Direct marketing giant Victoria's Secret suffered a defeat yesterday as the U.S. Supreme Court ruled that Cathy's Little Secret, an Elizabethtown, KY, store that sells lingerie and adult-themed items, did not hurt the trademark of the well-known brand.
The store's previous names of Victor's Secret and Victor's Little Secret prompted Victoria's Secret's legal action.
Attorney James R. Higgins Jr. of law firm Middleton Reutlinger, Louisville, KY, represented Victor Moseley, who is the store's co-owner with his wife, Cathy. Higgins maintained that the case would be decided based on the court's interpretation of the Federal Trademark Dilution Act.
The court unanimously decided that though Victoria's Secret has an interest in protecting its name, trademark law requires more evidence that a competitor actually caused harm by using a sound-alike or knockoff name.
“Use of the name 'Victor's Little Secret' neither confused any consumers or potential consumers, nor was likely to do so,” Justice John Paul Stevens wrote for the court, according to the Associated Press.
But Stevens asserted that circumstantial evidence may be enough to show economic harm, especially if the disputed business uses the same name as the well-known one. AP reported that Victoria's Secret and supporting business groups said consumer surveys and other means of testing public reaction to a trademark are expensive and can be problematic to arrange.
“Whatever difficulties of proof may be entailed, they are not an acceptable reason for dispensing with proof of an essential element,” of the trademark law, Stevens wrote.
The Sixth U.S. Circuit Court of Appeals in Cincinnati, which ruled against Moseley in July 2001, had 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 ,” Higgins told DM News in April 2002. After talks with Victoria's Secret's attorneys that included possible names, Moseley said he chose Victor's Little Secret in March 1998. The change wasn't enough as Victoria's Secret sued the store in U.S. District Court in Louisville in June 1998 on grounds including trademark infringement and dilution, Higgins said.
Higgins 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. But 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.
“The case is remanded to the lower courts for further proceedings consistent with [the Supreme Court] opinion, and there is a provision that says there is no evidence of dilution,” Higgins said. “The lower court must deal with the case as the Supreme Court has pronounced law. Our main goal in the lower court will be to have it permit them to change the name back to Victor's Little Secret. That should happen in the next three to six months.”
Though Higgins was confident in his view of the law, he was surprised that the vote was 9-0, as Stevens wrote the opinion for a unanimous court.
“The likelihood of dilution was something they abandoned before they got to the Supreme Court,” Higgins said. “Their argument was that harm was inevitable and the harm had to be snuffed out before it occurred. This is a good decision because it makes the dilution part of the trademark law much more objective and predictable.”
Higgins said Victoria's Secret could try to reopen the case to present more evidence.
“That would be unfair since it would give them a second bite at the apple,” he said. “I don't know if they would do that.”
Reuters reported that Stevens said the appeals court was wrong. He said the evidence was insufficient to support summary judgment for Victoria's Secret on trademark dilution.
“There is a complete absence of evidence of any lessening of the capacity of the Victoria's Secret mark to identify and distinguish goods or services sold in Victoria's Secret stores or advertised in its catalogs,” Stevens wrote, according to Reuters.
Stevens said the law, which protects against uses that blur a trademark's distinctiveness or tarnish or disparage it, required proof of actual dilution. The appeals court had said only proof of a likelihood of dilution was needed.
Reuters also reported that Victoria's Secret said more than 3.5 million Kentucky residents receive its lingerie catalog annually, including 39,000 in Elizabethtown. It said it has two stores in Louisville, which is about 60 miles from Elizabethtown.
In a separate concurring opinion, Justice Anthony Kennedy said an injunction still could be entered for Victoria's Secret if it presented sufficient evidence of blurring or tarnishing of its trademark.
“That's just one of the nine [justices] that said that,” Higgins said.
A call to a Limited Brands spokesperson was not returned yesterday. The company, which owns Victoria's Secret, issued a brief statement: “… [W]e are gratified that [the court] noted the unquestionable strength and value of the Victoria's Secret brand and trademark. … [T]he Court agreed with our primary argument that proof of actual economic harm is not required to establish trademark dilution under federal law. We will continue to vigorously protect and defend the Victoria's Secret brand, and the Court's decision allows us to do that.”
Ethan Horwitz, chair of the intellectual property practice at law firm Goodwin Procter, New York, said there was a split in the circuit courts involving whether there had to be a likelihood of harm from dilution or whether “you had to actually show harm” caused by dilution.
“A number of circuits said that you are going to have to prove actual dilution has harmed your mark while others said that you have to show a likelihood of dilution,” he said. “This decision settles the issue and says you will have to show actual harm, but then it eased up on the proof that a future party would need to provide to prove such harm to a mark.
“They said you have to show harm. Victoria's Secret didn't show harm. They argued the likelihood that the name would dilute the value of the Victoria's Secret mark was sufficient. My feeling is that if Victoria's Secret put up the proof of harm, they would have won the case. The court is saying you could do a survey — you can get circumstantial evidence that might include marketing experts to describe the kind of harm that it's causing.”