By Ian Robertson

Viewers of Viacom’s hit children’s television series “SpongeBob SquarePants” (“SpongeBob”) know that the Krusty Krab is the home of the Krabby Patty.  One of the show’s antagonists, Plankton, spends his days trying to steal the Krabby Patty’s secret formula from SpongeBob, the fry cook, and Mr. Krabs, the stingy owner.  In a recent case too ironic to be fiction, the Fifth Circuit Court of Appeals was tasked with deciding whether a real-life restaurant developer was trying to steal a little secret formula from SpongeBob for itself.

Although the facts read like a Saturday Morning cartoon, the legal actions were very real. IJR Capital Investments (“IJR”) sought to open a seafood chain named the Krusty Krab, supposedly after the crusted glaze it developed for seafood.[2]  Confident its secret sauce was a winner, IJR filed a trademark application with the United States Patent and Trademark Office (USPTO) for a restaurant named The Krusty Krab, one not previously registered by Nickelodeon’s parent company, Viacom.

Viacom responded with a lawsuit, claiming unfair competition under the Lanham Act and trademark infringement.[3]  The Act defines a trademark as “any word, name, symbol” meant to distinguish a product and indicate its source.[4]  Additionally, although the name “Krusty Krab” was not registered, the Supreme Court held that the Lanham Act will protect unregistered trademarks if they meet certain requirements.[5]  Viacom needed to show  “(1) that it owns a legally protectable mark in The Krusty Krab and (2) that IJR’s use of the mark creates a likelihood of confusion as to source, affiliation, or sponsorship.”[6]  The 5th Circuit Court noted that a novel issue was whether a specific element found in a television show could receive trademark protection.[7]  Considering SpongeBob’s success and how closely it is associated with the Krusty Krab, the Court found in favor of Viacom.[8]

It is fortunate that the Court saved the Krusty Krab.  Although the example is light-hearted, the issue is salient in the trademark space.  It hardly takes a Lanaham Act analysis to see that naming a seafood restaurant the “Krusty Krab” is clearly ripping-off the extraordinarily popular television show.  One commenter expressed that the legal standard here should be called “oh, please!”[9]  As the Velcro Brand recently and comically, discovered, trademark law is perceived as obtuse by many people outside the legal community.[10]  This may be nothing new, but with the rise of social media and the internet, it is certainly increasingly easy and common to commandeer symbols or brands to attract publicity without licensing or obtaining permission from the owner.[11]  Even if some situations are humorous, loss of intellectual property and the litigation it entails can be damaging.  Lawmakers could not have imagined how fast and easy information spreads over the internet when the Lanham Act was passed in 1946.[12] Perhaps it is time to rethink some aspects of trademark protection, particularly in these over-the-top easy cases.[13]  Fortunately, the Fifth Circuit did not overthink this one.  Its decision gives a sense of property security to creators and hopefully disincentivizes other nonsense litigation.

[1] Illustration of major characters in the television series, Wikipedia, https://en.wikipedia.org/wiki/File:SpongeBob_SquarePants_characters_cast.png (last visited October 10, 2018).

[2] Viacom Int’l, Inc. v. IJR Cap. Inv., L.L.C, 891 F.3d 178, 184 (5th Cir. 2018).

[3] Id. at 186.

[4] 15 U.S.C. § 1127 (2012).

[5] Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 768 (1992) (“It is common ground that [the Lanaham Act] protects qualifying unregistered trademarks and that [its] general principles . . . are for the most part applicable in determining whether an unregistered mark is entitled to protection”).

[6] Viacom Int’l, Inc., 891 F.3d at 185.

[7] Viacom Int’l, Inc. v. IJR Cap. Inv., L.L.C, 891 F.3d 178, 186-87 (5th Cir. 2018)

[8] Id. at 189, 191-92, 198.

[9] Neel Chatterjee & Ben Sneider, SpongeBob and the ‘oh, please!’ standard of trademark foolishness, A.B.A. J. (Aug. 23, 2018, 6:05 AM), https://www.abajournal.com/voice/article/spongebob_and_the_oh_please_standard_of_trademark_foolishness.

[10] See, e.g. Velcro Brand, Don’t Say Velcro, YouTube (June 4, 2018), https://www.youtube.com/watch?v=rRi8LptvFZY (attempting to educate consumers about the Velcro trademark); see also Velcro Brand, Thank You For Your Feedback – Don’t Say Velcro, YouTube (June 4, 2018), https://www.youtube.com/watch?v=ZLWMQLMiTPk (responding to consumers’ reactions on the Don’t Say Velcro video).

[11] See Daniel Loft, Article, Facebook, Twitter, and the Wild West of IP Enforcement on Social Media: Weighing the Merits of a Uniform Dispute Resolution Policy, 49 J. Marshall L. Rev. 959 (2016) (discussing the limited options available to trademark owners against infringers on social media); Debra Cassens Weiss, In-N-Out Burger sends pun-filled letter to beer maker to address ‘brewing’ trademark issue, A.B.A. J. (Aug. 23, 2018, 11:38 AM), https://www.abajournal.com/news/article/in_n_out_burger_sends_pun_filled_letter_to_beer_maker_to_address_brewing_tr (summarizing an instance of a brewery using a unlicensed logo to promote itself on Instagram).

[12] 79 P.L. 489, 60 Stat. 427, 79 Cong. Ch. 540

[13] All. for Good Gov’t v. Coal. for Better Gov’t, No. 17-30859, 2018 U.S. App. LEXIS 23648, at *2 (5th Cir. Aug. 22, 2018) (rejecting the “most curious argument” the two visibly identical logos are different because one logo features a hawk while the other features an eagle).

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