United States: Two Fictional Elements—The Krusty Krab (From Spongebob) And The Sabacc Card Game (From Star Wars)—Held Trademark-Eligible

In two recent decisions, courts have recognized trademark protection in fictional elements—The Krusty Krab, a restaurant that was part of the popular TV series SpongeBob SquarePants, and Sabacc, a card game that played a part in the Star Wars movies.

The Krusty Krab was at the center of Viacom Int'l v. IJR Capital Investments, L.L.C., 891 F.3d 178 (5th Cir. 2018), which considered whether IJR infringed Viacom's common law trademark rights in the fictional restaurant's name when it took steps to open seafood restaurants using the name. The Fifth Circuit held that IJR's use of The Krusty Krab name created a likelihood of confusion, and it affirmed summary judgment in Viacom's favor.

Viacom's SpongeBob SquarePants TV series revolves around a sea sponge of that name who wears square shorts, lives in an underwater pineapple, and works at The Krusty Krab restaurant, which played a prominent role in the series. Although Viacom licensed The Krusty Krab mark for a variety of products, it did not license it for restaurants nor did it register the mark with the PTO. IJR decided to open a seafood restaurant chain called The Krusty Krab, and its business plan for potential investors made no reference to the SpongeBob franchise. Further, IJR filed a trademark application for THE KRUSTY KRAB mark, which the PTO granted without opposition from Viacom. Nonetheless, when the mark issued, Viacom sent IJR a cease-and-desist letter and filed suit after IJR refused to stop using the mark.

On appeal from the district court's grant of summary judgment to Viacom, the Fifth Circuit considered three issues. First, it addressed whether Viacom used The Krusty Krab as a source identifier. After deciding, as a threshold matter, that it is appropriate to extend trademark protection to the specific elements of a TV show, the court considered whether The Krusty Krab mark would be recognized, by itself, as identifying a source. Finding that The Krusty Krab appeared in over 80% of its episodes, and played a "central role" in SpongeBob SquarePants, and also noting that Viacom had extensively licensed the mark, the court concluded that there was "immediate recognition" of the mark "as an identifier of the source for goods and services."

Next, the court addressed whether, based on seven specific factors, The Krusty Krab had acquired distinctiveness through secondary meaning—i.e., the public had come to associate the mark with the source of the product rather than the product itself. The court found that the first four factors (the length and manner of the mark's use, the volume of sales, the amount and manner of advertising, and the nature of use of the mark in newspapers and magazines) all supported Viacom. Accordingly, while it found there was no evidence regarding the fifth and sixth factors (consumer-survey evidence and direct-purchaser testimony), and that the evidence regarding the seventh factor (he defendant's intent in copying the plaintiff's mark) was inconclusive, the court concluded that the relevant factors led "inescapably" to the conclusion that "The Krusty Krab identifies the source of the products, which is Viacom, the creator of the 'SpongeBob SquarePants' fictional universe."

Finally, the court addressed the third issue—whether IJR's use of The Krusty Krab created a likelihood of confusion based on the "so-called 'digits" of confusion.'" The court found that most of the digits supported Viacom—specifically, the first (the strength of the mark infringed), second (the similarity of the marks), third (the similarity of products or services), and seventh (evidence of actual confusion). Accordingly, while it appeared to place no weight on the fourth and fifth digits (the identity of retail outlets and purchasers, and the identity of the advertising media used), and it found that the sixth digit (the defendant's intent) did not support Viacom, the court resolved the likelihood-of-confusion issue in Viacom's favor. Accordingly, it affirmed the district court's decision to grant summary that IJR's use of The Krusty Krab name infringed Viacom's trademark.

Similarly, in Lucasfilm Ltd. LLC v. Ren Ventures Ltd., 3:17-CV-07249 (N.D. Cal. 2018), the United States District Court for the Northern District of California refused to dismiss the trademark infringement action Lucasfilm had filed against Ren Ventures based on its mobile game app relating to a card game, called Sabacc, that played an important part in the Star Wars movies and was closely associated with Hans Solo, who won his spaceship the Millennium Falcon by beating Lando Calrissian in a game of Sabacc. Although Sabacc was thus fictional, Lucasfilm and its licensees used the mark in connection with a variety of products, and the court concluded that it was legally protectable.

More specifically, the court found Ren had promoted and distributed a mobile game app, "Sabacc—The High Stakes Card Game," which referred to well-known events, places, and phrases from the Star Wars franchise, featured Star Wars-inspired imagery, and mimicked the appearance and rules of the fictional Sabacc card game. When Lucasfilm sued Ren, Ren moved to dismiss the action, but the court denied the motion. In reaching its decision, the court inferred from the pleadings that (1) because Sabacc is a coined term, it is an inherently distinctive and protectable trademark, (2) due to the long and extensive use of Sabacc by Lucasfilm and its licensees, the public recognizes it as uniquely associated with Lucasfilm and the Star Wars franchise, and (3) Ren's mobile game app, along with its advertising and marketing, intentionally capitalized on the goodwill of Sabacc and the Star Wars franchise.

Relying on Second, Fifth, and Ninth Circuit case law (including the Viacom case dealing with The Krusty Krab), the court stressed that fictional elements of expressive works can function as trademarks when they symbolize the producer or its product to the consuming public. Thus, the court concluded that because Sabacc is associated with the Star Wars franchise's storyline and appeared in novels, games, television episodes, and a visual dictionary, it signifies Lucasfilm in the minds of the consuming public. As a result, the court denied Ren's motion to dismiss.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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