Coffee Break: Court Lowers Bar for Trademark Dilution Claims
When Starbucks sued a company selling “Charbucks” coffee, a district court found that the two marks had not been blurred, largely because the marks weren’t substantially similar. But an appeals court maintained that the degree of similarity between the marks was just one of six nonexclusive factors that should be considered when evaluating trademark dilution claims.
The Second Circuit Court of Appeals has made it significantly easier for owners of famous marks to obtain injunctions against similar marks. Its interpretation of the Trademark Dilution Revision Act of 2006 (TDRA) came in a trademark case, Starbucks Corp. v. Wolfe’s Borough Coffee, Inc., that has been grinding through the courts for almost a decade.
TROUBLE BREWING
Wolfe’s Borough Coffee, operating as Black Bear Micro Roastery, manufactures and sells roasted coffee beans and related goods online and via mail order as well as at a limited number of New England supermarkets. In April 1997, the family-owned business began selling a coffee called “Charbucks Blend” and later “Mister Charbucks.”
In August 1997, Starbucks demanded that Black Bear cease using the Charbucks marks. Starbucks eventually filed suit, alleging, among other claims, trademark dilution by blurring. After a trial, the district court dismissed Starbucks’ complaint.
While Starbucks’ appeal was pending, Congress passed TDRA. The Second Circuit remanded the case to the district court for reconsideration in light of the statute, and the district court again found for Black Bear.
DISTRICT COURT ROASTED
TDRA defines “dilution by blurring” as “an association arising from the similarity between a mark … and a famous mark that impairs the distinctiveness of the famous mark.” The district court found that the Charbucks marks didn’t blur Starbucks’ marks, largely because the marks weren’t substantially similar.
The Second Circuit agreed with the lower court that the marks were only “minimally similar” but didn’t agree that the dissimilarity alone was sufficient to defeat Starbucks’ blurring claim. The appellate court held that the district court erred to the degree that it required “substantial similarity.”
6 NONEXCLUSIVE FACTORS
Specifically, the court noted that the statute doesn’t use the word “substantial” and, instead, lists the degree of similarity between the marks as just one of six nonexclusive factors for evaluating blurring claims under TDRA. These factors are:
The degree of similarity between the mark or trade name and the famous mark The degree of inherent or acquired distinctiveness of the famous mark The extent to which the owner of the famous mark is engaging in substantially exclusive use of the mark The degree of recognition of the famous mark Whether the user of the mark or trade name intended to create an association with the famous mark Any actual association between the mark or trade name and the famous mark Because the second, third and fourth factors favored Starbucks and weren’t appealed, the Second Circuit went on to assess the fifth and sixth factors.
It held that where, as here, the allegedly diluting mark was created with an intent to associate with the famous mark, this factor favors a finding of a likelihood of trademark dilution — regardless of whether the defendant acted in bad faith. The court also held that the absence of actual or even a likelihood of confusion doesn’t undermine evidence of trademark dilution.
STARBUCKS GETS ANOTHER SHOT
The Second Circuit remanded the case for reconsideration of the dilution-by-blurring claim. In the meantime, its decision encourages owners of famous marks to pursue dilution claims where an infringement claim might fail.
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