is an even more important

“alternative reading” of trademark dilution concepts.

Dilution concepts developed alternately to

traditional Lanham Act protection. The history of how

the concept of trademark dilution developed is what made

the modern enactment of trademark dilution concepts so

40 Beebe, A Defense, p. 1145, fn. 6.

57

difficult to effectively define, resulting in

substantial modern amendments to correct the Lanham

Act’s dilution provisions within its first decade (from

1995 to 2006). There should be only one meaning of

dilution and that meaning should be limited to the

economic results of injurious conduct defined in the

Lanham Act.

Bone described Nelson’s treatment, in The Wages of

Ubiquity, of Schechter’s The Rational Basis article as “the

most careful I have found, but it fails to appreciate

the strong influence of legal realism on Schechter’s

thought.”41 According to Bone, Schechter proposed

dilution in the spirit of legal realism. Schechter

believed that dilution was the real reason to protect

marks because it was the reason that fit the way marks

actually functioned in the marketplace, and he urged

41 Bone, Schechter’s Ideals in Historical Context, p. 470, fn. 5.

58

judges to acknowledge this fact openly because doing so

would produce better decisions.42

Bone’s revised account of Schechter explained a

feature of trademark history that was “difficult to

reconcile with the standard account.” Bone argued that

no one attacked Schechter’s argument or seriously

engaged the merits of his dilution theory in a critical

way for more than a decade after the 1927 publication of

Schechter’s The Rational Basis article. This does not readily

fit the standard account focus on the radical nature of

Schechter’s ideas, but it at least raises some questions

about how strong the opposition to those ideas really

was post 1927.43 The concept of dilution did not

immediately become an independent theory of liability.

When analyzed using a definition of dilution as

lost sales and profits for a background, there is no

need to consider dilution as an “independent theory of

42 Bone, Schechter’s Ideals in Historical Context, pp. 471-472. 43 Bone, Schechter’s Ideals in Historical Context, p. 472.

59

liability.” Schechter’s concept of limiting

protectability to unique marks with selling power would

be defined as limiting the registrability of certain

marks that he defined as protectable. Schechter was

really trying to provide protection to a limited class

of marks, in the form of registrability. Once

registered, the liability would be related to

unauthorized use of another mark that caused diverted

sales, no different than traditional trademark

infringement but for the definition of registerable

marks. Related to this concept would be the

registrability of marks that protect the owner’s rights

such as “goodwill, reputation, business, credit or

securities of the owner.”

Schechter wanted to provide for the registrability

of marks that protect these interests. However, this

seems to be very closely related to the registrability

of trademarks subject to traditional infringement. The

60

true injury occurs when the consumer does not purchase

products because of an association with an unauthorized

mark. The association itself is not the injury; nor is

any “diluted” association. This is still not dilution of

the mark itself. Schechter included these specific

owner-based rights in his original 1932 definition of

registerable marks.

Use of another’s mark that harms the goodwill,

reputation, business, credit or securities of the owner

would result in an injunction against that use, no

different from traditional trademark infringement. What

is being diluted is not the mark, but the sales. Injury

to goodwill, reputation, business, securities or credit

of an owner, to the extent they are definable in

economic terms, seems to be the better use of the word

dilution to describe what is actually happening.

Dilution defined as lost sales or profits is related to

damages. The economic loss is a better indicator of such

61

injury than defining dilution as the reason a consumer

fails to purchase from a trademark owner.

Bone said that Schechter concluded that a firm that

invests heavily in advertising and builds a strong mark

“should receive the same protection from the courts for

his investment in advertising his trade-mark that he

would undoubtedly be entitled to receive for investment

in plant or materials.”44 The concept of using

advertising expense as a rationale for protecting

trademarks is related to the concept in the federal

dilution statute of protecting only famous marks against

likely dilution by analyzing the degree of recognition

of the famous mark as a relevant factor in finding

dilution by blurring.45

According to Mark Bartholomew, courts were

concerned about protecting trademarks under a dilution

44 Bone Schechter’s Ideals in Historical Context, p. 476. 45 See 15 U.S.C. § 1125(c)(2)(B)(iv) (The degree of recognition of

the famous mark is a relevant factor for finding dilution by blurring).

62

concept based on protecting the advertising of

businesses rather than traditional confusing uses:

Although trademarks were protected againstconfusing uses by competitors, the courtsreacted with disdain when advertisers andbusinesses promulgated a new theory ofprotection for advertising: dilution. Theproposed dilution cause of action would protectmark owners from the ‘gradual whittling away ordispersion of the identity and hold upon thepublic mind of the mark.’46

The statement that “trademarks” are protected

confuses the true issue. The issue is not whether the

trademark itself is protected. The injury is to either

the consumer or to the mark’s owner, not to the

trademark. Dilution is the recognition that trademark

owners can be injured when their trademarks do not

result in consumers purchasing their products.

Protecting owners’ investment in advertising is one of

46 Mark Bartholemew, “Trademark Law and the Power of Historical Myth,” paper presented to Intellectual Property Scholars Conference, Chicago, Illinois, August 9-10, 2007, p. 29, fn. 213 (available online at:

<http://www.law.depaul.edu/centers_institutes/ciplit/ipsc/paper/Mark_BartholomewPaper.pdf>) (accessed Apr. 22, 2012) (Historical Myth).

63

many rational bases for providing protection to an

owner. But the trademark itself does not receive the

benefits of investing advertising dollars in developing

and promoting the mark. The trademark is a tool for the

owner to get the consumer to recognize its product.

Trademark law does not exist to protect only the

investment in the marks. It exists so that consumers are

protected from being mislead from the truth, and also so

owners will receive the full amount of sales expected

from using their marks on their products. Infringement

and dilution exist to protect trademark users

(consumers) and trademark owners.

For example, if consumer confusion or association

is likely to cause diverted sales (as opposed to

dilution of the mark itself), such injury would be

protectable. But if a consumer’s purchase decision is

not likely to divert owner sales, then there would not

be actionable injurious conduct by use of another mark.

64

This could occur in the specific case of tarnishment of

reputation, where a consumer might experience a negative

reputational association with another mark, but not make

their purchasing decision based on that reputational

association. The consumer would not be confused or

misled; they just decide to purchase or not purchase

from the owner, but the negative association would not

be the cause of that purchasing decision. To the extent

the consumer’s purchasing of products from the owner is

diverted, such conduct would be actionable.

What Schechter really advocated for by protecting

owners that invest heavily in advertising is that an

owner of a qualifying trademark should be able to

receive trademark protection without the requirement to

first prove consumer confusion. The mark serves its

function and protects both the consumer and the owner,

no matter how much advertising is expended. The amount

of advertising may make a certain mark more recognizable

65

to the public than another mark, but it does not change

the purpose of a mark from a policy point of view. This

becomes a matter of proof of injury and causation. The

rationale for protecting marks by making them

registerable, whether the rationale for registrability

is advertising investment, uniqueness, or otherwise,

should not lessen the burden of proof of proving a

concrete injury.

The requirement of heavy investment in advertising

was an important point to Bone because it suggested that

Schechter’s endorsement of dilution was not a result of

frustration or impatience or simply a strategic ploy to

speed up judicial recognition of trademark liability in

noncompeting markets. Schechter actually believed that

dilution was the proper way to conceive trademark law.

Schechter defended dilution not simply as another type

of harm that a mark might suffer or just another

doctrine to supplement existing confusion-based

66

liability rules. Rather, dilution for Schechter was a

general theory of trademark liability superior to the

confusion theory. As Schechter put it, “the preservation

of the uniqueness of a trademark should constitute the

only rational basis for its protection.”47

“Confusion theory” is really proving whether

consumers have been misled into purchasing from an owner

they did not intend to purchase from. If proven, an

injunction against registration of the unauthorized mark

accomplishes protection to consumers by taking the mark

off the market. What is the best proof of the “dilution

theory” as a general theory of trademark liability? The

basis for protecting a mark by defining its

registrability is different from proving liability of

unauthorized use of a mark.

Technically speaking, if Schechter’s uniqueness of

the mark itself were the only rational basis for

47 Bone, Schechter’s Ideals in Historical Context, pp. 476-477, fns. 44-46.

67

protecting the mark, then traditional trademark

infringement analysis can accomplish this by defining

registrable marks as only “unique” marks, and providing

for remedies when consumers or owners’ rights are

affected. Proof of injury in the form of lost sales due

to diverted sales seems to be the better definition for

the concept of dilution. Whether the owner has to prove

damages directly through a lost sales analysis, or

indirectly through consumer confusion analysis, the

dilution is to the economic expectation of sales.

The theory of liability should flow from the dual-

purpose of trademark liability of protecting both

consumers and owners, rather than a theory based only on

the rights of one or the other. Consumers should prove

their injuries by proving they purchased from the wrong

owner. Owners should prove their injuries by proving

they lost sales. Is it possible to prove causation – the

cause of an owner’s lost sales – without proving the

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lost sales were caused by injury to consumers? This

seems to be what modern dilution is about. Owners do not

have to prove consumer confusion to obtain an injunction

against another mark that “dilutes” a famous mark.

The general history of trademark law is well cited.

The following history relates to early historical

dilution concepts and is cited from a 1960 Congressional

study.48 The first trademark law of the United States was

enacted in 1870 as part of an act to revise and

consolidate the patent and copyright laws (16 Stat. 198,

at 210). Based on the patent and copyright clause of the

Constitution (art. I, sec. 8, clause 8), the trademark

provisions of that act were held unconstitutional by the

Supreme Court of the United States in 1879 (Trademark Cases,

100 U.S. 82). In 1881, a new trademark law was enacted

48 Committee Print, 86th Cong., 1st Sess., Copyright Law Revision, Studies Prepared for the Subcommittee on Patents, Trademarks, and Copyrights of the Committee on the Judiciary, United States Senate, Eighty-Sixth Congress, First Session, Pursuant to S. Res. 53, Supplementary Note, Revision of Patent and Trademark Laws (Washington, D.C.: United States Government Printing Office, 1960), pp. 16-19 (comprehensive review of trademark law legislative history).

69

(21 Stat. 502) limited to trademarks used in commerce

with foreign nations or with the Indian tribes. It was

not until 1905 (33 Stat. 724) that a trademark statute

was enacted covering interstate commerce generally, and

for 42 years this was the basic Federal statute on

trademarks. The 1905 act was amended a number of times,

and was supplemented by a statute enacted in 1920 (41

Stat. 533) to provide for the registration of certain

trademarks not otherwise registrable, in order to

qualify them for protection in foreign countries under

international conventions.

The act of 1905 was merely a procedural statute

providing for registration of trademarks to establish

prima facie evidence of ownership and for remedial

actions in the federal courts. The substantive rights of

trademark owners were left to the common law or statutes

of the several States. By the 1920's, many people had

become dissatisfied with the act of 1905 and a movement

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began to revise and enlarge the federal trademark law.

Committees of several bar associations worked together

in drafting a bill for complete revision of the law,

which was first introduced in 1924 in the 68th Congress,

and successive bills were introduced in the 69th through

the 72d Congresses. Hearings were held in each Congress

before the House or Senate Committee on Patents at which

many of the features of the bills were in controversy.

In the 69th and 70th Congresses, bills introduced by

Representative Bill Vestal, as redrafted and

reintroduced after the hearings, passed the House but

died in the Senate committee. In the 71st Congress in

1931, the Vestal bill passed the House; it was reported

by the Senate committee and brought under debate in the

Senate, but was not reached for a vote before

adjournment. In the 72d Congress Representative Vestal

reintroduced his bill as H.R. 7118 and hearings were

held but, after his death during that session, no

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further action was taken. Congressman Vestal’s 1932

version contained Schechter’s version of owner-based

protections, but Schechter’s owner-based registration

requirements were not offered in future dilution related

legislation under registrability.

In the autumn of 1940, a number of trade

associations (the National Association of Manufacturers,

the Association of National Advertisers, the United

States Trademark Association, and others) had joined

with the trademark bar groups in organizing a

coordinating committee to reconcile the differing views

on the remaining points of controversy and draft a

revised bill that all might support. A number of

revisions and amendments were made, and many debates

took place. The Lanham Act was signed by President

Truman on July 5, 1946, and became Public Law 489, 79th

Congress, effective July 5, 1947.

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This Congressional history of trademark protection

leading up to the 1946 Lanham Act referenced Congressman

Vestal’s bill that used language drafted by Schechter’s

in 1932.49 A federal cause of action for dilution was not

enacted until the Federal Trademark Dilution Act was

passed in 1996, and was further amended in the Trademark

Dilution Revision Act of 2006. Various discussions took

place, and many versions of proposed statutory dilution

language were offered between the passage of the Lanham

Act in the fifty years between 1946 and the passage of

the trademark dilution amendment to the Lanham Act in

1996.

Historically, there have been many versions of

dilution concepts drafted into legislative bills.

However, none of the modern versions of owner-based

protections contained provisions for registrability

similar to Schechter’s 1932 provision that injury to

49 See fn. 22, supra., Schechter, Fog and Fiction.

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good will, reputation, business, credit or securities of

the owner of the previously used trade-mark, shall

constitute prima facie grounds for refusing registration.

Instead, modern versions of dilution law drafted

dilution in terms of the causes of action against injury

to trademarks. In the legislative history, injury to

reputation has been described as a sub part of

dilution.50 After the 1946 Lanham Act failed to define

trademark protection directly in terms of owner-based

rights (protecting trademarks based on consumer-based

proofs of confusion), states began to enact statutes

intended to protect trademark owners.

“Blurring” and “tarnishment” were early owner-based

dilution concepts recognized by state legislatures as

early as the 1947 Massachusetts antidilution law.51 The

dilution concept of “tarnishment” was not expressly

included in the 1996 FTDA definition of “dilution,”

50 Gilson, Gilson on Trademarks, p. 43-43.51 See Moseley at fn. 17.

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which appeared to be limited to a definition related to

distinctiveness of a mark under a concept of blurring.

When the TDRA amended the FTDA in 2006, basically re-

writing the federal dilution definitions, a second

dilution-related concept of “tarnishment” was clearly

added. To the extent that the 2006 TDRA added both

blurring and tarnishment, it accomplished in federal law

what the state legislatures began in 1947.52

Adding blurring and tarnishment as dilution was

intended to accomplish the dual-purpose of trademark

protection by providing a separate cause of action for

trademark owners separate from consumers. But trademark

owners have always had a cause of action to protect

their trademark rights. Owners could bring actions for

trademark infringement and, after proving that consumers

were confused by an unauthorized mark, obtain an

injunction.

52 See Moseley, at fn. 17.

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Historically, trademark protection has always

protected both consumers and owners, whether defined as

infringement or as dilution. Blurring and tarnishment

protect owner-based rights without regard to whether

consumers need to be protected from confusion by

providing for damages and injunction without proof of

confusion. Traditional infringement-based protections

protect consumers by requiring proof of consumer

confusion in order to receive damages or an injunction.

By not requiring proof of damages for blurring and

tarnishment in the form of lost sales and profits,

modern dilution provides for owner-based trademark

protection without proving likely damage to goodwill,

reputation, business, and securities of the owner.

Modern dilution by tarnishment is intended to protect

the reputation form of owner-based protection. The mark

only symbolizes these things. The best measurement of

injury and harm to the owner is diverted sales caused by

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injury to goodwill, reputation, business, and securities

of an owner. Modern dilution infers injury to the owner

without proof. The concrete injury is measurable in

terms of lost sales. Dilution is better defined as these

lost sales. Dilution of the mark itself does not make

logical sense.

Lost or diverted sales are more direct measurements

of injury than perceptions or associations of consumers

as an indirect method of proving these losses. Not

requiring direct proof of lost sales is roughly similar

to a strict liability criminal statute for liability

based on proving that certain acts occurred without

proving intent to commit the crime. Criminal intent is

inferred by conduct. For trademark dilution (and

infringement), an injunction can be obtained based on

likely infringement or likely dilution without direct

proof of the actual damages of lost sales.

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But an association (as dilution is defined) between

marks does not mean any diverted sales are caused by

that association. The damages are inferred by the

sufficient association between two marks that there is

likely confusion (for infringement), or likely “impaired

distinctiveness” (for blurring), or likely “harm to

reputation” (for tarnishment). There has to be some

evidence of lost sales to award monetary damages;

however, an injunction is based on a likelihood of

success standard. What is the best measurement of this

likelihood? Since actual damages are not required to be

proven to obtain an injunction, there must be a way to

measure this likelihood, even under non-trademark

jurisprudence. The best measurement of a likelihood of

damage might be an analysis of the effect of the

unauthorized mark on the consumer’s purchase choice for

all trademark protections, including infringement and

dilution.

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This would not be limited to a confusion analysis.

A consumer that fails to purchase because they do not

like the reputation of the owner would not fail to

purchase because of being confused. The reason this

makes sense is because, unless consumers fail to

purchase from the true owner due to some linkage with an

unauthorized mark, it is unlikely that the unauthorized

mark would cause actual damages to the owner, or to the

consumer. Under this reasoning, proof of the reason for

the consumer’s failure to choose the product from the

mark’s owner provides proof of the likely damage to both

the consumer and the owner. This also comports with the

dual-purpose of protecting both consumers and owners.

Defining dilution as lost sales and profits also

supports this reasoning.

In 1968, the American Bar Association PTC (Patent

Trademark Copyright) Section drafted proposed unfair

competition language related to the concept of dilution

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defined as a result of injurious conduct versus a cause

of action.53 The 1977 McClellan-Scott bill from the 94th

Congress, 1st Session, S.31, also contained dilution

language.54 In 1979, the American Bar Association PTC

(Patent Trademark Copyright) Section drafted

“antidilution” language related to false advertising.55

The concept of dilution as owner-based trademark

protection is not limited to the Lanham Act. There are

many non-Lanham Act federal statutes providing for

exclusive use of marks, words, and symbols that seem to

accomplish what modern dilution in the Lanham Act is

intended to accomplish. Modern dilution appears to be

related to providing protection for owners without any

requirement to prove that consumers are injured, either

directly or indirectly.

Title 36 of the United State Code provides

Congressional trademark protection without regard to 53 Gilson, Gilson on Trademarks, p. 43-49.54 Gilson, Gilson on Trademarks, p. 43-50.55 Gilson, Gilson on Trademarks, p. 43-50.

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consumer rights for identified names, symbols, emblems,

and words belonging to certain patriotic and national

organizations. Some of the these exclusive provisions

were later amended to more closely resemble Lanham Act

infringement concepts, in the statute protecting

exclusive rights to the Olympic Committee. The amendment

added a consumer confusion analysis requirement, similar

to trademark infringement.

There are various provisions for different

patriotic organizations ranging from the Boy Scouts of

America, to the Olympic Committee, to the American Red

Cross, and many other organizations. Some words and

symbols used by these organizations have “exclusive use”

privileges. The remedies provided by these statutes also

vary. Some organizations have exclusive use privileges

to words and symbols and can affirmatively seek the

statutory remedies for violation of trademark rights as

established in the Lanham Act under the language of the

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statute, while other organizations simply have exclusive

rights without an expressly stated right to seek Lanham

Act relief.

Reviewing Congressional protections of non-

traditional trademark rights granted to patriotic

organizations helps in the general understanding of the

historic and modern concepts of trademark dilution.

These Congressional grants of exclusive use to names and

symbols used by patriotic organizations are not subject

to traditional trademark infringement analysis.

Requiring a consumer confusion analysis in

trademark infringement is an indirect way of showing

that a trademark owner was damaged by the infringement.

Such analysis does not recognize the property right

directly. Direct Congressional grants of exclusive

trademarks are more similar to modern Lanham Act

dilution because these statues do not provide a

requirement to analyze consumer-based protections.

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Organizations that currently receive federal

“exclusive use” protections for various non-traditional

words, symbols, emblems, seals, and badges, codified

outside the Lanham Act in Title 36 range from The

American Legion to the Vietnam Veterans of America,

Inc.56 The current version of Title 36 protecting the

56 See, e.g., the following exclusive use provisions: 36 U.S.C. § 21705 (“The American Legion” or “American Legion” and to use, manufacture, and control the right to manufacture, emblems and badges the corporation adopts); 36 U.S.C. § 20907 (“American Ex-Prisoners of War” and the official American Ex-Prisoners of War emblem or any colorable simulation of that emblem); 36 U.S.C. § 21904 (“The American National Theater and Academy”); 36 U.S.C. § 22306 (“American Symphony Orchestra League” and distinctive insignia, emblems and badges, descriptive or designating marks, and words or phrases required to carry out the duties and powers of the corporation); 36 U.S.C. § 22505 (“American War Mothers”); 36 U.S.C. § 22706 (“AMVETS (American Veterans)” and seals, emblems, and badges the corporation adopts); 36 U.S.C. § 30106 (“The Big Brothers of America, Big Sisters International, Incorporated”, “Big Sisters of America”, “Big Brothers”, “Big Sisters”, “Big Brothers--Big Sisters of America”, and “Big Sisters--Big Brothers” and to use and to allow others to use seals, emblems, and badges the corporation adopts); 36 U.S.C. § 30306 (“Blinded Veterans Association” and seals, emblems, and badges the corporation adopts); 36 U.S.C. § 30507 (“Blue Star Mothers of America, Inc.” and to use, and to allow others to use, seals, emblems, and badges the corporation adopts); 36 U.S.C. § 30706 (“Board for Fundamental Education” and seals, emblems, and badges the corporation adopts); 36 U.S.C. § 30905 [Boy Scouts of America] (to use emblems, badges, descriptive or designating marks, and words or phrases the corporation adopts); 36 U.S.C. § 40306 (“Civil Air Patrol” and all insignia, copyrights, emblems, badges, descriptive or designating marks, words, and phrases the corporation adopts); 36 U.S.C. § 50305 (“Disabled American

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exclusive rights of the United States Olympic Committee

has been amended to more closely resemble Lanham Act

consumer confusion provisions.57 Because the statute

providing for exclusive use to the U.S. Olympic

Veterans”); 36 U.S.C. § 70506 (“The Foundation of the Federal Bar Association”); 36 U.S.C. § 70907 (“Future Farmers of America” and the initials FFA as representing an agricultural membership organization and seals, emblems, and badges the corporation adopts); 36 U.S.C. § 80305 [Girl Scouts of the United States of America] (all emblems and badges, descriptive or designating marks, and words or phrases the corporation adopts, including the badge of the Girl Scouts, Incorporated, referred to in the Act of August 12, 1937 (ch. 590, 50 Stat. 623) [unclassified], and to authorize their use, during the life of the corporation, in connection with the manufacture, advertisement, and sale of equipment and merchandise); 36 U.S.C. § 130106 (“Ladies of the Grand Army of the Republic” and to use and to allow others to use seals, emblems, and badges the corporation adopts); 36 U.S.C. § 130506 [Little League Baseball, Inc.] (“Little League” and “LittleLeaguer” and the official Little League emblem or any colorable simulation of that emblem); 36 U.S.C. § 140304 (“The Military Chaplains Association of the United States of America”); 36 U.S.C.§ 150507 (“National Conference of State Societies, Washington, District of Columbia” and seals, emblems, and badges the corporation adopts); 36 U.S.C. § 150707 (“National Conference on Citizenship” and seals, emblems, and badges the corporation adopts); 36 U.S.C. § 152306 (“National Music Council” and seals, emblems, and badges the corporation adopts); 36 U.S.C. § 152506 (“National Safety Council” and to use and to allow others to use seals, emblems, and badges the corporation adopts); 36 U.S.C. § 152907 (“National Society, Daughters of the American Colonists” and seals, emblems, and badges the corporation adopts); 36 U.S.C. § 153506 (to use and to allow others to use the name "National Tropical Botanical Garden”); 36 U.S.C. § 153706 (“National Woman'sRelief Corps, Auxiliary to the Grand Army of the Republic” and to use and to allow others to use seals, emblems, and badges the corporation adopts); 36 U.S.C. § 154106 (“Naval Sea Cadet Corps”

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Committee originally did not include these specific

references to a consumer-based protection scheme, it was

initially interpreted by federal courts to provide for

and distinctive insignia, emblems, and badges, descriptive or designating marks, and words or phrases required to carry out the duties and powers of the corporation); 36 U.S.C. § 154707 [Non Commissioned Officers Association of the United States of America,Inc.] (“The Non Commissioned Officers Association of the United States of America”, “Non Commissioned Officers Association of the United States of America”, “Non Commissioned Officers Association”, and “NCOA”, and seals, emblems, and badges the corporation adopts); 36 U.S.C. § 170105 (“Paralyzed Veterans of America” and seals, emblems, and badges the corporation lawfully adopts); 36 U.S.C. § 170307 (“Pearl Harbor Survivors Association” and seals, emblems, and badges the corporation adopts); 36 U.S.C. § 190106 (“Reserve Officers Association of the United States” and seals, emblems, and badges the corporation adopts); 36 U.S.C. § 190307 (“The Retired Enlisted Association, Incorporated”, “The Retired Enlisted Association”, “Retired Enlisted Association”, and“TREA” and seals, emblems, and badges the corporation adopts); 36 U.S.C. § 200306 (“Sons of Union Veterans of the Civil War” to use and to allow others to use seals, emblems, and badges the corporation adopts); 36 U.S.C. § 210307 (“369th Veterans' Association” and seals, emblems, and badges the corporation adopts); 36 U.S.C. § 220106 (“United Service Organizations, Incorporated” and “USO” and seals, emblems, and badges the corporation adopts); 36 U.S.C. § 220306 (“United States Capitol Historical Society” and seals, emblems, distinctive insignia, and descriptive or designating marks, words, or phrases required to carry out the duties and powers of the corporation); 36 U.S.C. § 230105 (“Veterans of Foreign Wars of the United States” and its corporate seal and to manufacture and use emblems and badges the corporation adopts); 36 U.S.C. § 230306 (“Veterans of World War I of the United States of America, Incorporated” and to use, and to allow others to use, seals, emblems, and badges the corporation adopts); and 36 U.S.C. § 230507 (“The Vietnam Veterans of America,

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exclusive rights not subject to the Lanham Act’s

consumer confusion infringement analysis.58

The amended version of the statute protecting the

word “Olympic” now more directly references consumer

Inc.”, “Vietnam Veterans of America, Inc.”, and “Vietnam Veterans of America,” and seals, emblems, and badges the corporation adopts).

57 See, 36 U.S.C. § 220506, which currently provides: (a) Exclusive right of corporation. Except as provided in subsection (d) of this section, the corporation has the exclusive right to use-- (1) the name "United States Olympic Committee"; (2) the symbol of the International Olympic Committee, consisting of 5 interlocking rings, the symbol of the International Paralympic Committee, consisting of 3 TaiGeuks, or the symbol of the Pan-American Sports Organization, consisting of a torch surrounded by concentric rings; (3) the emblem of the corporation, consisting of an escutcheon having a blue chief and vertically extending red and white bars onthe base with 5 interlocking rings displayed on the chief; and (4) the words "Olympic", "Olympiad", "Citius Altius Fortius", "Paralympic", "Paralympiad", "Pan-American", "America Espirito Sport Fraternite", or any combination of those words. (b) Contributors and suppliers. The corporation may authorize contributors and suppliers of goods or services to use the trade name of the corporation or any trademark, symbol, insignia, or emblem of the International Olympic Committee, International Paralympic Committee, the Pan-American Sports Organization, or of the corporation to advertise that the contributions, goods, or services were donated or supplied to, or approved, selected, or used by, the corporation, the United States Olympic team, the Paralympic team, the Pan-American team, or team members.(c) Civil action for unauthorized use. Except as provided in subsection (d) of this section, the corporation may file a civil action against a person for the remedies provided in the Act of July 5, 1946 (15 U.S.C. 1051 et seq.) (popularly known as the Trademark Act of 1946) if the person, without the consent of the

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related confusion and false representations similar to

traditional Lanham Act provisions. It appears to have

been amended in order to comply more closely with

traditional Lanham Act infringement-based protections,

corporation, uses for the purpose of trade, to induce the sale of any goods or services, or to promote any theatrical exhibition, athletic performance, or competition-- (1) the symbol described in subsection (a)(2) of this section; (2) the emblem described in subsection (a)(3) of this section; (3) the words described in subsection (a)(4) of this section, or any combination or simulation of those words tending to cause confusion or mistake, to deceive, or to falsely suggest a connection with the corporation or any Olympic, Paralympic, or Pan-American Games activity; or (4) any trademark, trade name, sign, symbol, or insignia falsely representing association with, or authorization by, the International Olympic Committee, the International Paralympic Committee, the Pan-American Sports Organization, or the corporation.(d) Pre-existing and geographic reference rights. (1) A person who actually used the emblem described in subsection (a)(3) of this section, or the words or any combinationof the words described in subsection (a)(4) of this section, for any lawful purpose before September 21, 1950, is not prohibited bythis section from continuing the lawful use for the same purpose and for the same goods or services. (2) A person who actually used, or whose assignor actually used, the words or any combination of the words described in subsection (a)(4) of this section, or a trademark, trade name, sign, symbol, or insignia described in subsection (c)(4) of this section, for any lawful purpose before September 21, 1950, is not prohibited by this section from continuing the lawful use for the same purpose and for the same goods or services. (3) Use of the word "Olympic" to identify a business or goods or services is permitted by this section where-- (A) such use is not combined with any of the intellectual properties referenced in subsection (a) or (c) of this section;

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as the entire statute appears to be a condensed version

of traditional Lanham Act trademark protections.59 It is

yet to be seen whether Congress would amend the current

(B) it is evident from the circumstances that such use of the word "Olympic" refers to the naturally occurring mountains or geographical region of the same name that were named prior to February 6, 1998, and not to the corporation or any Olympic activity; and (C) such business, goods, or services are operated, sold, and marketed in the State of Washington west of the Cascade Mountain range and operations, sales, and marketing outside of this area are not substantial.

58 Compare the current 36 U.S.C. § 220506 with the former 36 U.S.C. § 380, which provided:

(a) Unauthorized use; civil action; lawful use prior to September 21, 1950

Without the consent of the Corporation, any person who uses for the purpose of trade, to induce the sale of any goods or services, or to promote any theatrical exhibition, athletic performance, or competition--

(1) the symbol of the International Olympic Committee, consisting of5 interlocking rings;

(2) the emblem of the Corporation, consisting of an escutcheon having a blue chief and vertically extending red and white bars onthe base with 5 interlocking rings displayed on the chief;

(3) any trademark, trade name, sign, symbol, or insignia falsely representing association with, or authorization by, the International Olympic Committee or the Corporation; or

(4) the words “Olympic”, “Olympiad”, “Citius Altius Fortius”, or anycombination or simulation thereof tending to cause confusion, to cause mistake, to deceive, or to falsely suggest a connection withthe Corporation or any Olympic activity;

shall be subject to suit in a civil action by the Corporation for the remedies provided in the Act or July 5, 1946 (60 Stat. 427; popularly known as the Trademark Act of 1946). However, any personwho actually used the emblem in subsection (a)(2) of this section,

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statutes to require consumer confusion language for

other exclusive marks.

Under the former 36 USCS § 380, Congress provided

the U.S. Olympic Committee (USOC) with exclusive control

of certain uses of word “Olympic” without requiring the

USOC to prove that unauthorized use of word tended to

or the words, or any combination thereof, in subsection (a)(4) of this section for any lawful purpose prior to September 21, 1950, shall not be prohibited by this section from continuing such lawful use for the same purpose and for the same goods or services. In addition, any person who actually used, or whose assignor actually used, any other trademark, trade name, sign, symbol, or insignia described in subsections (a)(3) and (4) of this section for any lawful purpose prior to September 21, 1950 shall not be prohibited by this section from continuing such lawful use for the same purpose and for the same goods or services.

(b) Contributors and suppliers The Corporation may authorize contributors and suppliers of goods or

services to use the trade name of the Corporation as well as any trademark, symbol, insignia, or emblem of the International Olympic Committee or of the Corporation in advertising that the contributions, goods, or services were donated, supplied, or furnished to or for the use of, approved, selected, or used by theCorporation or United States Olympic or Pan-American team or team members.

(c) Exclusive right of Corporation The Corporation shall have exclusive right to use the name “United

States Olympic Committee”; the symbol described in subsection (a)(1) of this section; the emblem described in subsection (a)(2) of this section; and the words “Olympic”, “Olympiad”, “Citius Altius Fortius” or any combination thereof subject to the preexisting rights described in subsection (a) of this section.

59 36 U.S.C. § 220506(c), See fn. 57, supra. (amending statute to add consumer confusion requirement).

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cause confusion, and Congress did not incorporate the

traditional statutory trademark defenses for

unauthorized uses under the Lanham Act, which regulates

trademark infringement.60

The former 36 USCS § 380 was intended to make civil

remedies of Lanham Trademark Act available to the United

States Olympic Committee and to give it the exclusive

right to market licenses for the use of protected words

and symbols.61 Under the current version, the United

States Olympic Committee and International Olympic

Committee received a preliminary injunction because

there was a reasonable inference that, unless enjoined,

companies would continue to use their trademarks to

deceptively market and solicit sales of tickets to

Olympic games in violation of the Lanham Act, 15 USCS §§

60 SFAA v. USOC at 530.61 International Olympic Committee v San Francisco Arts & Athletics, 781 F2d 733,

228 USPQ 585 (9th Cir.Cal.1986), and, reh den, en banc (9th Cir.1986), 789 F2d 1319, 229 USPQ 1001, and affd 483 US 522, 97 L Ed 2d 427, 107 S Ct 2971 (1987) (IOC v. SFAA).

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1114 and 1125, and 36 USCS § 220506(a).62 This consumer

confusion analysis was not required under the original

version in 36 USC § 380. If Congress truly intended that

the Olympic Committee should have exclusive rights

without any consumer based analysis, the original

statute would not have had to be amended. By amending

this statute from an exclusive use statute with no

consumer based analysis to a more traditional consumer

related analysis, Congress recognized that exclusive

owner-based property rights should be analyzed together

with a consumer based analysis.

Even though Congress recognized the economic

purpose behind granting exclusive owner based

protections, it decided to link these exclusive

protections with a consumer based analysis. Exclusive

use provisions perform an economic function of promoting

the efforts of patriotic organizations. Entrusting the

62 United States Olympic Comm. v Xclusive Leisure & Hospitality Ltd., 89 USPQ2d 2011 (N.D.Cal.2009).

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United States Olympic Committee with unfettered control

over the commercial use of Olympic-related designations

facilitated its ability to raise financial resources

from the private sector that were needed to fund the

United States Olympic movement.63 Defining dilution as

lost sales recognizes this economic function of

nontraditional trademark protection. But protecting

owners through exclusive use of certain trademarks

should not necessarily be done without any consumer

based analysis to determine if the consumer was likely

to purchase from an unintended owner.

In 1984, prior to the enactment of the federal

trademark dilution amendments, federal courts already

recognized that Congress had placed a lesser burden of

proof on plaintiffs suing under the former 36 USCS § 380

than on plaintiffs suing under the Lanham Act alone.64 It

63 United States Olympic Committee v Intelicense Corp., S.A., 737 F2d 263, 222 USPQ 766 (1984, CA2 Vt), cert den 469 US 982, 83 L Ed 2d 321, 105 S Ct 387 (1984) (USOC v. Intelicense Corp.).

64 USOC v. Intelicense Corp., supra.

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was not necessary to prove confusion in the use of words

and symbols protected by the former 36 USCS § 380 of the

Amateur Sports Act to enforce prohibitions against

unauthorized use; thus, confusion did not have to be

shown to restrain the use of the phrase “Gay Olympics”

to describe an athletic competition not sponsored by the

United States Olympic Committee or the International

Olympic Committee.65 In 1987, a federal court

characterized a violation against the rights of the U.S.

Olympic Committee under the former 36 USCS § 380 as an

“infringement” of its right to certain exclusive use of

its mark.66 Title 36 protects owner rights without

requiring proof of direct injury to consumers. In this

respect, Title 36 was similar to modern Lanham Act

dilution.

65 IOC v. SFAA, supra.66 SFAA v. USOC at 522, fn. 22 (“In action to prohibit nonprofit

corporation from using the term, ‘Gay Olympics’, it was held that U.S. Olympic Committee has discretion as to when and against whom USOC files opposition to trademark applications and institutes suits for infringement of USOC's right to certain exclusive uses of the word ‘Olympic.’”).

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The United States Supreme Court cited Schechter’s

The Rational Basis article in the context of interpreting §

110 of the Amateur Sports Act of 1978, 92 Stat. 3048, 36

U.S.C. § 380.67 Section 110 of the Amateur Sports Act

granted the United States Olympic Committee (USOC) the

right to prohibit certain commercial and promotional

uses of the word “Olympic” and various Olympic symbols.68

In SFAA v. USOC, the Supreme Court cited Schechter’s The

Rational Basis article in support of interpreting the Amateur

Sports Act as finding a cause of action to protect the

word “Olympic” that was not based upon traditional

trademark law and did not require the prerequisite of

consumer confusion.69 The Supreme Court quoted

Schechter’s article in support of Congress’ ability to

67 SFAA v. USOC at 539.68 SFAA v. USOC at 526.69 SFAA v. USOC at 539, fn. 8 (“[Congress] could . . . determine

that unauthorized uses, even if not confusing, nevertheless may harm the USOC by lessening the distinctiveness and thus the commercial value of the marks.”) (“one injury to a trademark ownermay be ‘the gradual whittling away or dispersion of the identity and hold upon the public mind of the mark or name’ by nonconfusinguses.”).

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enact laws for the protection of certain non-confusing

uses of trademarks that are not subject to the

traditional federal trademark law requirements.

In SFAA v. USOC, the Supreme Court interpreted the

Amateur Sports Act as a Congressional finding that the

word “Olympic” had acquired “distinctiveness,”70 and the

Court equated “lessening the distinctiveness” of the

word to lessening “the commercial value” of the word

causing harm to the USOC.71 The analysis of the concept

of distinctiveness appears related to the historical

concept of dilution of a mark, while the Court’s

comparison of this concept with lessening the commercial

value of the mark appears to confirm a better definition

of dilution as being the actual economic result of

diverted sales. Lessening commercial value is measured

by lost sales.

70 SFAA v. USOC at 534.71 SFAA v. USOC at 539.

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Schechter’s The Rational Basis for trademarks was

applied by the United States Supreme Court in 1987 as

persuasive authority supporting a concept beyond the

“traditional” definitions of trademark protection. The

Court described this nontraditional protection as being

within the scope of trademark protections so as to be

constitutional.72 The scope of trademark protections is

the dual-purpose of protecting both consumers and

owners.

Dilution language was included in the 1988 version

of § 43 of the Lanham Act in Senate Bill 1883. This

amendment of the Lanham Act would have codified dilution

together with confusion in § 43(a)(1)(a),

misrepresentation in § 43(a)(1)(b), and tarnishment and

disparagement § 43(a)(1)(c). There was a separate

section for dilution of a famous mark as a cause of

72 SFAA v. USOC at 534-535 (“Congress' decision to grant the USOC a limited property right in the word ‘Olympic’ falls within the scope of trademark law protections, and thus certainly within constitutional bounds.”).

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action. In § 45 of the proposed 1988 amendment, dilution

was defined as lessening the quality and capacity of a

famous mark to identify and distinguish good and

services, regardless of the existence of competition,

confusion, mistake or deception.73

The first federal statute to define a federal cause

of action for dilution used a circular definition that

defined dilution using the term dilution in its own

definition. The 1996 FTDA provided a cause of action for

dilution, defining the cause of action as a set of harms

caused by dilution including “dilution of the

distinctive quality of the mark,”74 (defining the cause

of action) and “lessening of the capacity of a famous

mark to identify and distinguish goods or services.”75

Dilution was expressly defined in 15 U.S.C. § 1127

(1996). By inserting this express definition of

73 Cyd B. Wolf, Trademark Dilution: The Need for Reform, 74 THE TRADEMARK REPORTER 311 (1984), p. 322; and Gilson, Gilson on Trademarks, p. 43-26.

74 15 U.S.C. § 1125(c) (1996).75 15 U.S.C. § 1127 (1996).

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dilution into the cause of action for dilution, the

phrase in 15 U.S.C. § 1125(c) (1996) would read:

. . . causes [lessening of the capacityof a famous mark to identify and distinguishgoods or services] of the distinctive qualityof the mark . . .

The redundant and reiterative use of the word

“dilution” in 15 U.S.C. § 1125(c) (1996) did not help

clarify the modern concept of dilution. The circular

language in the definition of dilution in the 1996 Act

was both poor drafting, and it did not make any sense.

This specific definition was repealed in the 2006 TDRA

amendment.

A word should not be used in its own definition.

The definition of “dilution” in 15 U.S.C. § 1127 was

that dilution was “lessening of the capacity of a famous

mark to identify and distinguish goods or services.”

What was really being described is the injurious conduct

of passing off, or misrepresentation of one’s mark as

another’s mark. There is no such thing as “lessening the

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capacity of a famous mark to identify and distinguish

goods or services.” The mark, whether famous or not,

performs its trademark function to represent goods and

services. When another person uses a mark that causes a

consumer to unknowingly purchase products from an

unintended product source, a consumer has been wronged.

When another person uses a mark that intentionally

causes a consumer not to purchase products from a

product source that the consumer would have purchased

from but for an unauthorized use of a mark, an owner has

been wronged. Even without the circular language, the

1996 FTDA defined dilution in terms of lessening

capacity of a mark to identify goods and services. To

the extent this meant that consumers could not properly

identify the product source they intended to buy from,

the 1996 FTDA definition of dilution seems to be

concerned with protecting consumer rights by making sure

a mark is able to identify goods and services.

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However, since there was no likelihood of consumer

confusion requirement, the dilution of the mark itself

(as something concept directly to the mark itself

without certain consumer-related proofs) was considered

as indirect proof that a consumer purchase choice would

be assumed if the mark itself were diluted. This

assumption could protect owners by assuming that

consumers will make incorrect purchase choices, but it

does not necessarily protect consumers. If consumer

purchases are not affected by dilution of a mark, then

consumers do not need to be protected by dilution of a

mark, or by infringement of a mark. The generic proofs

in trademark infringement are consumer confusion,

mistake and deception. The only proof in dilution by

blurring and dilution by tarnishment is an association

(presumably by the consumer) between two marks that is

likely to cause this form of dilution to the mark

itself.

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Apart from the circular definition of dilution in

the 1996 FTDA, it is noteworthy that the Act had to be

amended because of other poorly drafted language in the

Act requiring a plaintiff to show that a defendant’s use

of its mark “causes dilution.” While the FTDA language

did not explicitly require actual dilution, the Supreme

Court of the United States interpreted this language to

require actual dilution rather than a likelihood of

dilution. The 1996 FTDA dilution provision stated:

The owner of a famous mark shall beentitled, subject to the principles of equityand upon such terms as the court deemsreasonable, to an injunction against anotherperson’s commercial use in commerce of a markor trade name, if such use begins after themark has become famous and causes dilution ofthe distinctive quality of the mark, and toobtain such other relief as is provided in thissubsection.76

Interestingly, in the legislative history of the

1996 FTDA, trademark attorney Michael A. Grow recognized

the portentous pitfall of failing to codify a likelihood

76 15 U.S.C. § 1125(c) (1996).

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of dilution instead of an actual requirement of

dilution.77 This unintended drafting mistake resulted in

the United States Supreme Court’s Moseley interpretation

based on interpreting the statute’s intent as requiring

actual dilution versus a likelihood of dilution

standard.78

Because actual dilution was not the intended

result, the FTDA required amendment. The 2006 TDRA

amendment of dilution stated:

Subject to the principles of equity, theowner of a famous mark that is distinctive,inherently or through acquired distinctiveness,shall be entitled to an injunction againstanother person who, at any time after theowner's mark has become famous, commences useof a mark or trade name in commerce that islikely to cause dilution by blurring ordilution by tarnishment of the famous mark,regardless of the presence or absence of actual

77 Gilson, Gilson on Trademarks, pp. 43-42 and 43-44 (remarks of AttorneyMichael A. Grow).

78 Moseley, supra. at 433 (“The contrast between the initial referenceto an actual "lessening of the capacity" of the mark, and the later reference to a "likelihood of confusion, mistake, or deception" in the second caveat confirms the conclusion that actual dilution must be established.”).

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or likely confusion, of competition, or ofactual economic injury.79

The 2006 TDRA amendment changed the intended

standard to a likelihood of causing dilution by

blurring, and added a form of dilution called dilution

by tarnishment. The drafting errors in the 1996 FTDA are

useful lessons for future revisions of the federal

trademark law, because they demonstrate that failure to

define terms and clarify intent in drafting statutory

language can result in embarrassing, unnecessary

litigation, and a waste of many judicial resources.

Failure to define dilution as lost sales and profits

also makes trademark law unnecessarily complicated.

Simply defining dilution as lost sales due to diverted

purchases is a starting point that would make for a more

coherent, integrated, and usable trademark protection

scheme based on protecting both consumers and owners.

79 15 U.S.C. § 1125(c)(1) (2006).

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In 1998, Congress enacted the Olympic and Amateur

Sports Act (“OASA”), 36 U.S.C. §220501 et seq., amending

the 1978 Amateur Sports Act, and enlarging the exclusive

rights of the USOC.80 In 2001, the United States Court of

Appeals for the Federal Circuit cited SFAA v. USOC in

interpreting the limited property rights Congress

granted to the USOC, finding that those rights went

beyond “normal” trademark protections.81

Both the SFAA v. USOC and USOC v. Toy Truck Lines cases

recognized that Congress could grant limited “property

rights” in words that are not subject to normal Lanham

Act trademark law provisions, including registrability

and available remedies. The USOC v. Toy Truck Lines case,

80 Olympic and Amateur Sports Act (“OASA”), 36 U.S.C. §220501 et seq., amending the 1978 Amateur Sports Act. ?Pub. L. 105-225, §1, Aug. 12, 1998, 112 Stat. 1469; Pub. L. 105-277, Div. C, Title I, §142(g), Oct. 21, 1998, 112 Stat. 2681-604.

81 United States Olympic Committee v. Toy Truck Lines, 237 F.3d 1331, 1334 (Fed.Cir.2001) (“The protection granted to the USOC's use of the Olympic words and symbols differs from the normal trademark protection in two respects: the USOC need not prove that a contested use is likely to cause confusion, and an unauthorized user of the word does not have available the normal statutory defenses.”).

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however, did not analyze Schechter’s The Rational Basis, and

did not comment on the “lessening of distinctiveness”

equating to “lessening the commercial value of the

word.” As cited by the United States Supreme Court in

footnote 4 of SFAA v. USOC, the 1978 Amateur Sports Act did

not expressly state that the lessening of the

distinctiveness of the word “Olympic” actually caused

the lessening of the commercial value of the word. But

clearly, in SFAA v. USOC, the United States Supreme Court

equated “lessening the distinctiveness” of a word, to

which Congress had granted extra limited property rights

not subject to traditional trademark law (not subject to

normal defenses requiring a find of consumer confusion),

with the “harm” of “lessening the commercial value” of

the word.82

The United States Supreme Court also said in Moseley

that modern trademark dilution law is not based on

82 SFAA v. USOC, at 539.

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traditional trademark infringement law, so any

prohibitions against trademark dilution are not the

product of common-law development and are not motivated

by an interest in protecting consumers.83 If dilution is

defined as lost sales and profits in the context of the

dual-purpose of trademarks protecting both consumers and

owners, the Moseley language would support the concept

that “dilution” is not motivated by an interest in

protecting consumers and instead is directed as

protecting only owners.

But the Moseley language would be incorrect as to

“dilution” not being a product of common-law development

like trademark infringement. The common law recognized

that trademark law protected both consumers and owners

when there was a likelihood of confusion. Prior to the

Lanham Act, the common law stated that the policy of

trademark law was to protect both consumers and owners.

83 Moseley at 429.

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The Lanham Act did not change this general policy by

negating owner protection outright, but it did limit

owner protections to proof that consumer purchasing

decisions were likely to be affected. Owner protection

is in the form of protection from lost sales or profits.

Trademark law is dual-purpose because trademarks still

protect consumers and owners. The difference is in the

form of injury and the proof of the injury required for

the remedy of an injunction.

The 2006 TDRA deleted the definition of dilution in

15 USC § 1127, and provided new definitions for

“dilution by blurring,” and “dilution by tarnishment.”

Dilution by blurring is:

. . . For purposes of paragraph (1),"dilution by blurring" is association arisingfrom the similarity between a mark or tradename and a famous mark that impairs thedistinctiveness of the famous mark. Indetermining whether a mark or trade name islikely to cause dilution by blurring, the court

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may consider all relevant factors, includingthe following:84

Dilution by tarnishment is:

. . . For purposes of paragraph (1),"dilution by tarnishment" is associationarising from the similarity between a mark ortrade name and a famous mark that harms thereputation of the famous mark.85

Dilution is not both blurring and tarnishment.

Dilution is a result of consumers not purchasing

products. Although defined as such, dilution is not the

association arising between the two marks. There is no

reason to define blurring as dilution by blurring or to

define tarnishment as dilution by tarnishment. Blurring

results in consumers being deceived into not purchasing

from the owner because their association with the mark

has deceptively been shifted to another person other

than the owner. Tarnishment should be conduct resulting

in consumers not purchasing from the owner because of a

negative association with an owner’s mark. There is no 84 15 U.S.C. § 1125(c)(2)(B) (2006).85 15 U.S.C. § 1125(c)(2)(C) (2006).

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need to enact a separate cause of action for dilution

because dilution is not the injurious conduct. Blurring

misleads consumers. Tarnishment may or may not make

consumers purchase from other owners, but tarnishment

should be recognized as a direct injury to owners.

Different forms of injury to consumers and to owners

require different injurious conduct, different

definitions, and different proofs of harm.

Reviewing the modern dilution definitions of

dilution by blurring and dilution by tarnishment, and

replacing the words “dilution by blurring” with simply

“blurring” accomplishes the same result:

. . . For purposes of paragraph (1),"[dilution by] blurring" is association arisingfrom the similarity between a mark or tradename and a famous mark that impairs thedistinctiveness of the famous mark. Indetermining whether a mark or trade name islikely to cause [dilution by] blurring, thecourt may consider all relevant factors,including the following:86

86 15 U.S.C. § 1125(c)(2)(B) (2006) (deleting the words “dilution by”).

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And defining dilution by tarnishment in the same

manner would result in:

. . . For purposes of paragraph (1),"[dilution by] tarnishment" is associationarising from the similarity between a mark ortrade name and a famous mark that harms thereputation of the famous mark.87

Removing the word “dilution” from these definitions

would not change the meaning of blurring or tarnishment.

Blurring and tarnishment are different forms of

injurious conduct. Dilution is the injury itself, in the

form of lost sales to the owner. An injury to consumers

would be being deceived. Defining dilution as only a

result of injurious conduct solves this confusing

definitions of dilution by blurring and dilution by

tarnishment. This analysis supports a finding that

dilution is neither blurring nor tarnishment, and that

defining dilution as the diverted sales makes sense.

87 15 U.S.C. § 1125(c)(2)(C) (2006) (deleting the words “dilution by”).

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It also makes sense to replace “dilution by

blurring” and “dilution by blurring” with simply

blurring and tarnishment in the modern dilution

statutory provision for injunctions:

Subject to the principles of equity, theowner of a famous mark that is distinctive,inherently or through acquired distinctiveness,shall be entitled to an injunction againstanother person who, at any time after theowner's mark has become famous, commences useof a mark or trade name in commerce that islikely to cause [dilution by] blurring or[dilution by] tarnishment of the famous mark,regardless of the presence or absence of actualor likely confusion, of competition, or ofactual economic injury.88

The fact that dilution by blurring and dilution by

tarnishment do not need to be defined using the word

dilution to accomplish the same result means that the

concept of modern dilution in these definitions may be

either erroneous, or superfluous.

According to Bone:

88 15 U.S.C. § 1125(c)(1) (2006) (deleting the words “dilution by”).

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“If dilution is to remain viable, it is past time for its advocates to provide a rigorous policy justification, one that rests on more than intuitive appeals to the wrongfulness of free riding.89

When dilution is defined as lost sales and profits,

dilution’s policy justification is provided in the dual-

protection of trademarks for owners, flowing directly

from the same 1849 Amoskeag policy definition that also

protects consumers from fraud under unfair competition

principles. Unless the dual-purpose of trademarks is

changed into protecting only one of these purposes to

the extinguishment of the other, there will always be a

dual-purpose reason for trademark protection. The

justification for dilution protection is equally as

viable as that of infringement protection, only directed

towards owners rather than consumers.

Modern dilution language attempts to separate the

dual-purpose of trademark law from protecting both

89 Bone, Schechter’s Ideals in Historical Context, p. 506.

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consumers and owners into protecting owners without

requiring proof of injury to consumers. When dilution is

defined as diverted sales, the justification for

protecting against dilution is no longer linked to the

dilution of a mark. The policy of protecting against

dilution should be understood in the context of lost

sales and profits.

Trademarks function to protect both consumers and

owners, regardless of the definitions of infringing uses

or diluting uses. Owners can be protected through

consumer-based protections indirectly when consumers

make informed purchase decisions associated with

choosing to purchase the correct products from the

correct owners based on the trademark. If they do make

their purchase decision based on some kind of

association with the mark, logically there should not be

a problem with the purchase, and there is no need to

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protect that consumer. There would be no need for either

infringement or dilution to protect that consumer.

Without proving consumer confusion, mistake, or

choice based on their associations with marks, it is

impossible to determine if the consumer’s choice has

been curtailed due to an unauthorized use of a mark.

Without proof of injury, this injury can only be

assumed. Therefore, protecting the trademark rights of

owners without consideration of the trademark rights of

consumers does not follow the dual-purpose of trademark

law. Protecting consumers indirectly protects owners

because injury to consumers may also result in loss of

sales to owners. However, loss of sales to owners does

not necessarily imply that consumers have been deceived

into purchasing from another owner. In fact consumers

may decide not to purchase from the owner based on their

association between two marks, and to the extent the

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consumer chooses this freely, they should be allowed to

do so with no interference by trademark owners.

Defining dilution as diverted sales due to consumer

associations, good or bad, with trademarks, makes sense

and addresses the dual-purpose of trademark policy

better than defining dilution or infringement in terms

of injuring a trademark directly. To the extent that the

United States Supreme Court interpreted the trademark

dilution act as not requiring proof of the “consequences

of dilution,”90 modern trademark law appears to not

properly address protecting both consumers and owners

equally. If trademark owners are not actually injured by

diverted sales and profits, or consumers are not

actually injured by making purchase choices they did not

intend to make based on associations with trademarks,

then there is no need to give them remedies provided for

in modern trademark law. Trademarks are not tangible 90 Moseley at 433 (“Of course, that does not mean that the

consequences of dilution, such as an actual loss of sales or profits, must also be proved.”).

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individuals or corporations entitled to trademark

remedies. They do not have legal standing to bring

lawsuits to protect themselves against “dilution” or

“infringement.” They are not the injured parties

entitled to trademark protection under federal law.

The concept of diluting of the ability of the mark

itself to be distinctive really has more to do with

unauthorized use of another’s trademark that causes

injury in the form of lost sales or profits to the true

owner, rather than an actual physical change in the

mark’s ability to function as a psychological symbol.

The owner’s mark still functions as a psychological

symbol of the goods and services it represents. What is

really happening is mere copying, or passing off, by

someone not authorized to use the true owner’s mark. The

injurious conduct is stealing another person’s rightful

sales and profits by any method that results in a

consumer, who intends to purchase from the mark’s owner,

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not purchasing from the mark’s owner as a result of the

conduct of the person using an unauthorized mark.

This could be defined more clearly without any

reference to the concept of diluting a mark. The injury

that is likely to cause diverted sales is ultimately

caused by a consumer’s purchase decision. Only if the

consumer’s purchasing decision is truly affected by some

form of injurious conduct should a mark owner receive

trademark protection. Modern dilution does not measure

the effect on a consumer’s purchasing decision and

assumes injury without proof of the effect on the

consumer’s purchasing decision. If owners do not lose

sales when a consumer purchases from a competitor by

choice, then owners have nothing to protect in the form

of lost sales. Those sales are not diverted or lost and

cannot be used as justification for protecting owners

separately from consumers.

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There is really no “dilution” (i.e., lessening) of

the mark’s psychological function, and no real physical

change to the true owner’s mark. The physical

representation of the mark, word, or symbol used as a

trademark does not change. The mark itself is not

changed or diluted at all. The mark does not lose its

ability to represent the qualities of the product it

represents.

Trademark protection has been broadly defined as

“law’s recognition of the psychological function of

symbols,”91 therefore entitling trademark owners to

maximum protection from injurious conduct that results

in damage to the psychological function of a trademark.

But this definition also relates the injury as an injury

to the function of the mark, rather than as a concrete

injury to a consumer or an owner. Dilution can best be

91 Susan Westcott Alessandri, Visual Identity: Promoting and Protecting the Public Face of an Organization (New York: M.E. Sharp, Inc., 2009), p. 8 (quoting United States Supreme Court Justice Felix Frankfurter in 1942).

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understood in the relationship of the cause and the

effect of injurious conduct as it affects consumers and

owners directly. All types of injurious conduct in the

Lanham Act, and in non-Lanham Act statutes, that provide

for Lanham Act remedies of injunction and monetary

damages are rooted in the general historical concept of

unfair competition. When dilution is defined as the

result of this injurious conduct it cannot be defined as

injuring a mark itself. Both infringement and dilution

are concepts of conduct that injures consumers and

owners based on associations with trademarks. Owners and

consumers should have to prove that they are likely to

be injured.

Owners are not mere third party beneficiaries of

the trademark protections for consumers. Owners are

equal beneficiaries of the dual-purpose of trademark

protection. The various forms of protectable injurious

conduct, and proofs thereof, merely attempt to provide

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these protections for both consumers and owner. The

history of linking the cause of action for dilution (as

owner-based protection) and the cause of action for

infringement (as consumer-based protection) as injury to

a mark, to the function of a mark, or otherwise, is

unfortunate, as it has resulted in a trademark scheme

that appears to try to separate the dual-purpose of

trademark protection into two types of trademark

protection, rather than integrate the dual-protections

into one scheme.

It has also resulted in attempting to separate

marks into different, discrete functions, instead of

integrating the functions of a trademark as symbolizing

many inseparable and intangible concepts. Dilution was

supposed to recognize the rights of trademark owners and

tried to do this by negating the traditional

infringement requirements of proofs of consumer-based

protections.

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Because trademarks and their intangible functions

as symbols cannot really be separated into these

historical and modern distinctions that define modern

trademark dilution as dilution of a mark, it is not a

rational basis for trademark protection to define

dilution as dilution of a mark. Neither can modern

trademark infringement be defined in terms of infringing

a mark itself. The only rational basis for trademark

protection is to recognize its inseparable dual-purpose

of protecting consumers and owners simultaneously and to

draft protections that are based on this reality.

When dilution is defined as dilution of a mark,

modern dilution cause of action does not analyze whether

consumers are likely to be deceived, or if consumers

change their purchasing decisions due to a negative

reputational association. The consequences of blurring,

tarnishment, confusion, mistake, deception, and other

forms of injurious conduct all lead to lost sales and

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profits to trademark owners. Diverting sales from the

owner occurs for all of these forms of conduct.

Diverted sales of a famous mark owner should not be

assumed without any proof that a consumer makes an

incorrect purchasing decision. Diverted sales for a

famous mark’s owner should have to be proven in order to

comply with the dual-purpose of trademark law,

especially without any consumer-based confusion or

purchasing decision analysis. Traditionally, trademark

owners have to prove injury to consumers in order to

obtain an injunction and damages. This dual-proof

requirement makes sense because it requires proof of

injury to consumers and to owners, which at least

recognizes the dual-purpose of trademark law.

Modern trademark dilution separates trademark owner

into classes. There is no rational basis for separating

trademark owners into classes. Traditional trademark

owners suffer the same injury in the form of lost sales

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as do owners of famous marks. Traditional trademark

owners are required to prove consumer-based injury.

Modern dilution does not comply with the dual-

purpose of trademark law. Although dilution is framed in

terms of property rights whereas consumer protections

are not, the reality is that trademark law has always

protected both consumers and owners. Consumer rights and

owner property rights are protected by traditional

infringement concepts. Trademark law must be written in

terms of protecting these dual rights, and marks must be

recognized as symbols, not as individuals or entities

that can be infringed or diluted. Defining dilution as

diverted sales resulting in lost profits makes rational

sense. Requiring some form of consumer-related decision,

whether deliberate or by deception, as a prerequisite to

trademark relief, is also rational and supports the

dual-purpose of trademark law. Requiring owners to prove

a likely concrete injury also makes rational sense in

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terms of the dual-purpose of protecting owners from

injury.

Schechter’s framing of the concepts that became

modern dilution unfortunately resulted in defining

modern trademark law in terms of infringing or diluting

trademarks directly, rather than in terms of directly

injuring consumers or owners. Flawed definitions of

trademark terms of art, including the concept of

dilution, continued in the legislative history, as well

as in legal commentary and case law. The real

protectable injury is to consumers and to owners, not to

marks. Rethinking and redefining the concept of dilution

as lost sales and profits would lead to a better

understanding of trademark terms of art, provide a more

rational basis for developing future trademark

protection, and recognize the inseparable rights of

consumers and owners that are represented and protected

by trademarks.

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