Prepare answers to the following cases from this week’s reading.  Each fully developed response should include an intro and conclusion, a thorough statement of the issue being  discussed and a thorough analysis of a resolution  to the issue.

• Case 7.3: Dilution of a Trade Mark on page 139
• Case 23.7: Holder in Due Course on pages 390–391

Your responses should be well-rounded and analytical, and should not just provide a conclusion or an opinion without explaining the reason for the choice.

For full credit, you need to use the material from the week’s lectures, text, outside resources and/or discussions when responding to the questions. It is important that you incorporate the question into your response (i.e., restate the question in your introduction) and explain the legal principle(s) or concept(s) from the text that underlies your judgment.

For each question you should provide at least one reference in APA format (in-text citations and references as described in detail in the Syllabus). Each answer should be double spaced in 12-point font, and your response to each question should be between 300 and 1,000 words in length.

Please provide a separate analysis for each question.  However, both analyses need to  be included on one Word document to be submitted for grading.  (Please   submit each analysis separately.)

CASE 7.3 Dilution of a Trademark: V Secret Catalogue, Inc. and Victoria’s Secret Stores, Inc. v. Moseley

605 F.3d 382, Web 2010 U.S. App. Lexis 10150 (2010) United States Court of Appeals for the Sixth Circuit

“The phrase ‘likely to cause dilution’ used in the new statute significantly changes the meaning of the law from ‘causes actual harm’ under the preexisting law.”

—Merritt, Circuit Judge

Facts

Victoria’s Secret is a successful worldwide retailer of women’s lingerie, clothing, and beauty products that owns the famous trademark “Victoria’s Secret.” A small store in Elizabethtown, Kentucky, owned and operated by Victor and Cathy Moseley, used the business names “Victor’s Secret” and “Victor’s Little Secret.” The store sold adult videos, novelties, sex toys, and racy lingerie. Victoria’s Secret sued the Moseleys, alleging a violation of the Federal Trademark Dilution Act of 1995. The case eventually was decided by the U.S. Supreme Court in favor of the Moseleys, when the Court found that there was no showing of actual dilution by the junior marks, as required by the statute. Congress overturned the Supreme Court’s decision by enacting the Trademark Dilution Revision Act of 2006, which requires the easier showing of a likelihood of dilution by the senior mark. On remand, the U.S. District Court applied the new likelihood of confusion test, found a presumption of tarnishment of the Victoria’s Secret mark that the Moseleys failed to rebut, and held against the Moseleys. The Moseleys appealed to the U.S. Court of Appeals.

Issue

Is there tarnishment of the Victoria’s Secret senior mark by the Moseleys’ use of the junior marks Victor’s Secret and Victor’s Little Secret?

Language of the Court

 The phrase “likely to cause dilution” used in the new statute significantly changes the meaning of the law from “causes actual harm” under the preexisting law. The burden of proof problem should now be interpreted to create a kind of rebuttable presumption, or at least a very strong inference, that a new mark used to sell sex-related products is likely to tarnish a famous mark if there is a clear semantic association between the two.

In the present case, the Moseleys have had two opportunities in the District Court to offer evidence that there is no real probability of tarnishment and have not done so. Without evidence to the contrary or a persuasive defensive theory that rebuts the presumption, the defendants have given us no basis to reverse the judgment of the District Court.

Decision

The U.S. Court of Appeals affirmed the U.S. District Court’s judgment in favor of Victoria’s Secret.

Case Questions

Critical Legal Thinking

Do you think that Congress often uses its “veto power” over the U.S. Supreme Court’s interpretation of a federal statute by enacting another statute to change the result of a Supreme Court’s decision?

Ethics

Do you think the Moseleys were trading off of Victoria’s Secret famous name? Do you think that the Moseleys had a legitimate claim to their business names because the husband’s name was Victor?

Contemporary Business

Did the change in the Trademark Dilution Revision Act of 2006 favor famous trademark holders?

23.7 Holder in Due Course Royal Insurance Company Ltd. (Royal) issued a draft in the amount of $12,000 payable through the Morgan Guaranty Trust Company (Morgan Guaranty). The draft was made payable to Gary E. Terrell in settlement of a claim in an insurance policy for fire damage to premises located in Kansas City, Missouri. Subsequently, the attorney for Mr. and Mrs. Louis Wexler notified Royal that Terrell’s clients had an insurable interest in the damaged property. As a result, Royal immediately stopped payment on the draft. On the same day, the draft was indorsed by Gary E. Terrell and deposited in his account at the UAW-CIO Local #31 Federal Credit Union (Credit Union). Over the next two days, Terrell withdrew $9,000 from this account. Immediately upon receiving the draft, Credit Union indorsed it and forwarded it to Morgan Guaranty for payment. The draft was returned to Credit Union with the notation “Payment Stopped.” When Royal refused to pay Credit Union the amount of the draft, Credit Union sued. The basis of the lawsuit was whether Credit Union was a holder in due course. Who wins? UAW-CIO Local #31 Federal Credit Union v. Royal Insurance Company, Ltd., 594 S.W.2d 276, Web 1980 Mo. Lexis 446 (Supreme Court of Missouri)