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After more than a decade of protracted litigation, Starbucks lost its trademark battle against Charbucks, a coffee produced by a small, family-owned New Hampshire roaster.
The trademark case turned on Starbucks' failure to prove that consumers are confused by the name Charbucks because of a "blurring" of its brand.
A trademark is an identifying name, logo, phrase, or design that customers associate with a brand or product. The purpose of registering a mark is to make sure competitors don't profit off your recognizable mark.
The power of a trademark is only as good as its ability to identify your business specifically. Any "dilution" through other uses of the same or similar marks makes it harder for you to protect your trademark. To keep a trademark strong, the owner must work to make it identifiable and stop others from using it.
In this case, Starbucks filed a lawsuit in 2001 to stop Black Bear Micro Roastery and its owner, Wolfe's Borough Coffee Inc., from selling "Charbucks Blend," and "Mr. Charbucks" coffee. The coffee giant claimed that Black Bear was misusing its brand, potentially reducing profit and revenue and damaging Starbucks' reputation, reports Reuters.
To prove infringement, Starbucks needed to show that the Charbucks line of coffee used a name similar enough to confuse or mislead consumers. The appeals court needed to find a likelihood that consumers would check out the Charbucks line of coffee thinking that they've found something related to Starbucks.
Central to Starbucks' case was a phone survey of 600 people that found "the No. 1 association of the name 'Charbucks' in the minds of consumers is with the brand 'Starbucks,'" reports Reuters.
But a district court didn't buy Starbucks' "blurring" conclusion, and neither did the 2nd U.S. Circuit Court of Appeals.
Turning to the survey's findings, the court pointed out that while 39.5 percent of participants thought of "Starbucks" or "coffee" when asked what came to mind upon hearing "Charbucks," only 4.4 percent said "Starbucks" or "coffee house" when asked who might sell a "Charbucks" product.
Ultimately, the appeals court affirmed a lower court's finding that "the marks are only minimally similar." It's a reminder to business owners that a minor association between two brand names isn't enough to prove infringement.
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