July 2003
(Issue No. 1: Decisions published June 16–30)

Court Rejects Dilution By Tarnishment Claim Based On Link To Pornographic Site Appearing On Same Web Site Where Plaintiff's Mark Appears

Voice-Tel Enterprises, Inc., v. Joba, Inc. 258 F. Supp. 2d 1353 (N.D. Ga. June 24, 2003)

Court Opinion

Case Snapshot:

Trademark Issue:	Dilution By Tarnishment
Case Overview:	The trademark issues arise in a franchise dispute. In the context of a broader business dispute, the franchisor Plaintiff sought to justify terminating Defendant franchisee based on alleged trademark misuse in violation of the franchise agreement.
Holding:	A dilution by tarnishment claim cannot be based on the presence of a hyperlink to a pornographic web site which appears on the same web site where the trademark owner's mark appears.
The Dispute:	The alleged tarnishment: Plaintiff franchisor's mark appeared on the Defendant franchisee's web site per the franchise agreement. One of the links that appeared on Defendant's web site connected to a certain legitimate web site. Later, without Defendant's knowledge, that web site went out of business and the link was changed and connected to a third-party pornography site that had grabbed the domain name. Defendant removed the link when it was alerted of this by Plaintiff. Contract and dilution issues entwined: Plaintiff sought to justify termination of the franchise on alleged breach of the franchise agreement provisions regarding proper use of the mark, and also brought trademark and dilution claims (i.e., unauthorized use after breach of the franchise agreement, and dilution by virtue of the alleged tarnishing misuse which justified termination of the agreement). The issues were intertwined – Plaintiff argued that the mark was "materially impaired" in breach of the franchise agreement because Defendant was guilty of dilution by tarnishment.
Procedural Posture:	Cross-motions for summary judgment.
Ruling:	Summary judgment granted in favor of defendants on all claims based on dilution.

Key Points:

Tarnishment

No "material impairment" of mark in violation of franchise agreement caused by inadvertent hyperlink to pornographic web site.

• Plaintiff produced no evidence of actual impairment of its mark. Therefore, the franchise agreement provision prohibiting "material impairment" of mark was not breached.

 There is no evidence that anyone on earth associates the Voice-Tel marks with pornography as a result of the hijacking of the Defendants' website.   

• No "material impairment" by virtue of alleged dilution by tarnishment:
  • Plaintiff argued that the mark was materially impaired, in breach of the franchise agreement, by virtue of dilution by tarnishment, relying on Victoria's Cyber Secret Ltd. Partnership v. V Secret Catalogue, Inc., 161 F. Supp. 2d 1339 (S.D. Fla. 2001).
  • The court distinguished Victoria's Cyber Secret: "This case is different. This case does not deal with domain names, but rather a hyperlink."
  • In Victoria's Cyber Secret, the defendant's domain names victoriasexsecret.com, victoriassexsecret.com, victoriasexysecret.com, and victoriassexysecret.com, which all linked to adult entertainment web sites, were found to constitute dilution by tarnishment.

A dilution by tarnishment claim cannot be based on hyperlinks to other sites appearing on a web site.

• The court relied on Bally Total Fitness Holding Corp. v. Faber, 29 F. Supp. 2d 1161 (C.D. Cal. 1998), a so-called "sucks site" case.
• The Bally court rejected Bally's dilution by tarnishment claim based on links: The "Bally Sucks" web site was included within the www.compupix.com domain, which included a direct link to an "Images of Men" website that displayed and sold photos of nude men. The court rejected Bally's argument that the proximity of the defendant's "Images of Men" site by virtue of the hyperlink to that site tarnished the good will that Bally's mark enjoys.
• Here, the court seemed concerned about the reach of dilution claims if extended to hyperlinks appearing in proximity to a plaintiff's mark on a web page or in a web site:

 The Court agrees that to extend a claim for dilution to a hyperlink situation would 'extend the statute far beyond its intended purpose.' The Court believes that to extend the protection of dilution to the facts of this case would give the trademark owner far more protection than what was intended by the statute. Thus, the Court grants Defendants' motion for summary judgment as to the Lanham Act claim.   

Analysis

More reigning in of dilution.

• Courts have been delimiting the scope of rights under the federal dilution statute. The Supreme Court's recent Mosely decision is an example.
• Without being tethered by a likelihood of confusion standard, dilution rights could be unduly expansive and approximate rights in gross – anathema to bedrock trademark doctrine.
• The court in this case noted:

 Congress greatly expanded the scope of protection available to owners of famous trademarks. Federal Trademark Dilution Act of 1995, Pub.L.No. 104-98, codified at 15 U.S.C. § 1125(c). In an action under the Dilution Act, in contrast with a traditional infringement action, the owner of a qualified, famous mark may seek to enjoin junior users throughout commerce, regardless of the presence or absence of competition or confusion.   

• This court and the Bally court were concerned about the practical effect of allowing dilution by tarnishment claims based on the presence of a hyperlink on the same web site where the plaintiff's mark appears. The court quoted Bally:

 The essence of the Internet is that sites are connected to facilitate access to information. Including linked sites as grounds for finding commercial use or dilution would extend the statute far beyond its intended purpose of protecting the trademark owners from uses that have the effect of 'lessening ... the capacity of a famous mark to identify and distinguish goods or services.'   [Bally, 29 F. Supp. 2d at 1168]