In 1978, a Nevada Federal District Court permitted the Nevada Real Estate Advisory Commission to regulate the registered service mark' of Century 21, a national franchisor of real estate brokerage firms.' Prior to this state regulation, Century 21's mark occupied approximately 80 percent of the surface area of any given display, while the name of the local franchisee covered the remaining 20 percent. To prevent consumer confusion," the Commission required that the 80:20 ratio be changed to a 50:50 ratio, effectively making the franchisee's logo as large as its counterpart. Century 21 objected to this mandate, arguing in part that such a regulation would dilute its registered mark and thereby violate the Lanham Act. The Court rejected this argument by holding that the regulation fell squarely within the purposes of the Lanham Act.'
After the Nevada decision, other states adopted similar regulations. Ultimately, however, courts found these rules burdensome on the franchisor-franchisee relationship and invalidated the regulation use of the term trademark to refer to both trademarks and service marks.")
Jeffrey W. Strouse,
Redefining Trademark Alteration Within the Context of Aesthetic-Based Zoning Laws: A Blockbuster Dilemma,
53 Vanderbilt Law Review
Available at: https://scholarship.law.vanderbilt.edu/vlr/vol53/iss2/12