FILE PHOTO: The SpongeBob SquarePants balloon makes its way down 6th Ave during the 91st Macy's Thanksgiving Day Parade in the Manhattan borough of New York City, New York, U.S., November 23, 2017. REUTERS/Shannon Stapleton/File Photo
The 5th U.S. Circuit Court of Appeals ruled 3-0 on Tuesday (22nd May 2018) that Viacom deserves trademark protection for The Krusty Krab, and that IJR Capital Investments LLC and its owner Javier Ramos cannot use it for their restaurants.
Circuit Judge Priscilla Owen wrote that Viacom proved that diners would likely be confused if IJR used the name The Krusty Krab, the restaurant located in the underwater city of Bikini Bottom where SpongeBob works as a fry cook.
She also said while Viacom had not registered “The Krusty Krab” with the U.S. Patent and Trademark Office, the name was important enough to the SpongeBob series to deserve trademark protection, despite not being the title.
Owen said The Krusty Krab has appeared in 166 of 203 SpongeBob episodes since its 1999 premiere on Viacom’s Nickelodeon network, as well as in two feature films.
She said that made it like the Daily Planet, the newspaper that employed Clark Kent in Superman, and the orange General Lee muscle car from The Dukes of Hazzard, both of which received trademark protection in earlier court rulings.
“In the minds of consumers, The Krusty Krab identifies the source of products, which is Viacom, the creator of the SpongeBob SquarePants fictional universe and its inhabitants,” Owen wrote.
A lawyer for IJR and Ramos did not immediately respond to requests for comment by Reuters.
Ramos claimed not to have heard of The Krusty Krab when he began fishing for a name, and chose it after checking Google and finding no restaurants using that name.
Viacom and its lawyers also did not immediately respond to requests for comment on Tuesday’s decision by the New Orleans-based appeals court, which upheld an April 2017 dismissal by U.S. District Judge Gray Miller in Houston.
The case is Viacom International Inc v IJR Capital Investments LLC, 5th U.S. Circuit Court of Appeals, No. 17-20334.
Also, from Courthouse News Service:
Fifth Circuit Rules for Viacom in ‘Krusty Krab’ Restaurant Case
(CN) – Viacom has established trademark rights to the fictional restaurant The Krusty Krab where animated chef SpongeBob SquarePants is known for dishing out tasty burgers, the Fifth Circuit affirmed Tuesday, so an aspiring restaurateur cannot use the name for seafood diners.
Viacom executives could never have imagined how successful its “SpongeBob SquarePants” series would become when it debuted on its Nickelodeon network in 1999.
Featuring a hyperactive sponge who lives in a pineapple in the seafloor town of Bikini Bottom with his pet snail Gary, the show has been the most-watched animated TV series for 15 consecutive years, spawned two movies that grossed $470 million at the box office, and inspired an eponymous musical that premiered on Broadway last December.
The Krusty Krab restaurant is central to the show. It appears in more than 80 percent of the episodes and Viacom has made millions of dollars on licensed products that bear the name, mainly aquarium figurines and children’s play sets.
Viacom sued IJR Capital Investment LLC for trademark infringement in Houston federal court in January 2016 when it learned that IJR’s owner Javier Ramos Jr. was planning to open seafood restaurants in Los Angeles and Houston called The Krusty Krab, and the U.S. Patent and Trademark Office had approved his application to use the name.
Ramos’ attorney Christopher Schaefer, with the Houston firm Knobloch and Tripp, told the Fifth Circuit in February that Ramos got the name from the crust that sticks to crabs when they are put in a seafood boil.
Ramos’ friend Ivan Murillo suggested calling the restaurant Crusted Crab, which evolved into The Krusty Krab, though Ramos testified in a deposition that he saw The Krusty Krab on “SpongeBob SquarePants” during an online search before filing his trademark application.
Ramos assumed he was in the clear because Viacom had not registered the mark, and his research did not locate an actual restaurant that used the mark.
But U.S. District Judge Gray Miller sided with Viacom in January 2017. He cited Fifth Circuit precedent that “ownership of a trademark is established by use, not by registration,” and found IJR’s use of the name “creates a likelihood of confusion” that consumers would believe Viacom had licensed it to IJR.
To win a federal trademark infringement claim, a company must prove it has a protectable ownership interest in the mark and that a defendant’s use of the mark is likely to confuse consumers that there is an affiliation.
IJR appealed to the Fifth Circuit. Schaefer, its attorney, argued at the February appeal hearing that Viacom cannot trademark an ornamental backdrop in a cartoon show.
The litigation stalled Ramos’ business plans, so he had not yet chosen a theme and décor for his restaurants before the February hearing.
Schaefer played up this point. He claimed it would have a chilling effect on business owners if they could be held liable for infringement for doing nothing more than filing an intent-to-use trademark application.
The attorney also lobbied for a jury trial. He said if IJR’s restaurants did not have the same color scheme, or anything at all relating to SpongeBob, nobody would presume that a Krusty Krab restaurant was connected to the TV show.
But the Fifth Circuit on Tuesday affirmed the lower court’s finding of trademark infringement on summary judgment pleadings, precluding the need for a jury trial.
The three-judge panel compared the dispute to Warner Bros. v. Gay Toys Inc., a 1981 ruling in which the Second Circuit held that trademark protection can extend to elements of a successful TV show.
The Second Circuit in that case barred a company from selling toy models of the General Lee, an orange 1969 Dodge Charger with a Confederate flag painted on its roof that was featured in the TV series “Dukes of Hazzard,” which ran on CBS from 1979 to 1985.
Just like the General Lee, The Krusty Krab deserves trademark protection, U.S. Circuit Judge Priscilla Owen wrote for the panel in a unanimous 28-page opinion.
“The mark is integral to ‘SpongeBob SquarePants,’ as it appears in over 80% of episodes, plays a prominent role in the SpongeBob films and musical, and is featured online, in video games and on licensed merchandise,” Owen wrote.
She added, “The Krusty Krab’s central role in the multi-billion dollar SpongeBob franchise is strong evidence that it is recognized in itself an indication of Viacom’s licensed goods and television services.”
Asked if Ramos had chosen another name for his restaurant chain, and how close he is to launching the business, Schaefer said his client is reviewing his legal and business options to decide the best course of action.
“Ramos deserved a chance to defend his unique use of the words ‘Krusty Krab’ as distinct from the fictional cartoon backdrop. However, he could not because he never got the chance to conceive its use,” Schaefer said in a statement.
Viacom praised the order as affirmation of the strength of its trademark.
“We are pleased with the decision to affirm the lower court’s ruling that Viacom’s rights in The Krusty Krab mark are strong and deserve protection from infringement,” its spokesman Alex Rindler said.
--Ends--
Also, from The Hollywood Reporter (via The Silver Telegram)
Viacom's Victory in 'SpongeBob' Restaurant Dispute Upheld by Appeals Court
"The factors lead inescapably to the conclusion that in the minds of consumers, The Krusty Krab identifies the source of products, which is Viacom, the creator of the 'SpongeBob SquarePants' fictional universe and its inhabitants."
If SpongeBob SquarePants' fictional workplace The Krusty Krab ever becomes a real restaurant, it will require the blessing of Nickelodeon's parent company.
A federal appeals court on Tuesday affirmed Viacom's victory in a dispute over the trademark, finding the company owns a legally protectable mark and there is a likelihood of confusion if another seafood restaurant were to use the name.
Viacom in 2016 sued IJR Capital Investments over its efforts to open a real-life Krusty Krab, claiming the Texas company's use of the moniker was likely to confuse consumers.
The media giant prevailed on a motion for summary judgment with regard to its common law trademark infringement and unfair competition claims last June when U.S. District Judge Gray Miller found that cartoon fans could mistakenly believe Viacom had endorsed the restaurant — especially since its subsidiary Paramount Pictures has licensed its Bubba Gump Shrimp Co. marks for a seafood restaurant chain inspired by Forrest Gump.
IJR appealed, arguing that Viacom doesn't have a valid trademark for The Krusty Krab.
A 5th Circuit Court of Appeals panel found, however, that the fictional restaurant's presence in the fictional world and its lucrative licensing record is enough to establish a valid ownership claim.
The court notes that specific elements from within a television show can receive trademark protection, citing examples like The Daily Planet from Superman and the General Lee from The Dukes of Hazzard, and that The Krusty Krab is analogous to other protected marks.
"The mark is integral to 'SpongeBob SquarePants,' as it appears in over 80% of episodes, plays a prominent role in the SpongeBob films and musical, and is featured online, in video games, and on licensed merchandise," writes circuit judge Priscilla R. Owen. "The Krusty Krab’s central role in the multi-billion dollar SpongeBob franchise is strong evidence that it is recognized in itself as an indication of origin for Viacom’s licensed goods and television services."
The panel also found that The Krusty Krab mark is distinctive enough to warrant protection. (Read the full decision below.)
"The record clearly shows that The Krusty Krab is a focal point in the 'SpongeBob SquarePants' television series and films, The Krusty Krab has continually been depicted in the advertising and promotion of the franchise over the past eighteen years, and it is used in the sale of products," writes Owen. "The factors lead inescapably to the conclusion that in the minds of consumers, The Krusty Krab identifies the source of products, which is Viacom, the creator of the 'SpongeBob SquarePants' fictional universe and its inhabitants."
The court also found a Krusty Krab restaurant, especially one that uses the unconventional spelling of those words, is likely to confuse consumers — even if that wasn't IJR's intent.
Viacom on Tuesday sent The Hollywood Reporter a statement in response to the decision: “We are pleased with the decision to affirm the lower court’s ruling that Viacom’s rights in The Krusty Krab mark are strong and deserve protection from infringement.”
--Ends--
Update (4/12): In a similar court case in Russia, a Russian court has ruled that a restaurant's name, "Krusty Pizza" ("Красти пицца"), located in Chelyabinsk does not violate Viacom's Krusty Krab trademark.
Originally published: Tuesday, May 22, 2018.
Additional sources: Google Translate, google.co.uk.
Follow NickALive! on Twitter, Tumblr, Google+, via RSS, on Instagram, and/or Facebook for the latest Nickelodeon and SpongeBob SquarePants News and Highlights!
