We recently told readers about a federal lawsuit involving trademark rights to the phrase “The Krusty Krab” between Viacom, the owner of the SpongeBob SquarePants cartoon, and a restauranteur who wanted to use the name for actual seafood restaurants. 

Most readers will remember that The Krusty Krab is the name of the fictional restaurant on the ocean floor where cartoon-character SpongeBob works.

Common law trademark 

As we discussed in the previous post, despite not having federally registered the word mark, Viacom was granted summary judgment based on protectable Texas state common law trademark rights. In part, common law rights developed because Viacom had used The Krusty Krab mark publicly, prominently and frequently to the extent that consumers associate it with Viacom as its source through the SpongeBob show and associated licensed products. 

Today, we continue our discussion of the Fifth Circuit opinion in Viacom International v. IJR Capital Investments, L.L.C. We talk further about how a mark gains distinctiveness through secondary meaning and the relevance of an allegedly infringing mark creating a likelihood of confusion about its source or affiliation. 

Secondary meaning 

To acquire common law trademark protection, Viacom must show that The Krusty Krab mark is distinctive, either inherently or through acquired distinctiveness (“secondary meaning”). Viacom showed distinctiveness through secondary meaning, meaning that the mark’s “primary significance” is association with its source. 

Secondary meaning is a question of fact established by any combination of seven factors. The court found as a matter of law that The Krusty Krab is distinctive through secondary meaning based on four of the factors: 

• Eighteen years of use
• Millions of dollars in sales of licensed products
• Effective advertising campaigns
• Media use by Viacom on social media, the SpongeBob website and its app 

Likelihood of confusion 

The court found that Viacom showed that if IJR used the mark for restaurants, there existed a probability of public confusion about the source or affiliation of the product. Courts use flexible “digits of confusion” to make this determination. 

The Fifth Circuit again found in Viacom’s favor as a matter of law, analyzing these digits for likelihood of confusion as to source: 

• The strong distinctiveness of the mark
• The similarity of marks that use the exact same words and stylized Ks
• IJR’s intention to use the mark to brand a restaurant when the initial use was for a fictional restaurant
• IJR’s intention to use the mark in the restaurant market when “fictional characters” are nowadays extended into restaurant branding such as Bubba Gump Shrimp restaurants from the Forrest Gump movie
• Consumer survey results and anecdotal confusion 

The court concluded that the digits of confusion support a finding of “impermissible likelihood of confusion as to source, affiliation, or sponsorship” if the defendant opened restaurants called The Krusty Krab.