In defining social capital, the authors modify definitions ...



Running Head: Trademark Infringement and Starbucks

Trademark and Infringement and Parody:

Illustrated by Claims Brought by Starbucks

Paula R. Davidson

Emporia State University

Abstract

This paper explores the legal issue of trademark infringement: its origins in the Lanham Act of 1946, its evolution through the Federal Trademark Dilution Act of 1995 and the Trademark Dilution Revision Act of 2006. The subject of trademark infringement and parody and various corresponding concerns are elaborated and illustrated by the examination of three legal claims brought by Starbucks U.S. Brands, LLC.

Starbucks Coffee Company (SSC), the dynamic international purveyor of coffee, has more than 10,000 stores worldwide, over 100,000 employees and serves nearly 25 million customers every week. Starbucks U.S. Brands, LLC (Starbucks) is an SCC owned company that currently holds and owns the property rights to approximately 120 patents and trademarks. Starbucks is headquartered in Minden, Nevada.

Starbucks has been involved in multiple lawsuits; three high profile cases involved trademark infringement. These cases are investigated here to explain the concrete application of trademark law. First we will look at the development of the laws themselves. These laws and cases are summarized and simplified; an exhaustive study is beyond the scope of this paper.

The legal history of United States federal trademark protection is rooted in the Lanham Act of 1946. The Lanham Act remains the governing law in federal trademark cases. Trademark is defined as “a distinctive design, picture, emblem, logo or wording affixed to goods for sale to identify the manufacturer as the source of the product” (, retrieved April 18, 2008). The Lanham Act defines the scope of a trademark, the process by which a trademark may be registered with the federal government and penalties for trademark infringement. The historic purpose of this act was to protect consumers from confusion surrounding the source of goods. This arrangement is commonly referred to as the ‘confusion’ doctrine. The Supreme Court has supported this view; trademark law exists primarily to preempt consumer confusion with the protection of the mark itself, as property of the holder, being secondary. Trademarks foster a trust in the consumer that he will be purchasing quality goods, not deceived by counterfeit products or imposter manufacturers. Simultaneously, the trademark owner is protected from counterfeiters attempting to pass off goods as those produced by an established brand. Both the consumer and the owner benefit.

Another key concept exists in trademark law. This second doctrine is called ‘dilution.’ Dilution first entered legal discourse in the United States in 1927 when Frank Schechter authored “The Rational Basis of Trademark Protection.” In this article, Schechter proposed the notion that protection of ‘uniqueness’ was paramount to protection from consumer confusion. Soon after the enactment of the Lanham act, individual states began to enact anti-dilution statutes. The first of these was Massachusetts in 1947 and by 2000 thirty-four states had some version of anti-dilution law. In 1995 the dilution concept entered into federal law with the passing of the Federal Trademark Dilution Act (FTDA).

The FTDA enabled trademark owners to take legal action based on the dilution of the distinctiveness of their mark; they must not allege consumer confusion. Senator Orrin Hatch, who introduced the dilution bill to the Senate, defined dilution thusly, “the lessening of the capacity of a famous mark to identify and distinguish goods or services, regardless of the presence or absence of competition between the owner and other parties, or the likelihood of confusion, mistake, or deception” (Zando-Dennis, 2005). This causes a shift in focus from protection of the consumer to protection of the mark itself, imbuing the mark with property-like qualities. Dilution can be of two varieties, ‘blurring’ and ‘tarnishment.’

The first of these, blurring, acts to weaken the distinctiveness of the mark. The Subcommittee on Courts and Intellectual Property of the House Judiciary Committee gave examples of potential blurring: “Dupont Shoes, Buick aspirin, and Kodak pianos” (Zando-Dennis, 2005).

The second variety of dilution, tarnishment, happens when association with something distasteful or inappropriate weakens a mark. To clarify, the Dallas Cowboy Cheerleaders (DCC) exemplify the concept when they brought a claim against the film company that made the pornographic film “Debbie Does Dallas”, in which actresses wore the DCC uniform. Often tarnishment stems from pornographic or bathroom humor; any tampering with the positive image of a mark can be the basis for tarnishment.

Critics of the FTDA find several issues of concern with the law. The first of these is that the concept of tarnishment does not appear anywhere in the Act, let alone a definition of the word. The concept is borrowed from state statutes and common law, yet federal courts interpret the Act to include trademark tarnishment. The second concern is that the language specifies that only famous marks are eligible for protection, causing critics to maintain that the law has a corporate-centered agenda. The third criticism of the FTDA is that tarnishment is ambiguous and subjective. It is vague and therefore open to abuse by large powerful corporations and perhaps biased judges. Another facet, and conceivably the one that causes the most unease, is the narrow fair use doctrine afforded by the FTDA.

Fair use for trademark, according to the FTDA, protects newsworthy information, noncommercial expression and comparative commercial advertising. Comparative commercial advertising has two uses. The first is called classic fair use. An example would be “Pepsi tastes better than Coke.” The second is termed nominative fair use, which is demonstrated in the company name, “Paula’s Toshiba Repair.” Paula repairs Toshibas; it is descriptive of her service. Both enable a competitor to advertise her product. These three caveats are the extent to which the FTDA grants trademark fair use. In contrast to fair use in copyright, which is highly discussed and debated, trademark fair use is an underdeveloped topic. Case law is ridden with conflict as to whether fair use warrants a distinct defense in trademark litigation.

Another issue of concern raised by the FTDA is the idea of actual dilution versus the likelihood of dilution. Many state statues enacted prior to the FTDA required the plaintiff to show only the likelihood of dilution. Some courts ruled as if the FTDA followed the same standard. However, the language in the FTDA states that the trademark must indeed cause dilution. Other courts operated under this standard, causing an inconsistent application of law. This discrepancy was eventually resolved when, in 2003, the Supreme Court ruled in Moseley v. V Secret Catalogue, Inc.

The United States Supreme Court case Moseley et al., DBA Victor’s Little Secret v. V Secret Catalogue, Inc., et al. (Moseley) was decided on March 4, 2003. Moseley was the first time the Supreme Court decided an FTDA dilution case. The Court unanimously decided that the FTDA “unambiguously requires a showing of actual dilution, rather than a likelihood of dilution” (Starbucks v. Wolfe’s Borough Coffee No. 01Civ.5981). Due to the Moseley decision, it is now necessary for the plaintiff to provide proof of actual harm, rather than merely the likelihood of harm, before an injunction will be granted.

Moseley has made injunctions more difficult for trademark owners to achieve. However, there are still criteria that must be met for the defendant to be protected. The first is that the defendants mark must be a parody. That is, it must poke fun at, or comment on, the plaintiff’s Senior Mark. A second criterion is that the Junior Mark still must not confuse the consumer. The Junior Mark may be similar, but must convey that it is not the original. In addition, the Junior Mark must be non-commercial. In summary, the more obvious, or the funnier the parody, the more likely that courts will rule in favor of the defendant Junior Mark.

Well-known, or famous, to use the language of the FTDA, trademarks are crucial players in shaping social discourse. As such, they are inherently targets for parody. Advocates for free speech argue that parody should be a defense to trademark infringement. Several courts have addressed parody in trademark infringement cases and their rulings have reached different conclusions. Some deemed that parody would confuse the consumer and ruled for the plaintiff. Others favored the notion that parody is a communication of an idea or point of view and ruled for the defendant. Thus, it is seen that parody is not an automatic defense in cases of trademark infringement or dilution.

Parody as free speech is complicated when it meets the FTDA fair use exception of non-commercial use. Defendants are especially open to injunctions when their parodies are on commercial products. The FTDA does not consider how large an economic impact these products have, only that they exist in the marketplace. Let us now take a close look at the first of our Starbucks cases to more fully understand the FTDA in practice.

In discussing this case, remember that it took place before the 2003 Moseley decision. In April 2000, Starbucks sued the artist Kieron Dwyer. The cartoonist had created a parody based on the Starbucks Siren logo. He added nipples and a navel ring. He gave her a cup of coffee in one hand and a cell phone in the other. The words ‘Starbucks Coffee’ in the original logo were changed to ‘Consumer Whore’ in the parody. Stars in the logo became dollar signs in the parody. Dwyer’s parody logo still exists on a number of websites such as . (Retrieved April 25, 2008).

Dwyer posted the parody on his website and put it on several items which were for sale via the site. Dwyer’s legal advocacy believed that Starbucks would send a cease and desist letter. Starbucks did not and immediately sued for trademark and copyright infringement, unfair competition and trademark dilution by tarnishment. The court recognized Dwyer’s creation as a legitimate parody and protected it under the First Amendment. However, they granted a preliminary injunction based on the plaintiff’s claim of dilution via tarnishment.

Ultimately, the court found that Dwyer’s cartoon was a protected form of free speech but the sale of any item with the parody, and the presence of the parody on a website that linked to merchandise for sale, constituted a commercial aspect and, hence, dilution. The first court order allowed Dwyer to keep the parody on his website, but the court later ordered that he remove it entirely. The case was settled out of court because Kieron Dwyer possessed insufficient funds for trial and appeal.

We will now look at our second illustrative Starbucks case, also pre-Moseley. Starbucks Corp. v. Wolfe’s Borough Coffee, Inc. Wolfe’s Borough Coffee, Inc. DBA Black Bear Micro Roastery (Black Bear) was selling blends of coffee using the name “Charbucks Blend,” “Mister Charbucks,” or “Mr. Charbucks.” In 1997, Starbucks contacted Black Bear, claimed their name was dilutive to the Starbucks brand and demanded that Black Bear stop using the Charbucks name. Black Bear continued to use the term and Starbucks sought injunction, claiming federal trademark infringement and unfair competition, federal and state trademark dilution and unfair competition under common law. Following is a discussion of each of these claims.

Under the Lanham Act, in order to claim federal trademark infringement, a plaintiff must prove consumer confusion. In the Starbucks v. Wolfe’s Borough Coffee case, eight factors were weighed to determine whether consumer confusion was present. These factors, along with summary of the court discussion follow:

1. The strength of the plaintiff’s mark

a. Weighs in favor of Starbucks

2. The degree of similarity between the two marks

a. Charbucks and Starbucks rhyme, imagery is distinctly different, Black Bear does not use Charbucks as a stand-alone phrase to promote its business

b. Although similarity is strong, seen contextually this factor weighs only slightly in favor of Starbucks as an indicator to consumer confusion

3. The proximity of the products

a. Weighs in favor of Starbucks

4. The likelihood that the owner will bridge the gap

a. Weighs in favor of Starbucks

5. Evidence of actual confusion

a. Results from a telephone survey reported that a mere 3.1% of 600 interviewees named Starbucks as a possible source for a product named Charbucks

b. Weighs in favor of Black Bear

6. Defendant’s good faith in adopting the mark

a. Evidence does not support that Charbucks was adopted to intentionally mislead consumers into believing the product was one from Starbucks

b. Neutral or slightly weighs in favor of Black Bear

7. The quality of the defendant’s product

a. Both companies take great care in their coffee roasting and quality control

b. Neutral

8. The sophistication of the consumers

a. Distinctive packaging and separate points of sale make it unlikely that a consumer will mistake Charbucks for Starbucks

b. Weighs in favor of Black Bear

The court decided that based on these eight factors, as well as based on a holistic view of the question of confusion, that Starbucks failed to prove consumer confusion, losing its claim to federal trademark infringement.

Starbucks also claimed dilution under federal and state statutes. Under the FTDA, the plaintiff must show the following to be true: that the Senior Mark is famous, that the defendant is using the Senior Mark in a commercial way, that the defendant began use after the Senior Mark became famous, that the defendants use dilutes the association between the Senior Mark and its goods and services. Both parties in the Black Bear case agreed on the first, second and third FTDA requirements for dilution. The question that remained was whether “Charbucks” diluted Starbucks by blurring, as described above. Dilution is defined as “the lessening of the capacity of a famous mark to identify and distinguish goods or services, regardless of the presence or absence of (1) competition between the owner of the famous mark and other parties, or (2) likelihood of confusion, mistake, or deception” (Hofrichter, 2007). The court decided that the use of “Charbucks” did not affect the Senior Mark, Starbucks, or its relationship to its goods and services. There was not enough evidence to support dilution by blurring or tarnishment. The FTDA requires proof of actual dilution, which the plaintiff failed to do. The state of New York merely requires the likelihood of dilution; the courts ruled that the plaintiff failed to show this as well.

The standard for unfair competition under common law is the same as for federal trademark infringement discussed above. Therefore, Starbucks lost this claim, too. Starbucks lost all three of its claims for injunction; the judgment was entered in the favor of Black Bear.

Starbucks Corp. v. Lundberg is our third illustrative case. In 2000, Samantha Lundberg bought a coffee shop in Astoria, Oregon. In 2001, Lundberg renamed the coffee shop “Sambuck’s Coffeehouse.” At that time, Starbucks coffee outlets were present and widely recognized throughout Oregon. Lundberg herself acknowledged having visited a Starbucks. In March of 2004, Starbucks counsel contacted Lundberg, explained that “Sambuck’s” infringed and diluted the famous Starbucks trademark and requested that she change the name of her coffee shop. Lundberg continued to operate and advertise her business under the name “Sambuck’s.” In 2005 the dispute went to court.

Starbucks claimed trademark dilution, trademark infringement and unfair competition. The dilution and unfair competition claims were brought under Oregon law and will not be addressed here, other than to mention that both of these claims were supported by the court and ruled in favor of the plaintiff, Starbucks. The plaintiff’s claim that Lundberg’s use of the name “Sambuck’s” infringed on Starbucks’ trademarks involved federal law will be addressed in some detail.

The Lanham Act requires that plaintiffs provide evidence that they own a protectable trademark. At that time, Starbucks owned more than sixty United Sates trademark registrations. This fact is undisputable. As discussed in the Black Bear case above, under the Lanham Act, in order to claim federal trademark infringement, a plaintiff must prove consumer confusion. A set of criteria, similar yet distinct from the factors considered in Black Bear, was applied to demonstrate confusion in the Lundberg case. These eight factors are listed and summarized below.

1. Similarity of the marks

a. The court found that the marks are quite similar in sight, sound and meaning. Seventy percent of survey respondents thought that “Sambuck’s Coffeehouse” brought Starbucks to mind.

b. Weighs in favor of Starbucks

2. The relatedness of the two companies’ services

a. The two companies sell competitive goods and services

b. Weighs in favor of Starbucks

3. The marketing channels used

a. Both companies sell their goods through stand-alone retail outlets

b. Weighs in favor of Starbucks

4. The strength of plaintiff’s marks

a. The expansive nature of Starbucks make its mark very strong, the Starbucks mark is also fanciful – that is, it does not describe or allude to coffee in any way. Fanciful marks are afforded greater protection under the Lanham Act. The high number of marks that Starbucks owns also contributes to protection under the Lanham Act.

b. Weighs in favor of Starbucks

5. Defendant’s intent in selecting its marks

a. Intent in adopting a similar mark indicates a higher likelihood of consumer confusion.

b. Weighs in favor of Starbucks

6. Evidence of actual confusion

a. Not applicable under the 2005 version of the Lanham Act.

b. Weighs in favor of Starbucks

7. The likelihood of expansion into other markets

a. The two companies already compete in a direct market. It is possible that Lundberg would expand or license the “Sambuck’s” name to other competitors

b. Weighs in favor of Starbucks

8. The degree of care likely to be exercised by the purchasers

a. Consumers exercise a low amount of care when making inexpensive purchases such as coffee

b. Weighs in favor of Starbucks

The plaintiff, Starbucks, won all eight criteria for determining consumer confusion. It was found that Lundberg violated the Lanham Act and was guilty of federal trademark infringement.

It is important to note that Lundberg’s assertion of fair use held no weight. There is no right to use an individual’s name in business if there is consumer confusion present. Samantha Lundberg’s previous surname was Buck.

Starbucks won on all three claims in the Lundberg case and an injunction was ordered.

Largely in response to the aforementioned 2003 Moseley case, the FTDA was revised in 2006. The Trademark Dilution Revision Act of 2006 (TDRA) was enacted on October 6, 2006. The major changes are highlighted here; a full discussion of the TDRA is beyond the scope of this paper.

First, and perhaps most widely discussed, the TDRA established the ‘likelihood’ standard for claims of dilution. This reversed the impact of the Moseley decision and subsequently shifted the burden back to the defendant. The TDRA also added tarnishment actions and provided a definition for tarnishment. The Revision redefined the word ‘famous,’ narrowed the scope to eliminate marks in niche markets and accepted as famous only widely recognized marks. The Act also broadened the spectrum of protectable marks to include not only distinctive marks, but also those that became distinct through exposure. Lastly, the TDRA lengthened the fair use clause. A clause was added to protect parody, but only if the Junior Mark is not used as a designation for its own goods or services.

Let us refer back to the Dwyer case. Pre-TDRA, the court forbid Dwyer to post his parody logo on his website because the site also sold products, which gave the logo a commercial nature. If this case took place after the TRDA, it is likely that Dwyer again would have been forbidden to post his logo, but for slightly different reasons. Viewed through the lens of the revision, Dwyer’s logo designated his goods and/or services, rendering it unacceptable.

Post TDRA, Starbucks again claimed dilution (against Black Bear) under the revised likelihood standard. The court determined that the likelihood of dilution was examined in regard to dilution under New York State law in the preceding trial. The judgment was vacated.

This survey into the three trademark infringement cases brought by Starbucks serves to illustrate how the Lanham Act, the Federal Trademark Dilution Act and the Trademark Dilution Revision Act affect both large corporations and smaller companies and individuals. Viewing actual cases brings legal laws and theories into focus and provides understanding of how they function in practice. The laws examined here have their advocates as well as their critics. For the student of library and information management, a cursory knowledge of trademark, parody and the various perceptions surrounding them is a valuable asset.

Annotated References

Blanke, Jordan M. (2003). Victor’s little secret: Supreme Court decision means more protection for trademark parody. Fordham Intellectual Property, Media & Entertainment Law Journal, 1053.

This article expounded on the Moseley case and how the Supreme Court decision to require proof of actual dilution serves to return a balance to infringement law. A history of pre-FTDA cases was offered, which served to further understand the implications of the law. The article was relatively unbiased and was a good introduction to the Moseley case.

Hofrichter, Jesse A. (2007). Note: Tool of the trademark: Brand criticism and free speech problems with the Trademark Dilution Revision Act of 2006. Cardozo Law Review, 1923.

This note was informative because it explained the TDRA by using a fictitious case scenario in layman’s terms. Dilution was well discussed. The legal issue of ‘chilling’ was also addressed, although this author decided to not discuss the topic.

Lee, Thomas R. (2004) Demystifying dilution. Boston University Law Review, 859.

This article was very expansive. Dilution was extremely well dissected. The article was not meant for a non-legal audience and was therefore difficult to read. It did, however, serve as a source of clarification for other literature.

Schlosser, Sarah Mayhew. (2001). Note: The high price of criticizing coffee: The chilling effect of the Federal Trademark Dilution Act on corporate parody. Arizona Law Review, 931.

This note took a close look at the Dwyer case. It also explored the ‘chilling’ effect and noncommercial use, which was good for an overall understanding of the topic.

Zando-Dennis, Julie. (2005). Note: Not playing around: The chilling Power of the Federal Trademark Dilution Act of 1995. Cardozo Women’s Law Journal, 599.

This note offered a thorough look at the FDTA. It was a great base for the topics of parody and trademark. It was somewhat biased.

Starbucks Corporation, a Washington corporation; and Starbucks U.S. Brands Corporation, a California Corporation v. Samantha Lundberg, an individual dba Sambucks Coffee, No. Civ. 02-948-HA (D. OR. November 29, 2005).

This was the actual Lundberg case document. It was imperative for an exploration of the topic. It was easy to read and understand.

Starbucks Corporation, a Washington corporation; and Starbucks U.S. Brands Corporation, a California Corporation v. Wolfe’s Borough Coffee, Inc., a New Hampshire corporation dba Black Bear Micro Roastery, No. 01Civ.5981 (LTS)(THK) (S.D. N.Y., December 23, 2005).

This was the actual Black Bear case document. It too was essential for this paper. The language in this case was much more difficult for the layman to grasp.

Starbucks Corporation, a Washington corporation and Starbucks U.S.Brands, L.L.C., a Nevada limited liability company v. Wolfe’s Borough Coffee, Inc., a New Hampshire corporation dba Black Bear Micro Roastery, Docket No. 06-0435-CV (C.A.2 N.Y. February 15, 2007)

This was the second case document from the Black Bear case.

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