Fictional, but Protectable: Court Nixes “The Krusty Krab” Restaurant on Trademark Grounds

Summary Judgment Order, Viacom International Inc. v. IJR Capital Investments, LLC, S.D. Tex. (January 11, 2017) (Judge Gray Miller) 

The Emmy nominations have been announced, and the fall television season is just weeks away. Accordingly, we thought it would be fun to revisit an interesting trademark ruling from earlier this year that still seems timely given these events.

With the rise of social media, mobile phone applications and viral marketing, cross-overs between the real world and the fictional world of T.V. shows, movies and video games, are becoming increasingly commonplace. To promote the upcoming season of its popular T.V. show Better Call Saul, for example, AMC created actual Los Pollos Hermanos fast-food restaurants in cities across the U.S.  Similarly, in the summer of 2006, ABC and the creators of Lost created an alternative reality game called The Lost Experience that included such disparate activities as advertisements of fictional companies on a variety of ABC programs and advertising sponsor websites, the publication under a pseudonym of a best-selling mystery novel called “Bad Twin,” a live disruption at San Diego’s Comic-Con by a fictional protagonist named Rachel Blake trying to unravel some of Lost’s mysteries, and the world-wide sale at special locations of fictional “Apollo” candy bars that had been featured in the show.  As these examples reflect, the names and likeliness of fictional locations, objects, and characters can represent significant and valuable components of a company’s intellectual property rights.

Not surprisingly, therefore, this trend also has produced real-world IP disputes. For example, earlier this year, in Viacom International Inc. v. IJR Capital Investments, LLC, Judge Gray Miller of the Southern District of Texas found that one such fictional element—the restaurant “The Krusty Krab” from Nickelodeon’s animated series SpongeBob SquarePants, was protectable as a trademark despite the fact that the fictional restaurant located under the sea was not the subject of any specific trademark registration.

Viacom International Inc. owns Nickelodeon, on which SpongeBob SquarePants airs.  Since its debut in 1999, the SpongeBob T.V. series and two cinematic adaptations have regularly featured “The Krusty Krab” as the name of the restaurant where the show’s titular character works as a fry cook.  IJR Capital Investments, LLC submitted an application to the United States Patent and Trademark Office to register the mark THE KRUSTY KRAB in connection with restaurant services in December 2014.  Although Viacom did not oppose IJR’s trademark application when it was published for opposition, Viacom sent IJR a cease and desist letter in November 2015. IJR refused the demand, arguing that Viacom did not hold any trademark rights to the phrase “The Krusty Krab,” and further claiming that there was not any likelihood of confusion between the marks.

Viacom then sued IJR based on nine separate claims, including violations of the Lanham Act and Texas unfair competition laws. On January 11, 2017, the Court granted Viacom’s motion for summary judgment, finding that Viacom had established ownership of a valid trademark and a likelihood of confusion between the marks.

In so ruling, the Court first examined the question of whether Viacom established that it has a valid trademark. Although Viacom had not registered “The Krusty Krab” as a trademark with the U.S. Patent and Trademark Office, it argued that it had a valid trademark because it has used “The Krusty Krab” in commerce continuously since 1999 when the restaurant was first featured in the pilot episode of SpongeBob SquarePants.  The restaurant has since been included in 166 television episodes and the two feature films that grossed over $470 million.  The Court agreed with Viacom that an element of a television show, such as the name of a fictional restaurant like “The Krusty Krab,” can be protected as a trademark.  The Court further held that specific elements or “ingredients” of successful T.V. shows, such as symbols, design elements, and characters that the public comes to recognize as associated with the program’s creator, can be protected as trademarks.  In support of this holding, the Court cited two past decisions from the Southern District of New York which found trademark protection for words found in the Superman universe, including “Kryptonite” and “Daily Planet.” DC Comics v. Kryptonite Corp., 336 F. Supp. 2d 324, 332 (S.D.N.Y. 2004); DC Comics v. Powers, 465 F. Supp. 843, 845, 847 (S.D.N.Y. 1978).  The Court also agreed with Viacom that “The Krusty Krab” is eligible for trademark protection as a distinctive mark.  The Court found that Viacom established the term had acquired secondary meaning through its consistent use of the phrase throughout the SpongeBob SquarePants series, and advertising expenses nearing $200 million for its two feature films.

The Court then moved on to the second step in a trademark infringement case and examined whether there was a likelihood of confusion between Viacom’s and IJR’s marks. Judge Miller found that, on balance, the likelihood of confusion factors weighed in favor of there being a likelihood of confusion.  The Court noted that the two marks are visually identical, including the unconventional way of spelling the words with a “K” instead of a “C,” as well as that Viacom had made extensive use of its “The Krusty Krab” mark in television series, movies, web and mobile applications, and licensed products.  Judge Miller also found it persuasive that both parties used the mark in connection with describing a restaurant, despite the fact that Viacom’s use was in connection with a fictional restaurant under the sea.  He noted that consumers could mistakenly believe that IJR’s restaurant was an officially licensed or endorsed restaurant, similar to how Paramount Pictures Corporation, a subsidiary of Viacom, has licensed its marks for restaurants, such as Bubba Gump Shrimp Co., a seafood restaurant chain inspired by the 1994 film Forrest Gump. Fans of the 1980’s NBC comedy Cheers likewise might immediately think of the fictional namesake bar in Boston that took advantage of the show’s popularity and can still be visited in Fannuiel Hall.

Judge Miller’s ruling illustrates that it is possible for content creators to successfully assert trademark rights to the names of various fictitious locations, characters, and symbols that consumers recognize and affiliate with the content that produced them, even if such names are not registered as federal trademarks. It also underscores the importance of diligently watching trademark registries for the names of such whimsical elements so as to catch and prevent infringing use before it takes off, whether in fictional or non-fictional universes.  Therefore, next time you find yourself enjoying a “four egg” ham and cheddar omelet at your local Los Pollos Hermanos restaurant, and you spot on the menu something called “The Krusty Krab Special,” consider whether you “better call Saul” for advice as to whether you are witnessing some kind of trademark infringement.