I won’t speak for Tim… and I will admit (as I have in the past) that I find the (relatively recent) addition of “dilution” to trademark law as a complete bastardization of the purpose of trademark law.

The idea started with Schechter’s article in the Harvard Law Review in 1927 where he argued that distinctiveness was being diluted by a mark’s use on unrelated goods, so it’s been around for a while. I’m curious though what you mean that it’s a “complete bastardization of the purpose of trademark law.” Trademark law has more than one purpose. I know you focus on consumer confusion, which is no doubt the main purpose of trademark law, but there’s more to it than that.

I’m not sure if you’ve read Posner’s exploration on dilution. It speaks to the economics, so you might enjoy it:

The fundamental purpose of a trademark is to reduce consumer search costs by providing a concise and unequivocal identifier of the particular source of particular goods. The consumer who knows at a glance whose brand he is being asked to buy knows whom to hold responsible if the brand disappoints and whose product to buy in the future if the brand pleases. This in turn gives producers an incentive to maintain high and uniform quality, since otherwise the investment in their trademark may be lost as customers turn away in disappointment from the brand. A successful brand, however, creates an incentive in unsuccessful competitors to pass off their inferior brand as the successful brand by adopting a confusingly similar trademark, in effect appropriating the goodwill created by the producer of the successful brand. The traditional and still central concern of trademark law is to provide remedies against this practice.

Confusion is not a factor here, however, with a minor exception discussed at the end of the opinion. Perryman is not a competing producer of beanbag stuffed animals, *511 and her Web site clearly disclaims any affiliation with Ty. But that does not get her off the hook. The reason is that state and now federal law also provides a remedy against the ?dilution? of a trademark, though as noted at the outset of this opinion the federal statute is limited to the subset of ?famous? trademarks and to dilutions of them caused by commercial uses that take place in interstate or foreign commerce. ?Beanie Babies,? and ?Beanies? as the shortened form, are famous trademarks in the ordinary sense of the term: ?everybody has heard of them?; they are ?truly prominent and renowned,? in the words of Professor McCarthy, 4 McCarthy on Trademarks and Unfair Competition ? 24:109, p. 24?234 (2001), as distinguished from having a merely local celebrity. TCPIP Holding Co. v. Haar Communications Inc., 244 F.3d 88, 98?99 (2d Cir.2001). And while both this court and the Third Circuit have held, in opposition to the Second Circuit’s TCPIP decision, that ?fame,? though it cannot be local, may be limited to ?niche? markets, Syndicate Sales, Inc. v. Hampshire Paper Corp., 192 F.3d 633, 640?41 (7th Cir.1999); Times Mirror Magazines, Inc. v. Las Vegas Sports News, L.L.C., 212 F.3d 157, 164 (3d Cir.2000), this is not a conflict to worry over here; Ty’s trademarks are household words. And Perryman’s use of these words was commercial in nature and took place in interstate commerce, and doubtless, given the reach of the aptly named World Wide Web, in foreign commerce as well.

But what is ?dilution?? There are (at least) three possibilities relevant to this case, each defined by a different underlying concern. First, there is concern that consumer search costs will rise if a trademark becomes associated with a variety of unrelated products. Suppose an upscale restaurant calls itself ?Tiffany.? There is little danger that the consuming public will think it’s dealing with a branch of the Tiffany jewelry store if it patronizes this restaurant. But when consumers next see the name ?Tiffany? they may think about both the restaurant and the jewelry store, and if so the efficacy of the name as an identifier of the store will be diminished. Consumers will have to think harder?incur as it were a higher imagination cost?to recognize the name as the name of the store. Exxon Corp. v. Exxene Corp., 696 F.2d 544, 549?50 (7th Cir.1982); cf. Mead Data Central, Inc. v. Toyota Motor Sales, U.S.A., Inc., 875 F.2d 1026, 1031 (2d Cir.1989) (?The [legislative] history [of New York’s antidilution statute] disclosed a need for legislation to prevent such ?hypothetical anomalies’ as ?Dupont shoes, Buick aspirin tablets, Schlitz varnish, Kodak pianos, Bulova gowns’ ?); 4 McCarthy on Trademarks and Unfair Competition, supra, ? 24:68, pp. 24?120 to 24?121. So ?blurring? is one form of dilution.

Now suppose that the ?restaurant? that adopts the name ?Tiffany? is actually a striptease joint. Again, and indeed even more certainly than in the previous case, consumers will not think the striptease joint under common ownership with the jewelry store. But because of the inveterate tendency of the human mind to proceed by association, every time they think of the word ?Tiffany? their image of the fancy jewelry store will be tarnished by the association of the word with the strip joint. Hormel Foods Corp. v. Jim Henson Productions, Inc., 73 F.3d 497, 507 (2d Cir.1996); 4 McCarthy on Trademarks and Unfair Competition, supra, ? 24:95, pp. 24?195, 24?198. So ?tarnishment? is a second form of dilution. Analytically it is a subset of blurring, since it reduces the distinctness of the trademark as a signifier of the trademarked product or service. *512

Third, and most far-reaching in its implications for the scope of the concept of dilution, there is a possible concern with situations in which, though there is neither blurring nor tarnishment, someone is still taking a free ride on the investment of the trademark owner in the trademark. Suppose the ?Tiffany? restaurant in our first hypothetical example is located in Kuala Lumpur and though the people who patronize it (it is upscale) have heard of the Tiffany jewelry store, none of them is ever going to buy anything there, so that the efficacy of the trademark as an identifier will not be impaired. If appropriation of Tiffany’s aura is nevertheless forbidden by an expansive concept of dilution, the benefits of the jewelry store’s investment in creating a famous name will be, as economists say, ?internalized??that is, Tiffany will realize the full benefits of the investment rather than sharing those benefits with others?and as a result the amount of investing in creating a prestigious name will rise.

Ty Inc. v. Perryman, 306 F.3d 509, 510-12 (7th Cir. 2002) (emphasis added).

But… even so, I fail to see how this has even a slightly dilutionary effect on Ben & Jerry’s. Is someone somehow going to think less of Ben & Jerry’s ice cream because of this? I can’t see how that’s likely at all. It doesn’t “tarnish” the brand. It’s a parody, a joke.

It tarnishes the brand by associating pornography with it. I don’t blame Ben & Jerry’s for not wanting to be associated with hardcore porn. And the First Amendment argument is less forceful when the alleged infringer is clearly just riding on their coattails for commercial purposes. This isn’t core, protected speech.. They aren’t making a statement about Ben & Jerry’s. They’re trying to trade off of Ben & Jerry’s goodwill at the expense of Ben & Jerry’s goodwill.