WASHINGTON, March 4 (UPI) -- The Supreme Court ruled Tuesday that a violation of federal trademark law requires actual proof that a company's image was diluted, not just the likelihood of damage.
The case pitted lingerie giant Victoria's Secret -- with its chain of stores and catalog sales -- against a tiny competitor originally called Victor's Secret. However, the decision is a defeat for all of the most recognizable brands in almost any marketplace.
The Federal Trademark Dilution Act bans activity that "causes dilution of the distinctive quality of the mark" of a competitor.
In the Victoria's Secret case, the Supreme Court was asked to decide whether under the law there had to be some actual economic injury or whether the mere likelihood of some dilution constitutes a violation of the law.
Tuesday, the justices said the had to be some actual harm.
In the case before the court, Victor and Cathy Moseley opened a store in Elizabethtown, Ky., called "Victor's Secret" in February 1998. The store's sign and local advertising featured a logo "of an index finger pressed across a pair of lips (as if to say 'shhh')."
The Moseleys sold "a wide variety of items, including lingerie, clothing and accessories and adult novelties and videos," but they told the court they have never "been accused by law enforcement officials of selling 'illegal' or 'obscene' items in their shop."
Almost immediately after the store opened, a lawyer for Victoria's Secret sent the Moseleys a letter telling them that the name of their store would illegally cause confusion with the larger company's logo.
The Moseleys changed the name of their shop to "Victor's Little Secret," but still used the "shhh" logo. The change was not enough for Victoria's Secret, which filed suit in federal court, charging a violation of U.S. trademark law.
A federal judge ruled that "Victor's Little Secret" was similar enough to "Victoria's Secret" to cause dilution of the trademark, even though the Moseleys's store was more risqué, and ordered the Moseleys to stop using "Victor's Little Secret" or any similar name.
When an appeals court agreed, the Moseleys asked the Supreme Court for review, and the justices heard argument in November.
Writing for the high court Tuesday, Justice John Paul Stevens cited the actual language of the Federal Trademark Dilution Act.
The act defines "dilution" of a trademark as "the lessening of the capacity of a famous mark to identify and distinguish goods and services."
But the act also says that the holder of a trademark is "entitled to injunctive relief against another person's commercial use of a mark or trade name if that use 'causes dilution of the distinctive quality' of the famous mark," Stevens said.
It was not enough to show that there is a "likelihood" of dilution, he added, and there was not enough evidence in the Moseley case to justify a judge's ruling for Victoria's Secret without holding a trial.
All of the other justices agreed at least in part with Stevens's opinion. There were no dissenters.
Tuesday's opinion reverses the lower court's ruling and sends the case back down for a rehearing based on the Supreme Court's interpretation of the law.
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(No. 01-1015, Moseley vs. V Secret Catalogue Inc. etc.)
