Trademarks For Fictional Business Establishment: Is it Possible?

Trademarks For Fictional Business Establishment: Is it Possible?

January 19, 2017

by Jerry Glover

Can the producer of an animated television series that features a fictional restaurant obtain a trademark for the restaurant’s name? A trademark must be used in commerce in connection with goods or services in order to be achieve trademark status. Is the use of a mark as the name of a fictional restaurant on a nationally televised series “use in commerce” if there is no real restaurant?

A federal trial court in Houston recently decided that not only was such a trademark obtainable, it had also been infringed by a real world restaurant’s proposed use of the same mark. Viacom International, Inc. v. IJR Capital Investments, LLC, 2017 WL 107141 (S.D. Tex. January 11, 2017). Viacom is the producer of the animated series “SpongeBob SquarePants” airing on Nickelodeon. In 166 of 203 broadcast episodes, one or more scenes are set in a restaurant called The Krusty Krab. The restaurant had also been featured in two SpongeBob feature films. See below:

Viacom had also used the mark on certain consumer goods. But Viacom never registered the mark in the U.S. Trademark Office. The defendant, however, did file an application for THE KRUSTY KRAB in the U.S. Trademark Office in 2014.

The defendant also announced that it would open a restaurant called The Krusty Krab. Viacom sent the defendant a cease and desist letter requesting that the defendant change the name of the proposed restaurant. The defendant refused. Viacom filed this lawsuit.

In order to prove trademark infringement under the federal trademark act (the Lanham Act), Viacom had to show it owned a valid mark and that defendant’s use of that mark created a likelihood of confusion as to source, affiliation or sponsorship. The confusion must be probable not just possible. Ownership means that the plaintiff actually uses the mark in the marketplace; registration of the mark alone is not enough.

So if there is no real Krusty Krab restaurant owned by Viacom, how could it claim use of the mark in commerce? The defendant claimed Viacom could not have any trademark rights in the title of a fictional restaurant. Viacom argued that consumers recognized The Krusty Krab as a trademark because of its frequent use in many television shows and in the feature films. It also sold and licensed consumer products with the Krusty Krab mark on them. Therefore, those uses by themselves were sufficient to prove use in commerce.

The district court first noted that elements of a television show can be protected under trademark law especially if it is, like The Krusty Krab, a recurring element of the show. Next, the court had to determine whether the mark was inherently distinctive (i.e., its intrinsic nature serves to identify a particular source—Viacom) or if it had acquired distinctiveness (also known as secondary meaning which occurs when, to the public, the primary significance of a mark is to identify the source of the product—Viacom–rather than the product itself). Using a seven-factor test, the court determined that The Krusty Krab had acquired distinctiveness in the mind of the public.

But was it likely that defendant’s use of The Krusty Krab for restaurant services would cause confusion in the public’s mind? The court held that it was likely. The court noted that both parties used the mark to describe a restaurant even if one was fictional. The court added that a consumer who sees defendant’s mark on a restaurant may believe that Viacom licensed the mark to the defendant and, thereby, endorsed the defendant’s restaurant.

There was also some evidence showing that the defendant was aware of Viacom’s use of The Krusty Krab before the defendant submitted its trademark application. But the court held that even if the defendant believed its mark would not be likely to cause confusion in the public’s mind with Viacom’s Krusty Krab mark—i.e., defendant had a good faith belief that its use of the mark would not infringe defendant’s rights—good faith is not a defense to trademark infringement. If consumers are confused, defendant’s good faith is irrelevant.

Consequently, the court granted Viacom’s summary judgment motion claiming infringement.

Viacom also complained that the defendant had diluted its mark under both federal and state law. Dilution is a separate cause of action from a claim for trademark infringement. But the court noted that the defendant had not yet used the mark in interstate commerce, a requirement of both federal and state dilution laws. Therefore the court denied Viacom’s motion for summary judgment on this claim.

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