Getting Around the § 43(c)(6) Federal Registration Defense to State Claims for Dilution

Trademark lawyers wax eloquent about the significant benefits of federally registering a trademark with the U.S. Patent and Trademark Office. Federal courts do too. And one of the benefits touted is the federal registration defense to state dilution claims provided by Lanham Act § 43(c)(6), 15 U.S.C. § 1125(c)(6).  In fact, in its recently well-publicized decision in In re Tam (which has nothing to do with the defense), the Federal Circuit listed the defense as one of the important legal rights and benefits conferred on trademark owners who register their marks.  In re Tam, 808 F.3d 1321, 1329 (Fed. Cir. 2015) (“registration operates as a complete defense to state or common law claims of trademark dilution”). But this “important” defense afforded by registration hasn’t been treated as such. It’s been chipped away at, and there’s not much left to rely on. Significant limitations have been placed on this supposed significant benefit.

The Exact Language of Lanham Act § 43(c)(6), 15 U.S.C. § 1125(c)(6)

Before analyzing it, let’s take a quick look at the exact language of the statutory provision under discussion:

The ownership by a person of a valid registration under the Act of March 3, 1881, or the Act of February 20, 1905, or on the principal register under this chapter shall be a complete bar to an action against that person, with respect to that mark, that—

(A) is brought by another person under the common law or a statute of a State; and

(B)

(i) seeks to prevent dilution by blurring or dilution by tarnishment; or

(ii) asserts any claim of actual or likely damage or harm to the distinctiveness or reputation of a mark, label, or form of advertisement.

Gut It With a Claim to Cancel the Registration

The federal registration defense statute clearly requires a valid trademark registration. Consequently, one way to negate the federal registration defense is to challenge the validity of the trademark registration by including a claim to cancel it.

In Jada Toys, Inc. v. Mattel, Inc., Mattel asserted a California state trademark dilution claim pursuant to California Business and Professions Code § 14330, alleging that Jada Toys’ use of HOT RIGZ diluted Mattel’s HOT WHEELS mark. Jada Toys, Inc. v. Mattel, Inc., 518 F.3d 628, 634-636 (9th Cir. 2008). In response, Jada Toys argued that Mattel’s California state trademark dilution claim was barred by § 43(c)(6) because Jada Toys owned a federal trademark registration for HOT RIGZ. The Ninth Circuit didn’t buy it:

Jada’s claim that its HOT RIGZ registration acts as a bar to Mattel’s state law claim is misplaced because Mattel’s eighth counterclaim is for cancellation of the HOT RIGZ registration under 15 U.S.C. § 1064. As such, if Mattel can succeed in obtaining that cancellation, the bar to state unfair competition actions in 15 U.S.C. § 1125(c)(6) will be inapplicable.

Id. at 635 n. 4.

Other courts have followed the Ninth Circuit’s reasoning in Jada Toys.  See, e.g., V.V.V. & Sons Edible Oils Ltd. v. Meenakshi Overseas LLC, 2016 U.S. Dist. LEXIS 44197, *32-33 (E.D. Cal. Mar. 31, 2016) (denying motion to dismiss and holding that, “[b]ecause VVV is currently seeking to cancel Meenakshi’s registrations of marks ‘172 and ‘000, 15 U.S.C. § 1125(c)(6) does not bar it from bringing a California dilution claim”); Sanofi-Aventis v. Advancis Pharmaceutical Corp., 453 F. Supp. 2d 834, 37 (D. Del. 2006) (cancelling defendant’s registration and finding in favor of plaintiff on its state dilution claim after bench trial).

Gut It By Basing the State Dilution Claim on Goods Not in the Federal Registration

The federal registration defense statute also restricts the defense to state dilution claims against the registered mark. Therefore, another way to skirt the defense is to premise the state dilution claim on the use of the registered mark in connection with goods or services that are not actually listed in the federal registration. This, of course, assumes that the owner of the registered mark also uses the mark in the marketplace for goods or services that are not listed in the federal trademark registration.

In Amy’s Ice Cream, Inc. v. Amy’s Kitchen, Inc., Amy’s Kitchen moved for summary judgment on Amy’s Ice Cream’s Texas dilution claim on the grounds that Amy’s Kitchen owned federal trademark registrations for both the AMY’S and AMY’S KITCHEN trademarks. Amy’s Ice Cream, Inc. v. Amy’s Kitchen, Inc., 60 F. Supp. 3d 738, 745-46 (W.D. Tex. 2014). However, Amy’s Ice Cream’s state dilution claim was based on Amy’s Kitchen’s use of the AMY’S and AMY’S KITCHEN marks in connection with non-dairy frozen desserts, which were not listed in Amy’s Kitchen’s trademark registrations. As a result, the Western District of Texas denied summary judgment on the grounds that the state dilution claim was not being brought against Amy’s Kitchen’s registered marks:

The issue before the Court is one of statutory interpretation and specifically the meaning of “with respect to that mark.” Here, AK owns incontestable federal registrations for the marks “AMY’S” and “AMY’S KITCHEN” in standard character and stylized form for a variety of foods, including apple pie and toaster pastries. In AK’s view, these registrations are a complete bar to state dilution claims premised on AK’s use of the mark even when the challenged use is not made in connection with the goods and services described in the original registration. AIC disputes this interpretation and argues AK’s registrations only bar state dilution claims challenging AK’s use of the registered mark with respect to the goods and services described in the original registration. Stated differently, AIC does not think AK should be able to use its registered marks for its frozen food products to bar AIC’s dilution claim based on AK’s use of the same marks in connection with non-dairy frozen dessert (and other dessert products).

As a matter of common sense, the Court agrees with AIC. AK’s view, when extrapolated, seems to be it can use the marks “AMY’S” and “AMY’S KITCHEN” on any good or service it wants and be immune from any state dilution claim because it has registrations in those marks. The Court rejects this logic and thinks it more sensible to limit AK’s ability to bar state dilution claims based on its federal registrations to situations where AK has used the marks on goods or services actually described in its registrations.

Id.

Gut It By Basing the State Dilution Claim on a Stylized Version of the Registered Mark

As mentioned above, the federal registration defense statute restricts the defense to state dilution claims against the registered mark. Yet another way to castrate the federal registration defense is to premise the state dilution claim on the use of a mark that is different than the mark in the federal registration. More specifically, if the federal registration covers a standard character mark, base the state dilution claim on the use of a stylized or design version of that mark. Or if the federal registration covers a design mark, base the state dilution claim on the use of a standard character version of the mark.

In Exxon Mobil Corp. v. FX Networks, LLC, FX Networks moved to dismiss Exxon’s Texas dilution claim pursuant to the federal registration defense on the grounds that it owned a federal trademark registration for FXX in standard characters. Exxon Mobil Corp. v. FX Networks, LLC, 39 F. Supp. 3d 868, 870 (S.D. Tex. 2014). Even though a standard character mark covers stylized versions of a mark, the court concluded (which is accurate given the lack of reasoning) that the standard character federal registration did not provide FX Networks with the federal registration defense against a state dilution claim based on its stylized version of the mark:

Although it is true (and undisputed by Exxon) that registering a mark in standard character form entitles a registrant to support that registration by depicting the mark in any form regardless of font, style, size, or color, it does not follow that the Lanham Act’s statutory bar also applies to such depictions. A standard character mark provides different protections than a special form mark, and as acknowledged by Defendants, parties have numerous reasons for often seeking registration of marks under one format, but not the other. Based on the plain language of the statute, the Court therefore concludes that the phrase “that mark” does not encompass unregistered stylized variations of a registered standard character mark.

Id. at 871-72.

Gut It By Arguing the Timing of the Federal Registration?

The federal registration defense statute is silent as to the timing of the federal registration vis-a-vis the initiation of a state claim for dilution. So an open question remains as to whether a federal registration obtained after the initiation of state dilution claim would suffice to invoke the federal registration defense.

In The Nautilus Group, Inc. v. Icon Health & Fitness, Inc., the Western District of Washington was confronted with this question. Icon Health filed a motion for summary judgment, arguing that its federal registration for the CROSSBOW mark provided a complete defense to The Nautilus Group’s Washington dilution claim that CROSSBOW diluted the BOWFLEX mark.  The Nautilus Group, Inc. v. Icon Health & Fitness, Inc., 2006 U.S. Dist. LEXIS 92550, *17 (W.D. Wash. 2006).  In response, The Nautilus Group argued that the defense did not apply because the registration was obtained after the lawsuit was commenced. The court noted that it was an issue of first impression and appeared to agree with the defendant, but declined to definitively resolve the issue by deciding the claim on other grounds:

This appears to be a question of first impression in the Ninth Circuit.

. . .

The Court agrees with defendant that the plain language of the statute does not restrict when a trademark owner must seek federal registration in order to avail itself of the protection. Further, the Court agrees with defendant that no exception exists in the plain language of the statute for cases such as this one, where a preliminary injunction has been issued or where the trademark applicant has stated that it will not use the mark until after resolution of the litigation. However, this Court need not definitively resolve the issue because plaintiff’s state dilution claim fails for another reason. The Washington dilution statute is identical to the federal statute. See RCW 19.77.160(1) and 19.77.010(6) (defining dilution). Thus, because the Court has already determined that plaintiff cannot demonstrate actual dilution, plaintiff’s state dilution claim must also fail. Accordingly, the Court finds summary judgment in favor of defendant appropriate.

Id. at *18-19.

The Federal Registration Defense Has Not Yet Been Gutted By State Courts

In addition to examining how the federal registration defense has been diluted by federal courts, I did research how the defense has been handled by state courts. It’s been 20 years since Congress enacted the Federal Trademark Dilution Act (“FTDA”) that created the federal registration defense to state dilution claims. But I haven’t been able to find a single state court case in which a party asserted a federal registration defense pursuant to § 43(c)(6) against a claim for trademark dilution under state law.

Procedurally, this may not be surprising. A plaintiff bringing a state dilution claim who is aware of the federal registration defense would likely include a claim for cancellation of the federal registration, which means the plaintiff would likely file in federal court from the outset. Likewise, a defendant asserting a federal registration defense under the Lanham Act would probably remove the case to federal court.

On top of that, when searching state cases on Lexis or Westlaw, you’re typically searching appellate decisions. Unlike federal court, trial court opinions are largely unavailable for state cases. This means that, even if a state court granted a motion to dismiss a state dilution claim based on the federal registration defense, it wouldn’t be returned in a legal search. And given how black and white the federal registration defense is, the party bringing the state dilution claim wouldn’t appeal unless it counterclaimed for cancellation, which brings us back to the more likely scenario of this issue being tried in federal court from the start. And we’ve already seen how the federal courts have gutted the § 43(c)(6) federal registration defense.

About the Author

Bruno Tarabichi