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securities

Dilution

The reduction in existing shareholders' ownership percentage caused by the issuance of additional shares.

Encyclopedia entry: Dilution

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dilution

In trademark law, dilution is the unauthorized commercial use of a mark or commercial trade name that is similar enough to a famous mark to diminish its distinctiveness or damage its reputation, even without causing consumer confusion. U.S. law recognizes two forms of dilution, blurring and tarnishment.

  • Dilution by blurring occurs when the distinctiveness of a famous mark is impaired through association with another mark. 
  • Dilution by tarnishment occurs when the reputation of a famous mark is harmed through such association. See 15 U.S.C. § 1125(c)(2)(B)–(C) .

The Federal Trademark Dilution Act , codified at 15 U.S.C. § 1125(c) , provides a federal cause of action to protect famous marks from unauthorized use, to prevent others from trading on their goodwill, and to preserve their distinctive quality. Owners of famous marks may obtain injunctive relief against uses likely to cause dilution, regardless of actual or likely confusion, competition, or economic injury. A mark is considered famous if it is widely recognized by the general consuming public, based on factors such as advertising, sales, and actual recognition. To establish dilution, the mark must have become famous before the allegedly diluting use began. Certain uses of famous marks are excluded from liabilityFair use is permitted for purposes such as comparative advertising, parody, criticism, or commentary, and use in news reporting or non-commercial contexts is also protected. See 15 U.S.C. § 1125(c)(3 ).

[Last reviewed in September of 2025 by the Wex Definitions Team

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Encyclopedia content from Cornell LII Wex (CC-BY-NC-SA 2.5).

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This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.