V Secret Catalogue, Inc. v. Moseley

• Decision Date: 14 June 2001
• Docket Number: No. 00-5320,00-5320
• Citation: 259 F.3d 464
• Parties: (6th Cir. 2001) V Secret Catalogue, Inc., Victoria's Secret Stores, Inc., and Victoria's Secret Catalogue, Inc., Plaintiffs-Appellees, v. Victor Moseley and Cathy Moseley, d/b/a Victor's Little Secret, Defendants-Appellants. Argued:
• Court: U.S. Court of Appeals — Sixth Circuit

Page 464

259 F.3d 464 (6th Cir. 2001)

V Secret Catalogue, Inc., Victoria's Secret Stores, Inc., and Victoria's Secret Catalogue, Inc., Plaintiffs-Appellees, v. Victor Moseley and Cathy Moseley, d/b/a Victor's Little Secret, Defendants-Appellants.

No. 00-5320

UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT

Argued: June 14, 2001

Decided and Filed: July 30, 2001

John E. Spainhour, Givhan & Spainhour, Shepardsville, KY, Don A. Pisacano, RAMBICURE, MILLER & PISACANO, Lexington, Kentucky, for Appellants.

Frank J. Colucci, COLUCCI & UMANS, New York, New York, Reford H. Coleman, Coleman, Lochmiller & Hall, Elizabetown, for Appellees.

Before: JONES, DAUGHTREY, and COLE, Circuit Judges.

OPINION

MARTHA CRAIG DAUGHTREY, Circuit Judge.

Defendants Victor and Cathy Moseley, d/b/a Victor's Little Secret, appeal the district court's grant of summary judgment to the plaintiffs, V Secret Catalogue, Inc., Victoria's Secret Stores, Inc., and Victoria's Secret Catalogue, Inc. (collectively "Victoria's Secret"), on the ground that the Moseleys' use of the name "Victor's Little Secret" for their lingerie and adult toy business constitutes trademark dilution under the Federal Trademark Dilution Act, 15 U.S.C. §1125(c) (2000). The district court granted summary judgment to the Moseleys on federal trademark infringement claims brought by Victoria's Secret, finding that the company had not provided sufficient evidence to establish a likelihood of confusion between the two marks. However, the district court did find that the Victor's Little Secret mark both blurred and tarnished the Victoria's Secret mark under the Federal Trademark Dilution Act (FTDA or "the Act") and, therefore, enjoined the Moseleys from making further use of the Victor's Little Secret mark.

On appeal, the defendants contend that entry of summary judgment resulted from the district court's faulty analysis of the "dilution" question, when reviewed in light of the leading case of Nabisco, Inc. v. PF Brands, Inc., 191 F.3d 208 (2d Cir. 1999), and from the court's failure to require proof of actual economic loss, as required by Ringling Bros.-Barnum & Bailey Combined Shows, Inc. v. Utah Div. Of Travel Dev., 170 F.3d 449 (4th Cir. 1999). To the extent that these two recent cases are not entirely consistent in their analysis of the FTDA's requirements, we conclude that the Second Circuit has developed standards that hew most closely to the Act and, applying that court's analysis to the undisputed facts in this case, we conclude that the district court did not err in granting summary judgment to Victoria's Secret on the trademark dilution claim. We therefore affirm the district court's judgment.

PROCEDURAL AND FACTUAL BACKGROUND

The facts, as considered by the district court and uncontested by the parties, are as follows:

Plaintiff V Secret Catalogue, Inc., is the record owner of the "Victoria's Secret" mark, which has been registered in the United States Patent and Trademark Office since January 20, 1981. V Secret Catalogue licenses Plaintiff Victoria's Secret Catalogue, LLC and Plaintiff Victoria's Secret Stores, Inc. to use the "Victoria's Secret" mark. Victoria's Secret sells a complete line of women's lingerie, as well as other clothing and accessories.

Victoria's Secret Stores operates over 750 stores, and Victoria's Secret Catalogue distributes 400 million copies of the Victoria's Secret catalog each year, including 39,000 in Elizabethtown, Kentucky, where Defendants' store i[s] located. Victoria's Secret's products are also sold over the Internet. Victoria's Secret has two stores in Louisville, Kentucky, within 60 miles of Defendants' store. One store has been open since November 16, 1982; the other since April 24, 1985. In 1998, Victoria's Secret spent over fifty-five million dollars on advertising its products. According to a recent survey, Victoria's Secret is rated as the ninth most famous brand in the apparel industry.

In February, 1998, Defendants Victor and Cathy Moseley opened "Victor's Secret," a store in a strip mall in Elizabethtown selling a wide variety of items, including men's and women's lingerie, adult videos, sex toys and "adult novelties." The Moseleys assert that they were not aware of Victoria's Secret's catalog or stores until they received a cease and desist letter from counsel for Victoria's Secret on February 25, 1998. The Moseleys subsequently changed the name of their store to "Victor's Little Secret."

Not finding the addition of "Little" to the Victor's Secret mark sufficient to quell its concerns, Victoria's Secret brought suit against the Moseleys in district court, claiming federal trademark infringement, unfair competition under Section 43(a) of the Trademark Act, violation of the Federal Trademark Dilution Act, and common law trademark infringement and unfair competition. Both parties filed motions for summary judgment.

Considering the list of eight factors established in Frisch's Restaurants, Inc., v. Elby's Big Boy of Steubenville, Inc., 670 F.2d 642, 648 (6th Cir. 1982), the district court found that the Moseleys were entitled to summary judgment on Victoria's Secret's federal infringement claims, because Victoria's Secret had not presented evidence sufficient to create a genuine issue of material fact that a likelihood of confusion existed between the two marks. That ruling is not before us on appeal.

Instead, we are asked to reverse the district court's grant of summary judgment on Victoria's Secret's Federal Trademark Dilution Act claim. In making its ruling, the district court first noted that unlike the standards that must be met to state an infringement claim, "dilution can occur even where the products are not in competition and no likelihood of confusion is possible." To prove a dilution claim, the district court found that the Act's plain language requires a plaintiff to show that "1) its mark is famous, 2) the defendant is making a commercial use of its mark in commerce, 3) the defendant's use of its mark came after the plaintiff's mark became famous, and 4) the defendant's use of its mark dilutes the quality of plaintiff's mark." (Quoting Panavision Int'l, L.P. v. Toeppen, 141 F.3d 1316, 1324 (9th Cir. 1998)). Finding it undisputed that the Victoria's Secret mark is famous, that the Moseleys are engaged in commerce, and that the registration of the Victoria's Secret mark in 1981 long predates the opening of Victor's Little Secret in 1998, the district court found the only element in dispute to be whether the Moseleys' mark diluted Victoria's Secret's.

The district court first found the marks to be sufficiently similar to cause dilution by blurring, noting that the marks' component words are virtually identical, and that the inclusion of "Little" in the Moseleys' mark, in smaller font above the original "Victor's Secret" logo, did little to lessen their similarity. ¹ Next, the district court found that the Moseleys' mark had a tarnishing effect upon the Victoria's Secret mark, in that "included in the inventory sold by the Moseleys, in addition to lingerie, are adult videos as well as sex toys and other 'adult novelties.'" The court concluded that "while the Defendants' inventory may not be unsavory to all, its more risque quality widely differentiates it from that of the Plaintiffs." Finding this evidence sufficient to support a dilution claim, the district court granted summary judgment to Victoria's Secret and enjoined the Moseleys from using the Victor's Little Secret mark. Since the issuance of the district court's order, the Moseleys have successfully operated their business as "Cathy's Little Secret," apparently without objection from Victoria's Secret. The Moseleys nevertheless bring this appeal from the grant of summary judgment in the district court.

DISCUSSION

Prior to the passage of the Federal Trademark Dilution Act in 1995, actions for trademark dilution were limited to those brought in the 25 states that had enacted dilution statutes, and the standards for finding dilution varied widely between jurisdictions. See 104-374 (1995), 1996 U.S.C.C.A.N. 1029, 1032. The FTDA was crafted "because famous marks ordinarily are used on a nationwide basis and dilution protection is currently only available on a patch-quilt system of protection . . . Further, court decisions have been inconsistent and some courts are reluctant to grant nationwide injunctions for violation of state law where half of the states have no dilution law." Id. The FTDA provides that:

The owner of a famous mark shall be entitled, subject to the principles of equity and upon such terms as the court deems reasonable, to an injunction against another person's commercial use in commerce of a mark or trade name, if such use begins after the mark has become famous and causes dilution of the distinctive quality of the mark, and to obtain such other relief as is provided in this subsection. In determining whether a mark is distinctive and famous, a court may consider factors such as, but not limited to:

(A) the degree of inherent or acquired distinctiveness of the mark;

(B) the duration and extent of use of the mark in connection with the goods or services with which the mark is used;

(C) the duration and extent of advertising and publicity of the mark;

(D) the geographical extent of the trading area in which the mark is used;

(E) the channels of trade for the goods or services with which the mark is used;

(F) the degree of recognition of the mark in the trading areas and channels of trade used by the mark's owner and the person against whom the injunction is sought;

(G) the nature and extent of use of the same or similar marks by third parties; and (H) whether the mark was registered under the Act of March 3, 1881, or the Act of February 20, 1905, or on the principal register.

15 U.S.C. § 1125(c)(1).

The Act further defines "dilution" as "the lessening of the capacity of a famous mark to identify and distinguish...