In the
`United States Court of Appeals
`For the Seventh Circuit
`
`No. 00-1375
`
`ELI LILLY & COMPANY, an Indiana corporation,
`
`Plaintiff-Appellee,
`
`v.
`
`NATURAL ANSWERS, INCORPORATED, a Florida
`corporation, and BRIAN A. FEINSTEIN,
`
`Defendants-Appellants.
`
`Appeal from the United States District Court
`for the Southern District of Indiana, Indianapolis Division.
`No. IP 99-1600-C H/G--David F. Hamilton, Judge.
`
`Argued September 11, 2000--Decided November 21, 2000
`
` Before BAUER, EVANS, and WILLIAMS, Circuit Judges.
`
` EVANS, Circuit Judge. When Internet start-up
`Natural Answers, Inc. began marketing a line of
`herbal products called Herbscriptions, we assume
`it hoped to avoid getting embroiled in a nasty
`court fight, especially one with a global
`pharmaceutical giant like the Eli Lilly company.
`But no such luck, for here it is (along with its
`founder Brian Feinstein), asking us to reverse a
`district court order, granted on Lilly’s motion
`for a preliminary injunction, which stopped
`Natural Answers from marketing its herbal "mood
`elevator" HERBROZAC. Although Natural Answers
`does its best to paint this case as David versus
`Goliath, and hopes for a result similar to that
`achieved by David, it doesn’t have much of a
`slingshot to carry into the battle.
`
` The basis of Lilly’s claim is that the name
`HERBROZAC comes unfairly close to Lilly’s
`protected mark for PROZAC, a prescription drug
`used to treat clinical depression. PROZAC has
`received considerable media attention since its
`rollout in 1988, appearing twice (March 26, 1990,
`and February 7, 1994) on the cover of Newsweek.
`In 1999 Fortune magazine named it one of the top
`six "health and grooming" products of the 20th
`
`

`
`Century./1 PROZAC has been prescribed over 240
`million times for 17 million Americans,
`generating sales of more than $12 billion.
`
` Natural Answers develops, markets, and sells a
`line of herbal dietary supplements that it calls
`Herbscriptions. Herbscriptions are positioned as
`"drug alternatives" and include supplements
`called HerbenolPM, HERBALIUM, HERBASPIRIN, and
`HERBADRYL. Natural Answers’ Feinstein testified
`that each name was chosen to call to mind the
`function of a famous drug from which its name is
`derived./2 Although Natural Answers is careful
`to characterize its products as alternatives to
`drugs, as opposed to substitutes for drugs,
`Feinstein testified that he hopes to persuade
`consumers not to have "a default reaction to
`immediately go to their physician and have a
`prescription for something they may not need."
`
` Natural Answers markets its Herbscriptions line
`exclusively through its Internet Web site but
`plans to expand its channels of distribution to
`include retail outlets like health food and
`convenience stores. Natural Answers’ Web site
`contains a column labeled "Think Herbs - not
`drugs!", under which it reads "Don’t get your
`prescriptions filled with drugs . . . Get your
`Herbscriptions filled with Nature!" The Web site
`also features a table labeled "Herbs v. Drugs"
`which contrasts Natural Answers’ products with a
`generic "Drug Alternative." In addition, until
`December 1999, Natural Answers’ Web site
`contained a source code which included the term
`"Prozac" as a metatag,/3 and described HERBROZAC
`as "a powerful, and effective all-natural and
`herbal formula alternative to the prescription
`drug Prozac." Internet search engines read source
`codes, which are not immediately visible to an
`Internet user, in response to search queries.
`Natural Answers’ use of "Prozac" as a metatag was
`an attempt to guide Internet users searching for
`information on PROZAC to Natural Answers’ Web
`site. This effort apparently was unsuccessful,
`however, because searchers entering the keyword
`"Prozac" were swamped with Web sites containing
`a greater number of references to PROZAC.
`Natural Answers removed the term "Prozac" from
`its source codes in response to this lawsuit.
`
` HERBROZAC is positioned as a "mood elevator."
`In order to maintain its status as a "food," and
`thus remain beyond the scope of the Food and Drug
`Administration’s drug approval process,
`HERBROZAC’s label warns that "[t]his product is
`not intended to diagnose, treat or cure any
`disease." No prescription is necessary to
`
`

`
`purchase HERBROZAC. The tablets themselves are
`larger than average, dark brown with black specs,
`and have a distinctly herbal odor. In contrast,
`PROZAC is available only with a doctor’s
`prescription, which can be filled only by a
`licensed pharmacist. PROZAC tablets are green
`and off-white, and smaller than average.
`
` Before Natural Answers could get HERBROZAC off
`the ground, Lilly sued to enjoin use of that
`name, claiming infringement under the Lanham
`Trademark Act, 15 U.S.C. sec. 1125(a), dilution
`under the Federal Trademark Dilution Act, 15
`U.S.C. sec.1125(c), and violation of Indiana’s
`unfair competition law. Addressing the federal
`claims only, the district court held that Lilly
`would likely succeed in proving at trial that the
`HERBROZAC name is likely to confuse consumers
`under the Lanham Act. In addition, after holding
`that Lilly was not required to demonstrate actual
`dilution in order to obtain relief under the
`Trademark Dilution Act, the court found that use
`of the HERBROZAC name created a likelihood of
`dilution of the PROZAC mark. Accordingly, the
`district court enjoined Natural Answers from
`further use of the HERBROZAC name and ordered
`that the references to PROZAC be removed from
`the source files of Natural Answers’ Web site. At
`that time, Natural Answers had sold less than
`$2,000 worth of the supplement. This appeal
`followed.
`
` The standard for deciding a motion for a
`preliminary injunction is well-established and
`need not be restated at length. Suffice it to say
`that the moving party is required to demonstrate
`a likelihood of success on the merits, that it
`has no adequate remedy at law, and that it will
`suffer irreparable harm if preliminary relief is
`denied. Abbott Lab. v. Mead Johnson & Co., 971
`F.2d 6, 11 (7th Cir. 1992). If the moving party
`can pass this threshold, the court will then
`consider any irreparable harm a preliminary
`injunction would cause to the nonmoving party, as
`well as the consequences to nonparties of
`granting or denying the requested relief. Id. at
`11-12. Then, sitting as would a court of equity,
`the court weighs all of these factors on a
`sliding scale; the more likely that the plaintiff
`will succeed on the merits, the less the balance
`of harms need favor him. Diginet, Inc. v. Western
`Union ATS, Inc., 958 F.2d 1388, 1393 (7th Cir.
`1992).
`
` The district court (Judge David F. Hamilton
`presiding) painstakingly followed the prescribed
`formula, although it devoted the bulk of its
`analysis to Lilly’s likelihood of success on the
`
`

`
`merits. Because the other factors are easily
`resolved, we’ll follow the district court’s lead.
`We review the district court’s decision to grant
`a preliminary injunction under the abuse of
`discretion standard. Abbott Lab., 971 F.2d at 12.
`In analyzing the relevant factors, a district
`court abuses its discretion only when it makes a
`clear error of fact or an error of law. Id. at
`13.
`
` We turn first to the Lanham Act, enacted in
`1946. In the Act, Congress explicitly stated it
`intended to protect registered marks from
`interference by state legislation, prevent unfair
`competition, and protect against fraud "by the
`use of reproductions, copies, counterfeits, or
`colorable imitations of registered marks . . . ."
`15 U.S.C. sec. 1127. Against this background
`suggesting a broad legislative purpose, courts
`have come to a consensus that a Lanham Act
`plaintiff need only establish that its mark is
`protectable and that the junior mark is likely to
`cause confusion among consumers. Munters Corp. v.
`Matsui Am., Inc., 909 F.2d 250, 252 (7th Cir.
`1990); International Kennel Club of Chicago, Inc.
`v. Mighty Star, Inc., 846 F.2d 1079, 1084 (7th
`Cir. 1988). Because Lilly registered the PROZAC
`mark in 1985 and has used it continuously for
`more than 5 years, it is incontestable. See 15
`U.S.C. sec. 1065. As a result, Natural Answers
`cannot--and does not--argue that the PROZAC mark
`is outside the protection of the Lanham Act. See
`Park ’N Fly, Inc. v. Dollar Park and Fly, Inc.,
`469 U.S. 189, 205 (1985).
`
` Natural Answers does contend, however, that
`consumers are unlikely to be confused by the
`HERBROZAC name. In assessing the likelihood of
`consumer confusion, we generally consider seven
`factors: (1) the similarity between the marks in
`appearance and suggestion, (2) the similarity of
`the products, (3) the area and manner of
`concurrent use of the products, (4) the degree of
`care likely to be exercised by consumers, (5) the
`strength of the complainant’s mark, (6) any
`evidence of actual confusion, and (7) the
`defendant’s intent (or lack thereof) to palm off
`its product as that of another. Smith Fiberglass
`Prods., Inc. v. Ameron, Inc., 7 F.3d 1327, 1329
`(7th Cir. 1993). As the district court
`recognized, these factors are not a mechanical
`checklist, and "[t]he proper weight given to each
`. . . will vary from case to case." Dorr-Oliver,
`Inc. v. Fluid-Quip, Inc., 94 F.3d 376, 381 (7th
`Cir. 1996). At the same time, although no one
`factor is decisive, the similarity of the marks,
`the intent of the defendant, and evidence of
`actual confusion are the most important
`considerations. G. Heileman Brewing Co., Inc. v.
`
`

`
`Anheuser-Busch, Inc., 873 F.2d 985, 999 (7th Cir.
`1989).
`
` After an exhaustive analysis of each of the
`relevant factors, Judge Hamilton concluded that
`use of the HERBROZAC name was likely to confuse
`consumers. Specifically, he found that the
`similarity between the two marks and products,
`the strength of the PROZAC mark, consumers’
`degree of care in choosing between PROZAC and
`HERBROZAC, alleged evidence of actual confusion,
`and Natural Answers’ intent to palm off all
`created a likelihood of confusion. The conclusion
`regarding likelihood of confusion is a finding of
`fact which will not be reversed unless it is
`clearly erroneous. Smith Fiberglass Prods., 7
`F.3d at 1329; AHP Subsidiary Holding Co. v.
`Stuart Hale Co., 1 F.3d 611, 616 (7th Cir. 1993).
`We’ll now take a closer look at each of the
`factors bearing on the likelihood of confusion.
`
` The similarity between the names PROZAC and
`HERBROZAC is obvious: HERBROZAC contains five of
`the six letters in PROZAC, and the "B" in
`HERBROZAC sounds similar to the "P" in PROZAC.
`Natural Answers argues that the two marks are
`dissimilar because HERBROZAC may be pronounced
`with an emphasis on the first syllable
`(HERBrozac), thus rendering the "B" and "P"
`sounds less similar than when the second syllable
`of HERBROZAC is emphasized (herBROzac). Even
`under Natural Answers’ preferred pronunciation
`(which seems contrary to the natural
`pronunciation of a combination of the root words
`"herb" and "Prozac"), however, the two words are
`strikingly similar.
`
` Natural Answers next argues that the HERBROZAC
`name merely "calls to mind" PROZAC, while at the
`same time distinguishing itself. The mere fact
`that one mark brings another mark to mind is not
`sufficient to establish a likelihood of confusion
`as to the source of the product. Application of
`Ferrero, 479 F.2d 1395, 1397 (C.C.P.A. 1973). In
`addition, Natural Answers asserts that its
`adaptation of the PROZAC name is a parody and
`implies that, as such, it is entitled to some
`heightened form of protection from trademark
`liability. In any case, the HERB prefix,
`according to Natural Answers, so significantly
`distinguishes HERBROZAC from PROZAC that
`consumer confusion is unlikely.
`
` As the district court found, however, "HERBROZAC
`does much more than merely ’call to mind’ the
`PROZAC mark." Unlike the mark at issue in
`
`

`
`Ferrero, PROZAC is a fanciful word that has no
`meaning independent of Lilly’s mark. Such marks
`are entitled to the highest protection. See
`Seven-Up Co. v. Tropicana Prods., Inc., 356 F.2d
`567, 568 (C.C.P.A. 1966) ("with coined words
`which are meaningless so far as the English
`language is concerned, slight variations in
`spelling or arrangement of letters are often
`insufficient to direct the buyer’s attention to
`the distinction between marks"). In addition, the
`district court received evidence that other
`pharmaceutical companies have expanded their
`product lines to include dietary supplements
`based on "St. John’s Wort" (the principal herbal
`component of HERBROZAC), increasing the
`likelihood that consumers would mistakenly
`believe that HERBROZAC is affiliated with or
`sponsored by Lilly. Moreover, HERBROZAC is not a
`parody of PROZAC. A parody is a humorous or
`satirical imitation of a work of art that
`"creates a new art work that makes ridiculous the
`style and expression of the original." Rogers v.
`Koons, 960 F.2d 301, 309-10 (2d Cir. 1992).
`Natural Answers does not even attempt to point
`out any humor or satire in its imitation of the
`PROZAC mark. More important, we previously
`cautioned that even if a junior mark meets the
`definition of a parody, it still runs afoul of
`the trademark laws if it is likely to confuse
`consumers. See Nike, Inc. v. "Just Did It"
`Enterprises, 6 F.3d 1225, 1228 (7th Cir. 1993)
`("the parody has to be a takeoff, not a ripoff").
`Given the strong similarity in the marks and the
`potential overlap in Lilly’s and Natural Answers’
`product lines, the mere addition of the HERB
`prefix does not go far enough to distinguish
`Natural Answers’ product from PROZAC.
`Accordingly, the strong similarity of the marks
`weighs heavily in favor of a finding of
`likelihood of confusion.
`
` Another factor is whether HERBROZAC and PROZAC
`are similar products. On a purely technical level
`they are different: HERBROZAC is a food and
`PROZAC is a drug. See 21 U.S.C. sec. 321(f)-
`(g)(1) (distinguishing between dietary
`supplements and drugs for purposes of Federal
`Food, Drug and Cosmetic Act); Dietary Supplement
`Health and Education Act of 1994, S. Rep. No.
`103-410, pt. VIII, sec. 2(2)(A)-(B) (clarifying
`that dietary supplements are not drugs and should
`not be regulated as drugs). This is a critical
`distinction, moreover, because HERBROZAC is not
`subject to the rigorous testing and approval
`process applied to drugs.
`
` The fact that HERBROZAC and PROZAC are not the
`same product does not end our inquiry, however,
`because we are concerned only with whether they
`
`

`
`are similar. Although its legal papers take a
`contrary position, Natural Answers would
`certainly have consumers believe that HERBROZAC
`and PROZAC are similar products. Indeed, Natural
`Answers describes HERBROZAC as a "mood elevator,"
`the mirror image of anti-depressant, and markets
`it as an alternative to PROZAC. Natural Answers’
`dual-track conception of HERBROZAC--as a PROZAC
`alternative for marketing purposes, but a
`dissimilar product for legal purposes--is
`disingenuous. Moreover, contrary to Natural
`Answers’ suggestion, our inquiry in comparing the
`two products is not whether they are
`interchangeable, but whether "the parties’
`products are the kind the public might very well
`attribute to a single source (the plaintiff)."
`International Kennel Club, 846 F.2d at 1089
`(affirming preliminary injunction in favor of dog
`show sponsor against manufacturer of toy dogs);
`see also Forum Corp. of N. Am. v. Forum, Ltd.,
`903 F.2d 434, 442 (7th Cir. 1990) (quoting
`International Kennel Club). Because dietary
`supplements and drugs serve somewhat similar
`functions, and because dietary supplements are an
`area of natural expansion for pharmaceutical
`companies, HERBROZAC’s similarity to PROZAC is
`indicative of a likelihood of confusion.
`
` It is unlikely that HERBROZAC and PROZAC would
`ever be used concurrently. As Lilly points out,
`there is some degree of danger that consumers
`suffering from self-diagnosed depression will
`view HERBROZAC as a PROZAC substitute and never
`seek medical advice. However, a consumer must
`have a prescription from a doctor in order to
`obtain PROZAC, and we have no doubt that doctors
`would experience little difficulty in
`distinguishing between the two products. Thus,
`any consumer with access to PROZAC would
`necessarily have the advice of a doctor, who
`presumably would explain the merits and demerits
`of each product. Accordingly, it is unlikely that
`HERBROZAC and PROZAC would be used concurrently.
`This factor, therefore, weighs in favor of
`Natural Answers.
`
` Although we will indulge in the assumption that
`doctors exercise great care in selecting
`medications for their patients, the record
`contains scant evidence of the degree of care
`likely to be exercised by ordinary consumers.
`Natural Answers suggests that the legislative
`history of the Dietary Supplement Health and
`Education Act--which found that consumers
`generally believe that dietary supplements should
`not be regulated as drugs--is indicative of a
`high standard of care among consumers. See
`Dietary Supplement Health and Education Act of
`
`

`
`1994, S. Rep. No. 103-410, pt. VIII, sec.
`2(9)(B). In addition, Natural Answers asserts
`that its Web site, the only medium through which
`HERBROZAC is advertised, makes clear that the
`product is not associated with Lilly.
`
` We are not at all sure that Natural Answers’
`customers exercise greater than average care.
`Natural Answers would have us consider only the
`care exercised by doctors, but the first-line
`consumers of HERBROZAC are ordinary consumers,
`who may or may not seek medical advice before
`buying HERBROZAC. Indeed, Natural Answers’
`strategy is to divert consumers away from doctors
`by "hav[ing] them go natural first and not go
`with drugs," so we must look at the degree of
`care exercised by all consumers. See Forum Corp.
`of N. Am., 903 F.2d at 442 ("the court properly
`should . . . consider[ ] the group of potential
`purchasers of both products"). Unfortunately for
`Natural Answers, there is just no evidence that
`consumers as a whole are extraordinarily careful
`when it comes to dietary supplements. The
`legislative history cited by Natural Answers
`demonstrates that consumers are not generally
`confused between dietary supplements and drugs,
`and maybe even that they are unlikely to think
`that HERBROZAC is actually PROZAC, but it
`certainly does not address the potential for
`confusion concerning Lilly’s sponsorship of, or
`affiliation with, HERBROZAC. This is the question
`we must answer, see Pebble Beach Co. v. Tour 18
`I Ltd., 155 F.3d 526, 543 (5th Cir. 1998), and
`neither the cited legislative history nor the
`fact that Natural Answers’ Web site does not
`visibly mention PROZAC or Lilly helps our
`analysis. We will therefore discount the degree
`of consumer care factor.
`
` "The term ’strength’ as applied to trademarks
`refers to the distinctiveness of the mark, or
`more precisely, its tendency to identify the
`goods sold under the mark as emanating from a
`particular . . . source." Sands, Taylor & Wood
`Co. v. Quaker Oats Co., 978 F.2d 947, 959 (7th
`Cir. 1992) (quoting McGregor-Doniger, Inc. v.
`Drizzle, Inc., 599 F.2d 1126, 1131 (2d Cir.
`1979), superseded by rule on other grounds, as
`stated in Bristol-Myers Squibb Co. v. McNeil-
`P.P.C., Inc., 973 F.2d 1033, 1044 (2d Cir.
`1992)). Natural Answers concedes, as it must,
`that PROZAC is a strong mark. This factor weighs
`in favor of a finding of likelihood of confusion.
`
` The record contains no evidence of actual
`consumer confusion, but Lilly cannot be expected
`to tender such evidence at this stage. When Lilly
`
`

`
`filed this lawsuit, Natural Answers had sold less
`than $2,000 worth of HERBROZAC, so it is not
`surprising that Lilly cannot identify consumers
`who were actually confused about the origin or
`sponsorship of HERBROZAC. Even a statistically
`reliable consumer survey would likely require a
`greater sampling than the total number of
`HERBROZAC customers.
`
` Despite these limitations, Judge Hamilton found
`a risk of "initial interest confusion." Such
`confusion, which is actionable under the Lanham
`Act, occurs when a consumer is lured to a product
`by its similarity to a known mark, even though
`the consumer realizes the true identity and
`origin of the product before consummating a
`purchase. Dorr-Oliver, 94 F.3d at 382. The
`district court relied upon the phonetic
`similarity of HERBROZAC to PROZAC, as well as
`Natural Answers’ use of the "Prozac" metatag on
`its Web site, to find a risk of initial interest
`confusion.
`
` But we are concerned here with evidence of
`actual confusion, not a mere risk of confusion,
`and we find no such evidence in the record. The
`similarity of the two marks is a separate
`consideration in our analysis, and although it
`does create a risk of confusion, it does not
`constitute evidence of actual confusion. The same
`can be said of Natural Answers’ use of the
`"Prozac" metatag: it is evidence of Natural
`Answers’ intent, see infra, and it creates a risk
`of confusion, but it is not evidence of actual
`confusion. Such evidence would most likely take
`the form of a consumer survey, which would not be
`limited to a sampling of HERBROZAC customers
`because "initial interest confusion" is complete
`prior to any actual purchase. Lilly failed to
`take such a survey, or to provide other evidence
`of actual confusion. So we must disagree with the
`district court that evidence of actual confusion
`indicates a likelihood of confusion. We have
`previously made clear, however, that evidence of
`actual confusion is not essential to a finding of
`a likelihood of confusion. E.g., Computer Care v.
`Service Sys. Enter., Inc., 982 F.2d 1063, 1070
`(7th Cir. 1992).
`
` The final factor for consideration is Natural
`Answers’ intent. Natural Answers urges us to drop
`this factor from our analysis, asserting that its
`intent (or lack thereof) to confuse consumers is
`not probative of whether consumers are likely to
`actually become confused. We disagree. The fact
`that one actively pursues an objective greatly
`increases the chances that the objective will be
`
`

`
`achieved, and we have no doubt that this general
`principle applies here. For this reason, a
`defendant’s intent is an "important factor,"
`Computer Care, 982 F.2d at 1070; Processed
`Plastic Co. v. Warner Communications, Inc., 675
`F.2d 852, 857 (7th Cir. 1982), and can even be
`weighed more heavily than other factors. See
`Schwinn Bicycle Co. v. Ross Bicycles, Inc., 870
`F.2d 1176, 1184-85 (7th Cir. 1989).
`
` Two facts point to the conclusion that Natural
`Answers intended to confuse consumers. First, Mr.
`Feinstein admitted that the name HERBROZAC was
`coined to remind consumers of PROZAC, in
`accordance with Natural Answers’ pattern of
`adapting famous marks for use in its
`Herbscriptions line. Although Natural Answers now
`claims that the intent of the name is only to
`describe the general function of the product and
`to distinguish it from PROZAC, we have a
`difficult time believing this innocent
`explanation. The HERBROZAC name does nothing--
`other than through its reference to the PROZAC
`mark-- to describe the function of "mood
`elevation." If, at the conclusion of this case,
`Natural Answers is searching for a new name for
`its product that truly describes its function, it
`might come up with something like "Natural
`Answers’ Herbal Mood Elevator," a name that would
`describe the product’s function but not infringe
`upon Lilly’s mark.
`
` The second fact probative of Natural Answers’
`wrongful intent is its references to PROZAC in
`the source codes of its Web site. The clear
`intent of this effort, whether or not it was
`successful, was to divert Internet users
`searching for information on PROZAC to Natural
`Answers’ Web site. As the Ninth Circuit explained
`in Brookfield Communications, Inc. v. West Coast
`Entertainment Corp., 174 F.3d 1036, 1064 (9th
`Cir. 1999), "[u]sing another’s trademark in one’s
`metatags is much like posting a sign with
`another’s trademark in front of one’s store." As
`such, it is significant evidence of intent to
`confuse and mislead. See id. at 1062; New York
`State Soc. of Certified Public Accountants v.
`Eric Louis Assoc., Inc., 79 F. Supp.2d 331, 341
`(S.D.N.Y. 1999) (defendant’s bad faith in using
`plaintiff’s trademark in metatag probative of
`likelihood of confusion). Because Natural
`Answers’ wrongful intent is so obvious, we weigh
`it heavily.
`
` Having considered each of the relevant factors
`in our likelihood of confusion analysis, we
`cannot say that the district court erred in
`
`

`
`finding such a likelihood. Although the district
`court improperly weighed the evidence of actual
`confusion, we believe the other factors--
`especially the similarity of the marks, the
`strength of the PROZAC mark, and Natural
`Answers’ intent to confuse--strongly support the
`district court’s ultimate conclusion.
`Accordingly, we affirm the district court’s
`preliminary injunction under the Lanham Act.
`
` Lilly also brought a claim under the Trademark
`Dilution Act of 1995, which opens an alternative
`avenue of relief for the owners of famous marks.
`The Act provides:
`
`The owner of a famous mark shall be entitled,
`subject to the principles of equity and upon such
`terms as the court deems reasonable, to an
`injunction against another person’s commercial
`use in commerce of a mark or trade name, if such
`use begins after the mark has become famous and
`causes dilution of the distinctive quality of the
`mark, and to obtain such other relief as is
`provided in this subsection.
`
`15 U.S.C. sec. 1125(c)(1). Courts recognize two
`principal forms of dilution: tarnishing and
`blurring. Dilution by tarnishing occurs when a
`junior mark’s similarity to a famous mark causes
`consumers mistakenly to associate the famous mark
`with the defendant’s inferior or offensive
`product. Panavision Int’l, L.P. v. Toeppen, 141
`F.3d 1316, 1326 n.7 (9th Cir. 1998). Dilution by
`blurring, the injury at issue here, occurs when
`consumers "’see the plaintiff’s mark used on a
`plethora of different goods and services,’ . . .
`’raising the possibility that the mark will lose
`its ability to serve as a unique identifier of
`the plaintiff’s product.’" Hormel Foods Corp. v.
`Jim Henson Prod., Inc., 73 F.3d 497, 506 (2d Cir.
`1996) (quoting 3 McCarthy on Trademarks and
`Unfair Competition sec. 24.13[1][a][i] (3d ed.
`1995) (hereinafter "McCarthy"); Deere & Co. v.
`MTD Prods., Inc., 41 F.3d 39, 43 (2d Cir.
`1994))./4 The Trademark Dilution Act seeks to
`prevent both of these forms of dilution by
`"protect[ing] the trademark owner from the
`erosion of the distinctiveness and prestige of a
`trademark caused by . . . a proliferation of
`borrowings, that while not degrading the original
`seller’s mark, are so numerous as to deprive the
`mark of its distinctiveness and hence impact."
`Illinois High School Ass’n v. GTE Vantage Inc.,
`99 F.3d 244, 247 (7th Cir. 1996). The strongest
`protection is reserved for fanciful marks that
`are purely the product of imagination and have no
`logical association with the product. Nabisco,
`Inc. v. PF Brands, Inc., 191 F.3d 208, 216 (2d
`Cir. 1999).
`
`

`
` There are four elements to Lilly’s Trademark
`Dilution Act claim: (1) the PROZAC mark is
`famous, (2) Natural Answers adopted its HERBROZAC
`name after the PROZAC mark became famous, (3)
`use of the HERBROZAC name "causes dilution" of
`the PROZAC mark, and (4) Natural Answers’ use of
`the HERBROZAC name is commercial and in commerce.
`See 15 U.S.C. sec. 1125(c)(1); Syndicate Sales,
`Inc. v. Hampshire Paper Corp., 192 F.3d 633, 639
`(7th Cir. 1999). The likelihood of confusion, and
`whether HERBROZAC competes with PROZAC, are
`irrelevant. See 15 U.S.C. sec. 1127. Natural
`Answers concedes all but the third element/5--
`that HERBROZAC "causes dilution" of PROZAC--so
`we will focus our attention solely on that issue.
`
` As a threshold issue, the parties dispute
`whether the "causes dilution" element can be
`satisfied by evidence of a mere likelihood of
`dilution, or whether proof of actual dilution is
`required. The legislative history of the Act does
`not specifically address this question, and the
`circuit courts to have considered it are divided.
`Compare Westchester Media v. PRL USA Holdings,
`Inc., 214 F.3d 658, 671 (requiring proof of
`actual harm) and Ringling Bros.-Barnum & Bailey
`Combined Shows, Inc. v. Utah Div. of Travel Dev.,
`170 F.3d 449, 461 (4th Cir.) (same), cert.
`denied, 120 S. Ct. 286 (1999) with Nabisco, 191
`F.3d at 224-25 (likelihood of dilution
`sufficient). See also Times Mirror Magazines,
`Inc. v. Las Vegas Sports News, L.L.C., 212 F.3d
`157, 179 n.11 (3d Cir. 2000) (dissenting judge
`agreeing with majority’s implicit holding "that
`the District Court did not err in finding that
`irreparable injury may be shown even in the
`absence of actual economic harm"). With guidance
`from these courts, we’ll take our own stab at
`deciding what "causes dilution" means, reviewing
`the district court’s statutory interpretation of
`that phrase de novo. Komorowski v. Townline Mini-
`Mart and Restaurant, 162 F.3d 962, 965 (7th Cir.
`1998).
`
` In Ringling Brothers, the Fourth Circuit set
`out a cogent argument for a restrictive reading
`of the Trademark Dilution Act that requires the
`plaintiff to submit proof of actual economic
`harm. The court observed that state antidilution
`statutes--upon which the Trademark Dilution Act
`is based--typically prohibit the use of a mark
`that creates a "likelihood of . . . dilution of
`the distinctive quality of a [senior] mark." 170
`F.3d at 456 (quoting Model State Trademark Act
`sec. 12 (1964), reprinted in 3 McCarthy sec. 22:8
`(4th ed. 1998)); see also, e.g., N.Y. Gen. Bus.
`
`

`
`Law sec. 360-1 ("Likelihood of . . . dilution of
`the distinctive quality of a mark . . . shall be
`ground for injunctive relief . . . ."); Cal. Bus.
`& Prof. Code sec. 14330 (same); Fla. Stat. ch.
`495.151 (injunction available if "there exists a
`likelihood . . . of dilution of the distinctive
`quality of the [senior] mark . . . ."). The
`federal Act, on the other hand, does not
`incorporate the word "likelihood," which implies
`an application to future acts that cause
`dilution, but instead employs the present tense
`"causes dilution." In addition, whereas state
`antidilution statutes generally provide only
`injunctive relief, indicating that their purpose
`is to prevent future harm, the federal statute
`permits injured plaintiffs to obtain damages in
`limited circumstances. Ringling Brothers, 170
`F.3d at 461. And the conduct proscribed by the
`federal statute is "another person’s . . . use,"
`not merely threatened use, of a protected mark.
`Id. Finally, Ringling Brothers found that the
`Act’s definition of dilution, "the lessening of
`the capacity of a famous mark to identify and
`distinguish goods or services," "makes plain what
`the state statutes may not: that the end harm at
`which [the Act] is aimed is a mark’s selling
`power, not its ’distinctiveness’ as such." Id. at
`458. Accordingly, the Fourth Circuit held that
`the use of a name that erodes the distinctiveness
`of a senior mark but does not affect its holder’s
`bottom line is not actionable under the Act. Id.
`at 461. The Fifth Circuit essentially adopted
`these conclusions in Westchester Media, 214 F.3d
`at 670-71.
`
` The Second Circuit rejected Ringling Brothers in
`Nabisco, observing that the Fourth Circuit’s
`reading of the statute would subject senior mark
`holders to uncompensable injury. After all, the
`primary remedy of the Act is an injunction
`against future use of an offending mark; damages
`are permitted only when the defendant acts
`wilfully. 15 U.S.C. sec. 1125(c)(2). Thus, if the
`"causes dilution" element requires proof of
`actual economic harm, senior mark holders will be
`restrained from bringing suit prior to suffering
`an injury for which the Act will not compensate
`them in many circumstances. Nabisco, 191 F.3d at
`224. By the time plaintiffs were permitted to
`file suit, moreover, junior mark holders might
`have the defense that the senior mark had lost
`its distinctiveness due to the numerous other
`marks that have copied it. Senior mark holders
`would also be open to the argument that they had
`failed actively to protect their marks. Finally,
`if adjudication of a Trademark Dilution Act claim
`were not possible prior to economic injury,
`upstart companies would be unable to seek a
`declaratory judgment that their mark is
`
`

`
`sufficiently different from a senior mark prior
`to expending the funds necessary to launch their
`product. Id. Congress could not have intended
`these unjust and inefficient results.
`
` In addition, the Fourth Circuit’s interpretation
`of the Act holds plaintiffs to an impossible
`level of proof. In the case of an immensely
`successful product such as PROZAC, it is
`possible that the distinctiveness of its mark
`could be diluted even as its sales are
`increasing, albeit not increasing as much as they
`would in the absence of the offending mark. See
`Times Mirror Magazines, 212 F.3d at 179 n.11
`(Barry, J., dissenting on other grounds; citing
`S. Rep. No. 100-515, at 108 (noting that
`distinctive quality of a mark "could be
`materially reduced during a period of rising
`sales")). Even if diminished reve