Jose Felgueroso
Abogado | Attorney
The Name of a Fictional Restaurant can be Protected as a Trademark
info@josefelgueroso.com
2018-06-06
An appellate court has found that the name of a fictional restaurant in a television show can be protected as a trademark, and that the defendant’s applied-for mark would likely create confusion about the source of its restaurant services.
Background
The Krusty Krab is a fictional hamburger restaurant in SpongeBob SquarePants, a television series about a sea sponge who wears square shorts, lives in an underwater pineapple, and works at The Krusty Krab as a fry cook. The television series had 73 million viewers in the second quarter of 2016.
The Krusty Krab is not a registered trademark, but rather is a common law mark held by Viacom, a media company and the plaintiff in this case. The restaurant has appeared in 166 of 203 episodes of SpongeBob SquarePants, and has also appeared in two feature films, a musical play, advertisements, and online materials. It has been licensed for toys, video games, aquarium accessories, stickers, and shirts, but not for restaurants.
The defendant intended to open seafood restaurants using the name “The Krusty Krab,” and it applied to register a trademark with the United States Patent and Trademark Office (USPTO) for the word mark “The Krusty Krab” for restaurant services. The USPTO authorized the registration once the defendant stated that it has used the mark in commerce. The defendant’s business plan included a logo for a Cajun seafood restaurant; it contained no references to the SpongeBob franchise or the fictional restaurant The Krusty Krab. The defendant purchased four domain names for the restaurant concept, leased property in California, and bought restaurant equipment. The plaintiff sent the defendant a cease-and-desist letter demanding withdrawal of its application, alleging infringement of its Krusty Krab mark.
After the defendant refused to withdraw its application, the plaintiff sued in federal district court based on the federal trademark statute and unfair competition under Texas common law. The plaintiff alleged that the defendant’s mark would create consumer confusion about affiliation, sponsorship, or connection, and that it would cause damage to the plaintiff’s goodwill and reputation. The district court granted summary judgment to the plaintiff on its claims of trademark infringement and unfair competition. It also held that Viacom had established ownership of the mark through sales and licensing, and that The Krusty Krab mark has acquired secondary meaning. Under the test to determine the likelihood of confusion among consumers, it held that every factor supported a finding of confusion. The defendant appealed to the United States Court of Appeals for the Fifth Circuit.
The issues before the appellate court were (1) whether the plaintiff owns a legally protected mark over “The Krusty Krab” and (2) whether the defendant’s use of “The Krusty Krab” creates a likelihood of confusion.
Legal Protection for “The Krusty Krab”
A party is the holder of a mark if it uses it as a source identifier and the mark is distinctive.
A mark is used as a source identifier if goods bearing the mark are placed on the market. Specific elements from a creative work (such as a television show) can be protected as a trademark, because this prevents consumer confusion and protects the invested goodwill; the element, however, must play an essential role in the franchise. Examples of elements of other works that have been held to be protectable as trademarks are kryptonite, General Lee, The Daily Planet, and Conan the Barbarian.
A mark must also be distinctive, and this can be achieved through inherent distinctiveness or through secondary meaning. Secondary meaning arises when in the mind of the public the primary significance of the mark is no longer the identification of the product, but rather the identification of the source of the product. For example, initially the term “Coca-Cola” referred to two ingredients of the drink, but over time consumers came to associate that term not with a type of drink, but rather with a drink made by a specific company. Federal courts under the jurisdiction of the appellate court that decided this case use the following factors to determine the existence of secondary meaning: the length and manner of use of the mark, the volume of sales, the amount and manner of advertising, the nature of the use of the mark or trade dress in newspapers and magazines, consumer surveys, direct consumer testimony, and the defendant's intent in copying the mark.
The appellate court held that the plaintiff uses “The Krusty Krab” as a source identifier, because it uses the term on goods sold in the market, such as playsets and aquarium ornaments. In addition, the court held that The Krusty Krab is central to the franchise, because it appears in 80% of the episodes and has been featured online and in video games. The mark also identifies the source of licensed merchandise, such as shirts and stickers.
The district court had held that “The Krusty Krab” was not inherently distinctive, so the appellate court considered whether the mark had acquired secondary meaning. It found that The Krusty Krab appeared in the pilot episode in 1999 and has appeared in 80% of the episodes; that about $470 million of licensed products bearing the mark have been sold, including two feature films; that the plaintiff has spent $197 million in advertising for the films alone, and the success of this advertising is reflected in its product sales and the success of the films; and that the mark is often referenced by the press and by SpongeBob’s own social media, website, and mobile apps. The parties did not submit any consumer surveys or direct consumer testimony, so the court did not consider these factors. Regarding the defendant’s intent, the appellate court did not address this factor in its distinctiveness analysis, but in its likelihood-of-confusion analysis it held that the record only contained circumstantial evidence of its intent to benefit from the plaintiff’s goodwill.
Based on its analysis, the appellate court held that “The Krusty Krab” is a legally protectable mark, because the plaintiff has used it as a source identifier and because it has acquired secondary meaning.
Likelihood of Confusion
A likelihood of confusion between two marks exists if the marks create a probability of confusion in the context in which consumers encounter the marks; the confusion can be about source, affiliation, or sponsorship. Federal courts under the jurisdiction of the appellate court that decided this case use the following factors to determine the existence of likelihood of confusion between two marks: the type of mark allegedly infringed; the similarity between the two marks; the similarity of the products or services; the identity of retail outlets and purchasers; the identity of the advertising media used; the defendant's intent to confuse; and any evidence of actual confusion.
The appellate court considered that the plaintiff’s mark is strong, as it has acquired secondary meaning. The two marks are similar: although they use different logos, both marks use the same words (including their peculiar spelling with a “k” instead of a “c”) and have identical pronunciation. The services with which the marks are used are potentially similar; although the plaintiff’s restaurant is a fictional hamburger restaurant, it could expand into the defendant’s business, as the plaintiff’s subsidiary did in the case of the Bubba Gump Shrimp Company, a real restaurant based on the fictional business from the movie “Forrest Gump.” The court found that the record did not contain enough evidence to assess the identity of retail outlets and purchasers of the parties’ goods, or to evaluate the overlap in the advertising media used by the parties. Regarding the defendant’s intent, the court held that it only used the name of the restaurant, and not its trade dress; since in this type of proceeding the evidence must be evaluated in the light most favorable to the non-moving party (the defendant in this case), the court found that this factor did not support a finding of likelihood of confusion. Finally, the court found that the survey evidence submitted by the plaintiff and the anecdotal evidence in the record supported a finding of likelihood of confusion.
In short, based on the strength of the plaintiff’s mark, the similarity between the parties’ marks, the potential similarity between the parties’ services, and evidence of actual confusion, the court found that the defendant’s use of its applied-for mark would probably confuse consumers about the source of its restaurant services.