United States: Keep Your Claws Off The Krusty Krab

Last Updated: July 17 2018
Article by Sarah Bro

The US Court of Appeals for the Fifth Circuit affirmed a grant of summary judgment finding that a specific element from a television series—in this case, The Krusty Krab restaurant from SpongeBob SquarePants—can receive trademark protection, and that a real-life seafood restaurant by the name of The Krusty Krab would cause confusion with Viacom's common law rights in The Krusty Krab trademark. Viacom International, Incorporated v. IJR Capital Investments, L.L.C., Case No. 17-20334 (5th Cir, May 22, 2018) (Owen, J). 

Viacom's SpongeBob SquarePants cartoon series has run since 1999 and features a talking sea sponge who lives in an underwater pineapple and works at a fictional undersea burger joint called The Krusty Krab. This restaurant plays a central role in the animated series, as well as in two SpongeBob SquarePants feature films, a popular Broadway musical and various licensed products, including playsets, t-shirts, stickers, a video game and aquarium accessories. In 2016, Viacom sued IJR Capital Investments in district court after IJR filed an intent-to-use trademark application for the mark The Krusty Krab in connection with restaurant services and developed a business plan for potential investors in its planned Cajun seafood restaurant.

The district court granted Viacom's motion for summary judgment on its common law trademark infringement and Lanham Act unfair competition claims, finding that IJR's proposed use of The Krusty Krab would likely cause consumer confusion. IJR appealed, claiming genuine issues of fact. Applying de novo review, the US Court of Appeals for the Fifth Circuit examined whether Viacom properly established that it owns a legally protected trademark in The Krusty Krab, and whether there was a likelihood of confusion between the parties' respective The Krusty Krab trademarks.

The Fifth Circuit explained that, absent a US federal registration, in order to show that it owns legally protectable trademark rights in The Krusty Krab mark, Viacom must establish that (1) the fictional restaurant name is used as a source indicator of goods and services, and (2) the fictional name is sufficiently distinctive to qualify as a trademark. Before delving into these two issues, the Court set forth a threshold question of whether elements from within a television series—as opposed to the title itself—can even receive trademark protection.

Answering the threshold question in the affirmative, the Fifth Circuit noted that it had never looked at the precise issue at hand, but cited a prior Fifth Circuit decision suggesting a grant of trademark rights in an element of a TV show, with the key inquiry being whether the particular show element plays such a central role in the franchise that it becomes an indicator of origin as to goods or services. Moreover, the Court cited Second and Seventh Circuit precedent extending trademark protection to the General Lee, a fictional automobile from the popular Dukes of Hazard television series.

With this as a foundation, the Fifth Circuit determined that Viacom uses The Krusty Krab as a source-identifying trademark given that the fictional restaurant is integral to the SpongeBob SquarePants show by appearing in more than 80 percent of the episodes, in the films and the Broadway show, and in licensed products, thus generating millions of dollars in revenue for Viacom. The Court also agreed with the district court's finding that The Krusty Krab trademark has acquired distinctiveness through secondary meaning. Specifically, the Fifth Circuit found that four of the seven "secondary meaning" factors weighed in Viacom's favor: the length and manner of use of the trademark given the show's run for over 18 years; the volume of sales of licensed products and films, which have grossed $470 million; the amount and manner of advertising surrounding The Krusty Krab mark in particular; and the nature and use of the mark in media.

Turning to likelihood of confusion between the two The Krusty Krab trademarks, the Fifth Circuit found that Viacom met its burden of proving that, as a matter of law, IJR's intended use of The Krusty Krab for a real-life restaurant was likely to create confusion as to "source, affiliation, or sponsorship." On this point, the Court examined the applicable likelihood of confusion factors and found that:

  • Viacom owns a strong mark given its secondary meaning.
  • The two marks are so similar as to be "indistinguishable."
  • The parties have similar products and services in that both marks identify restaurants and, more importantly, Viacom could "naturally develop a real The Krusty Krab restaurant based on the fictional eatery" (as Viacom's subsidiary company did when licensing the Bubba Gump Shrimp Co. restaurant based on the fictional business in the film Forrest Gump).
  • Viacom was able to show instances of actual consumer confusion via a consumer survey.

Thus, the Fifth Circuit concluded that "[b]y creating a connection in the consumer's mind between IJR's restaurant-in-development and The Krusty Krab from SpongeBob SquarePants, there is an impermissible likelihood of confusion as to source, affiliation, or sponsorship."  

Keep Your Claws Off The Krusty Krab

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