United States: Sprinkles Cupcakes Is Seeing Red ...Velvet, That Is!

Cupcakes, the staple of classroom birthdays everywhere, have become a huge phenomenon with adults and children alike. Cashing in on the current cupcake craze, cupcake-only bakeries have been springing up around the nation. Sprinkles Cupcakes of Beverly Hills, which touts itself as "The Original Cupcake Bakery," is turning up the heat on a new batch of copy-cupcakeries. In a climate where branding is vital to increasing client base and protecting marketplace reputation, Sprinkles Cupcakes has trademarked its name as well as its distinctive "modern dot" motif. Armed with these trademarks, Sprinkles has launched a campaign against those companies it sees as eating into its business and potentially creating brand confusion. In a not-so-sweet move, Sprinkles filed multiple lawsuits in the past year, and sent numerous takedown letters to competitors it sees as treading on its trademarks.

"Let Them Eat (Cup)Cake"

In 2005, Sprinkles opened its first retail bakery in Beverly Hills, Calif., and has since skyrocketed into popular culture. The Beverly Hills location is known to be a celebrity bastion and a must see on any star watcher's list. Its confections are so popular that there is seldom a time when a line is not formed in front of the store. The company and its gourmet cupcakes have been featured on shows such as "Entourage," "The Oprah Winfrey Show" and "Good Morning America," as well as in many major publications. Sprinkles has also begun aggressively expanding its brand, with multiple new nationwide locations in the works and by marketing its cupcakes mixes online and through Williams and Sonoma.

Batter Up ...

In a move that takes the (cup)cake, Sprinkles filed a trademark infringement lawsuit in the Central District of California against Famous Cupcakes, Inc. for its alleged use of Sprinkles' "modern dot" design (U.S. Trademark Registration No. 3,224,075). Sprinkles Cupcakes, Inc. v. Famous Cupcakes, Inc., No. CV08-05349, (C.D. Cal. filed August 14, 2008). Last year, Sprinkles trademarked its "modern dot" design. The "modern dot" is comprised of two concentric candy circles, one small circle on top of another larger circle, which adorns the top of Sprinkles' cupcakes. Various color combinations of the smaller and larger circles denote the cupcake flavor—including red velvet, chocolate marshmallow, and chai latte.

Sprinkles trademarked its "modern dot" design under 15 U.S.C. section 1052(f), for a mark that has acquired distinctiveness. The official mark consists of a nested-circle design placed prominently on the top center of a cupcake. The "modern dot" trademark was originally denied as being purely decorative or ornamental and then for being a non-distinct configuration. The trademark was ultimately granted based on the mark gaining secondary meaning.

Under trademark law, secondary meaning arises when the relevant consuming public has been exposed to the use of the descriptive mark enough to recognize the mark as an indication of the source of the product or service. Sprinkles gained the mark based on the showing that customers and food industry professionals associate the "modern dot" with Sprinkles' cupcakes. In its trademark application, Sprinkles included the declarations of food professionals and customers stating that they associate the "modern dot" design exclusively with Sprinkles. These affidavits included one from "The Fonz," Henry Winkler, declaring that his household purchases more than 30 dozen cupcakes a month from Sprinkles.

... For a Food Fight

In its complaint against Famous Cupcakes, Sprinkles alleges Famous adopted the "modern dot" design to promote its bakery goods business. It alleges the Famous website (www.famouscupcakes.com) prominently displays the "modern dot" design on each page. In addition, the complaint states that the Famous Cupcake store in Valley Village, Calif., prominently features the "modern dot" design on the interior walls and on all its marketing and promotional materials, including its cupcake boxes and water bottles.

The claims against Famous include infringement of a federally registered trademark (15 U.S.C. § 1114). Famous Cupcakes is allegedly using Sprinkles' "modern dot" design in commerce in a manner that is likely to cause confusion, deception or mistake among consumers—taking into account the extremely similar commercial activities of the parties. Sprinkles also alleges violations of the Lanham Act § 43(a), including passing off. These claims are followed by a dilution claim, a common law infringement claim, and various state law claims. Sprinkles requests that Famous be enjoined from using the "modern dot" design and that it be required to deliver for destruction all media, packaging and other materials that bear the "modern dot" design.

Sprinkles' complaint does not allege that Famous is using the "modern dot" design as a cupcake topper, but rather as a basis of its décor and marketing. Although Sprinkles primarily uses these dots on its cupcakes, it contends that Famous has infringed on Sprinkles' trademark by using dots on its website and other products. Since Famous is not using the design on the cupcake itself, the court will have to decide if the distinctiveness of the "modern dot" loses all significance. The court might find that, removed from the cupcake, the "modern dot" design does not genuinely identify Sprinkles Cupcakes as a business.

If the "modern dot" is actually associated with Sprinkles in the minds of the public, how does it differ from the toppers that bakers everywhere have traditionally put on top of cupcakes, such as Reese's Peanut Butter Cups or Necco Wafers? Under Trademark Examining Procedure section 1202.03, a design cannot serve as a mark when it is a mere refinement of a commonly adopted and well-known form of ornamentation for a particular class of goods without secondary meaning. It remains to be seen if the "modern dot" is a mere refinement of the toppers used by bakers throughout time or if it is a unique mark that signifies the origin of the cupcake to consumers.

A Sprinkle of This and a Dash of That

In addition to the fight over the "modern dot," Sprinkles also set its sights on other cupcakeries with similar names. Earlier this year, Sprinkles filed a lawsuit against a bakery in the Manhattan and Brooklyn areas of New York for using the website "www.sprinklesprinkle.com," alleging infringement of its Sprinkles trademark. SprinkleSprinkle has since changed its name. There have been similar stories of small cupcake shops who have received cease and desist letters from Sprinkles. The Los Angeles Times wrote a piece on one such shop, Sprinkled Pink Cupcake Couture in Montecito. The question on everyone's mind is whether Sprinkles can appropriate for itself a word commonly associated with baking.

Under trademark law, common words and phrases can be trademarked if the phrase has acquired a distinctive secondary meaning apart from its original meaning. That secondary meaning must be one that identifies the phrase with a particular good or service. While Sprinkles is now commonly identified with the cupcake bakery, it remains to be seen whether a trademark of a word that is so commonly associated with baking in general, such as "sprinkle," will survive a legal challenge. As the holder of valid trademarks, Sprinkles has every right to protect its original creations and brand by using the courts to enforce its rights. Until Sprinkles' marks are truly challenged, Sprinkles may have found an effective way to take a bite out of the competition.

John Stephens, a partner in Sedgwick's Los Angeles office, focuses his practice on media and entertainment litigation, intellectual property licensing and transactions, and specialty insurance coverage and litigation.

Jennifer Burtness is nervously eating cupcakes awaiting her bar results.

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