Court scores one for a store called 'Victor's Little Secret'

"Victor's Little Secret" may soon be a secret no more.

In a victory with important implications for US trademark law, the owner of a Kentucky lingerie and adult novelty store has won an important battle toward establishing the right to call his shop Victor's Little Secret.

In a unanimous decision announced yesterday, the US Supreme Court rejected a claim by Victoria's Secret, the intimate-apparel retail and catalog company, that the tiny Elizabethtown, Ky., shop was likely to tarnish its world-famous trademark by adopting a similar-sounding name.

Victor Moseley and his wife, Cathy, had insisted that their store's name was different enough to avoid confusing customers.

They say they are thrilled with the decision. "I can't even think straight. We're very excited," says Mrs. Moseley.

James Higgins, the Moseleys' lawyer, concurred. "We have always said that with the Supreme Court and the law, reason trumps power and that appears to be what happened," he says. "It looks like the Supreme Court followed our legal premise that the law is to be interpreted according to the plain meaning of the words that Congress used."

In siding with the Moseleys, the nation's highest court ruled that the holders of famous trademarks must demonstrate actual dilution to obtain a court order blocking someone else from using a business name similar to their own trademark.

This means that the mere likelihood of dilution of a famous trademark is not enough to obtain protection of that mark in the federal courts. Instead, the trademark holder must show that the infringing trademark causes confusion in the mind of would-be consumers to the extent that the trademark holder may lose business to the company with the similar-sounding name.

"The relevant text of the Federal Trademark Dilution Act provides that the owner of a famous mark is entitled to injunctive relief against another person's commercial use of a mark if that use causes dilution of the distinctive quality of the famous mark," writes Justice John Paul Stevens for the court. "This text unambiguously requires a showing of actual dilution, rather than a likelihood of dilution."

The decision resolves a split among appeals courts over the issue. Courts in Chicago and New York had ruled that the mere likelihood of dilution of a famous trademark was enough to sustain a case against a similar-sounding name. Courts in Richmond and New Orleans, meanwhile, had ruled that actual damage must be proved for a trademark holder to obtain relief.

The high court remanded the case to federal court in Kentucky to decide the actual damage issue.

The court noted that to prevail, Victoria's Secret need not prove that it has suffered the consequences of dilution, such as actual loss of sales or profits. But Justice Stevens added, "Where the marks at issue are not identical, the mere fact that consumers mentally associate the junior user's mark with a famous mark is not sufficient to establish actionable dilution."

"Whatever difficulties of proof may be entailed, they are not an acceptable reason for dispensing with proof of an essential element of a statutory violation," Stevens says.