This past Friday, Starbucks received yet another blow in its 12-year long trademark dispute against Wolfe's Borough Coffee Inc. The Second Circuit affirmed U.S. District Judge Laura Taylor Swain's decision and found that Starbucks failed to prove that Wolfe Borough's "Charbucks," "Mister Charbucks," and "Mr. Charbucks" marks were likely to dilute its brand. As such, the three-judge panel denied Starbucks' request for an injunction against the family-owned, New Hampshire-based coffee company.
Under the Trademark Dilution Revision Act of 2006 (the controlling law in this case) courts are required to balance six factors to determine whether one mark is likely to dilute another: 1) the degree of similarity between the mark or trade name and the famous mark, 2) the degree of inherent or acquired distinctiveness of the famous mark, 3) the extent to which the owner of the famous mark is engaging in substantially exclusive use of the mark, 4) the degree of recognition of the famous mark, 5) whether the user of the mark or trade name intended to create an association with the famous mark, and 6) any actual association between the mark or trade name and the famous mark. See 1125(c)(2)(B). The TDRA factors are designed to determine whether one trademark is likely to confuse consumers by "blurring" the trademark of another brand.
The Second Circuit agreed with the District Court's analysis, finding that the lack of an actual association between the Charbucks and Starbucks marks outweighed the distinctiveness, exclusive use, and high recognition of the Starbucks mark. The central issue here was whether consumers were likely to confuse Charbucks for Starbucks.
To help show consumer confusion, Starbucks commissioned a 600-person telephone survey. Consumers were asked: 1) What is the first thing that comes to your mind when you hear the name Charbucks, spelled C-H-A-R-B-U-C-K-S? and 2) Can you name any company or store that you think might offer a product called Charbucks? Although "[t]he number one association of the name 'Charbucks' in the minds of consumers is with the brand 'Starbucks,'" the Second Circuit found that the District Court was correct to discount the survey. The survey only focused on consumer associations with the word "Charbucks" and not associations with the actual packaging of the Charbucks blends.
As reported by Law360, counsel for Wolfe's Borough stated, "The Second Circuit recognized what we have long believed: Black Bear's 'Charbucks Blend' and 'Mr. Charbucks' do not dilute any of Starbucks' marks. This is an important trademark case, establishing that dilution by blurring is very difficult to prove when the marks are dissimilar and when the evidence of actual association between the marks is weak, as it was here."
A representative from Starbucks commented, "We are respecting the court's decision."
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