In a recent case called Viacom v. IJR Capital, the issue centered around defendant’s plan to open a chain of restaurants called Krusty Krab — just like the fictional restaurant in Viacom’s SpongeBob Squarepants franchise. That perennial cash cow spans a wide variety of media outlets, including the original television series, a movie, a musical, and downloadable games that count over seven million parental smart phones as subscribers.
The defendant, after having waved a red flag and summoning the attention of the behemoth by filing for trademark registration for “Krusty Krab” restaurants, was sued by Viacom for trademark infringement. For their part, IJR Capital contended that Viacom (or at least, in connection with SpongeBob) does not own any non-fictional restaurants, and thus there was no infringement. That was the best they could do.
The district court in Houston disagreed with IJR, and on May 22nd, the Fifth Circuit affirmed the district court’s grant of summary judgment, saying that it could confirm that Viacom established, through applying of a variety of factors, secondary meaning (a reputation that makes the mark distinctive) in “Krusty Krab.” Furthermore, the Court said that there have been other cases of trademarks derived from fictional contexts that extend to other goods and services.
For example, Bubba Gump’s Shrimp Restaurant came out of another Viacom property, the film Forrest Gump. The court reasoned that if an actual restaurant could develop from a movie, an actual restaurant is a reasonable expansion of trademark rights in a television series as well.
To me it’s reassuring that, even without a federally registered trademark for restaurant services in connection with Krusty Krab, Viacom could succeed in enforcing its unregistered trademark rights. However, it’s also discouraging for two reasons:
- Viacom has invested millions and millions of dollars in the SpongeBob franchise — and it’s unclear whether someone with less money invested into their property would get the same treatment; a smaller cartoon with less popularity might not get the protection that Viacom got in this instance.
- The attempt by the defendant to file a trademark may be exactly what woke the sleeping giant in Viacom. Otherwise Viacom might not have even heard of the restaurant until after it was established.
On the other hand I, and hopefully IJR, find it encouraging that the ill-fated Krusty Krab restaurants were able to benefit from this lawsuit in the sense that they were enjoined before they had invested significant funds into the venture. Otherwise, it could have developed into a more desperate situation.
I think it shows that the system worked for both Viacom and IJR Capital, though the latter may have a tough time seeing the silver lining as they brainstorm a new business plan.
