Starbucks Loses Big Against CHARBUCKS in the Court of Appeals

Starbucks lost a significant trademark appeal before a panel of three judges of the U.S. Court of Appeals for the Second Circuit in a case that it had brought against a small coffee shop that had named itself "CHARBUCKS".

Starbucks had filed a trademark infringement and dilution suit in federal court in New York against Black Bear Micro Roastery, which is operating a "CHARBUCKS"-named coffee shop in Tuftsboro, New Hampshire.

Starbucks' legal claim rested almost entirely on the theory that the play on the word STARBUCKS by  Black Bear constituted dilution by blurring.

Blurring is a species of trademark dilution that does not require that consumers are confused into thinking that the Plaintiff makes, endorses or sponsors the Defendant's products or services, but merely that the unauthorized use is likely to "blur" the mark's distinctive quality.

Blurring is distinct from the tarnishment theory of dilution, which seeks to determine if the famous mark is being called into disrepute by association with unsavory themes or words.

After a two day bench trial, the District Court rejected Starbucks' evidence, and found that the Defendant's use was not likely to blur the fame or distinctiveness of the famous Seattle coffee brand.

Starbucks subsequently appealed, and this week, a panel of three judges unanimously agreed that Starbucks had failed to carry its burden of proof at trial.  Starbucks has said that it respects but disagrees with the panel's decision.  Starbucks may seek review by the entire Circuit Court, in a rare but not unprecedented legal maneuver.