January 13, 2017 — A Texas federal judge, Judge Gray Miller, has ruled that The Krusty Krab, the fictional fast-food joint on SpongeBob SquarePants is deserving of trademark rights and that an enterprise, including IJR Capital Investments, that wanted to open up a Krusty Krab restaurant has violated such rights.Viacom, the company that owns the right to Nickelodeon had filed a lawsuit in 2016 against IJR Capital Investments for its attempt to register “Krusty Krab” as a trademark with the U.S. Patent and Trademark Office (USPTO).
Although Viacom hadn’t registered “The Krusty Krab” with the USPTO , it had continuously used it on merchandise and also in at least 166 TV episodes and two feature films.
In examining whether Viacom possesses a valid mark, the Judge considered whether an element of a television show can be protected and concluded that it can.
“IJR counters that the SpongeBob character is not as well-known as Superman, but fails to include any authority (legal or otherwise) to support its argument that fictional titles are not afforded trademark protection…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 found that there was the likelihood of consumers being confused by IJR’s use of the trademark.
“The court also finds it persuasive that both parties use the mark to describe a restaurant (albeit in Viacom’s case it is a fictional restaurant under the sea where the namesake character works for restaurant owner Mr. Krabs),” states the opinion.” Context here is critical because a consumer seeing either Viacom’s or IJR’s marks will likely think of a restaurant. Consumers may mistakenly believe that IJR’s restaurant is an officially licensed or endorsed restaurant, similar to how … Viacom Inc., through its subsidiary Paramount Pictures Corporation has licensed its marks for restaurants, including Bubba Gump Shrimp Co., a seafood restaurant chain inspired by the 1994 film Forrest Gump.”
On whether “Krusty Krab” had acquired secondary meaning, the court found:
“The court found that Viacom has shown by a preponderance of evidence that it has met several of the distinctiveness through secondary meaning factors…The records show the reach of Viacom and its brand, such as the approximately one billion page views for nick,com accessed via its website and mobile applications…”
The court did not however grant Viacom’s claim for trademark dilution since IJR had not opened the restaurant.
“Both federal and state dilution law require that another party use a famous mark in commerce and Viacom has not shown that IJR has used the mark in commerce.”
Source: Hollywood Reporter