It was David vs. Goliath in Washington yesterday as a small Kentucky store battled direct marketing giant Victoria's Secret in a trademark case before the Supreme Court.
The store is now known as Cathy's Little Secret, but its previous names of Victor's Secret and Victor's Little Secret sparked the suit by Victoria's Secret.
Attorney James R. Higgins Jr. of law firm Middleton Reutlinger, Louisville, KY, represented Victor Moseley, co-owner of the Elizabethtown, KY, store that sells “everything for romantic encounters” including lingerie and adult-themed items. He said the case turns on the Supreme Court's interpretation of the Federal Trademark Dilution Act.
Higgins argued before the high court that the nation's businesses need a uniform construction of the FTDA and that “this case [involves] a non-identical, non-confusing trademark by a small business in a remote corner of the economy. If this result stands, the FTDA threatens to usher in an expansion of trademark law into a patent-like realm for famous marks.”
What must be considered is the type of proof needed to establish present or actual dilution, he said.
“The standard we propose calls for objective evidence measuring consumer perceptions of the marks at issue, which is at the very core of Congress' definition of dilution, namely — 'the lessening of the capacity of a famous mark to identify and distinguish,' ” Higgins told the court. “The aim of the FTDA is to protect the selling power of a famous mark.”
A decision could be made in two to six months, he said. The current Supreme Court term ends June 30, 2003.
“We feel our view of the law is the guidepost for future cases like this,” Higgins told DM News following his Supreme Court appearance. “We are focusing on the objective aspects as opposed to the subjective aspects of the case. The objective standard is more predictable. Every business that brushes up against trademarks has a stake in this case.”
Howard Shire, a trademark attorney at intellectual property law firm Kenyon & Kenyon, New York, said the issue the Supreme Court will decide is whether the FTDA requires proof of actual injury to the economic value of a trademark, or whether the presumption of economic harm is enough for relief.
“After hearing the oral arguments, I don't know what they will decide,” he said. “The attorney for Victoria's Secret made the argument that tarnishment is part of the federal dilution law. Justice [Antonin] Scalia said that's not in the statute, and then the lawyer for Victoria's Secret said it's in the legislative history. The judges were interested in tarnishment.”
Shire also said that different Circuit Courts of Appeals have ruled differently, with some finding that actual dilution and actual economic harm are required while others have held that the test is a likelihood of dilution.
“If the court sticks with the literal interpretation of the dilution statute, then there's a good chance that Victor's Little Secret will win,” he said. “Victoria's Secret argued that you have to stop the first second user because if you don't stop that one, the mark will lose its ability to indicate the source and there will be economic harm. It would then be tougher to stop additional second users.”
The Sixth U.S. Circuit Court of Appeals in Cincinnati, which ruled against Moseley in July 2001, said a plaintiff “need only show a likelihood of dilution.”
The store opened Feb. 7, 1998, as Victor's Secret. “A cease-and-desist letter was sent out on Feb. 25 [1998],” Higgins told DM News in April.
After several communications with Victoria's Secret's attorneys that included discussions regarding possible names, Moseley said he decided on Victor's Little Secret in March 1998.
The name change wasn't enough as Victoria's Secret sued the store in U.S. District Court in Louisville in June 1998 on multiple grounds, including trademark infringement and dilution, Higgins said. He said a federal judge ruled in favor of the Moseleys on the trademark infringement issue, holding that the public could not be confused between Victor's Little Secret and Victoria's Secret. However, the court ruled against the Moseleys on the dilution issue.
The loss in the Louisville court led to another name change, to Cathy's Little Secret, in 2000. Victor Moseley's wife, Cathy Moseley, is the store's co-owner.
“We would not be making anyone available for an interview. It's our policy not to discuss pending litigation,” said Anthony Hebron, a spokesperson for Limited Brands, the parent company of Victoria's Secret.
