## Facts

- Ty, Inc. manufactured and sold “Beanie Babies” and related products under the “Beanie Babies” and “Beanies” trademarks.
- Ruth Perryman operated an online resale business using the domain name and site title “bargainbeanies.com.”
- About 80% of Perryman’s offerings were used Ty “Beanie Babies,” and about 20% were plush toys made by other companies.
- The site included a disclaimer stating it was not affiliated with Ty.
- Perryman used a link labeled “Other Beanies” to market non-Ty plush toys.
- Ty sued under the Federal Trademark Dilution Act (FTDA), alleging that Perryman’s uses diluted the distinctiveness of Ty’s famous marks, rather than relying on a traditional likelihood-of-confusion theory.

## Issues

1. Whether Ty’s “Beanie Babies” and “Beanies” marks were sufficiently famous and used in interstate commerce for FTDA coverage.
2. Whether Perryman’s use of “bargainbeanies.com” and “Other Beanies” constituted actionable dilution (e.g., blurring or tarnishment) under 15 U.S.C. § 1125(c).
3. Whether an injunction broadly barring any use of “BEANIE” or “BEANIES” in business/domain names or “in connection with any non-Ty products” was legally justified.

## Decision

- The Seventh Circuit reversed the district court’s summary judgment for Ty and vacated the injunction.
- The court accepted that Ty’s marks were famous and that Perryman used the marks in interstate commerce, but held these elements did not establish dilution.
- The court held that a reseller cannot be barred from using a trademark to truthfully identify and resell the trademark owner’s own goods.
- The court concluded Ty did not show dilution by blurring, tarnishment, or comparable harm from Perryman’s principal activity: reselling genuine Ty products.
- The court held the injunction was overbroad, particularly insofar as it categorically prohibited use of “Beanie(s)” in connection with non-Ty goods rather than addressing any specific misleading presentation with narrower relief.

## Legal Principles

- The FTDA’s protection for famous marks does not extend to prohibiting a reseller’s truthful use of the mark to describe and sell the trademark owner’s genuine goods.
- Dilution requires a showing of harm to a mark’s distinctiveness or reputation (such as blurring or tarnishment), not merely the commercial use of a famous mark.
- Trademark law generally permits nominative, source-identifying use necessary to market branded goods; prohibiting mention of the brand in resale advertising conflicts with that function.
- Injunctive relief in trademark cases must be tailored to the proven wrongdoing; categorical bans on use of common mark terms in business names or domains are improper absent a demonstrated basis for that breadth.

## Conclusion

The Seventh Circuit held that Ty could not use the FTDA to stop an online reseller from using “Beanie(s)” to truthfully market and sell used Beanie Babies, and it rejected the district court’s sweeping injunction because Ty failed to show actionable dilution and any remedy needed to be narrowly directed at specific misleading uses.


Ty, Inc. v. Perryman, 306 F.3d 509 (7th Cir. 2002)