So what ever happened to the dispute after the Supreme Court victory for the Moseleys? Well, like so much litigation, the dispute continued.
After the Supreme Court entered its mandate on April 3, 2003, the case was sent back to the Sixth Circuit Court of Appeals. On April 9, 2003, the Moseleys filed a motion in the Court of Appeals to vacate the injunction that had been put into place and V Secret filed its response on April 25, 2003. The Sixth Circuit, for reasons unclear, sat on the case for over four years without any action. Of course, during those four years, the TDRA had been enacted. On July 26, 2007, the Sixth Circuit finally remanded the case to the district court for further proceedings consistent with the Supreme Court’s decision.
On May 21, 2008, Judge Charles R. Simpson III of the U.S. District Court for the Western District of Kentucky issued a memorandum opinion granting V Secret’s summary judgment and request for a permanent injunction against the Moseleys, whose request for summary judgment was denied. See V Secret Catalogue, Inc., et al. v. Victor Moseley and Cathy Moseley, Case No. 98-cv-395 (W.D. Ky. May 21, 2008).
After providing a great summary of the events leading up the U.S. Supreme Court decision, the court first determined that the “actual dilution” standard is no longer the law of the case. The court also addressed the issue of retroactivity, rejectingthe Moseleys’ argument that the FTDA applied to claims pending prior to the effective date of the TDRA, noting that all claims for monetary relief had been withdrawn by V Secret and that V Secret now only seeks prospective injunctive relief. The court further noted that the court’s prior conclusions that the Victoria’s Secret mark was “famous” and “distinctive” were not part of the Supreme Court appeal, which reversed based only on the fact that the court used the “likelihood of dilution” rather than an “actual dilution” standard and that there was no evidence of actual dilution of the Victoria’s Secret mark. Both parties also apparently sought to maintain the findings that the VICTORIA’S SECRET mark is “famous” and “distinctive” as the law of the case..
The court rejected the Moseleys’ position that the Supreme Court’s reversal was based on a finding that there was “no evidence of dilution” because the Supreme Court focused only on evidence of actual dilution and did not directly address the lower courts’ determination of a likelihood of dilution. The court added that “the findings from both courts under the FTDA are so much flotsam and jetsam, having been jettisoned from the ship of the FTDA now sunk in the sea of new dilution law.” The court also rejected V Secret’s insistence that the court’s previous findings be adopted because the TDRA’s elements of likelihood of dilution are nearly identical to those of the FTDA.
Instead, the court evaluated V Secret’s entitlement to injunctive relief under the new TDRA likelihood of dilution standard – eight years after the Moseleys ceased using the name, but finding a case or controversy nonetheless existing with respect to V Secret’s entitlement to injunctive relief because the Moseleys were seeking to lift the prior injunction already in place.
In finding that the VICTORIA’S SECRET was a famous mark under the TDRA, the court noted that the Moseleys have not challenged the conclusion that the VICTORIA’S SECRET mark qualifies as a famous mark and noted that V Secret had provided sufficient evidence nonetheless to qualify as a famous mark under the various factors set forth in the TDRA for determining whether the mark possesses the requisite degree of recognition to be considered famous. As for the distinctiveness of the VICTORIA’S SECRET mark, the Moseleys also did not challenge the conclusion that the VICTORIA’S SECRET mark is distinctive. As for use of the mark after V Secret’s mark became famous, there was no question that the Moseleys’ use of the “Victor’s Little Secret” mark in 1998 was long after Victoria’s Secret’s fame had been established.
The court first addressed the first kind of dilution -- likelihood of dilution by blurring – noting that the TDRA defines “dilution by blurring” as an association arising from the similarity between a mark and a famous mark that impairs the distinctiveness of the famous mark. See 15 U.S.C. § 1125(c)(2)(B). “Dilution by blurring occurs when consumers mistakenly associate a famous mark with goods and services of a junior mark, thereby diluting the power of the senior mark to identify and distinguish associated goods and services.” Ringling Bros. - Barnum & Bailey Combined Shows, Inc. v. Utah Division of Travel Dev., 955 F.Supp. 605, 615 (E.D.Va. 1997), citing, Mead Data Cent., Inc. v. Toyota Motor Sales U.S.A., Inc., 875 F.2d 1026, 1031 (2nd Cir. 1989)).
The court then went through an analysis of the five factors set forth in the TDRA for determining the likelihood of dilution by blurring. Regarding the degree of similarity between the marks, the court found the two marks to be substantially similar (only two letters difference and the “Little” was to little to make a difference). As for distinctiveness, the court noted that the TDRA had not changed with respect to this element – and that the court and the Sixth Circuit had both concluded that the VICTORIA’S SECRET mark is distinctive in that it is “arbitrary and fanciful.” Regarding V Secret’s substantially exclusive use of the mark, the Moseleys did not dispute V Secret’s arguments of substantially exclusive use. As for degree of consumer recognition of the VICTORIA’S SECRET mark, the court found that the VICTORIA’S SECRET mark has a high level of consumer recognition. As for the Moseleys’ intent to associate with a famous mark, the court adopted its previous analysis and conclusion that the Moseleys intended to create an association with the VICTORIA’S SECRET mark (finding not credible the explanation offered by the Moseleys that they had never seen a Victoria’s Secret catalog or a Victoria’s Secret advertisement prior to opening their store).
In analyzing “actual association,” the court recounted the testimony of the army colonel who first saw an advertisement for the grand opening of the Moseleys’ store and subsequently sent this advertisement to V Secret. The Supreme Court had noted that while the colonel had made a mental association between the Moseleys’ store and the VICTORIA’S SECRET mark, “he was not actually misled as to the ownership of the Moseleys’ store, nor was his esteem of V Secret’s business diminished. Rather, he was offended that the Moseleys would attempt to use a variant of the VICTORIA’S SECRET mark in such a fashion.” The court, while acknowledging its weakness, accepted this one testimonial association as evidence of actual association.
However, the facts behind this actual association ultimately leads the court to conclude that there is no likelihood of dilution by blurring. The court stated:
The evidence, which is essentially limited to the experience of the offended army colonel, militates against a finding that the distinctiveness of the VICTORIA’S SECRET mark would likely be impaired by the use of the “Victor’s Secret” or “Victor’s Little Secret” marks. The evidence in the case established that a consumer, the army colonel, readily associated the Moseleys’ mark with the VICTORIA’S SECRET mark, but did not link the store to the Victoria’s Secret brand. There was no question in his mind that the Moseleys’ offerings of intimate lingerie, sex toys, and adult videos were not V Secret merchandise. The choice of name and presentation by the Moseleys being just slightly different from the VICTORIA’S SECRET mark, conjured the association with the famous mark, but fell short of blurring its distinctiveness in this instance.
However, while the colonel’s testimony may have worked against a finding of likelihood of dilution by blurring, such evidence supported a finding of likelihood of dilution by tarnishment:
The army colonel’s offended reaction to the use of “Victor’s Secret,” what he clearly believed to be a bastardization of the VICTORIA’S SECRET mark, for the promotion of “unwholesome, tawdry merchandise,” suggests the likelihood that the reputation and standing of the VICTORIA’S SECRET mark would be tarnished. In the words of the Deere & Co. case, the reputation of the famous mark would be “reduced” in the eyes of consumers as “a wholesome identifier” of the Victoria’s Secret brand Id. V Secret has stated that it scrupulously avoids sexually explicit goods while cultivating a “sexy and playful” image. The line between “sexy and playful” and sexually explicit in the world of women’s lingerie purveyors is one which V Secret seeks to maintain in order to preserve its image as a “well-respected retailer of high-quality women’s lingerie.”