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Starbucks Loses Trademark Dispute Over 'Charbucks' Coffee

Brand marking is a word, which combines branding and trademark. It further reflects a conviction that marketing and legal experts have a similar objective. The objective is simple and it involves the development of powerful, durable brand identities and captures them in various forms, which may include slogans, names and designs. Through such, consumers will find it easy to identify manufacturers or the providers of particular goods and services. As such, brands and company trademarks are important; hence, the emergence of trademark law, which aims at protecting companies against possible trademark conflicts. As per trademark law, a trademark is a nonfunctional, distinctive word, shape, symbol, phrase or some combination of the same, which helps consumers in differentiating products and their manufacturers (Wright, 2013). Similarly, because of many conflicts, in this context, there was implementation of The Lanham Act, which is a federal statute that further protects a registered trademark from potential use by other businesses without the holders’ consent. The case between Starbucks and Charbucks is an example of a conflict in the same, which saw to a court battle to establish whether there were any trademark violations (Stempel, 2013). . As such, Starbucks had to lose the trademark dispute over ‘Charbucks’ coffee as the two companies have distinguishable trademarks they use in commerce. Starbucks lacked evidence to prove ‘Charbucks’ coffee used the trademark to evoke Starbucks famous mark, and the number of consumers confusing the two companies and their products.

Well, the court ruled that there was no trademark violation While Starbucks had humble beginnings, the company has managed to grow over the years to hold a global position in the retail coffee industry. Throughout the years, the company has managed to build a strong brand. Competition has been stiff, but Starbucks, through strategic initiatives, has managed to survive. Having established many branches across the world, the company has achieved success both locally and internationally. A significant threat, however, is the emerging companies in the coffee industry. Considering that, it is hard to make it in such a competitive business, the emerging companies, for example, Black Dear somehow used the Starbucks trademark. Well, this has been a contentious issue, which saw to a court battle. Black Bear also had humble beginnings. Jim and Annie Clark, is a couple, native Englanders who shared a passion for coffee business. After some years of research in the business, the couple opened the Black Bear Micro Roastery. This was in the year 1995 aiming at creating an exceptional methodology for roasting gourmet coffee beans using advanced technology (Melvin, 2011).

The company was located in New Hampshire and targeted coffee drinkers, mainly in the New England area. Importantly, the couple sold much of their assets and refinanced the mortgage, with an objective to generate extra cash, which could finance the business. At first, the start-up for Black Bear was slow. During the 1997 period, the prices of coffee beans had fluctuated. Undeterred, the couple held on, and managed to develop unique blends, mainly blends, which had catchy names such as “Country French,” “Kenya Safari” and “Mocha Java (Melvin, 2011).” Starbucks is a global leader in coffee retailing. The business has more than 8,700 stores in many countries around the world. Originally, Starbucks focused its business in the USA, and in particular, Seattle, Washington. Apart from operating retail stores, Starbucks is into the coffee business and the company supplies coffee to airlines, restaurants and supermarkets. Throughout, the company has conducted commercial activities by displaying its registered “Starbucks” marks on its goods and services. Notably, the Starbucks marks include the trademark “Starbucks” and it has held a U.S trademark registration singe the year 1985. Currently, the company has more than 60 trademark registrations across the world (Shannon, 2010).

On the other hand, Wolfe Borough Coffee Inc d/b/a Black Bear Micro Roastery is a family business. The business focuses on selling coffee products in Tuftonboro, N.H. Unlike Starbucks, Black Bear is a small business. Black Bear also sells its products through mail and internet orders. In the year 1997, Black Bear began selling a “dark roasted blend” of coffee, which it called “Charbucks Blend” and later on “Mister Charbucks.” On its packaging material, the business puts large font words, “BLACK BEAR MICRO ROASTERY.” Well, the use of “Charbucks” in particular, the “Bucks” part was the center of conflict with Starbucks. Starbucks felt that, Black Bear had violated trademark regulations; hence, Starbucks sent Black Bear a cease-and-desist letter in the year 1997. However, Black Bear did not stop selling “Charbucks” coffee. Negotiation efforts between the two businesses failed to reach an agreement, which prompted Starbucks to file a complaint in court alleging trademark infringement and dilution, unfair competition and overall violation of The Lanham Act. The federal law grants the owner of a famous and distinctive trademark an “injunction against the user of that trademark, which can “cause dilution” of the famous trademark.” Based on the federal law Starbucks v. Wolfe’s Borough Coffee, there was no dispute; hence, the court suggested that, Starbucks trademark was not famous (Shannon, 2010).

Because of the court’s finding, the court focused its appeal on dilution. According to the federal law, dilution is actionable based on two cases, which are dilution by blurring, and dilution by tarnishment. Dilution by blurring is the case where the similarity between trademarks results to impaired distinctiveness of the famous trademark. On the other hand, dilution by blurring is actionable, despite the presence or absence of possible or actual confusion, of competition or of an actual economic disadvantage. Well, the company, Starbucks suffered a major loss when the courts, after significant analysis failed to establish dilution claims as per Starbucks. However, how did the court come to such a verdict? First, the court answered the question, how similar were Starbucks and Charbucks marks? The court did find similarity in the marks, but the similarity index was low. Another question, the court used is, how distinctive is the famous mark? Well, considering that STARBUCKS is an unusual word, the court ruling favored Starbucks. How unique was the famous mark? In this question, it is evident that, no one else had used STARBUCKS as a coffee mark; hence, the court ruled in favor of Starbucks.

How famous is the mark? In this context, a mark has to be famous so that, a dilution claim can apply. Starbucks, however, found challenges in establishing that, the mark was famous. Another important question, which the court sought to answer was did the defendant intend to evoke the famous mark? Since the beginning, Black Bear admitted that this was the case. Another question, was there any measurable actual dilution of the famous mark? In this regard, Starbucks introduced findings of a survey, which revealed that, around 30% of the respondents agreed that, upon hearing the name “Charbucks” they made them think of Starbucks, but the survey failed to focus on their reactions to Mister Charbucks; hence, the court ruled that, the survey demonstrated “minimal” dilution (Wright, 2013). Evidently, Starbucks lacked evidence to support trademark violation by Black Bear. While there were inconsistencies by the various courts, all the overall rulings held the same. In this regard, different legal experts held different opinions concerning the same ruling. A notable argument was that, Starbucks is undisputedly a famous brand (Stempel, 2013).

Being a global leader, then, it is undisputable that, Starbucks was and is a famous brand. However, the court held different views based on the legal definition of famous. Another important argument was the use of the term “Bucks” in both companies. Starbucks, which emerged or founded first, used the term. As such, the term “Bucks” is an unusual word. In this context, Starbucks was the name of a character in a novel written by Moby Dick. Apparently, the character in the novel did not have any connection with coffee. As such, this was a strong point, which the court used, but stated that, in efforts to establish dilution, the court could not rely on this point entirely. Thus, the need to ensure that, the court did consider all criteria of establishing dilution. Starbucks went a step further to conduct a survey in an effort to show that, consumers did link Charbucks coffee blend with Starbucks. At this point, Starbucks realized that, some consumers associated the blend of coffee with the company. However, the survey only realized a small or minimal dilution possibility. Considering all these factors, the court found that, there was inadequate evidence to suggest dilution or to link trademark violation by Black Bear (Mukherije, 2013).

References

Shannon, J. D. (2010). Starbucks v. Charbucks: Substantial similarity is not required to prove dilution by blurring. Retrieved from http://www.marshalldennehey.com/media/pdf-articles/O%20229%20by%20D.%20Shannon%20(Summer.10).pdf

Melvin, S. (2011). Case study of a coffee war: Using the Starbucks v. Charbucks dispute to teach trademark dilution, business ethics and the value of legal acumen. Journal of legal studies education, 29(1), 27-57. Retrieved from http://alsb.roundtablelive.org/Resources/Documents/NP%202011%20Melvin.pdf

Mukherji, A. (2013). Starbuck loses ‘Charbucks’ trademark appeal. Retrieved from http://blogs.findlaw.com/free_enterprise/2013/11/starbucks-loses-charbucks-trademark-appeal.html?DCMP=NWL-cons_openforbusiness

Stempel, J. (2013). ‘Charbucks’ not a trademark violation despite Starbucks appeal, court rules. Retrieved from http://www.huffingtonpost.com/2013/11/15/starbucks-loses-charbuck_n_4283018.html?ir=India

Wright, D. (2013). Brandmarking: Thoughts on the creation, protection, and enforcement of brand identity. Retrieved from http://www.dickinson-wright.com/~/media/Files/News/2013/12/brandmarking_12_13.pdf