Trademark term used to denote a situation when a famous mark is used by another which diminishes the quality or reputation of the mark. Even though there may be no likelihood of customer confusion as a result of the use by the party causing the damages, there still is a cause of action for trademark infringement. A famous example was the use of the trademarked word Candyland a children’s game was used for a website selling pornography. This obviously diluted and tarnished the reputation of the children’s game by the same name. Confusion in the marketplace was likely not at issue.
TheLaw.com Law Dictionary & Black's Law Dictionary 2nd Ed.