THE KRUSTY KRAB TRADEMARK Restaurant Services Infringement

In Viacom International Inc. v. IJR Capital Investments, LLC, the Southern District of Texas upheld Viacom’s claim of infringement against a company that filed a federal trademark application for THE KRUSTY KRAB and intended to open a restaurant under this name.  THE KRUSTY KRAB is a fictional restaurant featured on the children’s cartoon SpongeBob Square Pants.

Even though Viacom had not registered the name THE KRUSTY KRAB, the District Court granted summary judgment on the likelihood of confusion claim in its favor under the Lanham Act.  The Court found that Viacom had common law trademark rights in the trademark due to extensive use and advertising of the mark, noting that SpongeBob’s likely reaction to its decision would likely have been “Aw, tarter sauce!”

The Court first looked at whether the mark was inherently distinctive or had acquired distinctiveness in the minds of the consuming public.  The court found that the mark had acquired distinctiveness through its use in the television show, movie, and through advertising and marketing on products.

The Court next looked at whether there was likely to be confusion between IJR’s mark and Viacom’s mark.  The Court looked at the likelihood of confusion factors:  1) the strength of Viacom’s THE KRUSTY KRAB mark; 2) the similarity between the marks; 3) the similarity of the products or services; 4) the likely consumers of the goods or services; 5) the channels of trade (where the products or services are sold); 6) whether or not IJR had a bad faith intent in attempting to register and use the mark (whether it was aware of SpongeBob and THE KRUSTY KRAB); 7) whether there had been actual confusion (IJR’s mark had not yet been used); 8) the sophistication of potential consumers of the goods and services of the mark.

The Court found that 17 years of use of the mark, extensive advertising and marketing, and the unique spelling of the mark all created a likelihood of confusion in the marketplace.

To add to its claim, Viacom produced evidence from a consumer survey which, interestingly, found that 30% of consumers associated THE KRUSTY KRAB with Viacom.

As Viacom had not yet used the trademark, the Court did not hear its claims on trademark dilution, where Viacom would have had to show that they have a famous mark and that the use by IJR was likely to dilute the fame of the mark.