A restauranteur was hoping to open a seafood restaurant chain in Texas and California called The Krusty Krab, to which the owners of the “SpongeBob SquarePants” TV series objected by filing a lawsuit for common law trademark infringement. Viacom’s cartoon character SpongeBob works at a fictional restaurant at the bottom of the sea called The Krusty Krab.
Notably, Viacom had not previously filed an application to federally register a trademark on the name with the U.S. Patent and Trademark Office or USPTO. In contrast, the restauranteur’s company IJR Capital Investments had pursued a registration on the name, but it had not been granted. Nevertheless, Viacom was successful on summary judgment in federal trial court against IJR. On May 22, the judgment was affirmed on appeal by the U.S. Court of Appeals for the Fifth Circuit.
Viacom has since filed several trademark applications for The Krusty Krab mark.
Common law trademark
Common law rights are established through actual use of the mark in the marketplace, such that consumers associate the mark with a specific source of the goods or services. The Court of Appeals agreed with the District Court that Viacom has “legally protectable” common law trademark rights in the name under Texas law.
The court found as a preliminary matter that even though The Krusty Krab was only an element within the series as opposed to part of the show’s title, the phrase can be a protected mark as a “specific [ingredient] of a successful [TV] series.”
To qualify for common law trademark protection, The Krusty Krab mark had to be a “source identifier,” meaning that consumers associate it with Viacom as its source, a key function of trademarks.
In a television show, how frequently it shows up in the series is one indicator of whether people identify it with the source. The court noted:
- Krusty Krab is included in at least 80 percent of SpongeBob episodes.
- It has a “prominent role,” being used also in related SpongeBob products like movies, video games, licensed products and Internet sites.
- Viacom has received millions of dollars in licensing fees for use of The Krusty Krab on a wide variety of merchandise.
For these reasons, the court found that The Krusty Krab identifies Viacom as its source in the market, giving the company ownership rights to it as a word mark. In addition, even though “SpongeBob SquarePants” is the primary mark, The Krusty Krab creates a “distinct commercial impression” and both can exist, even though related and from the same source.
Further, the existence of IJR’s earlier trademark filing did not prevent Viacom from seeking relief. In fact, the process to federally register a mark takes into account “qualifying unregistered marks,” including determining whether the mark sought to be registered would give rise to a likelihood of confusion among consumers with an unregistered common law mark.
In our next post, we will talk more about the mark’s distinctiveness through “secondary meaning” and whether the allegedly infringing mark creates a “likelihood of confusion.”