Nguyen: ‘Requisite national fame’: A look at trademark dilution

Trademark dilution law appears to be losing its significance. From 2011 to 2020, lawsuits asserting trademark dilution dropped 54%. Only 620 lawsuits filed in 2020 contained trademark dilution claims, compared to 1,359 lawsuits filed in 2011. Another perspective, however, proposes the major drop in trademark dilution suits confirms the trademark dilution statute serves its purpose perfectly. Protection under the trademark dilution statute is provided only for a selected few trademarks. In other words, the plaintiff must demonstrate the trademark has attained national fame status. 15 U.S. Code § 1125(c)(2). (See Coach Servs., Inc. v. Triumph Learning LLC, 668 F.3d 1356, 1373 (Fed. Cir. 2012) (“It is well-established that dilution fame is difficult to prove.”); Invisasox, LLC v. Everything Legwear, LLC, No. 8:18-cv-2639, 2020 WL 6134336, at *7 (M.D.Fla. Oct. 16, 2020)(stating that famous marks must be “household name[s], of the likes of … Exxon, Kodak, and Coca-Cola,” recognized by “the general consuming public.”); Shippitsa Ltd. v. Slack, 2019 WL 3304890, at *10 (N.D. Tex. July 23, 2019) (providing that examples of nationally famous marks include “Budweiser beer, Camel cigarettes, Barbie dolls, and the like.”); BYC, Inc. v. Broken Yolk, 2021 WL 5074720, *7 (W.D.N.Y. Nov. 2, 2021)(finding the plaintiff failed to sufficiently demonstrated the “fame” of its BROKEN YOLK mark because the plaintiff provided “no statement of the expense on advertising, forums of its ads — specifically, whether the ads were local or national — or any other evidence from which this Court could discern the ‘fame’ of Plaintiff’s mark.”).)

Owners of trademarks not attaining national fame status and their attorneys must be careful in filing trademark dilution claims in their lawsuits. In a recent case, Off Lease Only, Inc. v. Lakeland Motors, the 11th Circuit Court of Appeals affirmed the district court’s ruling on a motion for attorney fees and costs against the plaintiff for filing a complaint containing a trademark dilution claim when it “knew it lacked the requisite national fame.”

The plaintiff, Off Lease Only, sued Lakeland Motors alleging the defendant’s billboards infringed Off Lease Only’s copyright while infringing and diluting its “DON’T PAY MORE” trademark. The plaintiff’s complaint contained a Count III trademark infringement claim and a Count IV dilution claim. Two months after the plaintiff filed its initial complaint, the defendant wrote to Off Lease that its allegations had no merit and were possibly sanctionable. A few months later, the defendant filed a motion for judgment on the pleadings as to Count III, trademark infringement. The court ruled for the defendant and allowed the plaintiff to amend its complaint by a certain deadline. In an email, the defendant then recommended the plaintiff drop the Count IV dilution claim because the plaintiff’s “representatives had conceded that its marks were not widely known outside of Florida, rendering the claim meritless.” Off Lease Only, Inc. v. Lakeland Motors, 846 Fed. Appx. 772 (11th Cir. 2021). The plaintiff refused, forcing the defendant to prepare against the dilution claim.

Consequently, the defendant incurred costs related to additional discovery, motions practice and an expert witness to prepare a nationwide survey. Specifically, the defendant hired an expert, Robert A. Peterson, Ph.D., to conduct a secondary meaning survey to assess the fame of the plaintiff’s “DON’T PAY MORE” trademark. Off Lease Only, Inc. v. Lakeland Motors, 2019 WL 6910162 (M.D.Fla., Dec. 19, 2019). Peterson conducted a survey of whether “a targeted universe of individuals who purchased or considered purchasing a used vehicle from a used car dealership in the last five years uniquely associate the logo/slogan with one company generally, and specifically with OFF LEASE ONLY, INC.” He administered an online questionnaire to a national sample of 475 individuals and a Florida sample of 250 individuals, all part of the targeted audience. Peterson found “strong evidence that the logo/slogan ‘DON’T PAY MORE’ does not possess any secondary meaning among members of the targeted universe either nationally or in Florida.” The plaintiff attempted to exclude Peterson’s findings, but the district court ruled that his findings and testimony were admissible. The defendant incurred costs associated with retaining Peterson for his expert survey and testimony.

Defendant Lakeland then filed a motion for summary judgment on the Count IV dilution claim. After the briefing was completed, the plaintiff then voluntarily dismissed Count IV. The district court found the plaintiff “knew it lacked the requisite national fame to pursue a federal trademark dilution claim but had proceeded anyway,” and the plaintiff’s conduct caused Lakeland to incur “substantial costs defending the count.” Off Lease Only, Inc. v. Lakeland Motors, 2020 WL 11423023, (M.D.Fla., Feb. 10, 2020), affirmed by 825 F. App’x 722 (11th Cir. Sept. 17, 2020). The district court dismissed Count IV without prejudice but conditioned dismissal on Off Lease paying Lakeland all “reasonable costs and attorney’s fees incurred in defending against Count IV.” On appeal, the 11th Circuit affirmed the district court’s decision on summary judgment.

Later, the plaintiff refused to pay the attorney fees and costs and the parties returned to the 11th Circuit. The circuit court held that the district court did not abuse its discretion by awarding attorney fees and costs related to preparation of the expert witness survey as a condition of dismissing Count IV in this case. The defendant had repeatedly warned the plaintiff about the shortcomings of the federal dilution claim and the plaintiff’s trademark lacking the requisite national fame, but the plaintiff ignored the warnings and caused the defendant to incur attorney fees and costs. The circuit court also noted the district court was within the court’s broad equitable discretion to award expert witness costs because the award was necessary to mitigate harm to the defendant.•

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Xuan-Thao Nguyen is the Gerald L. Bepko chair in law and faculty director for the Center for Intellectual Property Law & Innovation at Indiana University Robert H. McKinney School of Law. Opinions expressed are those of the author.

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