· Web viewLori Grisham, Social Media Reacts ... 15 U.S.C. § 1127 (“The term ‘trademark’ includes any word, name, symbol, ... John W. Schouten & James H. McAlexander,

Kalina ParkerWriting Competition Submission

Diluting Designers: An Analysis of Whether Designer-Department Store Partnerships Constitute

Self-Dilution and Whether Such Behavior Should Have Legal Consequences

Table of Contents

I. The Lilly Pulitzer-Target Partnership

A. The Agreement and Goals of the Partners

B. Consumer Responses Pre- and Post-Debut

C. The Harms to the Lilly Pulitzer Brand from This Arrangement

II. Anti-Dilution Laws

A. Anti-Dilution Law in its Inception

B. Anti-Dilution Law as Enacted in the United States

C. What Anti-Dilution Law is Truly Protecting

III. Designer Partnerships as Harming the Designer Brand’s Aura

IV. Conclusion

“Style isn’t just about what you wear, it’s about how you live.” – Lilly Pulitzer

Lilly Pulitzer consumers seem to have taken these words of their beloved fashion

designer seriously. When Target, early in 2015, announced a spring partnership with the fashion

house Lilly Pulitzer, some consumers were overjoyed at the possibility of purchasing the

colorful, beach-y designs at a lower price. Other “true” Lilly Pulitzer consumers, however, were

less than excited about the upcoming collaboration. These true Lilly Pulitzer consumers

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Diluting DesignersKalina D. Parker

expressed feelings that a partnership with Target selling the designer line at lower prices

cheapened the brand and damaged the brand’s exclusivity—generally, they believed that this

partnership was a poor decision for Lilly Pulitzer.

True designer consumers purchase expensive designer goods because owning goods

bearing particular trademarks signals elite status and wealth to those around them. These true

consumers feel harmed by designer-department store collaborations because such collaborations

decrease the designer’s goods’ exclusivity and, therefore, decrease the mark’s ability to act as a

status signal.

This paper will consider whether trademark law protects against the harm felt by these

true consumers by analyzing trademark dilution law in the United States. Though in its

incipiency anti-dilution law was only meant to protect highly distinctive trademarks against a

whittling away of their distinctiveness, in practice today, anti-dilution law seems to be applied to

protect famous marks against impairment of the mark’s aura or ability to act as a status symbol.

If courts are applying anti-dilution law to protect against such a broad harm, then designers are

potentially causing the same harms to their brands that other mark owner’s have brought cases

against third parties for causing. This paper will conclude that, if a designer self-dilutes her mark

through a partnership as described above, any third party that a designer may try to bring a claim

against in the future for harm to the designer’s brand aura should be permitted to bring a self-

dilution defense.

I. The Lilly Pulitzer-Target Partnership

A. The Agreement and Goals of the Partners

On January 6th, 2015, Target made an announcement in New York City that they

expected would excite their consumers and “leave [them] longing for the warmth of Palm

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Beach”: beginning April 19th, 2015, Target would be carrying a limited-edition Lilly Pulitzer for

Target line.1 Through their partnership, Lilly Pulitzer would design a collection for Target that

would only be stocked once.2

The partnership between Lilly Pulitzer and Target was particularly short-term, but each

company expected to derive benefits from the arrangement. Despite the limited nature of the

agreement, after the announcement by Target of the collaboration, Lilly Pulitzer saw a marked

increase in both Google searches of their brand and in Facebook traffic to their page.3 This

collaboration was also appealing for Target. Target has pursued such designer collaborations

over 150 times in the past4 and noted specifically that the Lilly Pulitzer collaboration was the

most talked-about partnership on social media.5 Furthermore, these collaborations gave Target

the opportunity to sell exclusive, often limited-edition lines that, due to this limited, exclusive

nature, tend to sell out.6 When consumers know that a particular line of goods is going to be

1 TARGET CORPORATE, https://corporate.target.com/article/2015/01/introducing-lilly-pulitzer-for-target (last visited Nov. 25, 2015).

2 TARGET CORPORATE, https://corporate.target.com/article/2015/04/kathee-tesija-talks-lilly-pulitzer-launch (last visited Nov. 25, 2015).

3During the time after the announcement and the release of the line, Lilly Pulitzer “saw a 95% spike on Facebook” and experienced “their largest search day every on Google.” Kristina Monllos, Why Selling Out So Quickly at Target Is So Good for Lilly Pulitzer , ADWEEK (Apr. 20, 2015, 5:32 PM), http://www.adweek.com/news/advertising-branding/why-targets-lilly-pulitzer-collection-selling-out-so-quickly-so-good-brand-164176.

4 Hayley Peterson, Target Just Infuriated Lots of Customers – and It’s a Great Sign for Business, BUSINESS INSIDER (Apr. 20, 2015, 2:40 PM), http://www.businessinsider.com/target-revived-a-big-part-of-its-business-2015-4.

5 Georgea Kovanis, Lilly Pulitzer Items Sell Out After Crashing Target Site, DETROIT FREE PRESS (Apr. 20, 2015, 12:07 PM), http://www.freep.com/story/life/2015/04/19/target-lilly-pulitzer/26026687/; see also TARGET CORPORATE, supra note 2 (showing a Target executive agreeing that the Lilly Pulitzer-Target collaboration was the most talked about on social media out of their previous 150 collaborations).

6 TARGET CORPORATE, supra note 2.

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limited edition and the line is in high demand because of its connection with a luxury designer,

the consumers are more likely to purchase the goods knowing that they will not have the

opportunity to do so again in the future.

B. Consumer Responses Pre- and Post-Debut

Though Target and Lilly Pulitzer entered into what they believed to be a beneficial

arrangement, the consumer responses immediately after the announcement of the partnership

made it unclear whether a majority of consumers were truly excited about this collaboration.

Some customers showed all of the enthusiasm that the partners were expecting by tweeting

comments such as “I WANT IT ALL!!!!” and “OMG Lilly Pulitzer for Target!!!! I could not be

freaking out more! So excited!”7 However, many other customers expressed concern that this

collaboration “cheapen[ed] the brand” and that “the brand is going to lose its exclusivity now.”8

One clearly established Lilly Pulitzer customer stated, “Tbh [To be honest,] I’m not happy about

Lilly for Target. What’s the point of investing in their clothes if you can just buy it for cheap at

Target now? ?”9

Despite the mixed reviews, when April 19th arrived, thousands of enthusiastic customers

lined up or waited at their computers with anticipation through the middle of the night to get

their hands on the limited-edition products.10 Within only a few hours, the stores were entirely

7 Lori Grisham, Social Media Reacts to Target, Lilly Pulitzer Partnership, USA TODAY (Jan. 11, 2015, 6:22 PM), http://www.usatoday.com/story/money/2015/01/08/target-lilly-pulitzer/21456255/.

8 Id.

9 Id.

10 Polly Mosendz, Lilly Pulitzer’s Target Line Turns into Lilly for eBay, NEWSWEEK (Apr. 20, 2015, 2:15 PM), http://www.newsweek.com/lilly-pulitzers-target-line-turns-lilly-ebay-323557.

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sold out of the Lilly Pulitzer line,11 and the heavy traffic online caused the Target website to run

incredibly slowly,12 although, according to a Target representative, it apparently did not crash

entirely.13 After all of the confusion and mayhem in the initial opening hours, many of the

customers who had been positive about the collaboration quickly became frustrated with the

entire process, with one customer stating that “[a]ll the hype was a waste.”14

Target had not placed any limit on the number of products that any one customer was

permitted to purchase, so those lucky first customers filled entire carts with the Lilly Pulitzer for

Target line, while those arriving at the displays later were left with nothing to purchase. 15 To add

to their customers’ frustrations, Target and other sources repeatedly commented that the Lilly

Pulitzer for Target line would not be restocked, and that customers who were not able to

purchase the products simply had to check with their local Target to see if any of the products

11 Target Overwhelmed by Demand for Lilly Pulitzer Collection, ABC (Apr. 19, 2015), http://abc7.com/fashion/targets-lilly-pulitzer-collection-creates-shopping-frenzy/670608/ (stating that many stores actually sold out of the product within minutes of opening); see also TARGET CORPORATE, supra note 2 (showing Target’s executive recognizing that this particular line of products sold out faster than their usual collaborative lines).


13 Id. (from customer comment section at the bottom of the page). Though Target executives deny that the website crashed, customer comments on this statement by the executive suggest that the website experienced problems. (“When you discriminate against your honest customers and cancel my simple order of 3 items to enjoy for myself not just once, but 4 times, you lose me as a customer for life! You also lose all sympathy and respect you would have from your customer!!”).

14 Abigail Elise, Lilly Pulitzer for Target Collaboration Sold Out: Social Media Backlash Could Have Been Prevented, Experts Say, INTERNATIONAL BUSINESS TIMES (Apr. 21, 2015, 12:17 PM), http://www.ibtimes.com/lilly-pulitzer-target-collaboration-sold-out-social-media-backlash-could-have-been-1890577 (“Frustrated w @Target…wanted to shop the @LillyPulitzer line but its [sic] sold out. All the hype was a waste. #MarketingFail #LillyforTarget”).

15 Mosendz, supra note 10 (“Unlike other high-low collaborations such as H&M, Target does not limit the quantity of product a shopper can purchase from a coveted designer collaboration line.”).

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had been returned.16 However, the vast number of the Lilly Pulitzer for Target products that

purchasers subsequently posted on eBay at incredibly marked-up prices17 left customers feeling

quite certain that none of the products would be returned to Target stores.18

C. The Harms to the Lilly Pulitzer Brand from This Arrangement

While many consumers became angry about varying aspects of the collaboration, Lilly

Pulitzer and Target both viewed the partnership as a success. Lilly Pulitzer seemed to take the

position that all press was good press.19 Due to the increase in traffic to their Facebook page and

the number of Google searches of the brand name, Lilly Pulitzer viewed the collaboration as

positive despite any negative feedback—their goal seemed to be to get consumers talking about

their brand.20 Target, meanwhile, minimized its customers anger towards the sell-out and

16 TARGET CORPORATE, supra note 2; see also Abigail Elise, Lilly Pulitzer for Target Collaboration Sale Won’t Be Restocked: How to Get the Items You Want, INTERNATIONAL BUSINESS TIMES (Apr. 22, 2015, 10:54 AM) http://www.ibtimes.com/lilly-pulitzer-target-collaboration-sale-wont-be-restocked-how-get-items-you-want-1892091.

17 By April 22, 2015, the International Business Times was already reporting that bidding for a bracelet that sold for $20 at Target was up to $35 on eBay and a tote bag that sold for $15 at Target was selling for $46 on the auction site. Elise, supra note 16; a chair and hammock package (two chairs and one hammock) that would have cost $240 at Target had a starting bid of $999.99 on eBay and a “buy it now” price of $1,299.99, Lori Grisham, See Outrageous Lilly Pulitzer for Target Markups on eBay, USA TODAY (Apr. 20, 2015, 11:54 AM), http://www.usatoday.com/story/news/nation-now/2015/04/20/lilly-pulitzer-target-markups-ebay/26063441/.

18 TARGET CORPORATE, supra note 2 (customer comments section) (“You really think people will return a lily [sic] p item?? Check out ebay….their all over that!”) and (“It is RIDICULOUS that Target tries to pretend that these goods were purchased for individual consumers to wear. The raid on Target was designed to post these goods for sale on eBay ABOVE selling price.”).

19 Monllos, supra note 3.

20 Id. (“According to Jane Schoenborn, vp of creative communications and marketing for Lilly Pulitzer, the brand is ‘taken aback by the frenzy,’ and the collaboration has ‘helped increase Lilly Pulitzer brand awareness.”).

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subsequent marked-up prices on eBay21 and, rather than seeing the rapidity with which the stores

ran out of product as poor management in the way that the customers viewed the experience,

believed that the quick sell out was the customers telling Target that they knew what they wanted

and did not need time to think about it.22

However, a quick glance at the reactions of consumers demonstrates that there were at

least two different groups of dissatisfied customers: those angered by their inability to purchase

the limited product due to what they perceived as poor management by Target and those angered

by Lilly Pulitzer’s choice to sell its luxury brand at lower prices in a non-exclusive store.

This group of customers23 comprised consumers who bought what they would probably

consider “true” Lilly Pulitzer products prior to the partnership. Their comments focused

specifically on feelings that the “classy and exclusive” Lilly Pulitzer brand was going to be

21 https://corporate.target.com/article/2015/04/kathee-tesija-talks-lilly-pulitzer-launch. The Target representative states that “the amount of Lilly Pulitzer for Target product being resold [online] . . . translates to roughly 1.5 percent of the collection. While [they would] prefer that number to be zero, it tells [them] that the vast majority of guests who purchased the collection did so with the intent of enjoying it for themselves.” TARGET CORPORATE, supra note 2. However, at one point there were over 26,000 items coming up in response to a “Lilly Pulitzer for Target” search on eBay, Kavita Kumar, While Left-Out Lilly Pulitzer Fans Are Still Fuming, Analysts Say It’s All Good for Target, STARTRIBUNE (Apr. 21, 2015, 8:40 AM), http://www.startribune.com/while-lilly-pulitzer-fans-fume-target-counts-sales-as-success/300736461/, and USA Today wrote that a chair and hammock package (two chairs and one hammock) that would have cost $240 at Target had a starting bid of $999.99 on eBay and a “buy it now” price of $1,299.99, Grisham, supra note 17.


23 In addition to the comments noted below, the website multichannelmerchant collected other Twitter and Facebook backlash against the partnership. One partciluarly harsh comment stated “I really only liked Lilly because not everyone could afford it. Like. I don’t want to wear it if my maid can too. #LillyForTarget.” Daniela Forte, Target-Lilly Pulitzer Collaboration Hit with Social Media Backlash, MULTICHANNEL MERCHANT (Jan. 8, 2015, 4:35 PM), http://multichannelmerchant.com/marketing/target-lilly-pulitzer-collaboration-hit-with-social-media-backlash-08012015/?utm_source=rss&utm_medium=rss&utm_campaign=target-lilly-pulitzer-collaboration-hit-with-social-media-backlash. It is unclear precisely what percentage of those responding to the partnership felt this harm to the exclusivity of the brand; however, those who voiced their opinions seemed to have incredibly strong opinions about the brand.

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cheapened by the partnership and that generally the “brand [was] going to lose its exclusivity . . .

.”24 Other consumers provided additional strong responses:

“Sorry but @Lilly Pulitzer should not be sold at Target. Sucks if you can’t afford

it but that’s life.”

“if people say they got something from Lilly at Target….the name will lose its

prestige. The brand was kinda built on class??”

“I completely agree. It took away the exclusiveness of the brand. Poor marketing

and branding on Lilly.”

“The fact that #lillyfortarget is happening is such a shame. It’s so degrading for

the product and name.”25

One consumer who felt especially let down by Lilly Pulitzer wrote, “So basically I just spent

almost 200$ on a dress that is going to now be about 50$ at target. What. The. F[]. Lilly

Pulitzer.”26

24 Grisham, supra note 7.

25 Leeann Duggan, 39 Girls Who Are Mad As Hell About Lilly Pulitzer for Target, REFINERY29 (Apr. 17, 2015, 9:29 PM), http://www.refinery29.com/2015/04/80415/lilly-pulitzer-for-target-reaction.

26 Id.

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Some even responded as though feeling a personal connection with Lilly Pulitzer herself,

writing as though she too would have felt betrayed by this collaboration.27 These frustrations are

focused on a fear about what this collaboration would do to what the Lilly Pulitzer brand stood

for in the minds of the consumers: luxury, exclusive resort products. As compared to certain

other designers, Lilly Pulitzer prices are not extravagantly high.28 Despite this lower pricing in

relation to other designers, some consumers of “true” Lilly Pulitzer view the brand as

exclusive.29 When a consumer chooses to purchase “true” Lilly Pulitzer products, part of the

intended benefit of the purchase is that the rest of the world will see her wearing expensive

clothing. These consumers purchase goods bearing particular marks because they want the marks

to “inform[] the public of [their] refined taste, status, and income.”30

27 Grisham, supra note 7 (“Lilly and Jackie are crying tonight in heaven at the thought of #LillyForTarget. It was never suppose [sic] to be this way”); see also id. (“Lilly Pulitzer for Target was probably the worst marketing decision ever for Lilly. LP is probably rolling in her grave.”).

28 The design house Missoni is another designer with which Target has created a collaborative line. A search on the Missoni website for women’s dresses shows the least expensive dress listed at a price of $1,230.00. MISSONI, http://www.missoni.com/us/missoni/women/dresses?menuseason=main#macro=cat_1892&gender=D&season=A,E&sortRule=PriceAscending&agerange=Adult&page=1&productsPerPage=30&macroMarchio=54 (last visited Nov. 25, 2015). Alternatively, on the Lilly Pulitzer website, the least expensive dress listed is priced at $88.00. LILLY PULITZER, http://www.lillypulitzer.com/section/dresses/38.uts?&currentIndex=0&sortByColumnName=SortByPriceAscending&toolId=null (last visited Nov. 25, 2015).

29 See supra notes 23-25; see also Polly Mosendz, The Cult of Lilly Pulitzer, NEWSWEEK (May 2, 2015, 4:06 PM), http://www.newsweek.com/cult-lilly-pulitzer-327865 (noting a blog post on a popular sorority site stated, “Imagining a $150 scarf being reproduced and sold for $20 is upsetting . . . . Is this incredibly superficial to think? If I want Lilly to continue to be exclusive, am I a horrible person? . . . I just hope a favorite brand of mine won’t go from a tasteful treat to a thrifty bargain find.”) (emphasis added).

30 Shahar J. Dillbary, Famous Trademarks and the Rational Basis for Protecting "Irrational Beliefs", 14 GEO. MASON L. REV. 605, 622 (2007).

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Based upon the comments from what this paper will refer to as “true Lilly purchasers,”

the harm they are experiencing is frustration about damage to what we will call the brand’s aura

—the sense of exclusivity and the prestige provided to consumers when they purchase a product

bearing the mark “Lilly Pulitzer.” Whether the law currently protects these aspects of a

trademark is not clearly answered by the texts of United States trademark laws. The two primary

laws protecting trademarks are those protecting against infringement, the Lanham Act (focused

on likelihood of consumer confusion between similar marks), and those protecting against

dilution (protecting against a similar mark whittling away a mark’s distinctiveness, i.e., the

mark’s ability to immediately call to the consumers’ mind the mark owners’ goods or services).

Neither law explicitly protects the consumers’ perception of the brand aura;31 however, some

scholars suggest that courts have recognized this harm.32 The next portions of this paper will

discuss what harm anti-dilution law was meant to protect against and what harm it may actually

be protecting against to determine whether any party should face repercussions based on the

harm felt by the true Lilly purchasers. The next part of the paper will discuss what type of harm

anti-dilution laws were meant to protect against when first conceptualized and whether, as

applied, the harm felt by these consumers concerning brand aura is what is actually being

protected by anti-dilution laws today.

II. Anti-Dilution Laws

A. Anti-Dilution Law in its Inception

Trademark law has always been primarily focused on concerns about likelihood of

confusion. The law providing protection to trademarks was designed to serve a particular

31 See generally 15 U.S.C. § 1051 et seq. and 15 U.S.C. § 1125.

32 See, e.g. Dillbary, supra note 30, at 607.

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purpose in the marketplace: to protect marks that act as source identifiers for consumers.33

Generally speaking, trademarks reduce search costs for consumers by assuring them that if they

purchase the same product bearing the same trademark as they have purchased in the past, then

they will have a similar experience concerning the characteristics and quality of the product.34

Trademark protection, therefore, has usually been focused on trying to protect consumers from

being misled into purchasing a product thinking it came from one source when it truly came from

a different source bearing a similar trademark.35

However, in 1927, Frank Schechter began promoting his belief that United States

trademark law should protect against another harm beyond a likelihood of confusion based on

similar marks being used on (at least to some extent) related products. Schechter believed that

the United States needed to protect against a harm known as dilution.

As compared to the common likelihood of confusion theory of trademark protection,

dilution is generally seen as protecting the owner of a trademark through protecting the mark as

property more so than protecting consumers against facing confusion in the marketplace.36

33 15 U.S.C. § 1127 (“The term ‘trademark’ includes any word, name, symbol, or device, or any combination thereof . . . used by a person . . . to identify and distinguish his or her goods, including a unique product, from those manufactured or sold by others and to indicate the source of the goods, even if that source is unknown.”).

34 Qualitex Co. v. Jacobson Prods. Co., 514 U.S. 159, 163-64 (1995) (citing 1 J. McCarthy, McCarthy on Trademarks and Unfair Competition § 2.02[2], p. 2-3 (3d ed. 1994)).

35 Id. at 164 (“The law thereby encourage[s] the production of quality products, and simultaneously discourages those who hope to sell inferior products by capitalizing on a consumer’s inability to quickly to evaluate the quality of an item offered for sale.”) (quoting 1 J. McCarthy, McCarthy on Trademarks and Unfair Competition § 2.01[2], p. 2-3 (3d ed. 1994)) (internal quotations omitted) (emphasis added).

36 See, e.g., Ameritech, Inc. v. Am. Info. Techs. Corp., 811 F.2d 960, 964 (6th Cir. 1987) (stating, after quoting The Rational Basis of Trademark Protection by Schechter, that “trademark law now pursues two related goals—the prevention of deception and consumer confusion, and, more fundamentally, the protection of property interests in trademarks.”); see also Standard Brands, Inc. v. Smidler, 151 F.2d 34, 41 (2d Cir. 1949) (showing Judge Frank supporting the

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Regardless, Schechter saw dilution harms as serious evils worth protecting trademark owners

against, and he described the harm of dilution as the impairment of a mark’s distinctiveness.37

Schechter based his theory of dilution law on cases from foreign countries and thought it was

important that the dilution claim was not based on a theory of registration, but rather on

“principles of fair trade.”38 He describes the German case of the Odol mark for mouthwash as the

moment when Germany recognized a cause of action for dilution. Primarily, because the second

user of Odol (for steel goods) could have chosen any other pleasing word to apply to his goods,

the court determined the defendant “chose the word . . . because this mark had acquired an

especially favorable prestige through the efforts of the complainant.”39 This notion that the

junior user has only chosen the mark because of the selling power acquired by the senior user

seems to drive Schechter’s theory that such behavior constitutes unfair trade practices.

In the article in which he laid out his initial argument for an anti-dilution statute,

Schechter had three requirements a trademark holder needed to satisfy before being able to claim

that its mark was being diluted: (1) the mark must possess distinctiveness in the marketplace (to

show that the mark acts as a source identifier); (2) the mark must be of the highest level of

distinctiveness (“coined, arbitrary, or fanciful”40); and (3) the mark must possess a singular

notion that the “sole purpose of trade-name law, he state, is to protect producers against those who wish to free ride on their goodwill”); see also E. Wine Corp. v. Winslow-Warren, Ltd., 137 F.2d 955, 958 (2d Cir. 1943). But see Dillbary, supra note 30_at 619 (arguing that because consumers gain prestige value from purchasing goods bearing a famous mark, anti-dilution law’s protection of a famous mark’s distinction is protecting this prestige sought by consumers).

37 Dillbary, supra note 30, at 825.

38 Frank I. Schechter, The Rational Basis of Trademark Protection, 40 HARV. L. REV. 813, 833 (1927).

39 Id. at 832.

40 Though Schechter used both the words “coined” and “fanciful,” the words, similar to today, would have likely had the same meaning as one another. Schechter cites his choice of the word

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association between itself and the underlying product. (“a mark must be ‘associated in the public

mind with a particular product, not with a variety of products.’”)41 Based on these requirements,

under a Schechter dilution analysis, only a very specific group of trademark owners could

actually bring a claim of dilution.42 While trademark law acknowledges five levels of

distinctiveness (only four of which can possibly receive protection as trademarks),43 only marks

falling into the category of the “highest level” of distinctiveness could bring a claim of dilution

under Schechter’s dilution analysis.

“coined” to the case Duro Pump & Mfg. Co. v. California Cedar Products Co. In that case, the court uses the term “coined” to explain the president of the company’s testimony that he “‘coined’ the word ‘Duro’ himself.” Duro Pump & Mfg. Co. v. California Cedar Products Co., 11 F.2d 205, 205 (D.C. Cir. 1926). The phrase was used presumably in the same way that it would be used today—to coin a phrase means to have invented the phrase or to come up with the phrase.

41 Sara Stadler Nelson, The Wages of Ubiquity in Trademark Law, 88 IOWA L. REV. 731, 749 (2003) (citing Schechter, supra note 38, at 829).

42 Id. at 734.

43 See, e.g., Abercrombie & Fitch Co. v. Hunting World, Inc., 537 F.2d 4, 9 (2d Cir. 1976).

The court in this case describes a spectrum of distinctiveness. A generic “mark” is a word that merely constitutes the name of a given object—for example, apple for the fruit apple. A descriptive mark is a word that describes the characteristics or nature of the product to which it is affixed. A consumer would not have to use any imagination to understand how the word describes the product—for example, Fish Fri for a substance with which one batters and fries fish. A suggestive mark suggests the characteristics or nature of the products without directly describing the products themselves. Courts may consider in determining whether a mark is suggestive whether a consumer would have to use some level of imagination to see the relationship between the suggestive mark and the product to which it is affixed—for example, Coppertone for suntan lotion. An arbitrary mark is a comprised of a word or words that are already known in (for U.S. purposes) the English language but are used to identify source for a product which has no rational relationship to the product outside of acting as a source identifier—for example, Apple for personal computers. Lastly, a fanciful mark is made up word that does not exist in the English language. Because the word has no common meaning, there is no rational purpose for placing it on a product or in advertising other than to identify source—for example, Kodak for film.

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Even if a trademark were fanciful, for Schechter, this would not be sufficient. The

trademark had to further be associated with a single product or product class in the consumers’

minds.44 An example of a mark that would be allowed to bring a claim of dilution under

Schechter’s theory is Kodak45—even today the word Kodak instantly brings the product of film

and cameras to the minds of consumers. Therefore, under Schechter’s theory of dilution, a

trademark needed to be of the “highest distinction,” having both the highest distinction in the

modern trademark sense of the term (based on the Abercrombie spectrum—either fancifulness or

arbitrariness) and the highest distinction in its relationship to the products or services it was

placed upon, namely being utilized for a sole product class. It is important to keep these

requirements in mind when one studies current dilution law to better attempt to grasp from which

types of harms dilution may actually be protecting marks.

B. Anti-Dilution Law As Enacted in the United States

44 On the other hand, Rolls-Royce, Aunt Jemima’s, Kodak, Mazda, Corona, Nujol, and Blue Goose, are coined, arbitrary or fanciful words or phrases that have been added to rather than withdrawn from the human vocabulary by their owners, and have, from the very beginning, been associated in the public mind with a particular product, not with a variety of products, and have created in the public consciousness an impression or symbol of the excellence of the particular product in question.

Schechter, supra note 38, at 829.

45 The fact that Schechter refers to Kodak as a mark which should receive protection from dilution helps readers determine how he defined the product with which a word must be associated in order to have a “singular association.” By 1900, the Eastman Kodak Company was making significant progress in both the areas of camera film and cameras. This suggests that Schechter would have deemed cameras and camera film closely related enough to make Kodak have a singular association with a single product class. KODAK, http://graphics.kodak.com/US/en/corp/aboutus/heritage/milestones/default.htm (last visited Nov. 25, 2015).

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In the United States, individual states were the first governmental bodies to recognize this

harm presented by Schechter.46 Eventually in 1996, Congress responded to this “patchwork” of

state anti-dilution laws and enacted the Federal Trademark Dilution Act (“FTDA”);47 however,

Schechter’s view of a dilution claim differed substantially from how the claim was organized in

the FTDA.

Although inspired by Schechter’s proposal, the FTDA differs from his original theory in

multiple ways. First, the FTDA delineates two different types of dilution, whereas Schechter

focused only on protecting marks against another mark impairing its distinctiveness.48 The two

types of dilution found in the FTDA are dilution by blurring and dilution by tarnishment. The

FTDA defines dilution by blurring as an “association arising from the similarity between a mark

or trade name and a famous mark that impairs the distinctiveness of the famous mark.”49 Dilution

by tarnishment is an “association arising form the similarity between a mark or trade name and a

famous mark that harms the reputation of the famous mark”50—Schechter did not describe a

concept of dilution in his article. Secondly, the Act only requires that an owner of a famous mark

show that a junior user’s use of a similar mark is “likely to cause dilution by blurring or dilution

by tarnishment of the famous mark.”51 Lastly, the FTDA further explains that dilution can occur

46 Starbucks Corp. v. Wolfe’s Borough Coffee, Inc., 736 F.3d 198, 205-206 (2d Cir. 2013).

47 Id. at 206.

48 In his article, Schechter does not actually use the word “dilution.” Schechter primarily focused on the need to protect marks that were highly distinctive, which would later be described as protecting marks from dilution and would specifically be the beginnings of dilution by blurring. See generally Schechter, supra note 38.

49 15 U.S.C.A. § 1125(c)(2)(B).

50 15 U.S.C. § 1125(c)(2)(C).

51 15 U.S.C. § 1125(c)(1).

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to a famous mark in the presence or absence of either competition between the parties or a

likelihood of confusion.52

From the language of the FTDA, one can see that dilution by blurring laws are still

focused on protecting a famous mark’s ability to identify and distinguish goods and services.53

The Supreme Court has referenced examples of hypothetical marks that would be “actionable

under this legislation.” These examples include “DUPONT shoes, BUICK aspirin, and KODAK

pianos.”54 Because we assume there is no likelihood of confusion, this analysis suggests that the

courts are not concerned that consumers will believe that the company that makes KODAK

pianos is the same as the company that makes KODAK film, but rather that KODAK has worked

to make their fanciful mark famous and to make the mark stand for something particular in the

consumers’ minds (film and film related products). To allow for KODAK pianos would decrease

the original KODAK mark’s ability to call instantly to consumers’ minds film and film related

products. This is the harm that dilution law is meant to protect against.55

As suggested above, an important distinguishing factor of dilution law is that a court can

find a likelihood of dilution “regardless of the presence or absence of—(1) competition between

the owner of the famous mark and other parties, or (2) likelihood of confusion, mistake, or

deception.”56 This language, therefore, states that the owner of a famous mark may have a viable

cause of action against another party using a similar mark on her products even if consumers are

not confused into believing both sets of products are produced by the same source.

52 15 U.S.C. § 1125(c)(1).

53 15 U.S.C. §1125.(c)(2)(B).

54 Moseley v. V Secret Catalogue, 537 U.S. 418, 431 (2003).

55 Id.

56 15 U.S.C. §1125(c)(1).

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In summary, the FTDA provides injunctive relief to owners of (1) famous marks who can

show (2) a likelihood of either dilution by blurring or dilution by tarnishment (3) in the presence

or absence of actual competition between the mark users or of any actual or likelihood of

confusion. The FTDA seems to attempt to track with Schechter’s concerns by giving an

enforcement option to mark holders for behavior that “impairs the distinctiveness of the mark.”57

However, one of the primary differences between Schechter’s notion of dilution law and the law

that was eventually enacted is that Congress chose to give protection against dilution “famous”

marks58 instead of relying on the distinctiveness breakdown provided by Schechter.

This difference opens up the possibility of dilution protection to a much greater portion of

registrable marks; the protection is certainly no longer limited to the fanciful marks eligible for

protection under Schechter’s theory. Consider the factors that go into a court’s determination of

fame: (1) “[t]he duration, extent, and geographic reach of advertising and publicity of the mark,

whether advertised or publicized by the owner or third parties,” (2) “[t]he amount, volume, and

geographic extent of sales of goods or services offered under the mark,” (3) “[t]he extent of

actual recognition of the mark,” and (4) [w]hether the mark was registered under the Act of

March 3, 1881, or the Act of February 20, 1905, or on the principal register.”59 Given that these

are the general factors that a court will consider, at least some suggestive and descriptive marks

will qualify for protection against dilution.

The FTDA also does not address the third consideration required by Schechter. There is

no requirement in the FTDA that the famous mark be linked in the minds of consumers with a

57 15 U.S.C. § 1125(c)(2)(B).

58 15 U.S.C. § 1125(c)(1).

59 15 U.S.C. § 1125(c)(2)(A)(i)-(iv).

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particular product or product class.60 For example, while Kodak would still qualify for dilution

protection under the FTDA as a famous mark, so might a well-known mark such as Virgin,

which could not have received dilution protection under Schechter’s theory. Today, Kodak is

still immediately linked in consumers’ minds with film, whereas Virgin, while remaining

associated with one particular company, is not affiliated with any specific product or product

class.61 “If the word ‘Virgin’ standing alone, triggers any associations in the minds of

consumers . . . it probably does no more than conjure up an image of Sir Richard Branson, the

flamboyant founder of the company.”62 That the mark “Virgin” does not call to consumers’

minds any particular product suggests that the mark lacks the distinctiveness of being associated

with one product or product class, which was required by Schechter and is sometimes mentioned

as a focus of anti-dilution law in cases applying the FTDA.63 Rather, if Virgin were able to bring

a successful claim of dilution by blurring, one might question whether, beyond being well

recognized, the Virgin mark has any distinctiveness in terms of its product association to dilute.

60 See generally 15 U.S.C. § 1125.

61 For example, Virgin Enterprises has registrations with the word “Virgin” as a dominant feature for dozens of product classes, including: “[a]ircraft, airplanes, space vehicles namely, astronautical vehicles,” see VIRGIN, Registration No. 4,688,904; “entertainment services, namely, providing games of skill and chance via the internet,” see VIRGIN Registration Nos. 4,467,646 and 4,467,644; watches, see VIRGIN, Registration No. 4,325,986; drinking water and non-alcoholic beverages, see VIRGIN, Registration Nos. 4,291,920 and 4,291,919; “provision of exercise facilities” and “operation of leisure centers,” see VIRGIN, Registration Nos. 4,220,791 and 4,105,375; arranging and organizing of cruises, see VIRGIN, Registration No. 4,810,741; “[a]pparatus for recording, transmitting, storing or reproducing sound or images,” education, retail store services, and insurance brokerage, see VIRGIN, Registration No. 4,416,519; alcoholic beverages, see VIRGIN, Registration No. 3,188,282; and “printed sheet music” and other paper articles and “articles of underclothing,” see VIRGIN, Registration No. 1,591,952.

62 Stadler Nelson, supra note 41, at 782.

63 E.g., Starbucks Corp., 736 F.3d at 205; see also Times Mirror Magazines, Inc. v. Las Vegas Sports News, L.L.C., 212 F.3d 157, 170 (3d Cir. 2000) (recognizing that without anti-dilution laws, courts could not provide a remedy to mark owners when similar marks were used on non-competing goods).

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Because a singular association with a product or product class is not a requirement under the

FTDA, despite this wide array of products bearing the Virgin mark, under the FTDA Virgin

Enterprises could still attempt to bring a claim for dilution, because the Virgin mark would only

need to be considered famous.64

C. What Anti-Dilution Law is Truly Protecting

This brings the discussion to what the FTDA should mean when it discusses impairment

of a mark’s distinctiveness. Based on Schechter’s requirements it seems fairly safe to say that he

was referring to the weakening of the relationship in the consumers’ minds between a fanciful or

arbitrary mark and the singular product class to which it was affixed by allowing the same or a

very similar mark to be affixed to a different product class. Generally, a student studying

trademark law comes away from his course understanding the FTDA to protect against this harm

as well.65 However, case law and some scholars suggest that this is not truly what anti-dilution

law may be protecting. In Starbucks Corp. v. Wolfe’s Borough Coffee, Inc., the court considered

a dilution by blurring claim brought by Starbucks. Starbucks was claiming in this case that the

use of the mark CHARBUCKS on coffee and other coffee related products would dilute the

STARBUCKS trademark.66 The district court, and subsequently the appeals court (though only

64 It is unclear whether the Trademark Trial & Appeal Board (the “Board”) would find the VIRGIN mark to be famous. The mark has come before the Board on multiple occasions, usually with evidentiary issues. Compare Virgin Enterprises Limited v. Steven E. Moore, Opposition No. 91192733 (August 31, 2012) (finding the sales of and advertising expenditures sufficient to show meaning in the marketplace for a likelihood of confusion analysis, but the total evidence (lacking survey evidence of brand recognition and awareness) insufficient for fame under a dilution theory) with Virgin Enterprises Ltd. v. Albion Motors Ford Mercury, Inc., Oppositions Nos. 91153575, 91153612, and 91154161 (August 19, 2007) and Virgin Enterprises Ltd. v. Kay Guitar Co., Opposition No. 91154392 (November 23, 2004) (in which the Board found the VIRGIN mark sufficiently recognizable to succeed on a 2(d) likelihood of confusion basis in its opposition and, therefore, declined to decide the dilution claims altogether).


66 Starbucks Corp., 736 F.3d at 201.

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focusing on those factors that were challenged), completed a full analysis of dilution by

blurring.67 The Second Circuit Court of Appeals affirmed the district court’s findings that, though

the second through the fifth factors delineated in the FTDA favored Starbucks,68 that the sixth

factor only minimally supported Starbucks’ claim,69 and that the first factor (similarity of the

marks) weighed in favor of Black Bear70 when the marks were compared as they are viewed in

the marketplace.71 Though the court eventually found no likelihood of dilution, the interesting

point to note is that the court did not focus on the fact that both marks were being used on coffee

67 Starbucks Corp. v. Wolfe's Borough Coffee, Inc., 2011 WL 6747431, at *3-6 (S.D.N.Y. Dec. 23, 2011) aff'd, 736 F.3d 198 (2d Cir. 2013); Id. at 207-13.

68 The degree of distinctiveness of the senior mark favored Starbucks, because “[t]here is no question that “Starbucks”—an arbitrary mark as applied to coffee—is highly distinctive.” Starbucks Corp., 736 F3d at 212. Starbucks was also in substantially exclusive use of the marks. D. Lastly, because Starbucks’s survey evidence showed that 79% of respondents were familiar with Starbucks, it was “undisputed that Starbucks constitutes a widely recognized mark . . . .” Id. “Clark’s testimony indicated that Black Bear was capitalizing on an historic connection between the word ‘Charbucks’ and ‘Starbucks,’ which arose out of the so-called ‘coffee-wars’ in Boston, Massachusetts, . . . , and that he ‘meant to evoke an image of dark-roasted coffee of the type offered by Starbucks.” Id. at 212 (quoting Starbucks Corp., 2011 WL 6747431 at *5) (internal quotations omitted).

69 Ultimately, on this factor, we consider only whether the District Court clearly erred when it found that the Mitofsky survey tilts the “actual association” factor “no more than minimally in [Starbucks’] favor.” . . . Had the Mitofsky survey presented the Charbucks Marks as they appear in commerce, we might well conclude that the District Court erred. But the word “Charbucks” was presented outside of its marketplace context, and Starbucks, which bears the burden of proof, . . . , failed to show that this flaw did not materially impact the survey results.

Starbucks, 736 F3d at 211.

70 The Court determined that the marks needed to be considered in the context in which they are viewed by consumers in the marketplace. This meant that the court could not simply compare “Starbucks” and “Charbucks” but had to take into consideration that the word Charbucks was used on packaging incorporated into the phrases “Charbucks Blend” and “Mister Charbucks.” Id. at 208.

71 Id. at 213.

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and other coffee products.72 The Court of Appeals, though taking the time in its third opinion in

this case to explain Schechter’s theory and to quote his description of the dilution theory as “the

gradual whittling away or dispersion of the identity and hold upon the public mind of the mark or

name by its use upon non-competing goods,” makes no mention as to why their entire dilution

analysis was not affected by both marks being used on precisely the same class of goods.73

Because the difference in the marks when they appeared in the marketplace seemed to be the

driving factor behind the court’s analysis, this seems to suggest that had the marks both been

merely “Starbucks” and “Charbucks” in the marketplace (as opposed to Charbucks Blend and

Mister Charbucks, which the court found differentiated the marks from the famous Starbucks

mark) then the court probably would have found a likelihood of dilution.

This analysis leads to the question of what the court believed it was potentially protecting

in the Starbucks case. The lack of similarity between the marks in the marketplace (i.e.

Starbucks/Charbucks vs. Starbucks/Mister Charbucks) and the way the marks were presented in

the consumer survey74 were the basis for the court’s decision that Starbucks had not shown a

likelihood of dilution. If the facts had supported Starbucks on those factors as opposed to Black

Bear, the court’s analysis suggests that it could have found a likelihood of dilution by blurring.

Further, because the court did not even mention that the marks being used on the same product

was an issue in the court’s mind, seemingly the hypothetical alternate facts described above

could still have lead to a likelihood of dilution claim despite the marks being used on the same

products. Usually we believe that dilution by blurring leads to cluttering the mind of the

consumer—for example, consumers who used to hear “Kodak” would immediately think “film,”

72 See generally id.

73 Id. at 205 (quoting Schechter, supra note 38, at 825).

74 Id. at 204.

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but if a piano company were allowed to use the Kodak mark then consumers would hear

“Kodak” and instead think “film or pianos?”75 The most common description of this harm is that

it increases the “mental search cost” of consumers by making them think harder before they

realize which source is being referred to by the mark.76 This same analysis is complicated and not

truly workable in the Starbucks case. An attempt to conduct the analysis would go something

like this: Consumers used to hear “Starbucks” and immediately think of Starbucks’s coffee but

now when they hear “Charbucks” they will think “coffee” but it will take more time77 for the

consumers to determine to which brand of coffee the speaker or advertisement is referring

because of how similar the marks are. This analysis does not make as much sense as the Kodak

example, which raises the question: if a ruling in favor of Starbucks on this issue was not

protecting the distinctiveness of Starbucks (or similar marks) in calling coffee products to

consumers’ minds, then the court must have been protecting some other aspect of the Starbucks’s

mark (whether intentionally or subconsciously).

Multiple scholars have discussed the concept of, what this paper will refer to as, a brand

“aura.” Brand aura describes the phenomenon where a trademark’s placement on a product, for

some reason, increases the value of the product in the consumer’s mind.78 One scholar explains

that, because trademarks carry these auras, when a consumer buys a product with a particular

75 Another example of this concept was described by Judge Posner. He explains that if a restaurant calls itself “Tiffany” then consumers will not likely think that they are patronizing the jewelry store when eating at the restaurant. “But when the consumers next see the name ‘Tiffany’ they may think about both the restaurant and the jewelry store, and if so the efficacy of the name as an identifier of the store will be diminished.” Ty Inc. v. Perryman, 306 F.3d 509, 511 (7th Cir. 2002).

76 Rebecca Tushnet, Gone in Sixty Milliseconds: Trademark Law and Cognitive Science, 86 TEX. L. REV. 507, 520 (2008) (citing Jerre B. Swann, Sr., Dilution Redefined for the Year 2002, 92 TRADEMARK REP. 585, 612 (2002)) (explaining that “[a] number of legal scholars have agreed with Judge Posner” in identifying increased mental search costs as the primary harm of dilution).

77 Id.

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trademark affixed to a good or associated with a service, she is buying not only the good or

service, but also the feelings evoked by the trademark and the prestige that it carries.79 The

existence of the additional benefit derived by a consumer by purchasing a specific brand can be

witnessed in a variety of contexts. Consider the brand Harley Davidson. One article has

described this brand as “in effect, a religious icon around which an entire ideology of

consumption is articulated.”80

Yet another piece of evidence suggesting the existence of brand aura is the mere fact that

brand names used to simply be placed on the inside tag of clothing, or potentially to be

78 Katya Assaf, Brand Fetishism, 43 CONN. L. REV. 83, 85 (2010) (“For instance, consumers rate the taste of soda higher when it carries the name ‘Coca-Cola’ than when it does not.”). Rebecca Tushnet explains this example with Coca-Cola in more detail by explaining that consumers like Pepsi soda better than Coke when they are not aware which soda is which, but when they are made aware which is Pepsi and which is Coke, consumers’ preferences shift to Coke. She explains that one of the reasons for this switch is the brand name’s ability to evoke certain emotions, including those emotions related with good memories. Tushnet, supra note 76, at 508-09. Sara Stadler Nelson recognizes that “[t]he modern brand, after all, is not just an indicator of source, but something that can ‘deliver emotional and . . . expressive benefits’ to purchasers, who often feel ‘a strong attachment to the brand.’” Stadler Nelson, supra note 41, at 776 (quoting Jerre B. Swann, Sr., et al., Trademarks and Marketing, 91 TRADEMARK REP. 787, 800 (2001)).

79 Dillbary, supra note 30, at 621; see also Jeremy N. Sheff, Veblen Brands, 96 Minn. L. Rev. 769, 795 (2012) (quoting Thorstein Veblen, The Theory of the Leisure Class (Houghton Mifflin Co. 1973) at 29-30) (explaining that “the possession of accumulated material wealth—the trophies of success in various stages of social organization—confers superior social standing”).

80 During a cultural study in which the two authors integrated themselves into a Harley Davidson group, they explain that upon beginning their research they were treated as outsiders and that they needed to acquire their own Harley-Davidson motorcycles, because they were missing the “empathic sense of a biker’s identity, psyche, and social interactions in the context of everyday life.” John W. Schouten & James H. McAlexander, Subcultures of Consumption: An Ethnography of the New Bikers, 22 J. CONSUMER RES. 43, 46 (1995). They further explain that dedication to the brand and subculture through features such as tattoos, bike customization, specific clothing, etc., creates a hierarchy of authenticity whereby enthusiasts feel free to snub those other bike riders whom they do not consider authentic, such as those who only ride on the weekends or who ride other brands of motorcycles. Id. at 49. These aspects of the bikers’ identities lead the authors to the conclusion that “[t]he values that make up the biker ethos touch on virtually all aspects of members’ lives, including the social, the political, and the spiritual.” Id. at 50.

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represented by a small logo on the left-breast pocket area of a shirt. Now, many well-known

brands place their name as the primary focal point of many of their shirts, with the mark usually

being large and often the only decorative feature on the clothing—turning these clothing articles

into “mere carriers of the brand they represent.”81 Most consumers are aware that the source of

clothing is usually identified on the tag of a shirt, so source identification is not generally

difficult. While placing a small logo on the outside of the shirt may expedite the process of

determining source, placing the mark as the primary, large feature in the center of a shirt, notably

a place that is used for decoration as opposed to source identification,82 seems to have little if any

effect on the consumer’s search costs. Because many consumers wear clothing with the source’s

trademark prominently featured, presumably these consumers want the mark to be visible, not

only for source identification purposes for themselves, but so other people who see them wearing

the articles of clothing will know that they are wearing a particular brand.83

This concept of buying a particular product partially for the purpose of others knowing

that the consumer owns an expensive and/or exclusive product can also be seen in cases

discussing post-sale confusion. In the case Mastercrafters Clock & Radio Co., the court was

analyzing a case concern two clocks. The defendant in that case sold atmospheric clocks that

required no external power source, but that were wound by small changes in the temperature—

they called these clocks “Atmos—The Perpetual Motion Clock.”84 After several years, the

81 Assaf, supra note 78, at 85-86.

82 See, e.g., In re LS&S Retail, Inc., U.S. Trademark Application Serial No. 77525450 (filed Jul. 17, 2008) (T.T.A.B. 2010) (not precedential) (explaining why the trademark examining attorney refused registration of a trademark used as the central, large feature on a shirt based on ornamentation—the mark would not be seen as a mark in the marketplace, but rather as mere decoration by the consumers).

83 Richard S. Higgins & Paul H. Rubin, Counterfeit Goods, 29 J.L. & ECON. 211, 211 (1986).

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company made a decision to create a distinctive outward appearance for these clocks.85 Though

the plaintiff’s clocks did have some distinguishing features such as a cord in the back to plug in

for electricity, a different name on the face, and a different stated country of origin, the design of

the plaintiff’s Model 308 clocks was “practically an exact copy of the Atmos” in external

appearance.86

Based on these facts, consider Judge Frank’s opinion in Mastercrafters Clock. First, he

recognized that purchasers of the clock were not buying the non-atmospheric clocks because

they thought they were the defendant’s clocks—on the contrary, the electric cord made it clear

that the plaintiff’s clocks were not the same as the defendant’s.87 Rather he described the

consumers’ motives in the following way: “This goes to show at least that some customers

would buy plaintiff’s cheaper clock for the purpose of acquiring the prestige gained by

displaying what many visitors at the customers’ homes would regard as a prestigious article.”88

Though this paper makes no argument concerning post-sale confusion, the Mastercrafters

decision is important to demonstrate the court’s recognition that consumers purchase goods of a

particular brand—or of a similar design that would suggest to others the product comes from the

particular brand—because of the prestige that comes from owning the article.

84 Mastercrafters Clock & Radio Co. v. Vacheron & Constantin-Le Coultre Watches, Inc., 119 F. Supp. 209, 210 (S.D.N.Y. 1954) rev'd sub nom. Mastercrafters Clock & Radio Co. v. Vacheron & Constantin-LeCoultre Watches, Inc., 221 F.2d 464 (2d Cir. 1955).

85 Id. at 211.

86 Id.

87 Mastercrafters Clock & Radio Co. v. Vacheron & Constantin-LeCoultre Watches, Inc., 221 F.2d 464, 466 (2d Cir. 1955).

88 Id.

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Shahar Dillbary relates this concept of brand aura specifically to anti-dilution law in the

United States. He explains that trademarks can function both as a source identifier and still

enhance the consumer’s demand for the product.89 This dichotomy explains why consumers are

willing to pay more for goods—such as those bearing the trademark “Armani”—even if other

non-branded goods are of identical or even higher quality.90 Owning a good that bears a famous

mark “informs the public of the owner’s refined taste, status, and income.”91 Generally, the mark

“conveys an ‘image’ or a ‘look’ that is annexed to the physical garments.”92 Dillbary ultimately

explains that, not only do famous trademarks provide consumers with this additional prestige,

but United States law supports consumers holding these “irrational beliefs” by only protecting

famous marks from dilution.93

Finally, Dillbary also explains that this theory of protecting the brand aura is not merely

providing consumers with a means to demonstrate to the public their taste, status, and income,

but is also providing a good for the consumer whether others are aware of the brand or not.94 He

explains this theory as such:

The consumer who wishes to reward herself with a new Cartier watch or L’Oreal lotion would not be able to mimic the feeling by buying a knockoff watch (even if no one but her would know the difference) or a generic lotion. She would not enjoy the feeling of


90 Id. at 622.

91 Id.; see also Sheff, supra note 79, at 796-97 (“[D]emand for a particular good can increase as the price or scarcity of the good increases, precisely because conspicuously costly or rare goods serve as ‘signals’ of social status.”).


93 Id. at 606-07.

94 Id. at 625.

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owning unique or luxurious goods unless she buys the original product (and pays the fame premium).95

Therefore, a mark comprises both the mark as a distinct source identifier of goods and its

prestigious aura. While dilution law is not meant to protect brand aura, (indeed, had the FTDA

merely followed Schechter’s theory dilution law would likely be easier to apply96) the structure

of the FTDA in requiring only fame for protection against dilution97 and court cases such as

Starbucks suggest that dilution law is already protecting brand auras. The court certainly does

not have to consider the different types of distinctiveness required by Schechter—there is no

requirement that the mark be associated with only one product class. For many trademark

owners, at least part of their fame is based on the exclusivity, aura, or personality that is

associated with owning a product bearing that mark.98 Further, by not requiring that the marks be

used on noncompeting goods, as demonstrated by the Starbucks case, the FTDA shows that the

law is protecting some aspect of the mark beyond the relationship between the mark and a

distinctive product class—rather, the law seems to be protecting the specific message—likely a

combination of quality, characteristics, and aura—that is affiliated with the mark.

Because the wording of the FTDA and the application of the law in cases suggests that

brand aura is already being protected,99 dilution of either the distinctiveness of the mark or the

95 Id.



98 See generally, Sheff, supra note 79, at 774 (discussing how one area of post-sale confusion doctrine is focused on what the author calls “Veblen brands,” which are goods that consumers are willing to pay more for because of the brand name signaling status to the world around them).

99 See id. at 803 (describing how judges in “status confusion” cases—e.g. a case such as MasterCrafters described above—must be referring to “quality” as something other than physical qualities or workmanship, because by-stander or downstream confusion would cover

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aura should be considered dilution of the mark since consumers are using the marks to benefit

from both of these aspects. Seemingly, this prestige that consumers are also buying when they

purchase a product under a certain mark can only exist if the mark is well known by the general

public (or at least by those will sufficient funds to also purchase goods bearing the mark in the

case of a very expensive brand). Specifically, if the public, or others who purchase similar goods,

does not recognize the mark as prestigious then the consumer will not gain the benefit of her

status being known to those around her.100 By only requiring a showing of fame for a mark to be

eligible for protection against dilution, Congress enacted an anti-dilution law that “protects only

the persuasive function of branding.”101 This protection for fame, as opposed to a law that

protects the most highly distinctive of marks as required by Schechter, suggests that U.S. anti-

dilution law may actually be protecting brand aura instead of the distinctiveness of the mark.

When the brand aura surrounding a trademark consists of an element of exclusivity, expanding

beyond this exclusive market at the brand owner’s direction may be a form of self-dilution of the

famous mark.

III. Designer Partnerships as Harming the Designer Brand’s Aura

The “true” Lilly Pulitzer consumers are complaining about harm to the brand’s aura—the

sense of exclusivity and class that Lilly Pulitzer stands for in her devoted customers’ minds. The

question now remains whether our legal system should acknowledge that designers entering into

collaboration with lower end stores could be causing dilutive harms to their marks.

such concerns. “Rather, the ‘quality’ sought by consumers in the market for status goods is the quality of the message the brand conveys: its ability to communicate social status to others.”).

100 See id. at 798.


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Under a Schechter theory of anti-dilution law, Lilly Pulitzer would not have any possible

cause of action against a third-party for dilution. Under the Lanham Act, a party can only use her

name as a registered trademark once she can show that her name has attained secondary

meaning.102 These marks are categorized as descriptive and must be brought under Lanham Act

protection under subsection (f) extending protection to “a mark used by the applicant which has

become distinctive of the applicant’s goods in commerce.”103 As descriptive marks, designers’

names would not qualify as marks that are of the highest distinction, regardless of how many

goods or services the marks are used for. Therefore, had Congress followed Schechter’s theory

when it enacted the FTDA, this analysis would not be relevant, because these marks would never

be in danger of being diluted by third parties. However, under the FTDA, a descriptive mark, so

long as the owner can demonstrate sufficient fame and distinctiveness (i.e. acquired

distinctiveness), can still qualify for protection, because there is no requirement that the marks be

of a certain level of distinctiveness beyond merely qualifying as a trademark.104

The concept of self-dilution under the FTDA, however, is not new, though perhaps it has

previously been described differently. Originally, trademark holders could not license their

marks without transferring all of their interest and goodwill, because courts feared a “naked

license” would defeat the purpose of a trademark, which is to indicate the origin of the marked

products.105 Though licensing is permitted currently, there remains a hint of the courts’ concern

in the requirement that licensors maintain some right to inspect the quality of the goods and

102 15 U.S.C § 1052(e)(4).

103 15 U.S.C. § 1052(f).

104 See generally 15 U.S.C. § 1125.

105 Irene Calboli, The Sunset of “Quality Control” in Modern Trademark Licensing, 57 AM. U.L. REV. 341, 344 (2007).

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services for which their mark is being used so customers can rely on the trademark as an

indicator of the quality of the products.106 This view of self-dilution is focused primarily on

licensing regimes under which a licensee might not maintain the same standard of quality as the

licensor and which could prevent the consumer from being able to rely on the mark to ensure

quality. Elizabeth Bannon describes self-dilution as a “natural extension of the dilution

concept.”107 She explains that self-dilution “occurs when a trademark owner has licensed the

mark without maintaining adequate control of quality, thereby causing the mark to lose its

meaning in the consumer’s mind as an indicator of quality and in turn destroying the business

interest.”108 Because the mark owner is not guaranteeing that the same level of quality is

maintained on all goods bearing the mark, including those sold by a licensee, the mark loses its

meaning in the consumer’s mind in that regard.

The same phenomenon could occur if, rather than failing to maintain a level of quality

that the brand has come to represent, the mark owner fails to maintain the same aura that the

brand has come to represent. Arguably, this is what Lilly Pulitzer and many other designers are

doing to their own brands through their partnerships with department stores such as Target. As

described above, the harm to the aura of the brand that the consumers are feeling is the precise

harm that other mark holders have brought cases against third parties for causing.109

106 Id. at 346.

107 Elizabeth C. Bannon, The Growing Risk of Self-Dilution, 82 TRADEMARK REP. 570, 592 (1992).

108 Id. (emphasis added).

109 Consider the information asymmetry that Sheff describes in his status confusion analysis. This asymmetry does not exist between buyers and sellers of goods bearing a particular trademark, but rather between purchasers of goods bearing a brand—be it the true brand or a “counterfeit”—and those observing their ownership of the brand. True Lilly consumers want the public observing them with Lilly products to know that they are of a social status that makes them able to purchase true Lilly goods and do not want to be confused with “counterfeits.” This

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Based on the above discussion that aura and prestige might truly be the focus of anti-

dilution laws, once Lilly Pulitzer is connected in consumers’ minds with a sense of exclusivity

and class, as several unhappy Lilly customers proclaimed it to be,110 then any erosion of the aura-

portion of the trademark should be considered a form of dilution of the mark.111 One can imagine

that the Lilly Pulitzer company would want to claim dilution of its mark if another company

chose to make exclusive, classy beach products under a similar mark; yet there is no party to

bring a claim against Lilly Pulitzer itself for harming the prestige of its brand in the minds of its

consumers. This lack of claim is probably the preferable legal regime—we do not want the law

overregulating how a mark owner uses its own mark and sells its own products. Yet, it seems

unfair that designers such as Lilly Pulitzer could cause this harm to their own brand and later

attempt to bring a dilution claim against a third party for causing the exact same or a similar

harm.

In order to solve this seemingly unfair result, the ultimate conclusion of this paper is to

suggest a defense for third parties later accused of diluting a mark’s aura that has arguably

already been diluted by the mark holder. Sara Stadler Nelson purported a similar response to

same harm would be felt with Target on its own made the “counterfeit” Lilly Pulitzer goods or Lilly Pulitzer worked with Target to create the “counterfeit” version of the brand. Sheff, supra note 79, at 803.

110 See discussion supra notes 23-35.

111 Note that this same harm could extend to situations in which a mark owner begins using lower-quality materials, chooses to change its formula, or chooses to alter another aspect of the good that the mark has come to represent. For example, Shahar Dillbary uses the example of the calorie-free sweetener Splenda. When consumers see the mark SPLENDA, they understand, not only that every package bearing the mark is made by the same source, but that SPLENDA represents a (1) no-calorie sweetener that is (2) made from sugar and therefore safe for people with diabetes. Dillbary argues that since consumers have come to rely on the mark to relay this additional information that when mark holders change any of the inputs that affect what the brand has come to mean for these consumers (e.g. a no-calorie sweetener safe for diabetics) then that behavior is the same as false advertisement. Shahar J. Dillbary, Trademarks as a Media for False Advertising, 32 CARDOZO L. REV. 327, 342 (2009).

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another conflicted aspect of dilution. She termed her defense the “ubiquity defense.”112 She

argues that trademark owners can choose to use their marks on a variety of goods at their own

will, but that this choice should affect their ability to litigate a successful dilution claim.113 She

bases this notion on the fact that dilution by blurring is meant to be a harm felt by marks

associated with a particular product or product class and once a mark holder by its own actions

eliminates the possibility of such a singular association, then an alleged dilutor should be able to

bring a defense of ubiquity—meaning the mark is already in use on a variety of goods and no

longer bears a singular association, so the third party is not the source of this harm.114

A similar notion could be applied in a case where consumers feel that the brand aura is

being diluted by the famous mark owner’s choices. At least part of “true” Lilly Pulitzer

consumers’ love of the brand is attached to the sense of exclusivity they feel when purchasing

her products. 115 One person specifically said that this partnership constituted “[p]oor marketing

and branding on Lilly.”116 Just as Stadler Nelson’s theory allows owners of famous marks to use

them on a variety of products without any immediate repercussions, under a self-dilution

defense, famous mark owners could choose to change the aura of their brand. However, if the

famous mark owner later wanted to bring a claim of dilution against a third party for diluting

their trademark through dilution of brand aura, the third party should be able to raise a defense of

self-dilution. This concept is predicated on the notion that by, for example, making an exclusive


113 Id. at 790.

114 Id. at 797.

115 See discussion supra note 29.

116 Duggan, supra note 25.

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brand less exclusive the famous mark owner has already diluted a significant part of the

trademark: the brand aura.

In evaluating the strength of a self-dilution defense, courts could take into consideration

facts such as the short term of the Lilly Pulitzer-Target partnership117 and the long-term

partnership between Vera Wang and Kohl’s.118 In these scenarios, Lilly Pulitzer’s short-term

arrangement with Target clearly had an effect on the brand aura in at least some consumers’

minds; however, theoretically, because after only a few hours only true Lilly Pulitzer goods were

available for sale outside of eBay. Alternatively, a self-dilution theory should be more harmful to

a potential Vera Wang claim, because the long-standing nature of their relationship has led to a

much higher probability that Vera Wang evokes the Simply Vera line at Kohl’s as much in the

consumers’ minds as it evokes the true Vera Wang line. Furthermore, consumers would

presumably be more upset about certain partnerships than others. Courts would be able to

consider and balance all of these factors before deciding the legitimacy of a famous mark

holder’s dilution claim against a third party. Overall, because a famous mark holder can cause

the same harm to their own marks that are already being recognized in courts when caused by

third parties, the strength of any potential future dilution claim against a third party should be

decreased based on the self-diluting activity of mark holder itself.

IV. Conclusion

In conclusion, true Lilly Pulitzer consumers felt a real harm to the exclusivity of the

brand through the Lilly Pulitzer-Target partnership. Though many may think that recognition of

117 See discussion supra note 11.

118 The original partnership between these two companies was announced in 2006 as a “long-term licensing agreement” and continues today. Vera Wang to Design Line Just for Kohl’s, USA TODAY (Aug. 25, 2006, 10:47 PM), http://usatoday30.usatoday.com/money/industries/ retail/2006-08-24-vera-wang_x.htm.

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such harm is merely protecting vanity and snobbery,119 dilution law may already be protecting

this snobbery. Dilution law in its inception may have only been meant to protect a very narrow

class of marks against the very specific harm of a whittling away of distinctiveness, but courts’

applications of the FTDA and the FTDA’s expansion of protection to any mark that can prove

fame suggests that dilution law is much broader today than Schechter imagined.

When receiving the benefit of protection from a greatly expanded law, famous mark

holders should be held to high standards that require that they not cause the same type of harm to

their marks that they claim another has caused. Courts should be able to consider the partnerships

to determine whether a famous mark owner has already started causing harm to the mark’s aura.

Furthermore, a third party being sued for dilution by the famous mark owner should have the

opportunity to bring a defense of self-dilution to demonstrate that she did not initiate this harm to

the famous mark. Dilution law is already a controversial area of law because it does not seem to

focus on consumers as much as it focuses on protecting mark owners, and courts should be wary

of famous mark holders attempting to benefit from partnerships and additionally benefit from the

breadth of protection found in the FTDA.

119 See generally Dillbary, supra note 30.

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