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Fictional restaurant wins trademark battle: The Krusty Krab

Posted in Infringement, Mixed Bag of Nuts, Squirrelly Thoughts, Television, Trademarks, USPTO

Who lives in a pineapple under the sea?

If you know the answer to that theme-song question, you’ve probably seen, or at least heard of, the popular cartoon SpongeBob SquarePants. It is one of the highest-rated and most-watched animated series to air on television. Many of us, myself included, grew up watching it on Nickelodeon since the early 2000s (or watched our kids watch it) (or still watch it as adults).

For those of you who are less familiar, the series revolves around SpongeBob, a yellow sea sponge, who lives in a pineapple and works as a fry cook at the Krusty Krab, in the underwater city of Bikini Bottom. The series follows the adventures of SpongeBob and his various friends and co-workers, including Patrick, a friendly starfish who lives under a rock, Squidward Tentacles, SpongeBob’s ill-tempered neighbor, and Sandy Cheeks, a squirrel from Texas. Another frequent character is Mr. Krabs, the penny-pinching crustacean and owner of the Krusty Krab.

Krusty Krab & Patrick

The Krusty Krab restaurant, famous in Bikini Bottom for its Krabby Patty burgers, recently became embroiled in a trademark dispute.

hou_food_160201_thekrustykrab_nickelodeon

A couple years ago, a real-life, above-water company IJR Capital Investments filed an intent-to-use trademark application (Serial No. 86470477) for the mark THE KRUSTY KRAB for “restaurant services.” Viacom (the distributor of the show and parent company to Nickelodeon) objected through a cease-and-desist letter to IJR, asking it to withdraw its trademark application and change the name of its restaurant. IJR persisted with its application and its plans to open a restaurant under that name. Eventually, Viacom filed a complaint in federal court (the Southern District of Texas), alleging various claims including trademark infringement and dilution. Viacom moved for summary judgment, which the court recently granted in part. The court granted SJ in favor of Viacom for trademark infringement, but not dilution.

Although Viacom had no federal trademark registration or application for “The Krusty Krab,” the court explained it was protectable as a common-law trademark owned by Viacom, in part because Viacom had presented sufficient evidence of acquired distinctiveness. The court also explained that trademark protection may extend to ingredients of popular television shows that the public directly associates with the plaintiff or its products, such as characters or design elements. For example, the court cited cases holding that common law trademark protection applied to the words “Kryptonite,” (a fictional radioactive compound in the Superman series) and the “Daily Planet” (a fictional newspaper where Superman works), because they were a “staple of the Superman character and story” and “regularly appeared on licensed consumer merchandise over the years.”  Order at 6 (citing DC Comics v. Kryptonite Corp., 336 F. Supp. 2d 324 (S.D.N.Y. 2004); DC Comics v. Powers, 465 F. Supp. 843 (S.D.N.Y. 1978)).

As for likelihood of confusion, the court focused on the strength of Viacom’s mark, the identity of the marks with the same misspellings, and the similarity of the restaurant settings. The court was also persuaded by a consumer survey, showing that 30% of respondents believed that Viacom would operate, approve, or be affiliated with a “Krusty Krab” restaurant. (As a related example, the court also referred to the Bubba Gump Shrimp Company, a worldwide restaurant chain inspired by the 1994 film Forrest Gump, and licensed by Viacom’s subsidiary Paramount Pictures.) In addition, there was evidence that IJR was aware of Viacom’s mark prior to filing the trademark application.

Aside from its legal analysis, the court also sprinkled in some hilarious but decidedly on-point footnotes with SpongeBob quotes. For example, to illustrate the court’s point that trademark rights arise from use, and do not require a trademark registration, the court quoted SpongeBob:  “You don’t need a license to drive a sandwich.” The court also predicted that SpongeBob’s reaction to Viacom’s lack of briefing on certain claims would be: “Aw, tartar sauce!”

This is an interesting case study in trademark protection for fictional story elements in the entertainment field, which will likely be followed closely by those in the industry. And this case is not over yet–IJR’s owner Javier Ramos has vowed to appeal–and if that doesn’t work, Ramos says he’d consider changing the restaurant name to the Crusty Crab. Reading the sea leaves here, based on the decision, it’s unlikely that either Viacom or a court would be satisfied with a minor spelling change. Stay tuned for updates.