Supreme Court curbs trademarks' reach

In a 9-0 decision, the justices effectively narrowed the scope of a federal trademark law that frequently is invoked in spats over domain names. The effect is to make it more difficult for trademark owners to win lawsuits over alleged infringements of their intellectual property rights.

Even if consumers recognize a word or phrase as a trademark, the court ruled, "such mental association will not necessarily reduce the capacity of the famous mark to identify the goods of its owner."

Tuesday's decision arose out of a lawsuit brought by undergarment-vendor Victoria's Secret against a sex toy shop called Victor's Secret in Elizabethtown, Ky. In an opinion written by Justice John Paul Stevens, the court said Victoria's Secret had not proven that the value of its trademark to identify its own stores or products had been reduced.

Under a law called the Federal Trademark Dilution Act, actions that effectively dilute the value and distinctiveness of the trademark can be punished. Dilution is defined as the "lessening of the capacity of a famous mark to identify and distinguish goods or services."

Paul Levy, an attorney at Public Citizen who estimates he has litigated 10 to 20 domain name cases on behalf of people sued by corporations, says the decision will have a "tremendous impact."

"It's going to affect the cases that arise over infringement because Justice Stevens emphasizes that infringement is about the interests of consumers, not just protection of companies," Levy said. "A lot of judges and lawyers have lost sight of that."

For example, a current case pitting Nissan Computer--owned by Uzi Nissan--against Nissan Motor involves the Federal Trademark Dilution Act. "The only legal basis for the district court's injunction against criticism of Nissan Motor Co. was a finding of dilution, and that finding...must in my view be reconsidered in light" of the new ruling, Levy said.