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Designer Skin LLC v. S & L Vitamins, Inc., et al.
Unauthorized internet reseller of plaintiff’s products is not guilty of trademark infringement, and does not cause actionable initial interest confusion, by using plaintiff’s trademarks in meta tags of website at which plaintiff’s and its competitors’ products are sold, and in...

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Visa International Service Association v. JSL Corporation

2:01-CV-00294-LRH-LRL (D. Nev., December 27, 2007)

On remand, the District Court adheres to its initial decision, and holds that defendant’s use of the domain name to promote its language service business dilutes plaintiff Visa International Service Association’s famous ‘visa’ trademark.  Following the Supreme Court’s interpretation of the Federal Trademark Dilution Act (“FTDA”) announced in Moseley v. V Secret Catalogue, the District Court found the requisite evidence of actual dilution in the defendant’s use of a trademark – evisa – substantially similar to plaintiff’s famous Visa mark in its own domain name.  This, the Court held, had the effect of both preventing plaintiff from using that domain to market its products, and of placing plaintiff’s reputation at the mercy of defendant.  Importantly, the Court did not rely on direct evidence of actual dilution, or on evidence that consumers actually associated defendant’s evisa mark with plaintiff or its products.  As a result, the District Court granted plaintiff summary judgment on its trademark dilution claim.

At the outset of its decision, the Court noted that Congress had amended the Federal Trademark Dilution Act in 2006 so as to return the Act to its pre-Moseley state.  As such, under the Act, as amended, the holder of a famous mark need only show a likelihood of dilution arising out of defendant’s use of its mark to prevail on a federal dilution claim – and not the evidence of actual dilution mandated by the Supreme Court in Moseley v. V Secret Catalogue.

However, under applicable Ninth Circuit precedent, the District Court was obligated to interpret the FTDA as directed by the Supreme Court, because the case at bar was filed prior to the 2006 amendment of the FTDA.

Under Moseley, to prevail on a dilution claim, the owner of a famous mark must show that defendant’s use actually diluted plaintiff’s mark.  When the defendant’s mark is not identical to plaintiff’s, this requires direct evidence that defendant’s use lessened the capacity of plaintiff’s mark to identify its goods – such as via survey evidence as to consumers’ reaction to defendant’s conduct, their belief as to its source and sponsorship, and the effect it has on their view of plaintiff.

However, as noted by the Supreme Court “it may well be … that direct evidence of dilution such as consumer surveys will not be necessary if actual dilution can reliably be proved through circumstantial evidence – the obvious case is one where the junior and senior marks are identical.”

The Court held that given the near identity of the parties’ respective marks – Visa and evisa – direct evidence of actual confusion was not necessary.  Rather, the inability of plaintiff to use this variant of its mark in a domain name to identify its products is sufficient to establish that defendant’s use lessens the capacity of Visa’s mark to identify its own products.  Said the Court:

As this Court made clear, Defendant’s use of the Evisa mark weakens the ability of the Visa mark to identify its respective goods and services because internet users who enter the domain name are not brought to plaintiff’s website.  Rather, they are brought to Defendant’s language services website, which makes use of the Visa trademark with only an added ‘e.’  As noted, the use of an ‘e’ before a trademark is commonly used to denote the online version of a business.  Thus, internet users entering the domain name would find, in that instance, the visa mark does not correspond to its payment card services.  This dilution therefore reduces the capacity of the visa mark to identify the goods and services of its owner.

The Court also rested its decision on the fact that “permitting Defendant’s unauthorized use of the Visa mark would put plaintiff’s name and reputation at the mercy of defendant.”

At bottom, the Court’s holding was premised on its finding that businesses commonly place an ‘e’ before their trademark to denote the online version of their business.  Importantly, the Court did not require any direct evidence of actual dilution.  Indeed, the Court did not require the submission or, or consider evidence that consumers associated defendant’s evisa mark with plaintiff, or that defendant’s use of evisa altered consumers’ view of plaintiff or its products.

The remaining elements necessary to establish a dilution claim – “that (1) [plaintiff’s] mark is famous, (2) defendant is making commercial use of the mark in commerce and (3) defendant’s use began after plaintiff’s mark became famous” – were easily established.

In this decision, the Court found that plaintiff’s Visa mark was famous and distinctive, and entitled to protection under the FTDA.  In its prior decision, the Court had found that defendant was making a commercial use of the mark – to promote a language service business – which began after plaintiff’s mark became famous.

As a result, the Court granted plaintiff’s motion for summary judgment, finding defendant violated the Federal Trademark Dilution Act.

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