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112th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     112-647

======================================================================



 
     TO AMEND THE TRADEMARK ACT OF 1946 TO CORRECT AN ERROR IN THE 
              PROVISIONS RELATING TO REMEDIES FOR DILUTION

                                _______
                                

 September 10, 2012.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

Mr. Smith of Texas, from the Committee on the Judiciary, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 6215]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on the Judiciary, to whom was referred the 
bill (H.R. 6215) to amend the Trademark Act of 1946 to correct 
an error in the provisions relating to remedies for dilution, 
having considered the same, report favorably thereon without 
amendment and recommend that the bill do pass.

                                CONTENTS

                                                                   Page

Purpose and Summary..............................................     1
Background and Need for the Legislation..........................     2
Hearings.........................................................     3
Committee Consideration..........................................     3
Committee Votes..................................................     3
Committee Oversight Findings.....................................     4
New Budget Authority and Tax Expenditures........................     4
Congressional Budget Office Cost Estimate........................     4
Performance Goals and Objectives.................................     5
Advisory on Earmarks.............................................     5
Section-by-Section Analysis......................................     5
Changes in Existing Law Made by the Bill, as Reported............     6

                          Purpose and Summary

    The purpose of H.R. 6215 is to correct a drafting error in 
the Trademark Dilution Revision Act of 2006\1\ to ensure that 
Federal registration of a trademark does not constitute a 
defense to a claim of federal dilution asserted against that 
trademark. This clarification will prevent the proliferation of 
bogus diluting trademarks that otherwise cost legitimate 
trademark owners time and money spent monitoring registrations 
and other marks used in commerce.
---------------------------------------------------------------------------
    \1\Pub. L. 109-312.
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                Background and Need for the Legislation

           THE FEDERAL TRADEMARK DILUTION ACT (``FTDA''):\2\ 
                      ABRIDGED HISTORY, 1995-2005
---------------------------------------------------------------------------

    \2\Pub. L. 104-98.
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    Trademark rights are unique because they are based on 
Federal as well as state law. In fact, many states offer 
trademark protection against ``dilution.'' Dilution is defined 
as ``the lessening of the capacity of a famous mark to identify 
and distinguish goods or services regardless of the presence or 
absence of (a) competition between the owner of the famous mark 
and other parties or (b) likelihood of confusion, mistake, or 
deception.'' Courts have defined dilution as either the 
blurring of a mark's product identification or the tarnishing 
of the affirmative associations a mark has come to convey.
    Dilution does not rely upon the standard test of 
infringement; that is, likelihood of confusion, deception, or 
mistake. Rather, it applies when the unauthorized use of a 
famous mark reduces the public's perception that the mark 
signifies something unique, singular, or particular. In other 
words, dilution can result in the loss of the mark's 
distinctiveness and, in worst-case scenarios, the owner's 
rights in it.
    In order to promote uniformity and certainty for trademark 
owners, a Federal dilution statute was enacted in 1995. The 
purpose of the FTDA is to protect famous trademarks, whether 
registered or unregistered, from subsequent uses that blur the 
distinctiveness of the mark or tarnish or disparage it, even in 
the absence of a likelihood of confusion. The FTDA applies when 
unauthorized users attempt to trade upon the goodwill and 
established renown of such marks, and thereby dilute their 
distinctive quality. It specifies a number of factors that a 
court may consider, but is not limited to, in determining 
whether a mark is distinctive and famous.

            MOSELY V. V SECRET CATALOGUE, INC.,\3\ AND THE 
                TRADEMARK DILUTION REVISION ACT OF 2006
---------------------------------------------------------------------------

    \3\537 U.S. 418 (2003).
---------------------------------------------------------------------------
    Following passage of the FTDA, the circuit courts of 
appeals split as to whether the statute required the owner of a 
famous mark to prove actual harm as a prerequisite to 
injunctive relief. This question was addressed by the Supreme 
Court in the case of Mosely v. V Secret Catalogue, Inc. In a 
dilution action between the lingerie company Victoria's Secret 
and a small retail company (Victor's Little Secret) that sold, 
among other items, adult ``novelties,'' the Court determined 
that the FTDA ``. . . unambiguously requires a showing of 
actual dilution, rather than a likelihood of dilution.''
    The Mosely decision upset the American trademark community, 
whose members argued that requiring a mark holder to 
demonstrate actual damage in a dilution case would only 
guarantee that the value of a mark would be compromised and 
lost. In response, the 109th Congress enacted H.R. 683, the 
Trademark Dilution Revision Act of 2006 (``Revision Act''). The 
amendments to the FTDA clarify, in addition to other 
refinements, that a mark holder need not prove actual dilution.

                       TECHNICAL ERROR IDENTIFIED

    In 2011, two law professors identified a technical problem 
with the FTDA as amended.\4\ During Senate consideration of 
H.R. 683, a section providing a Federal registration defense to 
a dilution action was reorganized, producing an unexpected and 
unintended change to the law.
---------------------------------------------------------------------------
    \4\See Timothy A. Lemper & Joshua R. Bruce, The Dilution Defense 
Congress Never Meant to Create (And Needs to Fix), 101 Trademark Rep. 
1580 (2011); and Lemper & Bruce, Beware of the Scrivener's Error: 
Curing the Drafting Error in the Federal Registration Defense to 
Trademark Dilution Claims, 19 Tex. Intell. Prop. L.J. 169 (2011).
---------------------------------------------------------------------------
    As originally drafted in the House of Representatives, the 
provision was designed to encourage Federal registration of 
trademarks, a worthy policy goal that prevents state laws from 
interfering with federally-protected marks and ensures that 
registered marks are protected nationwide. The House draft 
promoted this goal by barring a state action for dilution 
against a federally-registered mark. However, and without 
explanation, the Senate reformatted the House text in such a 
way as to create a bar against state action for dilution as 
well as a state or Federal action based on a claim of actual or 
likely damage or harm to the distinctiveness or reputation of a 
mark. This means the federal-registration defense is available 
not only to state dilution claims, but Federal dilution claims 
as well.
    Congress could not have intended such an outcome. If all 
dilution claims, including Federal claims, are barred by 
registration, it becomes difficult to cancel a diluting mark 
that is registered. This only encourages illegitimate mark 
holders to register diluting marks, which forces legitimate 
mark holders to expend greater resources monitoring 
registrations as well as other marks being used in commerce.

                                Hearings

    The Committee on the Judiciary held no hearings on H.R. 
6215.

                        Committee Consideration

    On August 1, 2012, the Committee met in open session and 
ordered the bill H.R. 6215 favorably reported without 
amendment, by voice vote, a quorum being present.

                            Committee Votes

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that there 
were no recorded votes during the Committee's consideration of 
H.R. 6215.

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of rule XIII of the Rules 
of the House of Representatives, the Committee advises that the 
findings and recommendations of the Committee, based on 
oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

               New Budget Authority and Tax Expenditures

    Clause 3(c)(2) of rule XIII of the Rules of the House of 
Representatives is inapplicable because this legislation does 
not provide new budgetary authority or increased tax 
expenditures.

               Congressional Budget Office Cost Estimate

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, the Committee sets forth, with 
respect to the bill, H.R. 6215, the following estimate and 
comparison prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                   Washington, DC, August 23, 2012.
Hon. Lamar Smith, Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 6215, a bill to 
amend the Trademark Act of 1946 to correct an error in the 
provisions relating to remedies for dilution.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Susan Willie, 
who can be reached at 226-2860.
            Sincerely,
                                      Douglas W. Elmendorf,
                                                  Director.

Enclosure

cc:
        Honorable John Conyers, Jr.
        Ranking Member




  H.R. 6215--A bill to amend the Trademark Act of 1946 to correct an 
       error in the provisions relating to remedies for dilution.

      As ordered reported by the House Committee on the Judiciary 
                           on August 1, 2012.




    CBO estimates that implementing H.R. 6215 would have no 
significant cost to the Federal Government. Further, enacting 
H.R. 6215 would not affect direct spending or revenues; 
therefore, pay-as-you-go procedures do not apply.
    H.R. 6215 would amend provisions of trademark law that 
relate to a trademark owner's ability to be sued for diluting 
another trademark. Under current law, the owner of a famous 
trademark can bring a suit against another trademark owner 
alleging dilution when the other trademark impairs the 
distinctiveness or harms the reputation of the famous 
trademark. For example, the owner of a trademark for a famous 
handbag could sue another company that begins using the 
trademark to refer to laundry detergent. However, certain 
dilution claims are disallowed in both Federal and State courts 
if the person being sued holds a registered trademark. H.R. 
6215 would continue the prohibition of those claims in State 
courts, but allow the claims to go forward in Federal court. 
Based on information from the Patent and Trademark Office, CBO 
estimates that implementing H.R. 6215 would have no significant 
cost to the Federal Government because of the small number of 
cases likely to be affected.
    H.R. 6215 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would not affect the budgets of State, local, or tribal 
governments.
    The CBO staff contacts for this estimate are Susan Willie 
(for Federal costs) and Paige Piper/Bach (for the private-
sector impact). The estimate was approved by Peter H. Fontaine, 
Assistant Director for Budget Analysis.

                    Performance Goals and Objectives

    The Committee states that pursuant to clause 3(c)(4) of 
rule XIII of the Rules of the House of Representatives, H.R. 
6215 clarifies that Federal registration of a trademark does 
not constitute a defense that bars a claim of Federal dilution 
against that trademark.

                          Advisory on Earmarks

    In accordance with clause 9 of rule XXI of the Rules of the 
House of Representatives, H.R. 6215 does not contain any 
congressional earmarks, limited tax benefits, or limited tariff 
benefits as defined in clause 9(e), 9(f), or 9(g) of Rule XXI.

                      Section-by-Section Analysis

    The following discussion describes the bill as reported by 
the Committee.
    Sec. 1. Remedies for dilution. Subsection (a) cures the 
scrivener's error regarding Federal registration of a mark as a 
defense to a claim of Federal dilution. It reformats Section 
43(c)(6) of the Lanham Act\5\ to clarify that Federal 
registration only constitutes a complete bar to a state claim 
based on dilution, or actual or likely damage or harm to the 
distinctiveness or reputation of a mark.
---------------------------------------------------------------------------
    \5\15 USC 1125(c)(6).
---------------------------------------------------------------------------
    Subsection (b) applies the fix to any action commenced on 
or after the date of enactment of the Act.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

                          ACT OF JULY 5, 1946

        (Commonly referred to as the ``Trademark Act of 1946'')

  AN ACT To provide for the registration and protection of trademarks 
used in commerce, to carry out the provisions of certain international 
                  conventions, and for other purposes

Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

           *       *       *       *       *       *       *


   TITLE VIII--FALSE DESIGNATIONS OF ORIGIN, FALSE DESCRIPTIONS, AND 
                           DILUTION FORBIDDEN

    Sec. 43. (a) * * *

           *       *       *       *       *       *       *

    (c) Dilution by Blurring; Dilution by Tarnishment.--
            (1) * * *

           *       *       *       *       *       *       *

            (6) Ownership of valid registration a complete bar 
        to action.--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 Act shall be a complete bar to an action 
        against that person, with respect to that mark, that--
                    [(A)(i) is brought by another person under 
                the common law or a statute of a State; and
                    [(ii) seeks to prevent dilution by blurring 
                or dilution by tarnishment; or
                    [(B) asserts any claim of actual or likely 
                damage or harm to the distinctiveness or 
                reputation of a mark, label, or form of 
                advertisement.]
                    (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.

           *       *       *       *       *       *       *