Absolutely flawed

Michael Atkins, the estimable Seattle Trademark Lawyer (true, there are others!), writes on the subject both Matthew and I have written about at length here:  The outcome of the CHARBUCKS trademark case.  He says this:

Because trademark dilution doesn’t require an owner to show likelihood of confusion — and, therefore, provides super-trademark rights — the federal statute limits such protection to the owners of truly “famous” trademarks, which the statute defines as trademarks that are widely known on a nationwide basis. In other words, the dilution cause of action is only available to the owners of household names.

STARBUCKS is clearly one such name. Therefore, Starbucks Corp. was able to avail itself of the dilution cause of action against coffee roaster Wolfe’s Borough Coffee, Inc., d/b/a Black Bear Micro Roastery, which had named some of its coffee CHARBUCKS BLEND and MISTER CHARBUCKS. Starbucks argued the roaster’s doing so was intended to and did call to mind Starbucks’ famous STARBUCKS brand, so Starbucks was entitled to an injunction stopping such use. . . .

[I]n the end, the Second Circuit found that despite having super-trademark rights, Starbucks did not prove the roaster’s marks were likely to dilute the famous STARBUCKS brand.

Michael AtkinsIn making that decision, the Second Circuit weighed the factors set forth in the statute. It found the district court was not wrong when it concluded the parties’ marks were not very similar. It also found the district court was not wrong to conclude that Starbucks’ consumer survey was flawed because it did not reflect how the parties’ marks were used in the marketplace. Therefore, it found the survey “only minimally” proved that consumers actually associated the roasters’ marks with STARBUCKS.

The court found three of the statutory factors — distinctiveness, recognition, and exclusivity — favored Starbucks, but “the more important factors in the context of this case are the similarity of the marks and actual association.”

This led the Second Circuit to conclude: “Ultimately what tips the balance in this case is that Starbucks bore the burden of showing that it was entitled to injunctive relief on this record. Because Starbucks’ principal evidence of association, the Mitofsky survey, was fundamentally flawed, and because there was minimal similarity between the marks at issue, we agree with the District Court that Starbucks failed to show that Black Bear’s use of its Charbucks Marks in commerce is likely to dilute theStarbucks Marks.”

This goes to show that while potentially powerful — really powerful — the federal dilution statute does have its limits.

Right.  The only problem is that, let’s face it, no one has any idea what they are.

Because if you would have asked me what would be a good test case for the dilution cause of action based on blurring, I would have bet on this one.  And I say this as not-the-biggest-fan of dilution.  But it is the law.

But what is the law?

STARBUCKS and CHARBUCKS.  For coffee.  Not one of them, but both of them.  Second Circuit:  “Minimal similarity between the marks at issue.”

“Minimal”?

Maybe this is why some trademark lawyers get paid so well:  We seem to have no idea what we’re talking about.  The outcomes of so many of our cases are, it seems, completely unpredictable — big brand or small.  As for the business owners and the managers and the shareholders who want, who you’d think are entitled to, some degree of predictability in the law, so they could govern their decision-making on both enforcement and business issues?

Not happening.  Because this legal remedy “has its limits.”  Well, our client asks — what are these limits?

Whatever the last judge to sign off says they are.

Same thing with surveys, by the way.  Are these ever good enough?  It seems they’re always flawed, but why?  Are we trying to impose science on something that is, at the end of the day, completely resistant to quantification?  Matthew discussed the survey in more depth in his post here:

At the trial, “two matters of significance to [the last] appeal occurred,” according to the Second Circuit. One of those is that Starbucks introduced the testimony of a “scientist in the field of consumer research and polling.” Warren J. Mitofsky explained the results of a telephone survey he had conducted of “six hundred participants, designed to be representative of the United States population.”

The survey asked, “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?” 30.5 percent of participants answered “Starbucks.” Nine percent answered “coffee.” (Other common responses included “barbecue” or “charcoal”; “restaurant” or “grill”; “meat,” “steak,” or “hamburger”; and “money.”)  When the participants were asked “Can you name a company or store that might offer a product called ‘Charbucks’?,” 3.1 percent responded “Starbucks,” and another 1.3 percent responded “coffee house.” But more popular responses to the second question included: “grocery store”; “discount store”; “restaurant”; “department store”; and “hardware store” or “home improvement store.” . . .

[T]he sixth factor—actual association—went Black Bear’s way …, even if the results of the Mitofsky survey “constitute evidence of actual association”–because the District Court found Mitofsky’s survey flawed and ultimately unpersuasive on the whole. The survey had failed to present to participants the relevant marks in full context, and when compared to other survey results, a 30.5 percent association fell well short of the more common 70-90 percent associations of other dilution cases. The District Court fund that the actual association factor weighs “no more than minimally” in Starbucks’s favor. And considering the likelihood of dilution, the District Court emphasized that the statutory language leaves no doubt that the factors of association and similarity are “obviously important.”

Reading this, several things occur to me as explanations of what’s going on here.  One is that, yeah, no one — even someone engaged by a major company such as Starbucks and presumably unhampered by budgetary concerns — knows how to take what would seem to be a really obvious survey for consumer association of a word for a trademark infringement case.  No one.  This completely confounds me.

The second possibility is that science proved to us here that despite what our guts tell us about the association between these two marks, they’re not really so similar after all.  The only problem with that is that the Circuit said the survey really doesn’t tell us anything, being “flawed” and “unpersuasive.”

The third, a variation on the second, is that the Circuit was wrong, the survey is right, but its proponent is wrong, and so are we:  Consumers aren’t all confused, or likely to be a-blurred, or whatever the test exactly is, by the juxtaposition of CHARBUCKS coffee and STARBUCKS coffee in the market.

Which, personally, gut-wise (and believe me, I know whereof I speak regarding guts), gets me back to where I didn’t quite think I’d be, which is maybe dilution isn’t such a great cause of action after all.  Not only because it has its limits, but because those limits, if properly considered, are a lot tighter-in than we had thought when we got on the Save the Big Brands Bandwagon and bought into the “dilution solution.”  Because it’s one thing to say that dilution isn’t such a big problem, really, if you manage your brand properly; or that dilution is essentially a right in gross, contrary to basic trademark doctrine; or that it mainly acts as a catchall for the companies that need it least but who can’t really prove the real thing — trademark infringement….

That one’s thing, or three things.  But if, when put to the test, trademark dilution doesn’t work well enough to get CHARBUCKS out of the face of STARBUCKS, how much more are clients going to pay trademark lawyers to keep rapping on the manifold or lubricating the flywheel or whatever it is we’re doing to try to get it right before something really bad happens?

To us, I mean.  For the clients, of course, it’s already way past the bottomless cup of coffee — except not the deal you get at the diner for one of those.  More like, I guess, the Starbucks plan.

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Author:Ron Coleman

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