Category: Trademarks

If you are from Bawlmer, you probably say “hon.”  It is a local tradition.  The word is a part of our local vernacular.  However, Denise Whiting, owner of a restaurant named “Cafe Hon” registered the word “hon” as a trademark with the federal patent and trademark office.  The registrations online (which Whiting has subsequently abandoned after a public outcry) include these uses: (a) retail gift shops (see: Hon Trademark Reg) (IC 035), (b) paper goods, namely, bumper stickers, napkins, note cards, gift cards, greeting cards, stationery, wrapping paper, gift bags, note pads, note paper, calendars, pens (see: Hon Trademark Reg 2) (IC 016), and (c) restaurant services (see: Hon Trademark Reg 3) (IC 043).  Ms. Whiting’s use with her restaurant was not controversial, as Cafe Hon has been around for quite some time in Baltimore.  The public outcry was over her registrations for various goods with the “Hon” logo.

Trademarks, whether registered or not, are intended to identify the source of goods of a product or service.  Trademarks, in one way or another, have been in use by craftsmen and traders for thousands of years.  Trademarks serve an important purpose in commerce today, in that brand names distinguish a particular maker’s goods from competitors.  Businesses may invest millions of dollars over time in building up brand name recognition with the public.  Brands, with time, become associated with a particular product’s quality or attributes (the taste of Coke is strongly associated with its mark, and distinguishes it from Pepsi and other soft drink products).

In the “Hon” controversy, the public outrage was over Whiting’s claim of exclusivity for gift shop goods. Interestingly, even though the baseball team, the Orioles, evokes strong public response and is strongly identified with Baltimore, there is not much controversy over their trademarks or their exclusive right to use those marks on t-shirts and baseball hats (and a whole lot of other merchandise based on their trademark registration: O’s Trademark Reg).  I suppose the public doesn’t claim to own the “O’s” (that’s Peter Angelos, hon), but is there that much of a difference?  I haven’t seen any bumper stickers inviting the Orioles to sue to challenge the “O’s” trademark registration.

Property rights, whether the right is to a physical thing or an intangible, are limited by certain public interests.  For a piece of real property, you have to pay your property taxes or risk the loss of title to your property.  The public may also have certain limited rights to enter your property (like the sidewalk that runs through the front yards of many homes in Maryland).  And the air roughly 100 feet above your home is not yours, either.  The exclusive rights in intellectual property are also limited by certain public interests.  For example, there is the concept of the “public domain” in copyright law.  Original works of authorship can be dedicated to the public domain, or end up there after a certain period of time from when the work was originally created (a work today doesn’t end up in the public domain for quite some time, but older works created before the 1920’s are generally in the public domain).

The Lanham Act provides the statutory basis for trademark registrations in the U.S.  Section 1052 identifies certain exceptions to the right to register a particular mark.  Unlike the U.S. Copyright Act, which provides for a “public domain” of works that otherwise would be entitled to protection, the Lanham Act has a much more limited set of circumstances that would prevent registration of a mark.  For example, immoral or deceptive marks can’t be registered.  The coat or flag of a state can’t be registered as a mark.  A living person’s name, portrait or signature can’t be registered without that person’s consent.  The mark cannot be confusingly similar to another registered mark.  The mark cannot be merely descriptive of the product (e.g., “Table” brand tables won’t work).  But, words in the public vernacular are not necessarily protected by these exceptions.  As subsection (f) notes, a mark that has become distinctive over time as to that person’s goods can be registered.

Irregardless of the Lanham Act, Whiting abandoned her marks after local outcry about “Hon.”  There was a strong sense among some in the public that “you just can’t do that” with the word “Hon.”  Some invited Whiting to sue them so that they could challenge her marks in court.  The Baltimore Sun ran a number of articles on the controversy.  Public opinion was against the registration of the word “Hon.”  Ultimately, Whiting abandoned or “Hon” marks in response to it all.  Tempest in a teapot?  Maybe.  But don’t mess with our “Hons.”

Starbucks is a well known, international purveyor of coffee products, with thousands of stores throughout the world.  Starbucks v. Wolfe’s Borough Coffee, Inc., No. 01 Civ. 5981 (LTS)(THK), 2005 U.S. Dist. LEXIS 35578 (S.D.N.Y. Dec. 23, 2005) (Starbucks I).  Starbucks Corporation was formed in 1985 in Washington State, after the original founders had been in business for themselves since 1971 in the Seattle Pike’s Place Market.  Id. at *3. Under a traditional trademark analysis, Starbucks has spent a substantial amount of money to market its coffee products worldwide (over one hundred thirty-six million dollars worth from 2000-2003).  Id. at *5.  One should not use a trademark similar to “Starbucks” without expecting trouble.

In 2004, Wolfe’s Borough Coffee, a small coffee manufacturer that distributes its brands in a store in New Hampshire and through some New England supermarkets, was sued by Starbucks in the southern district of New York for trademark infringement and dilution under the Lanham Act and state law.  Id. at *6.  Wolfe’s Borough Coffee was trading with two allegedly infringing names: “Mr. Charbucks” and “Mister Charbucks,” both similar to the trademark “Starbucks” used by the famous coffee house of the same name.  Starbucks v. Wolfe’s Borough Coffee, Inc., 559 F. Supp. 2d 472 (S.D.N.Y. June 5, 2008) (Starbucks III).  Yet, Starbucks lost in district court on all of its claims.  Starbucks I, 2005 U.S. DIST LEXIS 35578 at *29.  Starbucks appealed, the second circuit reversed in 2007 because of a change to the Lanham Act in 2006 by Congress through the Federal Trademark Dilution Act, and the trial court affirmed its prior decision in favor of the defendant in 2008.  Starbucks v. Wolfe’s Borough Coffee, Inc., 477 F.3d 765 (2nd Cir. 2007) (Starbucks II); 15 U.S.C. §§ 1125(c), 1127 (2008); Starbucks III.

Starbucks Claims
Starbucks sued Wolfe’s under federal and state law, alleging trademark infringement under sections 1114 and 1125(a) of the Lanham Act, trademark dilution under sections 1125(c) and 1127 of the Lanham Act and also under New York law, and unfair competition under state common law.  15 U.S.C. §§ 1114(1), 1125(a) (2008); Id. at §§ 1125(c), 1127; N.Y. Gen. Bus. Law § 360-1 (1999).  This case note will focus on the allegation of trademark dilution.

In order to prove trademark dilution, the plaintiff must demonstrate that (a) the plaintiff’s mark is famous, (b) the defendant is using commercial use of the famous mark, (c) the defendant’s use came after the plaintiff’s use, and (d) the defendant’s use of the plaintiff’s mark dilutes the plaintiff’s mark.  Starbucks I, 2005 U.S. DIST LEXIS 35578 at *22.  The defendant had conceded the first three elements leaving only the last element of the rule in dispute.  Id.

Moseley v. Victoria’s Secret Catalogue, Inc., 537 U.S. 418, 433 (2003) requires a plaintiff to prove actual dilution rather than a likelihood of dilution in order to prevail under the Lanham Act anti-dilution section.  New York law is less stringent than federal law in this area, and the court reasoned that if the plaintiff could not prevail under state law, it also could not prevail under federal law.  Starbucks I, 2005 U.S. DIST LEXIS 35578 at *25.  The court examined the likelihood that the defendant’s use of its marks would either blur or tarnish the plaintiff’s marks, and concludes that plaintiff could not prevail under either standard.  Id. at *30.  Blurring occurs when a defendant uses the plaintiff’s mark to identify defendant’s products, increasing the possibility that the plaintiff’s mark will no longer uniquely identify plaintiff’s products.  Id. at *25.  Tarnishment occurs when a plaintiff’s mark is associated with products of a shoddy or unwholesome character.  Id. at *26.

The court’s review of the record caused it to conclude that the plaintiff had failed to demonstrate actual or likely dimunition “of the capacity of the Starbucks Marks to serve as unique identifiers of Starbucks’ products…” because the plaintiff’s survey results did not show an association with the defendant and the mark “Charbucks,” only that respondents associated the term “Charbucks” with “Starbucks.”  Id. at *27.  The court also held that the plaintiff’s survey results did not substantiate that the mark “Charbucks” would reflect negatively on the Starbucks brand.  Id. Plaintiff therefore lost on its dilution claims.

Change in Dilution Act
Prior to 2006, dilution of a famous mark required that the plaintiff demonstrate actual dilution to prevail under section 1125(c) of the Lanham Act.  Moseley, 537 U.S. at 433.  However, Congress amended the applicable statute to only require that the defendant’s use was “likely to cause dilution.”  Starbucks II, 477 F.3d at 766.  The second circuit held it was not clear if the amended Lanham Act’s prohibition of dilution of famous marks was coextensive with New York law, the latter being the basis for the trial court not finding dilution of Starbucks’ marks.  Id. Therefore, the appeals court vacated the trial court’s judgment and remanded for further proceedings.  Id.

On Remand
The district court took back up the Starbucks case under the amended anti-dilution statute.  To demonstrate blurring of a famous mark, the amended Lanham act requires a court to consider all relevant factors including: “(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 use 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.”  Starbucks III, 559 F. Supp. at 476 (citing 15 U.S.C. § 1125(c)).

Degree of Similarity
The district court held that a plaintiff must demonstrate under this element that the marks are very or substantially similar.  The court pointed out that the defendant’s marks appear on packaging that is very different from the plaintiff, and the defendant used the rhyming term “Charbucks” with “Mister,” where Starbucks appears alone when used by the plaintiff, therefore the court found this factor to weigh against the plaintiff.  Id. at 477.

Distinctiveness of Starbucks Mark
Given the extent of the use of the Starbucks mark by plaintiff and the amount of money expended by the plaintiff in its marketing program, the court found this factor favored the plaintiff.  Id.

Exclusive Use by Starbucks
The fact that the plaintiff polices its registered marks, and the amount of money spent on using the mark both led the court to weight this factor in favor of the plaintiff.  Id.

Degree of Recognition of Starbucks’ Mark
Again, given the longevity and number of customers that visit Starbucks stores, the court found this factor to favor the plaintiff.  Id.

Defendant’s Intent to Associate with Starbucks’ Mark
The court finds that while the defendant intended to allude to the dark roasted quality of Starbucks brand coffees, the fact that the marks are different and the defendant had not acted in bad faith led the court to weigh this factor in favor of the defendant.  Id. at 478.  The court reasoned that the defendant used this mark to distinguish its own lines of coffee products, with the Mr. Charbucks brand being the dark roasted coffee as compared to other Wolfe’s Borough/Black Bear coffees.  Id.

Actual Association with Starbucks’ Mark
Here, the court found that while there was an association with the Starbucks’ mark to some respondents to the survey conducted by Starbucks, this association alone is not enough to find dilution.  Id. Instead, the court found that the defendant’s marks would not cause customers to confuse the defendant’s products with the plaintiff’s.  Rather, customers would tend to see the playful reference to a quality of Starbucks’ coffee – the dark roast – to distinguish one kind of Wolfe’s Borough brand coffees from other Wolfe’s Borough brand coffees.  Id.

Tarnishment Analysis
The amended Lanham Act also provides a specific definition for dilution by tarnishment: “[an] association arising from the similarity between a mark or trade name and a famous mark that harms the reputation of the famous mark.”  15 U.S.C. § 1125(c)(2)(C) (2008).  The court held that the plaintiff’s survey evidence could not support a finding of dilution by tarnishment, because the plaintiff’s survey was susceptible to multiple and equally likely interpretations.  Starbucks III, 559 F. Supp. at 480.  In addition, the court found that the defendant’s coffee products were not of actual poor quality, so any actual association between the defendant’s coffees and Starbucks would not likely be damaging to Starbucks.  Id.

As a result, Starbucks lost its case on remand for trademark dilution.  One might almost say that Starbucks has become so synomous with quality dark roasted coffees that their brand name can’t be diluted by other quality coffee brands.  Instead, the Starbucks mark is a victim of its own success in the world.  Add that to the list of reasons why a Starbucks on every street corner is not a good idea.

Note: This post was originally published in the Annual Intellectual Property Law Update, volume II, June 2009, Maryland State Bar Association Intellectual Property Section – Publications Committee.