Do You See Starbucks When You Read Charbucks?

In an ongoing litigation between Starbucks and an outfit called Black Bear Micro Brewery, the brewer of Mr. Charbucks and Charbucks Blend coffees, a New York Southern District judge found that notwithstanding the similarity in names and the fact that Charbucks was trying to capitalize on the Starbucks name, Charbucks did not violate trademark law.

One of the privileges provided by trademark law is a trademark holder’s right to prevent another’s use of a mark that, while not confusingly similar in a direct way, nevertheless “dilutes” the trademark holder’s registered trademark. One way to dilute a mark is to “blur” it. Blurring is pretty much as it sounds: A competitor’s use of mark that, in the court’s words, “impairs the distinctiveness of the famous mark.” When a mark is blurred, its “distinctiveness,” that element of the mark by which it is known to the public, is weakened.

In this case, the Southern District court was faced with deciding whether the marks “Mr. Charbucks” and “Charbucks Blend” diluted the Starbucks trademark. To reach a conclusion, the court had to review six factors that, while not exclusive, provided guidance in determining dilution: “(i) [t]he degree of similarity between the mark or trade name and the famous mark; (ii) [t]he degree of inherent or acquired distinctiveness of the famous mark; (iii) [t]he extent to which the owner of the famous mark is engaging in substantially exclusive use of the mark; (iv) [t]he degree of recognition of the famous mark; (v) [w]hether the user of the mark or trade name intended to create an association with the famous mark; [and] (vi) [a]ny actual association between the mark or trade name and the famous mark.” Because these elements are suggested but not exclusive, the overarching consideration is whether the blurring makes the distinctive registered mark less distinctive.

Despite conceding that Starbucks’ claims satisfied the distinctiveness, exclusivity and recognition elements, and also agreed that Black Bear attempted to create an association between its product and Starbucks’, the court refused to find dilution because the way that the respective marks were used were not similar and easily distinguished by the consumer. For example, the court noted that Charbucks was always preceded by “Mr.”or “Mister,” or in conjunction with “Blend” and its logo was very different that what Starbucks used. Presumably, though, had the mark “Charbucks” been used alone, Starbucks would have made out its dilution claim.

The court expressed its concern that preventing the use of the Charbucks mark would give Starbucks too broad a right to exclude any mark that troubled Starbucks, something not provided for under law, even where defendant intended to associate its coffee with Starbucks’.

This case highlights that while some surface confusion between marks may appear, a deeper examination is required before confusion becomes a concern. Succeeding on a dilution claim against a small competitor without a meaningful market presence is made more difficult with this decision, notwithstanding the change in law designed to avoid this type of outcome, which was enacted subsequent to the United States Supreme Court’s decision in the seminal Victoria’s Secret case. Seemingly, where a small competitor tries to piggy-back off the recognition of a large and well know company’s trademark, a dilution claim seems to not always be enough to obtain an injunction.

For some tongue-in-cheek thoughts on this issue, take a look at a post by Ron Coleman, Esq.

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