Viacom International, Inc. v. IJR Capital Investments, L.L.C.
891 F.3d 178 (2018)
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Rule of Law:
An unregistered, fictional element from a popular entertainment franchise (such as the name of a fictional restaurant) is a protectable common law trademark if it is consistently used as a source identifier and has acquired distinctiveness through secondary meaning in the minds of the public.
Facts:
- In 1999, Viacom International, Inc. (Viacom) launched the popular animated television series 'SpongeBob SquarePants,' which features a fictional fast-food restaurant named 'The Krusty Krab.'
- The Krusty Krab is a central element of the franchise, appearing in over 80% of episodes, two feature films, a musical, video games, and other media.
- Viacom has licensed 'The Krusty Krab' name and likeness for use on numerous consumer products, including playsets, aquarium accessories, and apparel, generating millions of dollars in royalties.
- Viacom has never licensed 'The Krusty Krab' mark for use by an actual restaurant.
- In 2014, Javier Ramos, owner of IJR Capital Investments, L.L.C. (IJR), decided to open a seafood restaurant and chose the name 'The Krusty Krab.'
- Ramos claims he was unaware of the fictional restaurant until he performed a Google search, which revealed no actual restaurants using that name.
- IJR filed an intent-to-use trademark application with the USPTO for 'THE KRUSTY KRAB' for restaurant services, developed a business plan, and leased property.
- In 2015, Viacom sent IJR a cease-and-desist letter asserting its trademark rights, which IJR rejected, leading IJR to postpone its restaurant opening.
Procedural Posture:
- Viacom filed suit against IJR in the U.S. District Court, asserting claims for trademark infringement under Texas common law and unfair competition under the Lanham Act.
- IJR filed a motion to exclude the report and testimony of Viacom's consumer survey expert.
- Viacom filed a motion for summary judgment on its trademark infringement and unfair competition claims.
- The district court denied IJR's motion to exclude the expert report.
- The district court granted Viacom's motion for summary judgment, holding that Viacom owned a protectable mark in 'The Krusty Krab' and that IJR's proposed use would create a likelihood of confusion.
- After the district court entered a final judgment in favor of Viacom, IJR (as appellant) appealed the decision to the U.S. Court of Appeals for the Fifth Circuit.
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Issue:
Does a company's plan to open a real-world restaurant named 'The Krusty Krab' infringe on the unregistered, common law trademark of the fictional 'Krusty Krab' restaurant from the 'SpongeBob SquarePants' television series?
Opinions:
Majority - Priscilla R. Owen
Yes, IJR's plan to open a restaurant named 'The Krusty Krab' infringes on Viacom's common law trademark because the fictional name is a legally protectable mark and IJR's use would create a likelihood of consumer confusion. To establish a valid trademark, Viacom must demonstrate ownership through use as a source identifier and that the mark is distinctive. The court found that fictional elements within an entertainment series can receive trademark protection if they play a central role. The Krusty Krab's constant and prominent appearance in the 'SpongeBob' franchise, coupled with its use on licensed merchandise, establishes that it functions as a source identifier for Viacom. The court further held the mark acquired distinctiveness through secondary meaning, as the long-term use, high volume of sales, extensive advertising, and media attention have caused the public to associate 'The Krusty Krab' primarily with Viacom and the 'SpongeBob' franchise. Finally, analyzing the 'digits of confusion' factors, the court concluded that a likelihood of confusion exists as a matter of law, pointing to the strength of Viacom's mark, the identical nature of the names, the similarity of services (both being restaurants), and evidence of actual consumer confusion from a survey.
Analysis:
This decision solidifies the legal principle that creators of popular media can protect key fictional elements within their works as trademarks, even without formal registration or use in the exact industry as an infringer. The court's focus on the 'centrality' of the element within the franchise provides a framework for distinguishing protectable marks from incidental details. This strengthens the hand of entertainment companies in policing the use of names and symbols from their fictional universes, preventing others from capitalizing on the goodwill built by the original work. The ruling confirms that establishing secondary meaning and a likelihood of confusion is sufficient to protect even fictional business names against real-world appropriation.
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