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.

Fashionable Parodies: Where Does Free Speech End and Dilution Begin?

Where does First Amendment-protected parody end, and trademark dilution and/or infringement begin?

That is the interesting legal issue being discussed this week after Women's Wear Daily (WWD) published an article discussing the recent increase in parodies of well-known fashion designers.

As was mentioned in the WWD article, and has been commented on in fashion blogs such as Stylecaster and Refinery29, I explained that there are two separate legal theories at play here, functioning against the backdrop of the Constitution's guarantee of freedom of speech.

I also explained that these cases are highly fact specific and often depend on both the particular sensibilities of the brand involved, and the message being conveyed.

Likelihood of Confusion:  The first legal test is fairly straightforward, that is, would the ordinarily prudent consumer, when confronted with the accused item, likely believe that it originated from, was sponsored or endorsed by, someone else?  For example, would a prospective consumer confronted with one of Brian Lichtenberg's "FELINE" t-shirts (depicted left), believe that fashion brand Celine was behind it?

Dilution:  The second legal question is, assuming purely for argument's sake that there was NOT a serious likelihood of consumer confusion, is there still a likelihood that a famous brand will be diluted, either through tarnishment or through "blurring" of its ability to continue to function as a trademark?

In other words, the law holds that a famous brand can be diluted, even in the absence of any consumer confusion, if the famous brand is called to mind and tarnished.

An example of a case where federal courts found that harm to the famous Coca Cola brand was indeed likely from tarnishment include the famous "ENJOY COCAINE" poster.  

In that 1972 case which was decided decades before the Federal Anti-Dilution statute was passed by Congress, a New York court held that "to associate such a noxious substance as cocaine with plaintiff's wholesome beverage as symbolized by its "Coca-Cola" trademark and format would clearly have a tendency to impugn that product and injure plaintiff's business reputation, as plaintiff contends."

This holding has long suggested that a key part of the inquiry should focus on whether there is a salacious quality to the parody that injures the brand.

The First Amendment:  However, there is a third critical issue which is the First Amendment guarantees freedom of speech. Courts have long held that commercial activities do not fall within the "core" of political speech that the Founding Fathers intended. Consequently, commercial conduct can be more regulated than purely political speech.


Because the sale of a t-shirt with a parody logo emblazoned on it could function as a form of "speech," the first question looks to what exactly is being communicated by the intent of the parody, and is that message being effectively communicated?


In the case of Brian Lichtenberg's "FELINE" shirts, the shirt clearly is designed to call Celine's brand to mind, but it isn't really clear what the message is.  Merely "mocking" an established brand is not necessarily sufficiently political an act to warrant free speech protection.  Otherwise, the "ENJOY COCAINE" t-shirt would have been protected, and it wasn't.




Not all courts have found that a protected parody requires a clear political "message."

In a 2007 case, Louis Vuitton lost an attempt to stop a small company from selling "CHEWY VUITON" dog toys.  

The Fourth Circuit Court of Appeals in Virginia affirmed the dismissal of that case, holding that:  "[a] parody must convey two simultaneous -- and contradictory -- messages:  that it is the original, but also that it is not the original and is instead a parody.  This second message must not only differentiate the alleged parody from the original but also must communicate some articulable element of satire, ridicule, joking or amusement."  (emphasis added).

The Chewy Vuiton dog toy was not shown to be causing any form of consumer confusion, but was clearly designed to call Louis Vuitton's famous trademark to mind, and mock it.  There was no clear political message, but the absurdity of the item itself functioned as a mockery of the high end luxury brand.

Further, in part because a chewy dog toy is not a salacious item, there was really no "tarnishment" of the brand.  Ultimately, the parody was obvious to the observer, leaving Louis Vuitton without any form of legal remedy.  Indeed, the Chewy Vuiton dog toys are still available for sale on Amazon, and Louis Vuitton seems to have survived.

More troubling for Lichtenberg, however, might be his t-shirt mocking Cartier with "CANNABIS."  (seen left)

Cartier would seem to have a valid claim of dilution, as per the 1972 ENJOY COCAINE decision.

The key legal questions are fact specific: Will the particular parody cause confusion? If not, will it dilute the brand through tarnishment or blur the trademark's ability to function? And finally, will the public's right to freedom of speech trump the brand owner's perceived offense?

So, in conclusion, clever parodies of famous designers are certainly not new, and courts have long struggled with balancing the public's right in free expression, with the brand owner's right to protect its image.