Chanel Prevails in Trademark Dilution Case

by | Jul 21, 2014 | Industry News

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In April 2012, Jerzy Makarczyk filed an application with the U.S. Patent and Trademark Office (USPTO) to register the mark “CHANEL” for “real estate development and construction of commercial, residential and hotel property.” Initially, the mark was found to be entitled to registration and published for opposition by the USPTO. Chanel, Inc. opposed the registration, asserting Makarczyk’s use and registration of the CHANEL mark would create a likelihood of “dilution by blurring.” The Trademark Trial and Appeal Board (TTAB) agreed with Chanel, Inc. and denied Makarczyk his registration.

All trademark owners can assert a claim for infringement based on likelihood of confusion. Owners of famous marks receive additional protections under the trademark laws. Only the owners of famous marks can assert a claim for trademark dilution, i.e., damage to the mark that can be caused by tarnishment or blurring.

Establishing a claim of dilution requires proof of three elements. First, the owner of the mark must prove the mark is famous and distinctive. A mark becomes famous only when it is widely recognized by the general consuming public of the United States as a designation of source of
the goods or services of the mark’s owner. More specifically, a mark is famous if, when the general public encounters the mark in almost any context, the general public associates the term, at least initially, with the owner. A mark is sufficiently distinctive when the public would
associate the term with the owner of the famous mark even when it encounters the term apart from the owner’s goods or services.

Second, the owner of the mark must prove that the party accused of dilution is using a mark in commerce that allegedly dilutes the owner’s famous mark. The owner must show its mark became famous prior to the use of the mark or initial trademark filing (whichever came first) of
the accused. The owner must also show the marks are sufficiently similar to each other for dilution to occur.

Third, the owner must demonstrate the distinctiveness of the famous mark will be tarnished or blurred by the accused’s mark. A famous mark is tarnished if cast in a negative light. For example, if the accused offers goods of low quality, the reputation of the famous mark suffers.
Likewise, if the mark is associated with sex, drugs, crime or other scandalous activities the reputation of the famous mark suffers. The case between Chanel and Makarczyk involved blurring rather than tarnishment.

The following factors among others are relevant to proof of blurring:

  • The degree of similarity between the marks as to appearance, sound, connotation and commercial impression.
  • The degree of distinctiveness of the famous mark.
  • The extent to which the owner of the famous mark is engaged in substantially exclusive use of the mark.
  • The degree of recognition of the famous mark.
  • Whether the accused intended to create an association with the famous mark.
  • Any actual association between the late‐comer’s mark or trade name and the famous mark
  • Impairment of the distinctiveness of the owner’s famous mark.

The TTAB found virtually all these factors to favor Chanel, Inc. The parties stipulated the marks were identical. The CHANEL mark is also inherently distinctive and not descriptive of the goods. Chanel, Inc. has engaged in substantially exclusive use of its CHANEL mark and expended substantial resources preventing such use by others including, according to the TTAB, “filing over one hundred (100) trademark infringement lawsuits and sent over one‐thousand (1,000) cease and desist letters, leading the New York Times in 2007 to identify opposer as one of the top ten filers of trademark suits.”

Additionally, Chanel presented evidence to the TTAB demonstrating that Makarczyk intended to create an association with Chanel’s famous CHANEL mark, despite the fact that Chanel never licensed Makarczyk to use the mark (either orally or in writing) and has never even conducted
any business with Makarczyk. While the actual association factor was deemed by the TTAB to be neutral due to the absence of evidence related to this factor, the TTAB agreed that the distinctiveness of the CHANEL mark is likely to be impaired by any use or registration of the
CHANEL mark by Makarczyk.

We have substantial experience successfully representing clients in dilution cases. We can help you exercise the diligence required to protect well‐known brands and even less well‐known brands that may become famous along with your success. We also can help you identify
potential trademark dilution issues and navigate a path that keeps you out of court.

Please contact us about our trademark monitoring, enforcement and clearance services and the assistance we can provide regarding trademarks, brand identity and protection.



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