David and Goliath: Did Charbuck Infringe on Starbucks’ trademark rights?

Started in 1971 at a cafe in Seattle, today, Starbucks is the world’s largest coffee franchise with more than 28,000 branches in 75 countries.

Some of the coffee prices paid by consumers around the world are used to protect Starbucks’ brand and its value. Many coffee shops, such as Sambuck’s in a small American town and Xingbake, which have been widespread in China, have been renamed after losing their trademark dispute with Starbucks. 

On the other hand, there was a case in which a local shop prevailed in a trademark infringement Starbucks after 12 long years of a legal battle with Starbucks. Black Bear, a small cafe in Tuftonboro, New Hampshire is a local cafe, run by Jim and Annie Clark. Their primary mode of sale was through Internet orders, but they also sold coffee at several New England supermarkets and cafes around the state. In 1997 Black Bear created the ‘Charbucks Blend’–the shop’s darkest roast. This exceptionally dark roast was made available at the request of customers and was sold using the label ‘Charbucks.’

In appearance, Black Bear’s Charbucks packaging material is printed in black and white with a black bear with the phrase ‘Mr. Charbucks’ or ‘Charbucks Blend’ written under the logo. Fonts used for the brand are also different from Starbucks. The critical issue, in this case, was brand dilution for Starbucks; however, upon examination, the courts ruled that there is no substantial brand dilution for Starbucks here when considered within the framework of the New York State law. 

In order for a trademark to be likely to cause a trademark dilution on another’s trademark, there must be 1) a degree of similarity between the trademark or the trade name and the brand name in question 2) the inherent or acquired specificity of the famous mark 3) degree of use 4) recognition of the famous mark 5) whether the user of the trademark or trade name in question attempts to show the association with the famous mark.

In this case, the court found that strong brand power is undoubtedly in Starbucks’ favor, but the similarity between the two brands stop there. In particular, because the word ‘Charbucks’ was used only as part of a phrase such as ‘Charbucks Blend ‘and’ Mr. Charbucks’ rather than merely using the word ‘Charbucks,’ the likelihood that the consumers would confuse Black Bear’s product with Starbucks’ products is minimal.

So, Black Bear will continue to sell its products under the same name, with little possibility of brand dilution. Starbucks complained that it was wrong to think that there was little similarity between the two brands and that there was not much relationship between the two brands, but the argument did not hold.

The survey that Starbucks submitted to prove the two brands’ similarity did not convince the court.

The courts ruled for Black Bear in part because Starbucks only considered the word “Charbucks” rather than considering the overall context and im[pact of the mark. In other words, to determine relatedness between two brands, the overall brand design, product packaging, homepage, etc. must be considered as a whole.

The fact that Black Bear already knew about Starbucks at the time of its mark creation in conjunction with Black Bear intended to remind the consumers of the famous brand became a significant issue. Black Bear acknowledged that they intended to create an association in the minds of consumers. However, they also stated that Charbucks was a word widely used in the United States to satirize Starbucks coffee—especially the kind of dark roast that is so dark that it is almost charcoal-like. They wanted to catch the attention of consumers using a play on words.

Ultimately, the courts refused to accept Starbucks’ claim that the intention to make a connection is separate from the actual relationship. 

How does it feel to win against the world’s largest coffee shop?

Black Bear’s CEO Jim Clark said the 12-year lawsuit was a tough fight, which caused a tremendous amount of stress. During the trial, he received an enormous amount of calls, e-mails, and interviews, but all this increase publicity did not yield a boost in sales.

Would it comfort Jim to know that he was once part of an infamous case? If I ever go to Tuftonboro, I would like to order a cup of Charbucks and offer him my sincere congratulations

www.hayoonkanelawfirm.com

Hayoon Kane, Attorney At Law

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