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Paul Levy: Trademark bill threatens right to criticize companies

Paul Levy: Trademark bill threatens right to criticize companies
Paul Levy: Trademark bill threatens right to criticize companies

-------- Original Message --------
Subject: Trademark bill threatens right to criticize companies
Date: Thu, 25 Aug 2005 18:19:31 -0400
From: Paul Levy  

An insidious attack on free speech is making its way through Congress, 
in the form of a series of technical amendments to the trademark laws. 
One version has already passed the House, and a related version is, I am 
told, under very active consideration in the Senate.

Our concern is about the anti-speech implications of HR 683, the 
Trademark Dilution Revision Act, which passed the House last spring. 

The original, stated objective of HR 683 was to overrule the Supreme 
Court's 2003 decision in the Victoria Secrets case.  The Supreme Court 
decided that, in order to establish a claim for "dilution" of a famous 
trademark, the plaintiff must show not just that dilution is "likely," 
but that it has already begun to occur.  Owners of famous trademarks 
have expressed concern both because it has been hard to meet that 
standard of proof, and because, with the purpose of anti-dilution law 
being to protect against dilution, the case cannot even be brought until 
the mark owner has suffered the very loss against which the law was 
intended to protect.  Or, at least, that is what they say.

Along with that revision, HR 683 makes some other reasonable changes to 
the Lanham Act's rules on dilution (such as limiting its application to 
truly famous marks) and some changes that may be less desirable (such as 
expressly covering tarnishment, eliminating doubts raised by the 
Victoria Secret decision that federal dilution law might be limited to 
blurring).  One might also wonder whether, overall, the technical 
changes made to the dilution laws are ones that tend to favor major 
corporations and to harm small businesses.  Under the new definition of 
famousness * which is limited to marks whose fame "is widely recognized 
by the general consuming public of the United States" * it is largely 
the very major national companies that are most likely to be the 
plaintiffs, while adversely affecting smaller businesses which, after 
all, are most likely to be the defendants rather than plaintiffs in most 
dilution cases.  In the circumstances, I find it mystifying that the 
small business community is not up in arms about this bill.

But it is the bill's revisions to the "exclusions" section, which are 
paragraph (4) of the existing statute, and are now paragraph (3) of the 
bill, as well as its impact outside the area of dilution, that are of 
most concern to me.  It is not at all clear to me that anybody has 
focused on the implications of some of the more technical changes that 
the bill makes to the current anti-dilution statute.  Checking the 
written remarks of the four witnesses who testified before the IP 
subcommittee of the House Judiciary Committee, NOBODY took note of this 
change, which makes me wonder whether this issue has just been under the 

Under current law, section 43(c)(4) of the Lanham Act contains three 
exceptions which, under the language of the statute, apply to "this 
section": fair use, noncommercial use, and news reporting and 
commentary.  We have had some success in arguing that the language "this 
section" means that subsection (a) (common law infringement and 
comparative advertising) are also subject to these provisos.  But under 
the bill, the exceptions would expressly be limited to dilution by 
blurring and dilution by tarnishment "under this subsection."   Thus, 
the protections for fair use and non-commercial use would no longer 
extend to suits for infringement of unregistered trademarks.

In this regard, it should be noted that although the Lanham Act has a 
separate subsection that allows a defense of fair use, section 33(b)(4), 
that section is expressly limited to defenses against claimed 
infringement of REGISTERED trademarks (which can be pursued under 
section 32 of the Act).  Courts have generally assumed that the fair use 
defense applies to both registered and unregistered marks, but given the 
increasing emphasis on literal reading of statutes, I see some danger 
that this could change if the fair use exception in 43(c)(4) no longer 
applies to "this section."

It is hard to figure out why fair use and news reporting and truly 
noncommercial use ought NOT be excluded from the trademark laws, and 
especially for trademarks that the owners have never bothered to 
register.  When the trademark laws were amended in 1988 and 1996, 
Congress was acutely aware of the constitutional problems (under the 
First Amendment) that would arise if the Lanham Act were extended to 
noncommercial speech.  And in our litigation in defense of consumers who 
criticize companies online, the non-commercial use exception has 
provided an inexpensive and clear way out of what otherwise might be a 
lengthy and expensive trademark proceeding.

Although I am most familiar with the issue as it arises in the context 
of Internet trademark litigation, it would similarly come up in the 
context of an ordinary political leaflet or campaign, where the 
plaintiff threatens a consumer or a citizen's group with expensive 
trademark litigation on the ground that merely using the plaintiff's 
name or logo on leaflets about the company violates its trademark.  Some 
suggestive cases are: Tax Cap Committee v. Save Our Everglades, 933 F. 
Supp. 1077 (S.D. Fla. 1996); Brach Van Houten Holding v. Save Brach's 
Coalition for Chicago, 856 F. Supp. 472 (N.D. Ill. 1994); and MGM-Pathe 
Communications v Pink Panther Patrol, 774 F. Supp 869 (S.D.N.Y. 1991).

I am also quite concerned that, in the course of House Committee 
hearings, the old exception for "non-commercial use" was been eliminated 
altogether and replaced by a second "fair use" requirement, which, 
although written with free speech considerations in mind, is actually 
WORSE from the perspective of any ordinary citizen who must face the 
realities of litigation.  We have had a fair amount of success in 
getting critics of trademark holders out of litigation quickly, and 
cheaply, by raising the non-commercial use defense.  Fair use, by 
contrast, tends to require application of a multi-factor test that is 
heavily dependent on context.  Making the defense rest on a complicated 
fair use analysis may make dismissal harder to obtain at the motion to 
dismiss or summary judgment stage.  Citizen and consumer critics at 
least as likely to be worn down by the expense of litigation as they are 
by actual losses in court -- and trademark cases are notoriously 
expensive.  Critics are much less likely to be able to afford to defend 
themselves under this new language (not to speak of the years of 
litigation that it will take to define it -- the courts had finally 
settled in on a construction of the old exceptions).   And thinking of 
the cases that are attractive to lawyers who might consider taking cases 
pro bono, if the case looks to be fact-intensive and might swallow up 
substantial out-of-pocket expenses as well as time, the cases become a 
much less attractive proposition.

Now, there is other language in various sections of the Lanham Act on 
which critics can rely to support something of an exception for 
non-commercial speech * the definition of "use in commerce" and the 
requirement that use be "in connection with the sale, distribution or 
advertising of goods and services" (worded differently in different 
sections) * but those statutory arguments are more complicated. 
Moreover, trademark owners are certianly going to argue that the 
decision to strip section 43 of the "non-commercial use" exception 
implies that Congress intended to expand the trademark laws to limit 
non-commercial speech.

Finally, the re-written fair use defense would require that the 
allegedly diluted mark have been used to comment on the holder of the 
famous trademark.  Many trademark parodies, however, do not necessarily 
comment on the trademark holder, and so would not be protected. For 
example, in the famous "Mutant of Omaha" case, Mutual of Omaha Ins. Co. 
v. Novak, 836 F.2d 397 (8th Cir. 1987), although admittedly not decided 
as a dilution case, it is not clear that the defendant intended to 
criticize the insurance company Mutual of Omaha, but was using a play on 
their name to talk about the dangers of nuclear war.  Similarly, and in 
the more recent "Taft-quack" case, the defendant was not intending to 
say anything about AFLAC but was using their famous duck quack to make 
fun of Bob Taft.   American Family Life Ins. Co. v. Hagan, 266 F. 
Supp.2d 682 (N. D. Ohio 2002).  Or, in the suit by MasterCard against 
Ralph Nader for his television commercial describing "finding out the 
truth" as being "priceless," the Nader campaign did not invoke the 
famous "Priceless" campaign theme to comment on MasterCard so much as to 
comment on other politicians.   MasterCard Int'l v. Nader 2000 Primary 
Committee, 70 U.S.P.Q.2d 1046 (S.D.N.Y. 2004).  But the bill would 
eliminate the protection that the current federal dilution law, as 
commonly construed, would provide to these defendants.

Indeed, Walter Mondale's put-down of Gary Hart during the 1984 
primaries, using the Wendy's slogan "Where's the Beef", would be 
actionable as dilution under the bill as passed by the House.   It is 
quite likely that the slogan would be a famous trademark even under the 
new definition of famousness; a strong case could be made for likelihood 
of blurring; and although the use is non-commercial, that alone would 
not be a protection from the dilution cause of action.  The phrase was 
used to comment, to be sure, but not to comment on Wendy's; Mondale just 
borrowed the phrase to comment on Hart.  Thus, it would not be protected 
by revised exception (B).

So, whatever Congress does with the remainder of section 43(c) of the 
Lanham Act, it ought to leave the text of section 43(c)(4) alone, 
leaving it applicable to "this section" and leaving the existing 
protection for "non-commercial use" intact.

Paul Alan Levy
Public Citizen Litigation Group
1600 - 20th Street, N.W.
Washington, D.C. 20009
(202) 588-1000 

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