SpongeBob SquarePants Eatery Gets TM Protection

The Krusty Krab, a fictional restaurant from the SpongeBob SquarePants cartoon, deserves trademark protection, a federal court judge in Texas has ruled, holding that a proposed real-life eatery with the same name violates Viacom's trademark rights.

The Krusty Krab is featured prominently in the antics of SpongeBob and friends, who enjoy the restaurant's "Krabby Patties" with regularity. But when IJR Capital Investments filed a trademark application for its restaurant "The Krusty Krab" under the U.S. Patent and Trademark office's restaurant services category, Viacom sent IJR a cease and desist letter. When IJR refused to comply, Viacom filed suit under the Lanham Act and Texas common law.

Viacom argued in its motion for summary judgment that while it never registered "The Krusty Krab" mark, it has used the term continuously since 1999 in two feature films, in at least 166 television episodes and with associated merchandise.

U.S. District Court Judge Gray H. Miller first determined that Viacom possessed a valid mark and then held that IJR's use of the mark created a likelihood of confusion, ruling in favor of the plaintiff.

But, IJR argued that Viacom could not trademark the name of a fictional restaurant.

The court disagreed. "[T]rademark protection extends to the 'specific ingredients of a successful T.V. series,' including symbols, design elements, and characters which the public directly associates with the plaintiff or its product," Judge Miller wrote, citing decisions granting protection for made-up words such as "Kryptonite" and the "Daily Planet," the fictional newspaper where Clark Kent of the Superman franchise works.

Moreover, ownership of a trademark is established by use, not by registration, the court noted, and there was no dispute that Viacom had regularly used "The Krusty Krab" for well over a decade.

Despite the fact SpongeBob is not as well known as Superman, because The Krusty Krab "is a recurring element of the 'SpongeBob SquarePants' show, the court finds that the mark is eligible for trademark protection," the court said. Viacom also demonstrated through a preponderance of evidence that it met several of the "distinctiveness through secondary meaning" factors established by other courts, including the length and use of the mark as well as the reach of the movies and associated ad campaigns ($470 million in gross receipts and $197 million in advertising).

Judge Miller next found a likelihood of consumer confusion, by citing factors such as the strength of the mark based on its continued use in its television series, movies, Web and mobile applications, and the number of licensed products that reference or directly mention "The Krusty Krab."

The court also found it notable that the two marks had identical spelling and pronunciation, including the unconventional way of spelling the words with a "K" instead of a "C," and the fact that both parties use the mark in connection with a restaurant.

"Context here is critical, because a consumer seeing either Viacom's or IJR's marks will likely think of a restaurant," the judge wrote. "Consumers may mistakenly believe that IJR's restaurant is an officially licensed or endorsed restaurant, similar to how Viacom's parent company … has licensed its marks for restaurants, including Bubba Gump Shrimp Co., a seafood restaurant chain inspired by the 1994 film 'Forrest Gump.'"

A national consumer survey tipped the scale in Viacom's favor. It found that 30 percent of respondents who have or expect to patronize restaurants identified Viacom and its brand as the entity that operates, affiliates, connects, approves, or sponsors a restaurant named "The Krusty Krab."

The court granted summary judgment in favor of the plaintiff on its motion for trademark infringement. Viacom's motion for summary judgment on its dilution claims was denied, however, as the court found the claim unripe since IJR had yet to use the mark in commerce.

To read the opinion and order in Viacom International, Inc. v. IJR Capital Investments, LLC, click here.

Why it matters: The court had no problem holding that a fictional restaurant featured in a cartoon show deserved trademark protection because Viacom used the name in television, movies, and associated merchandise for roughly 17 years. A likelihood of consumer confusion was also demonstrated by the identical spelling of the two restaurants (even though one exists in a fictional world under the sea and the other was set to open in Texas), and the results of the consumer survey.



pursuant to New York DR 2-101(f)

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