By Steve Abreu, a member of our Trademark Practice Group
No doubt about it: It is
hard for brand owners to protect against trademark dilution, even with a
name as famous as STARBUCKS. With its decision in Starbucks Corp. v. Wolfe's Borough Coffee, Inc., a federal court in Manhattan has yet again served a bitter brew to the coffee chain in this 14-year dispute.
In 1997, Black Bear Micro Roastery began marketing its premium dark
roast coffee under the name "Black Bear Mr. Charbucks Blend Coffee." Not
surprisingly, Starbucks objected to Black Bear's use of "CHARBUCKS,"
and eventually sued the New Hampshire roaster for both trademark
infringement and trademark dilution in a 2001 lawsuit.
In 2005, the court handed Starbucks its first defeat in the suit, ruling that the use of CHARBUCKS resulted in no actual
dilution under federal trademark law. The next year, Congress passed
the Trademark Dilution Revision Act (TDRA), which significantly eased
the burden of proof on a brand owner. Now, the owner of a famous mark
is required to show only that the defendant's mark is likely to cause dilution.
The court of appeals
asked the trial court to reconsider Starbucks's claim under the new
law, specifically whether dilution by "blurring" had occurred. Diluting
a mark by blurring it means impairing its distinctiveness. According to
the federal courts, "blurring occurs where the defendant uses or
modifies the plaintiff's famous mark to identify the defendant's goods,
raising the possibility that the mark will lose its ability to serve
as a unique identifier of the plaintiff's product."
In determining whether dilution by blurring has occurred, the TDRA requires courts to consider the following factors:
In a second rejection of
Starbucks's claims, the trial court determined, among other things,
that blurring did not occur because the marks were not substantially
similar. However, the court of appeals reversed the
dilution-by-blurring part of the decision because "substantial
similarity" between the famous mark and the junior mark was not
necessary in order to prove trademark dilution.
The court of appeals asked
the district court to reconsider, once again, whether the association
in consumers' minds between CHARBUCKS and STARBUCKS was sufficient to
show that Black Bear had had Starbucks's fame in mind when developing
and selling its Mr. Charbucks line of coffee.
The court of appeals added
that any reliance by Black Bear on a parody defense was improper
because the parody - using the mark Charbucks -- was not commentary on
Starbucks coffee, but a reference to Black Bear's coffee. We previously
analyzed this 2009 court of appeals decision.
In the most recent
development, the district court re-evaluated whether dilution by
blurring occurred. Remarkably, despite finding that four of the six
dilution factors favored Starbucks, the court concluded that dilution
by blurring had not been proven because the marks are only minimally
similar and, based on the results of a survey, only "weakly associated
in consumers' minds."
The district court allowed
that Starbucks's evidence on distinctiveness, recognition and
exclusivity of use was "strong." However, Starbucks ultimately came up
short in the comparison of the marks themselves.
The court reasoned that
the necessary comparison was not between "Starbucks" and "Charbucks"
but between Starbucks and the marks Black Bear actually used in
commerce, namely, "Mr. Charbucks," "Charbucks Blend" and use of
Charbucks with Black Bear logos and color schemes. Blurring was not
likely because consumers could distinguish between the two coffee
roasters when taking the entirety of the marks into account.
While survey evidence
showed that 30.5% of respondents associated the term "Charbucks" with
Starbucks, only 3.1% though Starbucks might be a company that would
offer a product called "Charbucks."To the court's mind, this weak
association between the marks in consumers' minds outweighed Black
Bear's admission that it used the "Charbucks" marks to evoke "an image
of dark-roasted coffee of the type offered by Starbucks."
This decision is a strong
warning to famous-mark owners that vast renown, long periods of
substantially exclusive use, and even evidence of a junior user's
intent to evoke the famous mark, may not suffice to support a
If other federal courts adopt the Charbucks reasoning, an aggrieved
owner of a famous mark may have to show that the junior mark is
identical or nearly identical to prove that the distinctiveness of the
famous mark has been impaired.
© 2005-2012 Sunstein Kann Murphy & Timbers LLP, All Rights Reserved.
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