Summary
The Second Circuit considered Starbucks's claims for federal and state trademark dilution, infringement, and unfair competition arising from Black Bear's use of the marks "Charbucks Blend" and "Mister Charbucks." The court held that the district court improperly required substantial similarity and misapplied the intent-to-associate and actual-association factors under the Trademark Dilution Revision Act. It vacated in part and remanded for further proceedings on federal dilution by blurring, while affirming the judgment in all other respects.
Topics
Practice areas
Questions Presented
- Whether the district court applied an erroneous substantial-similarity requirement in evaluating Starbucks's federal trademark dilution-by-blurring claim under 15 U.S.C. § 1125(c).
- Whether the district court improperly treated bad faith as relevant to the statutory intent-to-associate factor and relied on the absence of actual confusion when evaluating actual association for federal dilution by blurring.
- Whether Starbucks established federal or New York dilution by tarnishment.
- Whether the Charbucks marks were protected as parody under the Trademark Dilution Revision Act.
- Whether the district court correctly rejected Starbucks's federal trademark infringement and unfair competition claims under the Polaroid likelihood-of-confusion test.
- Whether Starbucks established dilution under New York General Business Law § 360-l.
Holdings
- The federal Trademark Dilution Revision Act does not require the marks to be very or substantially similar before a court considers the remaining statutory blurring factors. Degree of similarity is one factor in the multifactor inquiry into whether an association arising from similarity impairs the famous mark's distinctiveness.
- The statutory factor asking whether the junior user intended to create an association with the famous mark does not require a separate finding of bad faith. Where the junior mark was created with an intent to associate with the famous mark, that factor favors a likelihood of dilution.
- The absence of actual or likely consumer confusion does not negate evidence of actual association for purposes of dilution by blurring.
- Starbucks failed to establish dilution by tarnishment under federal or New York law merely by showing that consumers associated Charbucks with Starbucks and had negative impressions of the Charbucks name.
- Wolfe's use of Charbucks did not qualify for the TDRA's parody fair-use exception because the marks were used as designations of source for Wolfe's own goods. The court also held that the use was not a sufficiently clear parody to favor Wolfe's in the blurring analysis.
- The district court correctly denied relief under New York General Business Law § 360-l because the Charbucks and Starbucks marks were not substantially similar and Starbucks failed to establish tarnishment.
- The district court correctly concluded that the Charbucks marks were not likely to cause consumer confusion as to source, sponsorship, or association, and therefore correctly rejected Starbucks's federal infringement and unfair competition claims.
Key quotations
“Consideration of a "degree" of similarity as a factor in determining the likelihood of dilution does not lend itself to a requirement that the similarity between the subject marks must be "substantial" for a dilution claim to succeed.” (588 F.3d at 108-09)
“Thus, 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 dilution.” (588 F.3d at 109)
“The crucial issue in an action for trademark infringement ... is whether there is any likelihood that an appreciable number of ordinarily prudent purchasers are likely to be misled, or indeed simply confused, as to the source of the goods in question.” (588 F.3d at 114)
Factual background
Starbucks owns widely recognized and extensively advertised coffee trademarks, including the Starbucks name and siren logo. Wolfe's Borough Coffee, a small New Hampshire coffee company, sold dark-roasted coffee under the names Charbucks Blend and Mister Charbucks, using packaging prominently identifying Black Bear and its New Hampshire micro-roastery. Starbucks demanded that Wolfe's stop using the Charbucks names, but Wolfe's continued selling the products. A consumer survey showed some association between Charbucks and Starbucks, but Starbucks had no evidence of an actual customer being confused about the source or sponsorship of the products.
Procedural history
Starbucks filed suit in 2001 after Wolfe's Borough Coffee continued selling coffee under the names Charbucks Blend and Mister Charbucks. The district court dismissed the complaint after a bench trial. During the first appeal, the Second Circuit vacated and remanded in light of the Trademark Dilution Revision Act of 2005. On remand, the district court again entered judgment for Wolfe's Borough Coffee. The Second Circuit vacated the judgment in part and remanded for further proceedings on federal dilution by blurring, while affirming all other aspects of the judgment.
Remand instructions
The district court must reconsider Starbucks's federal trademark dilution-by-blurring claim under 15 U.S.C. § 1125(c)(2)(B), without requiring substantial similarity and without improperly discounting the intent-to-associate and actual-association factors based on bad faith or lack of confusion.