You should be looking at the Trademark dilution revision act of 2006 which has superseded it. While Coke would easily get an injunction against blurring, there are counter arguments about similarity, and the lack of intentional or factual associations with the famous Sprite mark, not to mention it's lack of inherent distinctiveness (as opposed to say '7up'.) The situation is more nuanced than you suggest.

https://www.govtrack.us/congress/bills/109/hr683/summary has a good CRS-authored summary of that legislation's content.