Starbucks Corporation v. Wolfe's Borough Coffee, Inc.
588 F.3d 97 (2009)
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Rule of Law:
Under the Trademark Dilution Revision Act (TDRA), a claim for dilution by blurring does not require that the junior mark be 'substantially similar' to the famous senior mark; rather, the 'degree of similarity' is just one of six statutory factors that a court must weigh to determine if the junior mark is likely to impair the distinctiveness of the famous mark.
Facts:
- Starbucks Corporation is a large, international coffee company with numerous registered 'Starbucks' trademarks that are famous and distinctive.
- Starbucks has spent hundreds of millions of dollars on advertising and actively polices its trademarks.
- Wolfe's Borough Coffee, Inc., d/b/a Black Bear Micro Roastery ('Black Bear'), is a small, family-run coffee business in New Hampshire.
- In April 1997, Black Bear began selling a dark-roast coffee blend under the names 'Charbucks Blend' and later 'Mister Charbucks'.
- The owner of Black Bear chose the name 'Charbucks' as a reference to what he perceived as Starbucks' tendency to sell dark or 'charred' roasts.
- The packaging for Black Bear's product prominently featured the name 'BLACK BEAR MICRO ROASTERY' and imagery of a bear or a man, distinct from Starbucks' siren logo.
- In August 1997, Starbucks sent a cease-and-desist letter to Black Bear, but Black Bear continued to sell its product.
- Black Bear's owner testified that an association with a large corporation like Starbucks would be bad for his business, and he believed the product packaging made it obvious there was no connection.
Procedural Posture:
- Starbucks filed a complaint against Black Bear in the U.S. District Court for the Southern District of New York, alleging federal and state trademark dilution and infringement.
- Following a bench trial, the District Court entered judgment in favor of Black Bear, finding no actual dilution under the then-existing federal law.
- Starbucks appealed to the U.S. Court of Appeals for the Second Circuit.
- While the appeal was pending, Congress enacted the Trademark Dilution Revision Act (TDRA), changing the standard from 'actual dilution' to 'likelihood of dilution'.
- The Second Circuit vacated the District Court's judgment and remanded the case for reconsideration under the new TDRA standard.
- On remand, the District Court, after additional briefing, again entered judgment in favor of Black Bear.
- Starbucks again appealed to the U.S. Court of Appeals for the Second Circuit.
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Issue:
Does a junior mark that is minimally similar to a famous mark create a likelihood of dilution by blurring under the Trademark Dilution Revision Act (TDRA) when the junior user intended to create an association with the famous mark?
Opinions:
Majority - Miner, J.
Yes, a junior mark can create a likelihood of dilution by blurring even if it is not substantially similar to the famous mark because the TDRA requires a multi-factor balancing test, not a threshold similarity requirement. The District Court erred by requiring 'substantial similarity' between the marks, a standard from pre-TDRA case law. The TDRA's plain language lists the 'degree of similarity' as only one of six factors to be considered, and imposing a substantiality requirement as a prerequisite improperly diminishes the significance of the other statutory factors. The District Court also erred by requiring 'bad faith' for the intent factor, when the statute only requires an 'intent to create an association,' which Black Bear admitted. Furthermore, the court improperly dismissed survey evidence of actual association by analyzing it through the lens of consumer confusion, which is irrelevant to a dilution claim. The dismissal of the federal dilution-by-blurring claim is therefore vacated and remanded for reconsideration under the correct legal standard. However, the court's dismissal of the dilution-by-tarnishment claim is affirmed because Black Bear sold a high-quality product and was not using the mark to harm Starbucks' reputation. The dismissal of the trademark infringement claim is also affirmed because, under the Polaroid factors, there was no likelihood of consumer confusion.
Analysis:
This decision is significant for clarifying the legal standard for federal trademark dilution by blurring after the passage of the Trademark Dilution Revision Act (TDRA). It explicitly rejects the pre-TDRA 'substantial similarity' test, lowering the bar for owners of famous marks to bring dilution claims against marks that are merely referential or parodic. By treating similarity as just one factor among many, the court makes it easier to establish a likelihood of dilution even where marks are not confusingly similar. This holding strengthens the protection for famous marks against gradual 'whittling away' of their distinctiveness by subsequent users.
