Famous Trademarks: Dilution versus Confusion

January 17, 2011

Branding strategy and trademark protection are critical to the success of a business. Trademarks surround consumers every day and help them to make valuable and informed decisions about the goods and services that they purchase. Consumers easily recognize the Starbucks® trademark and associate it with the immensely popular coffee products. Consumers also recognize non-traditional trademarks, such as the sound of the Aflac® duck that they associate with insurance services. Over time and as companies grow, the purchasing public may establish a strong connection between certain goods or services and the source of those goods or services. Some marks enjoy a higher degree of consumer recognition and become famous trademarks.

Trademarks are generally words, phrases, symbols or designs used to identify and distinguish the source of a company’s goods and services from its competition. More traditional trademarks involve the use of a word, slogan or logo in connection with certain goods and services. For example, when consumers see the Apple® mark, they immediately think of mobile computer devices. Consumers also associate goods and services offered under a specific trademark with different levels of quality. The Lexus® trademark is generally recognized as being associated with luxury automobiles.

In addition to words, phrases, symbols or designs, trademark protection may be obtained for non-traditional marks such as colors, sounds and shapes. For example, Apple Inc. was granted a trademark registration for the three-dimensional shape of its iPod® media player. Owens-Corning was granted a registration for the pink color of its insulation used in buildings. Almost every consumer recognizes the familiar shape of the Coca-Cola® beverage bottle.

Nationwide protection is achieved by filing and registration with the United States Patent & Trademark Office. Registration is generally based on either use of the trademark in commerce or a party’s bona fide intent to use the trademark in commerce. Although one can use a trademark without federal registration, there are advantages to receiving federal registration. For example, the federal registration provides national protection from trademark infringement, essentially other parties using a similar mark that would cause likelihood of confusion with the registrant’s mark and goods and services.

When a trademark has attained “famous” status, it is afforded a higher level of protection. The legal standard becomes a likelihood of dilution. Starbucks Corporation utilized the famous status of its mark in attempting to prevent a competitor from using the terms “Mr. Charbucks” and “Mister Charbucks.” Wolfe’s Borough Coffee, a family business operating as Black Bear Micro Roastery, manufactured and sold roasted coffee beans via mail order, online and at retail outlets in New England. Black Bear introduced dark roasted coffee under the marks “Charbucks Blend” and “Mister Charbucks.” Starbucks filed suit alleging violations of federal and state law including trademark infringement and dilution. The court found that Starbucks Corporation failed to carry its burden of proving that there was likelihood of confusion. Although the goods were essentially the same, the court reasoned that the “Charbucks” and “Starbucks” marks were only minimally similar so as to not cause confusion with consumers. Without a higher level of protection, Starbucks Corporation would not be able to adequately protect its mark.

Continuing the legal analysis, the appellate court considered whether Starbucks Corporation did prove likelihood of dilution. Although the marks were only minimally similar, the appellate court stated that evidence only needs to demonstrate that there was an association between the marks that impairs the distinctiveness of the famous mark; substantial similarity is not required. The appellate court remanded the case for further analysis by the lower court. As a result, owners of famous marks may rely on likelihood of dilution claims as a weapon against marks that may be somewhat similar to their marks.

In conclusion, a company should regularly review its branding strategy and the associated trademark protection for both new and existing goods and services. As a part of such review, trademark searches to clear use of marks with respect to confusion and dilution should be considered by the company’s marketing professional and legal counsel.

¹ Vasilios Peros is founder and principal of Law Office of Vasilios Peros, P.C. His practice is focused primarily on business, technology and intellectual property law.  He can be reached at (410) 274-2053 and VPeros@PerosLaw.com.

² This article is provided for informational purposes only and should not be construed as a legal opinion or legal advice. The reader should not rely on this article in making business, legal or other decisions on any matter without first consulting an attorney regarding any such decision or undertaking.