Starbucks Corp., et al v. Wolfe's Borough
Filing
125
OPINION AND ORDER. For the foregoing reasons, the Court finds that Plaintiff has failed to carry its burden of demonstrating its entitlement to relief under the amended FTDA. Plaintiff's request for an injunction is denied. The Clerk of Court is respectfully requested to enter judgment in Defendant's favor and close this case. This Opinion and Order resolves docket entry no. 122. (Signed by Judge Laura Taylor Swain on 12/23/2011) (rjm)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
STARBUCKS CORPORATION, a Washington
corporation; and STARBUCKS U.S. BRANDS
INC., a California corporation,
Plaintiffs,
No. 01 Civ. 5981 (LTS)(THK)
-v-
WOLFE'S BOROUGH COFFEE, INC., a New
Hampshire corporation d/b/a BLACK BEAR
MICRO ROASTERY,
Defendant.
OPINION AND ORDER
APPEARANCES:
FULBRIGHT & JAWORSKI L.L.P.
By: Mark N. Mutterperl, Esq.
Jessica S. Parise, Esq.
666 Fifth Avenue
New York, NY 10103
Attorneys for Plaintiffs
SHEEHAN PHINNEY BASS
& GREEN, P.A.
By: Christopher Cole, Esq.
1000 Elm Street, P.O. Box 3701
Manchester, NH 03105-3701
Attorneys for Defendant
LAURA TAYLOR SWAU'J, United States District Judge
This action is now before the Court for resolution of the claims of Plaintiffs
Starbucks Corporation and Starbucks U.S. Brands LLC (collectively "Plaintiff') against
Defendant Wolfe's Borough Coffee, Inc., d/b/a Black Bear Micro Roastery ("Defendant" or
"Black Bear") for injunctive relief, brought pursuant to the federal Trademark Dilution Act as
amended, 15 U.S.C. §§ 1125(c)(1), (c)(2)(B) (the "FTDA"). The Court has jurisdiction pursuant
to 28 U.S.C. §§ 1331, 1332(a) and 1338(a).
Soon after this Court issued its initial Opinion and Order addressing Plaintiff's
claims, Starbucks Corp. v. Wolfe's Borough Coffee, Inc., No. 01 Civ. 5981 (LTS)(THK), 2005
WL 3527126 (S.D.N.Y. Dec. 23,2005) ("Starbucks I"), Congress passed the Trademark
Dilution Revision Act of 2005 ("TDRA") amending the FTDA. The United States Court of
Appeals for the Second Circuit vacated ===~in light of the enactment of the TDRA.
Starbucks Corp. v. Wolfe's Borough Coffee, Inc., 477 F.3d 765 (2d Cir. 2007) ("Starbucks If').
Having reconsidered Plaintiff's Lanham Act trademark dilution claim in light of the TDRA, the
Court found that Plaintiff had failed to carry its burden of demonstrating its entitlement to relief
on any of its federal and state trademark infringement, dilution and unfair competition claims
and ordered that judgment be entered in Defendant's favor. Starbucks Corp. v. Wolfe's Borough
Coffee, Inc., 559 F. Supp. 2d 472 (S.D.N.Y. 2008) ("Starbucks III"). Plaintiff appealed.
On appeal, the Second Circuit affirmed =~=:..== with respect to Plaintiff's
Lanham Act trademark infringement, state dilution and state unfair competition claims.
Starbucks Corp. v. Wolfe's Borough Coffee, Inc., 588 F.3d 97, 101 (2d Cir. 2009) ("Starbucks
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IV"). The Second Circuit vacated the Court's judgment with respect to Plaintiffs federal
trademark dilution claim, however, and remanded the case for further proceedings on Plaintiffs
federal claim of dilution by blurring. Id. In so doing, the Second Circuit found inappropriate
this Court's reliance on pre-TDRA Second Circuit decisions requiring a showing of substantial
similarity in connection with federal trademark dilution claims, id. at 107, observed that this
Court "may also have placed undue significance on the similarity factor in detennining the
likelihood of dilution in its alternative [dilution] analysis," id., and held that the absence of bad
faith is not relevant to the TDRA analysis of intent to associate, id. at 109.
The parties submitted additional briefs following the remand. The Court has
considered thoroughly all of the parties' arguments and, for the following reasons, finds that
Plaintiff has failed to carry its burden of demonstrating its entitlement to relief under the FTDA.
The Court's findings as to the material background facts of this matter, as
required by Rule 52 of the Federal Rules of Civil Procedure, are detailed in ===~.
DISCUSSION
The one remaining question on remand is whether Defendant's use of its "Mister
Charbucks," "Mr. Charbucks" and "Charbucks Blend" marks (the "Charbucks Marks") for one
of its blended coffee products is likely to dilute Plaintiff s "Starbucks" marks by blurring. The
FTDA provides, in pertinent part, that
Subject to the principles of equity, the owner of a famous mark that is
distinctive, inherently or through acquired distinctiveness, shall be entitled
to an injunction against another person who, at any time after the owner's
mark has become famous, commences use of a mark or trade name in
commerce that is likely to cause dilution by blurring ... of the famous
mark, regardless of the presence or absence of actual or likely confusion,
of competition, or of actual economic injury.
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15 U.S.c.A. § 1125(c) (West 2009). "Dilution by blurring" is an "association arising from the
similarity between a mark or trade name and a famous mark that impairs the distinctiveness of
the famous mark." 15 U.S.C.A. § 1125(c)(2)(B) (West 2009). Blurring is "the whittling away of
the established trademark's selling power and value through its unauthorized use by others."
Tiffany eNJ) Inc. v. eBay Inc., 600 F.3d 93, 111 (2d Cir. 2010) (internal quotations and citations
omitted). In other words, blurring "is the loss of a trademark's ability to clearly identify one
source." Miss Universe, L.P. v. Villegas, 672 F. Supp. 2d 575, 591 (S.D.N.Y. 2009) (citing
Hormel Foods Corp. v. Jim Henson Prods., Inc., 73 F.3d 497,506 (2d Cir. 1996»; see also New
York Stock Exchange v. New York, New York Hotel LLC, 293 F.3d 550,558 (2d Cir. 2002)
("Blurring occurs 'where the defendant uses or modifies the plaintiffs trademark to identify the
defendant's goods and services, raising the possibility that the mark will lose its ability to serve
as a unique identifier of the plaintiffs product"'); Louis Vuitton Malletier S.A. v. Haute Diggity
=~=::::::,
507 F.3d 252,265 (4th Cir. 2007) (Blurring involves an "association [that] is likely
to impair the distinctiveness of the famous mark" and, "[i]n the context of blurring,
distinctiveness refers to the ability of the famous mark uniquely to identify a single source and
thus maintain its selling power.").
The FTDA identifies six non-exclusive factors for consideration in the blurring
analysis: "(i) [t]he degree of similarity between the mark or trade name and the famous mark; (ii)
[t]he degree of inherent or acquired distinctiveness of the famous mark; (iii) [t]he extent to
which the owner of the famous mark is engaging in substantially exclusive use of the mark; (iv)
[t]he degree of recognition of the famous mark; (v) [w]hether the user of the mark or trade name
intended to create an association with the famous mark; [and] (vi) [a]ny actual association
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between the mark or trade name and the famous mark." 15 U.S.C.A § 1125(c)(2)(B) (West
2009).
These six factors are not exhaustive, and the court may consider all evidence
relevant to the ultimate question of whether the junior mark is likely to be associated with a
famous mark in a way that impairs the famous mark's distinctiveness. Id.; Starbucks IV, 588
F.3d at 109;
Playtex Products, 390 F.3d at 62 ("[D]istrict courts generally should not treat any
single factor as dispositive; nor should a court treat the inquiry as a mechanical process by which
the party with the greatest number of factors wins.") (citing Paddington Corp. v. Attiki Importers
& Distrib., 966 F.2d 577, 584 (2d Cir. 1993)). In the end, the Court's analysis of a blurring
claim "must ultimately focus on whether an association, arising from the similarity between the
subject marks, 'impairs the distinctiveness of the famous mark.''' Starbucks IV, 588 F.3d at 109
(internal citation omitted).
The Statutory Factors
At this stage of the litigation, there is no dispute that four of the six factors weigh
in Plaintiffs favor. They are: the distinctiveness of Plaintiffs marks, Plaintiffs exclusivity of
use, the high degree of recognition of Plaintiffs marks, and Defendant's intent to associate its
marks with the Plaintiffs marks. Starbucks IV, 588 F.3d at 106-110. On remand, this Court
focuses on the degree of similarity of the marks and the evidence of actual association between
the marks.
Similarity of the Marks
When detennining similarity for purposes of a dilution claim, courts must
consider "the differences in the way the [marks] are presented" in commerce. Starbucks IV, 588
F.3d at 106 (citing Playtex Products, Inc. v. Georgia-Pacific Corp., 390 F.3d 158, 167-68 (2d
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Cir. 2004)). Here, there is no evidence that Charbucks is ever used as a standalone term, and it is
unlikely that Charbucks "will appear to consumers outside the context of its normal use."
Starbucks N, 588 F.3d at 106. In commerce, the term Charbucks is always preceded or
followed by the terms "Mister," "Mr." or "Blend." Defendant uses the Charbucks marks in
conjunction with its Black Bear mark, a large black bear, or the figure of a walking man above
the words "Black Bear Micro Roastery." Starbucks IV, 588 F.3d at 106. These marks are not
similar to Plaintiffs highly recognizable siren mark, which does not appear on the Charbucks
product packaging. Id. Further, Defendant's packaging, which uses an entirely different color
scheme from that employed by Starbucks, identifies Black Bear as a "Micro Roastery" located in
New Hampshire.
Where the Charbucks marks are used on Black Bear's website, they are
accompanied by Black Bear's domain name, www.blackbearcoffee.com.ld. Thus, although the
term "Ch"arbucks is similar to "St"arbucks "in sound and spelling" when compared out of
context, the marks are only minimally similar as they are presented in commerce. Id.
Plaintiff cites to decisions finding other marks sufficiently similar to the
Starbucks marks to create a likelihood of dilution. Plaintiff argues that a finding of dilution is
likewise warranted in the instant case. (See PI.'s Opening Brief on Second Remand, pg. 5 n.6,
citing Bell v. Starbucks U.S. Brands Corp., 389 F. Supp. 2d 766 (S.D. Tex. 2005) (prohibiting
use of "Starbock" and "Star Bock" marks for beer), affd 205 Fed. Appx. 289 (5th Cir. 2006),
and Starbucks Corp. v. Lundberg, No. Civ. 02-948-HA, 2005 WL 3183858 (D. Or. Nov. 29,
2005) (finding "extensive and obvious" similarities between "Sambuck's" and "Starbucks"').)
In those cases, however, the Court found dilution where the junior marks were used on their
own, without contextual features distinguishing the junior mark from the senior mark. See, e.g.,
Bell, 389 F. Supp. 2d at 780 (finding that "Plaintiffs use of the words 'Star Bock' and
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'Starbock' alone violate numerous state and federal laws" but that "the 'Star Bock Beer' logo
with the 'Born in Galveston' wording as shown in Plaintiffs Exhibit 1, does not violate any
trademark or unfair competition laws"). Here, the Charbucks marks are used exclusively with
terms "Mister," "Mr." or "Blend" and in contexts dissimilar from the contexts in which the
Starbucks marks are used. The Court will not "ignore relevant evidence" of such distinguishing
contextual features. Starbucks IV, 588 F.3d at 107. The minimal degree of similarity between
the marks as they are used in commerce weighs in Defendant's favor.
Actual Association with the Famous Mark
Plaintiff has proffered, as evidence of actual association, the results of a
telephonic survey in which respondents were asked to react to the terms "Charbucks" and
"Starbucks." Of the 600 respondents surveyed, 30.5% said that they associated the term
"Charbucks" with "Starbucks," and 9% said they associated the term "Charbucks" with coffee.
Starbucks, 2005 WL 3527126, *9. When asked to name a company or store that they thought
might "offer a product called 'Charbucks,'" 3.1 % of respondents said Starbucks. Starbucks,
2005 WL 3527126, *5. These results constitute evidence of actual association.
The results of Plaintiff s survey show some association between the terms
Charbucks and Starbucks. However, the survey did not measure how consumers would react to
the Charbucks marks as they are actually packaged and presented in commerce. Further, the
percentage of respondents who indicated a mental association between the marks is relatively
small. In the cases relied on by Plaintiff, survey respondents typically made an association
between the marks between 70% and 90% of the time. See e.g., Visa Intern., 590 F. Supp. 2d at
1319 (73% of respondents said EVISA reminded them of Visa); Nike, Inc. v. Nikepal Intern.,
Inc., No. 2:05-cv-1468-GEB-1FM, 2007 WL 2782030, *4 (E.D. Cal. Sep. 18,2007) (87% of
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respondents said Nikepal reminded them of Nike); Lundberg, 2005 WL 3183858, at *8 (85% of
respondents thought of Starbucks when shown "Sambuck's Coffeehouse" and 70% said they
thought of Starbucks because the marks were so similar). Here, even stand-alone use of the core
term "Charbucks" drew only a 30.5% association response.
Plaintiff invokes the Ninth Circuit's decision in Jada Toys v. MatteI, Inc. to
demonstrate that lower survey numbers (28%) have been found significant. Jada Toys v. MatteI,
Inc., 518 F.3d 628,636 (9th Cir. 2008). In Jada Toys. the survey asked respondents who they
thought "puts out or makes" a product called HOT RIGZ. rd. Twenty-eight percent of those
responding said that they thought it was either made by MatteI, by the company that makes HOT
WHEELS, or that whoever made it required MatteI's permission to do so. Id. The Ninth Circuit
found that these survey results showed "significant evidence of actual association." rd. By
contrast, when asked a similar question, only 3.1 % of those responding to the survey in this case
said that they thought Plaintiff offered a product called Charbucks. Starbucks I, 2005 WL
3527126, at *5. While Jada Toys does confirm that association numbers in the lowest third can
be significant, it does little to bolster Starbucks' argument that a single-digit source confusion
indicator produced by a survey that did not present the relevant terms in context is probative of a
likelihood of dilution by blurring.
The Court finds, after careful consideration of the survey results and
methodology, that the actual association factor weighs no more than minimally in Plaintiffs
favor.
Likelihood of Dilution by Blurring
The ultimate analytical question before the Court is not simply whether there has
been an association between the marks. As the Second Circuit explained in Starbucks IV, the
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ultimate analytical question presented by a dilution-by-blurring claim is whether there is an
association, arising from the similarity of the relevant marks, that impairs the distinctiveness of
the famous mark. 588 F.3d at 109. The Court evaluates the non-exclusive statutory factors in
light of that ultimate question.
The Court is also mindful of the purposes and core principles of trademark law
when analyzing a blurring claim. It is settled law that trademarks do not create a "right-in-gross"
or an unlimited right at large. American Footwear Corp. v. General Footwear Co. Ltd., 609 F.2d
655,663 (2d Cir. 1979); see also 4 McCarthy on Trademarks § 24:11 (4th Ed. 2010) (collecting
cases). Federal anti-dilution law should not be read to "prohibit all uses of a distinctive mark
that the owner prefers not be made." Nabisco Inc. v. P.F. Brands, Inc., 191 F.3d 208,224 n.6;
see also 4 McCarthy on Trademarks § 24:67 ("[N]o antidilution law should be so interpreted and
applied as to result in granting the owner of a famous mark the automatic right to exclude any
and all uses of similar marks in all product or service lines.") Antidilution law has been called
"a scalpel, not a battle axe," and should be applied with care after rigorous evidentiary
examination by the courts. 4 McCarthy § 24:67.
As previously explained, the distinctiveness, recognition, and exclusivity of use
factors weigh in Plaintiffs favor. Indeed, Plaintiffs evidence on all three of these factors is
strong. None ofthe three, however, is dependent on any consideration of the nature of the
challenged marks or any defendant's use of any challenged mark. Thus, although these factors
are significant insofar as they establish clearly Plaintiff s right to protection of its marks against
dilution, they are not informative as to whether any association arising from similarity of the
marks used by Defendant to Plaintiffs marks is likely to impair the distinctiveness of Plaintiffs
marks.
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A fourth factor - intent to associate
also weighs in Plaintiffs favor, as
Defendant's principal testified during trial that, by using the term Charbucks, he meant to evoke
an image of dark-roasted coffee of the type offered by Starbucks.
Similarity of the marks and association between the marks are obviously
important factors. The statutory language leaves no doubt in this regard
dilution "is
association arising from the similarity between a mark or trade name and a famous mark that
impairs the distinctiveness of the famous mark." 15 U.S.C.A. § 1125 (c)(2)(B) (West 2009). It
is thus appropriate to examine carefully, in considering the significance of both the evidence of
similarity and the evidence of actual association, the degree to which any likelihood of dilution
by blurring has been shown to arise from similarity between Defendant's marks and those of
Plaintiff. As explained above, the marks being compared in this case are only minimally similar
as they are presented in commerce, and the evidence of association weighs no more than
minimally in Plaintiffs favor.
After considering all of the evidence and noting the dissimilarity of the marks as
used in commerce, the weakness of the survey evidence, and the fact that consumers encounter
Defendant's Charbucks term only in conjunction with other marks unique to Defendant, the
Court holds that the Charbucks marks are only weakly associated with the minimally similar
Starbucks marks and, thus, are not likely to impair the distinctiveness of the famous Starbucks
marks. In other words, Plaintiff has failed to carry its burden of proving that Defendant's use of
its marks, as evidenced on the record before the Court, is likely to cause dilution by blurring.
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CONCLUSION
For the foregoing reasons, the Court finds that Plaintiff has failed to carry its
burden of demonstrating its entitlement to relief under the amended FTDA. Plaintiffs request
for an injunction is denied. The Clerk of Court is respectfully requested to enter judgment in
Defendant's favor and close this case. This Opinion and Order resolves docket entry no. 122.
SO ORDERED.
Dated: New York, New York
December 23, 2011
~RSWAIN
United States District Judge
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