The Myth and Reality of Dilution

Abstract:     
Statutory dilution claims are traditionally justified on the theory that even non-confusing uses of a famous trademark (or similar mark) can nonetheless minutely dilute the source-identifying power of the targeted trademark. This Article advances three arguments about such claims.

First, the underlying premise of statutory dilution law, that multiple uses of the same (or similar) trademark dissipate the source-identifying function of the mark, even when those uses do not present a likelihood of consumer confusion, is fundamentally flawed.

Second, even if dilution does dissipate the source-identifying capacity of famous marks to some degree, the social and transaction costs imposed by the current version of the federal dilution statute still outweigh the harm to trademark holders that it aims to prevent. Dilution claims inflict anticompetitive burdens and prohibit protected speech without sufficient justification. For these reasons and others, the federal dilution statute imposes substantially more harm than it (allegedly) prevents.

Finally, the true foundation for the federal dilution statute lies not in alleged economic harms, but rather the misplaced fiction of corporate personality. We do not require trademark holders to prove actual economic injury in the context of a dilution claim because, at least in the vast majority of cases, there is none. Instead, we have granted the holders of famous trademarks the equivalent of a "moral" right to these marks, analogous to the rights granted to a creator of an expressive work in the copyright context. By granting monopoly protection to famous marks, notwithstanding the absence of actual economic injury, the federal dilution statute turns competition on its head and serves only to entrench and further concentrate economic power in the hands of dominant corporate firms at the expense of consumers and competitors alike.

Number of Pages in PDF File: 68

Keywords: trademark, dilution, Trademark Dilution Revision Act, TDRA, moral rights, parody, Visual Artists Rights Act, VARA, right of publicity, free speech, First Amendment

JEL Classification: K10, K19, K20, K29

Accepted Paper Series