How a Kentucky smut shop put the starch in Victoria's Secret's shorts.

Oral argument today in the long-awaited trademark dispute between lingerie leviathan Victoria's Secret and a Kentucky smut shop named Victor's Little Secret is sort of like the Victoria's Secret faux-fly boyshort. It must have seemed like a good idea to someone at some point, but when we're all sitting here looking at it, nobody can recall why.

The issue involves a very special type of trademark protection— known as "trademark dilution"—codified in a 1995 federal statute, the Federal Trademark Dilution Act. The FTDA allows the owner of a particularly famous trademark to enjoin others from copying it or playing off it when such copying "dilutes" the distinctive quality of the trademark. "Dilution" is one of the words we'll fight about a good deal today, but the act defines it as "lessening of the capacity of a famous mark to identify and distinguish goods or services."

In 1998, Victor and Cathy Moseley opened a shop in Elizabethtown, Ky. Their inventory includes underwear, lingerie, sex toys, videos, and adult novelties. They had toyed with the name "Adult Toys-R-Us" before settling on "Victor's Secret." The Moseleys allege they'd never heard of the lingerie chain—founded in 1977 in California, whose sales amounted to $1.5 billion in 1998, the year the Moseleys managed never to have heard of them—until this case was launched. They chose the name because they wanted to keep the business a "secret" from Victor's former employer. (Was he a monk?)

For some reason, a judge advocate general at an Army Center in Fort Knox was so enraged by a Victor's Secret ad that he fired off a letter of complaint to Victoria's Secret, claiming he was "personally offended" by the "unwholesome tawdry merchandise" being sold in violation of its trademark. Evidently, Victoria purists reach up to the highest echelons of the nation's military. Colin Powell was unavailable for comment.

Victoria's Secret sent a cease-and-desist letter to Victor, who cleverly changed the store's name to "Victor's Little Secret." Victoria's Secret, still unsatisfied, sued the shop for violations of the Lanham Act—the federal trademark statute—and lost these trademark claims because there was no evidence of consumer "confusion" between the two businesses. Victoria's Secret prevailed, however, on a new, fancy-style dilution claim under FTDA. While the standard for what constitutes "dilution" is very much in dispute—with circuit courts split on both the definition and test—the district court found that Victor had indeed diluted Victoria's trademark, and the 6^th Circuit Court of Appeals affirmed that decision.

The smut store, now called Cathy's Little Secret, appealed this decision to the Supreme Court, who are here today to determine whether a company claiming "dilution" of its trademark needs to show actual or economic injury or just some squishy "likelihood of dilution" to prevail on a trademark dilution claim.

James R. Higgins, from Louisville, Ky., argues on behalf of the Moseleys. He opens with the suggestion that this case concerns something legally remote, which prompts Justice Anthony Kennedy to ask whether he means Tennessee is remote. Higgins replies that the case is out of Kentucky and then cites a 2^nd Circuit case in which Nabisco was unfairly enjoined from ever, ever making small orange cheese crackers shaped like goldfish, because Pepperidge Farm claimed that its famous Goldfish were being diluted. Poor Nabisco.

Justice Stephen Breyer interrupts to ask whether a necessary element of dilution is "tarnishment" of reputation, giving the example of "Bugweiser" bug spray, which might not lead Budweiser consumers to believe that their beer has Deet in it, but which might nevertheless lead them to think, according to Breyer: "Budweiser. Yuck."

Higgins says that there is no dilution unless consumers are actually confused. Call this the Miracle Bra argument: Are they real or not real?

Breyer points out that no "tiny, totally separate product with the same name will ever hurt the selling power of a big famous name." There could never be a successful dilution claim under Higgins' test. Here, he invokes something called the "Kodak Monkey Ranch" and confuses Higgins (and me and the monkeys) even further. In response to an inquiry from Justice Sandra Day O'Connor, Higgins changes his tune and claims consumer confusion is not an important element of trademark dilution. He adds that showing that the famous company suffered "actual economic harm" is necessary to proving dilution, however.