'Identical or Nearly Identical' Standard Did Not Survive TDRA, Ninth Circuit Rules

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A district court erred when it applied a legal standard in evaluating a dilution claim requiring a junior mark to be “identical or nearly identical” to the senior one, the U.S. Court of Appeals for the Ninth Circuit ruled Feb. 8, stating that such a standard--found in the Federal Trademark Dilution Act--did not survive Congress's adoption of the Trademark Dilution Revision Act of 2006 ( Levi Strauss & Co. v. Abercrombie & Fitch Trading Co., 9th Cir., No. 09-16322, 2/8/11).

The court reversed a district court ruling that retailer Abercrombie & Fitch did not dilute Levi Strauss's trademarked design on the back pocket of jeans, finding that the district court's error was not harmless.

In addition to looking at the history of what led up to the TDRA and the language of the statute itself, the court determined that case law proffered by Abercrombie did not squarely address the question before the panel. The court interpreted the TDRA to require a plaintiff to show--based on the factors set forth in § 1125(c)(2)(B), including the degree of similarity--that a junior mark is likely to impair the distinctiveness of the famous mark.

Levi Sues Abercrombie Over Jean Design.

Levi Strauss & Co. is a famous jean-maker which holds a federally registered trademark on its “Arcuate” design--a stitching on the back pocket with two connecting arches that meet in the center of the pocket.

In 2006, a competitor in the jean market, Abercrombie & Fitch Trading Co., began using a stitching design on the back pocket of its Ruehl jeans, which Levi suggested incorporated the arcing elements of the Arcuate trademark. Levi sued Abercrombie for trademark infringement, unfair competition, and trademark dilution under both federal and California state law. It subsequently dropped its state-law dilution claim and withdrew its claim for monetary relief on the federal dilution claim.

During trial, Levi presented the testimony of Sanjay Sood, who conducted a survey and found that 30 percent of all respondents identified the Ruehl jeans as made, sponsored, or endorsed by the same company that made the Levi's jeans. Abercrombie presented contradictory testimony from its expert Gerald Ford, stating that Sood's survey was not conducted according to accepted and standard practices. Further, as part of deliberations, the jury provided an advisory ruling in which it found--although it later determined that the Arcuate trademark was famous and distinctive--that the marks were not identical or nearly identical and that the Arcuate mark was not likely to be diluted by the Ruehl design.

In 2009, Judge Jeffrey S. White of the U.S. District Court for the Northern District of California entered judgment in favor of Abercrombie on Levi's federal dilution claim, noting that the results of Sood's confusion survey was Levi's only evidence that the Ruehl design was identical or nearly identical to the Arcuate mark. The district court determined that Ford's critique of Sood's methodology was persuasive and that his testimony was more reliable than that offered by Sood.

The district court first reviewed the elements of a claim under the Trademark Dilution Revision Act of 2006, 15 U.S.C. § 1125(c), stating in part that the advisory jury had not found that Ruehl and Arcuate were identical or nearly identical, a standard that required that the two marks be similar enough that a significant segment of the target group of customers sees the two marks as essentially the same. The court observed that, although the evidence showed that Levi had expended significant amounts of money advertising the Arcuate mark, this was not a case where the two marks at issue involve only minor differences.

Levi appealed.

Background of the TDRA.

Levi argued that the district court erred in requiring it to establish that its mark was identical or nearly identical to the Ruehl mark because nowhere in the plain language of 15 U.S.C. § 1125(c) is the language “identical or nearly identical to.” Thus, it maintained that the statute does not require a prima facie showing of substantial similarity before a district court balances the dilution factors. Instead, Levi argued, the “degree of similarity” is one of several factors that a court must balance to determine whether dilution has occurred.

Tracing the ancestry of the “identical or nearly identical” standard, Senior Judge Kenneth F. Ripple, sitting by designation from the U.S. Court of Appeals for the Seventh Circuit, said that the requirement of identity, or substantial similarity, pre-dated the adoption of the Federal Trademark Dilution Act (the predecessor to the TDRA) in 1996 and has its origins in state dilution law, specifically that of the State of New York. Further, though the identical or nearly identical standard had its roots in pre-FTDA state dilution law, the court said that the Ninth Circuit determined in Thane International Inc. v. Trek Bicycle Corp., 305 F.3d 894, 64 USPQ2d 1564 (9th Cir. 2002) (64 PTCJ 436, 9/20/02), that “our adoption of the standard was rooted in the language of the FTDA, the legislative history and purpose of that statute, our prior interpretation of the FTDA, and the policies we believed were embodied in that statute.”

In response to the Supreme Court's decision in Moseley v. V Secret Catalogue Inc., 537 U.S. 418, 65 USPQ2d 1801 (2003) (65 PTCJ 400, 3/7/03), Congress enacted the TDRA to replace the FTDA. The TDRA provided relief for likely, as opposed to actual, dilution, but also explicitly provided relief for dilution by blurring or by tarnishment. Dilution by blurring is the association arising from the similarity between a mark or a trade name and a famous mark that impairs the distinctiveness of the famous mark. Moreover, the first factor in the non-exhaustive list is the degree of similarity between the mark or trade name and the famous mark.

Post-TDRA Case Law.

For its part, Abercrombie argued that, since the passage of the TDRA, the Ninth Circuit has thrice determined that a junior mark must be identical or nearly identical to that of the senior user in order for a trademark dilution plaintiff to be entitled to relief, citing Visa International Service Association v. JSL Corp.,No. 08-15206 (9th Cir. June 28, 2010) (80 PTCJ 337, 7/16/10); Jada Toys Inc. v. Mattel Inc., 518 F.3d 628, 85 USPQ2d 1895 (9th Cir. 2008); and Perfumebay.com Inc. v. eBay Inc., 506 F.3d 1165, 84 USPQ2d 1865 (9th Cir. 2007) (75 PTCJ 93, 11/23/07).

In Perfumebay.com, the court observed that a state-law dilution claim was subject to the same analysis as a federal claim, which required that the mark used by the alleged diluter be identical, or nearly identical, to the protected mark for a dilution claim to succeed. Although applying California law, the court there noted that its emphasis on the extent to which the marks are nearly identical and the strength of the senior mark was bolstered by passage of the TDRA which explicitly included the similarity between the mark and the degree of inherent or acquired distinctiveness of the famous mark in its dilution analysis.

The court here discounted Abercrombie's analysis of Perfumebay.com.“We do not believe these observations ought to be considered a binding determination that the 'identical or nearly identical' standard survives the passage of the TDRA,” the court here said. “We have held that, 'where a panel confronts an issue germane to the eventual resolution of the case, and resolves it after reasoned consideration in a published opinion, that ruling becomes law of the circuit, regardless of whether doing so is necessary in some strict logical sense. However, in Perfumebay.com, we did not 'confront' the issue of the applicable standard under the TDRA,” as it involved a claim under California state law, which had, at the time, not yet altered its statute to reflect the changes in the newly enacted TDRA.

Thus, the court said that Perfumebay.com did not present an opportunity to address squarely the question currently before the panel.

“The same is true of our decision in Jada Toys,” the court said, as it was tried under the FTDA and was resolved without any discussion of whether Thane's standard survived the change in law. That case involved the court first making a ruling under the FTDA and then an amended opinion in response to passage of the TDRA which did not confront any differences between the two statutes other than applying the new “likelihood of dilution” standard. “Indeed, we copied the FTDA analysis of 'nearly identity' into the TDRA opinion without mentioning the material changes in the statute's language regarding similarity,” Ripple said.

“In short, our use of the 'identical or nearly identical' standard in Jada Toys cannot represent a definitive resolution of the issue before us 'after reasoned consideration,' and, therefore, does not establish the standard for dilution under the TDRA,” the court said.

Finally, Abercrombie said that the ruling in Visa International applied and relied on cases that employ the “identical or nearly identical” standard and that the court's emphasis on the one mark, two products paradigm showed that the standard provides the appropriate legal framework under the TDRA. The court took issue with that analysis:  

We cannot accept Abercrombie's view of Visa International. We believe it clear that our reference to prior cases and our use of the “one mark, two products” paradigm were of little significance to our analysis. Nor can we agree that Visa International “applied the identical or nearly identical standard.” In evaluating the district court's judgment in Visa International, we stated that “Congress has enumerated factors courts may use to analyze the likelihood of dilution, including the similarity between the two marks and the distinctiveness and recognition of the plaintiff's mark.” … We then went on to evaluate the evidence presented according to those statutory standards. With respect to similarity, we observed that “[t]he marks here are effectively identical” with the “only difference” being “the prefix 'e.'” Our reference to “effectively identical” was a factual assessment of the similarity of the two marks with which we were presented. There simply is no basis for asserting that we required a showing of identity or near identity in evaluating Visa International's claim under the TDRA. 



Thus, the court concluded that it was the first panel to address the issue whether the “identical or nearly identical” standard survived the TDRA.

Showing of Identicalness Not Required.

Concluding that the standard did not survive, the court looked first at subsection (c)(1) of 15 U.S.C. § 1125. When referring to the junior mark in that provision, Congress did not authorize an injunction against another person who commences use of “the” mark, the court said. Use of the definite article “the” clearly would have signaled that the junior mark had to be the same as the senior, the court said.

Instead, Congress employed the indefinite article “a,” which the court said indicated that any number of unspecified, junior marks may be likely to dilute the senior mark.

Next, the court noted, in subsection (c)(2)(B), the TDRA defines dilution by blurring as the association arising from the similarity between a mark and a trade name and a famous mark that impairs the distinctiveness of the famous mark. “Congress did not require an association arising from the 'substantial' similarity, 'identity' or 'near identity' of the two marks,” the court said. “The word chosen by Congress, 'similarity', sets forth a less demanding standard than that employed by many courts under the FTDA.” Further, it added, Congress chose to make “degree of similarity between the mark or trade name and the famous mark” to be the first of the six or more relevant factors to be considered.

The court also found it significant that, in adopting the TDRA, Congress re-wrote Section 1125(c), as opposed to altering discrete wording or subsections--suggesting that Congress did not wish to be tied to the language or interpretation of prior law.

“Thus the plain language of 15 U.S.C. § 1125(c) does not require that a plaintiff establish that the junior mark is identical, nearly identical or substantially similar to the senior mark in order to obtain injunctive relief,” the court ruled. “Rather, a plaintiff must show, based on the factors set forth in § 1125(c)(2)(B), including the degree of similarity, that a junior mark is likely to impair the distinctiveness of the famous mark.”

The court said that its interpretation was compatible with case law of the Second Circuit, which squarely addressed the question whether the requirement of identity or substantial similarity survived the TDRA in Starbucks Corp. v. Wolfe's Borough Coffee Inc., 588 F.3d 97, 92 USPQ2d 1769 (2d Cir. 2009) (79 PTCJ 156, 12/11/09).

Error Was Not Harmless.

Abercrombie argued that, even if the district court erred in applying the “identical or nearly identical” standard, the judgment should still be affirmed as any error was harmless. It argued that the district court determined the Arcuate mark and Ruehl design were not visually similar and because “similarity” is the correct standard, Levi suffered no prejudice.

The court disagreed:  

Abercrombie presents a very strained view of the district court's opinion. In its order entering judgment for Abercrombie, the court noted that “[t]he advisory jury found that the Ruehl design and the Arcuate mark were not identical or nearly identical.” It also observed that the test for similarity in a dilution context “is more stringent than in the infringement context.” After evaluating the visual depictions of the designs, the court concluded that “[t]his evidence demonstrates that a significant segment of the target group of customers would not view the marks as essentially the same.” The court then reviewed Dr. Sood's testimony and concluded that, given the survey shortcomings, there was insufficient evidence that target customers would “see the Ruehl design and the Arcuate mark as essentially the same.” In summary, the court stated: “[T]he Court concludes, consistent with the advisory jury's finding, that [Levi Strauss] has not established that [Abercrombie] is making commercial use of a mark that is identical or nearly identical to the Arcuate mark.” Use of the “identical or nearly identical” standard permeated the court's analysis and provided the basis upon which the court evaluated the evidence. 




The court also said the standard played a pivotal role in the district court's determination that the Ruehl design was not likely to dilute the Arcuate mark and that the lower court's balancing of the relevant factors “convinces us that application of the incorrect standard affected its dilution determination.”

Concluding that the district court would not have reached the same result absent legal error, the appellate court reversed the judgment with respect to Levi's claim under the TDRA.

Judges Pamela A. Rymer and Raymond C. Fisher joined the opinion.

Levi was represented by Gregory S. Gilchrist of Townsend & Townsend & Crew, San Francisco. Abercrombie was represented by J. Michael Keyes of K & L Gates, Spokane, Wash.

By Nathan Pollard

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