Starbucks Charred Again

For those of you who enjoy a fun case, the saga of Starbucks v. Wolfe’s Borough Coffee “WBC” is for you. During the course of this epic ten year battle pitting the famous international coffee purveyor against the small New England roaster, the law of trademark dilution has been analyzed, argued and then revised by the Trademark Dilution Revision Act of 2006 “TDRA.” A manufacturer and retailer of Mister Charbucks and Charbucks Blend coffees, WBC was sued by Starbucks in 2001 for trademark infringement, dilution and unfair competition. Starbucks sought an injunction preventing use of the Charbucks marks. The District Court ruled in favor of WBC and Starbucks appealed to the 2nd Circuit.

Pending the appeal, the TDRA of 2006 was enacted setting forth a dilution standard of causality without regard to the presence or absence; of actual or likely confusion, of competition, or of actual economic injury. The Act further redefined dilution by blurring as an association with the famous mark that impairs its distinctiveness setting forth six factors for the court to consider (i) The degree of similarity between the mark or trade name and the famous mark. (ii) The degree of inherent or acquired distinctiveness of the famous mark. (iii) The extent to which the owner of the famous mark is engaging in substantially exclusive use of the mark. (iv) The degree of recognition of the famous mark. (v) Whether the user of the mark or trade name intended to create an association with the famous mark. (vi) Any actual association between the mark or trade name and the famous mark.

Following enactment of the TDRA, the 2nd Circuit remanded the case back to the District Court for a new determination.  The District Court again denied Starbucks relief and it again appealed the 2nd Circuit.  Finding that the District Court erred in requiring a substantial similarity between the marks, the Appeals Court stated that the inclusion of “degree of similarity” was only one of six factors and that even a low degree of similarity would not categorically bar a dilution by blurring claim. The Court also found error by requiring “bad faith” necessary for the intent to associate factor.

On remand the District Court concluded the same result, no dilution by blurring.  On appeal, Starbucks argued error on the factual findings of minimal similarity and weak association. Finding that the importance of each of the six factors varies depending upon the case, the Appeals Court stressed that dilution analysis was not an inflexible, mechanical test, but based on evidence of use and commercial impression. Here, WBC used Mister Charbucks in plain text and the Charbucks Blend marks in colors and appearance associated with its packaging and website. The association created was found to be minimal. Although there was testimony of a WBC executive regarding knowledge of Starbucks brand, such did not serve as an admission for blurring purposes. Further, a survey presented by Starbucks failed to consider the commercial impression of the marks with regard to association.  The survey failed to take into account the use of  “Mister” or “Blends” with the Charbucks marks.  Therefore it was not clear error to discount the survey results showing an association. Click here for the 2013 Court of Appeals for the Second Circuit decision that may provide final resolution of this matter.

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