Dilution of a trademark refers to a situation where unauthorized persons use a company’s trademark on its products that do not compete with those of the owner of the mark. Such unethical business practices are common among small and medium-sized companies that do not have registered trademarks. They try to ride in the wave of the strong brand of the targeted company. For instance, a coffee shop may use the name Microsoft Inc as its name in the market. Products offered by such a coffee shop may not be related in any way with products offered by Microsoft Corporation. The two companies may not be in any form of competition. However, the act of using a known brand on a product that the owner does not offer may be considered an infringement upon rights of the owner. Customers that hold the company in high regard may be shocked when they see a local shop that offers substandard products using the same name. They may develop a negative impression towards the brand as they associate it with the local coffee shop. Sometimes it may not be easy to detect such forms of trademark infringements, especially if it is in a remote location that agents of the trademark owner rarely visit. However, once it is detected, an immediate measure should be taken to stop it and relevant damages awarded to the aggrieved party through a legal process.
The following are the two main types of trademark dilution:
1. Blurring Dilution
Blurring dilution occurs when there is an unauthorized use of a trademark on dissimilar goods and services. The trademark’s image in that specific market gets blurred as customers will be confused about the exact products that the brand specializes on within a given market. As explained above, this is a case of a company that is keen on achieving success in the market using a strong brand but without any intention of posing its products as those manufactured by the owner of the brand. The main damage that is caused by this form of dilution is the confusion that customers are subjected to as they wonder about the product portfolio of the originating company. It is a silent approach to dilution and sometimes it may go undetected for a long time because it may not raise instant suspicion. In the case of Louis Vuitton Malletier S.A. v. Haute Diggity Dog, LLC, and the district court ruled that the products of defendants were parodies of plaintiff’s trademark and as such, diluted it.
2. Tarnishment Dilution
Tarnishment dilution is a more serious form of infringement because it targets the products of the affected company. It happens when one company uses the trademark of a different firm, without authorization, to sell inferior quality products in the market. In this case, the aggressor ends up developing and selling products similar to that of the targeted company and uses the same trademark. Customers will be confused in the market when making purchases. These clients will purchase the counterfeited product thinking that it is from the desired company only to realize that they have been offered substandard products. The effect is that both the customer and the affected firm will be hurt. The customer will end up with a poor quality product that fails to meet the need for which it was purchased. On the other hand, the affected company will get its name tarnished. After years of effective marketing and production of high-quality products, actions of an unscrupulous businessperson may cost the firm the benefits that come with a strong brand. It will be viewed as an untrustworthy company that delivers substandard products to its clients. It may take awhile to recover from such an impact. The trademark laws in the United States seek to protect companies from such malpractices. Moseley v. V Secret Catalogue, Inc., is a case that demonstrates a dilution of the trademark by tarnishment . Victoria’s Secret sued Victor’s Secret for using a name that closely resembles its own to sell similar products. Although the Supreme Court rule against Victoria’s Secret based on the Federal Trademark Dilution Act (FTDA), the United States Congress overturned the decision when it enacted Federal Trademark Dilution Revision Act (FTDRA) of 2006. It is now impossible for an entity to go unpunished for committing a similar mistake after the new law came to force.