Is 'Victor's Little Secret' a trademark infringement?

When Victor and Cathy Moseley opened a lingerie and adult novelty store in a strip mall in Elizabethtown, Ky., they decided to name their new business Victor's Secret.

It wasn't a secret for long.

Within two weeks, the Moseleys received a letter from a lawyer for Victoria's Secret, the intimate-apparel retail and catalog company, demanding that they change their business name or face legal action.

The Moseleys, who had invested everything they owned into their fledgling store, quickly altered the business name to Victor's Little Secret.

Not different enough, countered lawyers for Victoria's Secret. They filed suit in federal court, alleging that the Moseleys were violating the famous Victoria's Secret trademark by using a similar-sounding name in an attempt to attract business.

The Moseleys countered that their name accurately reflected the first name of the owner of the store, and that they used the word "secret" as a kind of inside joke because they wanted to keep the new business a secret from a former boss at a competing store.

A federal judge and a federal appeals court panel sided with Victoria's Secret.

The dispute arrives at the US Supreme Court Tuesday, where the justices will examine whether federal trademark law should be construed narrowly or broadly. The decision will set a national standard for future cases.

Specifically, the justices will consider whether a suing company has to produce evidence of actual economic harm as a result of another business using a similar name, or whether judges may instead rely on the mere likelihood of such use causing dilution of a famous trademark.

"Victoria's Secret, the retail giant, has applied this law in a way that reaches out into the very nether lands of the economy to bring the power of the federal courts down on a nonidentical, nonconfusing trademark that happens to be the owner's real name," says James R. Higgins Jr., a patent and trademark lawyer for the Moseleys. "If the dilution law reaches that far, then every business owner in the United States, whether big or small, needs to be fearful of that reach."

Lawyers for Victoria's Secret decline to discuss the issue while it is pending before the high court. The company has hired former US Solicitor General Walter Dellinger to argue its case.

In his brief, Mr. Dellinger says a broad reading of the law is necessary to ensure quick and effective protection of famous trademarks. It is implausible, he says, that Congress would force the owners of famous trademarks to endure a lessening of their trademark's distinctiveness until they could prove economic harm.

"Once a [trademark] has been tarnished in consumers' minds by a negative association – with a porn shop, for example – the mental association, and therefore the dilution injury, is effectively permanent," Dellinger writes. "Only an injunction at the very outset of the lessening can avoid that problem."

Mr. Higgins says his client's establishment is not a "porn shop." In addition, he says, customers at the store are in no way confused that they might be shopping at a Victoria's Secret store. Nevertheless, he says, lawyers for Victoria's Secret are complaining that shoppers might think of Victoria's Secret. "Their position is that if their [trademark] is famous – and it is – then anyone who uses a name that is semantically similar to theirs automatically causes dilution [of their trademark] because people will think of them," he says.

He also says that the position taken by Victoria's Secret amounts to the granting to large companies of the exclusive use of certain words – the rough equivalent of a patent on a word.

To some analysts, a broad reading of the trademark law may ultimately lead to a collision with free-speech rights. In effect, trademark law could become a means to censor the speech of others, these analysts warn.

But other analysts say that within the larger context of trademark law, it would be inconsistent to require holders to have to wait until they could prove economic damage before being able to take action. They say that famous trademark holders invest much money and effort to establish trademarks, and that they're entitled to prevent others from trying to benefit from theirs.

In resolving the Moseleys' case, the high court is likely to also resolve a split among circuit courts. The Fourth and Fifth circuits in Richmond, Va., and New Orleans have ruled that actual harm must be proved. The Second and Seventh circuits in New York and Chicago have determined that the mere likelihood of dilution is enough to establish a violation.

As for the Moseleys, they have renamed their store "Cathy's Little Secret," pending the outcome of the court fight.

Mr. Moseley agrees that it is not a bad name for a store. "But the name's not the point," he says. "They [Victoria's Secret] have their rights and I believe they should be protected, but how far do you go to protect their rights before you start trampling on everyone else's rights?"

He adds, "My name is Victor."