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Ninth Circuit Finds HOT RIGZ May Dilute HOT WHEELS Under Actual Dilution Test

On Aug. 2, the Ninth Circuit handed down a new dilution decision, albeit under the old standard.

In Jada Toys, Inc. v. Mattel, Inc., Jada sued Mattel for trademark infringement, false designation of origin, and unfair competition on the theory that Mattel’s OLD SCHOOL and NEW SCHOOL lines of miniature vehicles infringed Jada’s registered trademark OLD SKOOL for toy trucks. Mattel counterclaimed on several grounds, including that Jada’s HOT RIGZ mark infringed and diluted Mattel’s HOT WHEELS mark. The Central District of California granted summary judgment for Mattel on Jada’s OLD SCHOOL and NEW SCHOOL claims, and granted summary judgment for Jada on Mattel’s counterclaims. Mattel appealed the dismissal of its counterclaims. The court’s treatment of Mattel’s dilution claim is discussed below.

Hot%20Rigz%20Photo.jpgAs a threshold matter, the Ninth Circuit applied the “actual dilution” standard set forth in the Federal Trademark Dilution Act rather than the “likelihood of dilution” standard contained in the Trademark Dilution Revision Act. In a footnote, the court explained: “Because this action was filed in 2004, prior to the 2006 amendment of § 1125, the previous version of § 1125 applies….” This may be the first time an appellate court has applied the “actual dilution” standard on summary judgment after the TDRA was enacted based on when the lawsuit was filed. (STL has covered courts’ retroactive and prospective application of the October 2006 statute here and here.)

Analyzing the FTDA, the court found a reasonable trier of fact could conclude that HOT WHEELS is famous and that Jada began to use HOT RIGZ after HOT WHEELS became famous. As for actual dilution, the court found that because the marks were not identical, Mattel needed to show that consumers “mentally associate one mark with the other” and that “the mental association that occurs reduces the capacity of the famous marks to identify its goods.”

“Here, Mattel submitted two surveys to show actual dilution. In the first survey, respondents were exposed to the HOT RIGZ name and asked who they believed ‘puts out or makes’ a toy vehicle with that name. Twenty-eight percent of respondents thought that the toy vehicle put out under that name was either made by Mattel or by the same company that produced HOT WHEELS, or that whatever company that did produce it required permission from Mattel to sell the product.”

The court stated: “In a separate survey, respondents were shown a HOT RIGZ package and asked who they thought put out that product. Of the respondents, 7% believed it was either made by Mattel or by the same company that produced HOT WHEELS, or that whatever company that did produce it required permission from Mattel to sell the product.”

The court concluded: “These surveys do more than indicate that consumers associate one mark with the other; they suggest that Mattel’s HOT WHEELS mark does not adequately identify its product because Jada is able to convey, through the use of its HOT RIGZ mark, the impression that MATTEL either produces or allows the production of HOT RIGZ. Thus, a reasonable trier of fact could conclude that this evidence was sufficient to establish the existence of actual dilution.

Based on this finding, the court reversed the district court’s summary judgment dismissal of Mattel’s dilution counterclaim. The court likewise reversed the district court’s dismissal of Mattel’s infringement claim. Those claims are remanded for trial.

The case cite is Jada Toys, Inc. v. Mattel, Inc., 2007 WL 2199286, No. 05-55627 (9th Cir.).

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