Sunstein, Kann, Murphy, & Timbers: Starbucks Absorbs Another Loss in Its Long Trademark Battle with Charbucks

Sunstein, Kann, Murphy, & Timbers: Starbucks Absorbs Another Loss in Its Long Trademark Battle with Charbucks

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:

  1. The degree of similarity between the mark and the famous mark,
  2. The degree of inherent or acquired distinctiveness of the famous mark,
  3. The extent to which the owner of the famous mark is engaging in substantially exclusive use of the mark,
  4. The degree of recognition of the famous mark,
  5. Whether the user of the non-famous mark intended to create an association with the famous mark, and
  6. Any actual association between the non-famous mark and the famous mark.

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 dilution-by-blurring claim.

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.

Legal Notice

....

Lexis.com subscribers can explore/search Trademark Law resources on Lexis.com or access any of these Mathew Bender Trademark Law publications:

Non-subscribers can purchase Trademark Law treatises/resources and Mathew Bender publications from the LexisNexis Bookstore

For more information about LexisNexis products and solutions connect with us through our corporate site.