Trademark Fight Leaves Starbucks Feeling Burned

, The Litigation Daily

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After 12 years of litigation, including three trips to the U.S. Court of Appeals for the Second Circuit, a small family-owned coffee company in Center Tuftonboro, N.H., has prevailed against Starbucks in a trademark fight.

The Second Circuit on Friday held that Starbucks could not enjoin Wolfe's Borough Coffee Inc., which does business as Black Bear Micro Roastery, from selling coffee called Charbucks Blend and Mr. Charbucks. Upholding a decision by Manhattan U.S. District Court Judge Laura Swain, the Second Circuit found that the Charbucks mark is unlikely to impair the distinctiveness of Starbucks mark.

Writing for a unanimous panel, Second Circuit Judge Raymond Lohier Jr. agreed with Swain that the two marks are "only weakly associated." Lohier concluded that a consumer survey that Starbucks had conducted to show trademark dilution was fundamentally flawed. Although 30 percent of the people surveyed associated Charbucks with Starbucks, the court found that figure didn't support trademark dilution in light of Starbucks' fame. (In many successful dilution cases, 70-90 percent of the people surveyed made an association between the marks at issue.) In addition, Lohier found that the survey didn't present Charbucks in proper context because the marks were only minimally similar when viewed on the packaging.

Starbucks reported $14 billion in revenue in its most recent fiscal year; Black Bear has a single retail outlet in New Hampshire and sells most of its coffee over the Internet. The litigation began in 2001, when Starbucks sued Wolfe's Borough. The district court repeatedly ruled in favor of the defendant; twice the Second Circuit remanded the case for the lower court to reconsider issues.

"It's gratifying," said John Mark Turner of Sheehan, Phinney, Bass & Green in Manchester, N.H., who represents Wolfe's Borough Coffee. "It's been a long road." Turner said that Wolfe's Borough's owner, Jim Clark, kept fighting because he didn't want to back down. "It's the principle of feeling singled out by a big business," he said.

Starbucks was represented by David Sipiora of Kilpatrick Townsend & Stockton. We contacted him but did not hear back. A Starbucks spokesperson told us: "We are respecting the court's decision."

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