Viacom International, Inc. v. IJR Capital Investme

Case: 17-20334 Document: 00514482390 Page: 1 Date Filed: 05/22/2018
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
No. 17-20334
Fifth Circuit
FILED
May 22, 2018
VIACOM INTERNATIONAL, INCORPORATED, Lyle W. Cayce
Clerk
Plaintiff–Appellee,
v.
IJR CAPITAL INVESTMENTS, L.L.C.,
Defendant–Appellant.
Appeal from the United States District Court
for the Southern District of Texas
Before REAVLEY, SMITH, and OWEN, Circuit Judges.
PRISCILLA R. OWEN, Circuit Judge:
Viacom International, Inc. (Viacom) sued IJR Capital Investments,
L.L.C. (IJR) for infringing on its common law trademark of The Krusty Krab—
a fictional restaurant in the popular “SpongeBob SquarePants” animated
television series—after IJR took steps to open seafood restaurants using the
same name. The district court granted summary judgment to Viacom on its
trademark infringement and unfair competition claims. IJR appeals, asserting
that Viacom does not have a valid trademark for The Krusty Krab and that its
seafood restaurants would not create a likelihood of confusion between the two
marks. We affirm the judgment of the district court.
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I
In 1999, Viacom launched the animated television series “SpongeBob
SquarePants” on its Nickelodeon network. The show revolves around
SpongeBob SquarePants, a sea sponge that wears square shorts, lives in an
underwater pineapple, and works at the fictional The Krusty Krab restaurant
as a fry cook with an array of characters including a cranky co-worker and the
owner of The Krusty Krab. The show has become the most-watched animated
television series for 15 consecutive years, with over 73 million viewers in the
second quarter of 2016 alone. While the audience is predominately comprised
of children, one-third of all viewers are 18 or older.
The fast food restaurant The Krusty Krab played a prominent role in the
pilot episode of the series and has appeared in 166 of 203 episodes. The Krusty
Krab was featured in two “SpongeBob SquarePants” feature films that grossed
$470 million (and incurred $197 million in promotional expenses). The Krusty
Krab Restaurant is also an element of Viacom’s mobile app “SpongeBob Moves
In” (seven million global downloads), appears in a play called The SpongeBob
Musical, and is frequently mentioned in the franchise’s advertisements and
online outreach (approximately seven million page views across platforms per
week). The press has referenced The Krusty Krab many times when discussing
the show.
The Krusty Krab is also licensed to third parties for a variety of products.
These licensed products include: licensed Krusty Krab playsets from Just Play,
Mattel, The LEGO Company, and Mega Brands, Inc. ($1.4 million in royalties
since 2009), the video game “SpongeBob SquarePants Creature from The
Krusty Krab” (over one million units), The Krusty Krab aquarium accessories
(187,000 units), reusable franchise-themed stickers of The Krusty Krab, The
Krusty Krab shirts sold at The SpongeBob Store at Universal Studios, Florida,
and more. Viacom has never attempted to license The Krusty Krab mark to a
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restaurant. However, Viacom’s subsidiary company Paramount Pictures
Corporation did license Bubba Gump Shrimp Co. for seafood restaurants based
on the fictional business from the 1994 movie “Forrest Gump.”
In 2014, IJR’s owner, Javier Ramos, decided to open seafood restaurants
in California and Texas. Ramos asserts that he was describing the crusted
glaze applied to cooked seafood when his friend Ivan Murillo suggested naming
the restaurant Crusted Crab, which quickly became The Krusty Krab. Both
Murillo and Ramos deny having considered SpongeBob during this
conversation, however Murillo has since stated that those who see the name
may think of the restaurant from “SpongeBob SquarePants.” Also, an IJR
investor mentioned SpongeBob “out of the blue” while discussing the
restaurant. Ramos said that he first became aware of the fictional restaurant
from “SpongeBob SquarePants” when he performed a search using Google to
determine if there were restaurants with a name similar to The Krusty Krab.
Because Ramos’s search did not find an actual restaurant that used the
mark, IJR filed a trademark application with the United States Patent and
Trademark Office (USPTO) for THE KRUSTY KRAB. Viacom had not
previously registered The Krusty Krab mark. The USPTO approved IJR’s
mark and published the application for opposition. Viacom did not oppose at
this time, and the USPTO issued a notice of allowance for the mark authorizing
issuance once IJR filed a statement of use.
Beyond filing an intent-to-use trademark application, IJR also developed
a business plan for potential investors in The Krusty Krab. The business plan
included a logo for the restaurant and described the eatery as a “Cajun seafood
restaurant” that would sell shrimp, crawfish, and po-boys. IJR intended to
target families, singles, and students through print, radio, and online
advertisements. The business plan makes no reference to the SpongeBob
franchise or the fictional restaurant The Krusty Krab. IJR also purchased four
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domain names for the restaurant concept, leased property in California, and
procured restaurant equipment.
In November 2015, Viacom sent a cease-and-desist letter that demanded
the withdrawal of IJR’s trademark application and alleged infringement of The
Krusty Krab mark. IJR promptly responded, declining to cease use and
asserting that Viacom does not actually use The Krusty Krab as a trademark
and that there was no likelihood of consumer confusion. However, IJR
postponed opening any restaurants. Viacom then filed suit in January 2016.
Viacom asserted nine claims against IJR including unfair competition
under the Lanham Act and trademark infringement under Texas common law.
The complaint included allegations that IJR’s use of the mark in connection
with restaurant services was likely to cause, or to have caused, confusion or
mistake and to have deceived potential customers, causing them to believe that
the services offered by IJR were affiliated with, sponsored by, or connected
with Viacom; use of the mark would materially influence customers’
purchasing decisions for restaurant services; and as a result, Viacom suffered
and would continue to suffer damages to its goodwill and reputation.
Viacom commissioned a consumer survey and an expert report by Dr.
Edward Blair. The survey found that 30% of respondents thought The Krusty
Krab was connected with Viacom and 35% of respondents associated the
hypothetical restaurant with Viacom. IJR filed a Daubert motion to exclude
Dr. Blair’s report and testimony—alleging it was flawed—and Viacom filed a
motion for summary judgment on eight of its nine claims.
The court held a hearing on the motions and denied IJR’s motion to
exclude Dr. Blair’s report. The district court then granted, in part, Viacom’s
summary judgment motion on its common law trademark infringement and
Lanham Act unfair competition claims. The district court held that: Viacom
established ownership of the mark through sales and licensing; Viacom
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demonstrated that The Krusty Krab has acquired distinctiveness; and every
likelihood-of-confusion factor indicated IJR’s proposed use would probably
cause confusion. Viacom then requested that the district court dismiss its
other seven claims with prejudice and enter final judgment. The district court
did so, and IJR appealed.
II
A trademark infringement action under Texas common law is analyzed
in the same manner as a Lanham Act claim. 1 For Viacom to prevail on these
claims, it must show (1) that it owns a legally protectable mark in The Krusty
Krab and (2) that IJR’s use of the mark creates a likelihood of confusion as to
source, affiliation, or sponsorship. 2
IJR contends that the district court erred in granting summary judgment
for Viacom. We review de novo a district court’s grant of summary judgment. 3
IJR specifically asserts that there are genuine issues of material fact as to
whether Viacom owns a legally protectable mark and whether there is a
likelihood of confusion between the two The Krusty Krab marks.
1 Streamline Prod. Sys., Inc. v. Streamline Mfg., Inc., 851 F.3d 440, 450 (5th Cir. 2017)
(“The elements of common law trademark infringement under Texas law are the same as
those under the Lanham Act.” (citing Hot-Hed, Inc. v. Safehouse Habitats (Scotland), Ltd.,
333 S.W.3d 719, 730 (Tex. App.—Houston [1st Dist.] 2010, pet. denied))); Amazing Spaces,
Inc. v. Metro Mini Storage, 608 F.3d 225, 235 n.7 (5th Cir. 2010) (“A trademark infringement
and unfair competition action under Texas common law presents essentially ‘no difference in
issues than those under federal trademark infringement actions.’” (quoting Horseshoe Bay
Resort Sales Co. v. Lake Lyndon B. Johnson Improvement Corp., 53 S.W.3d 779, 806 n.3 (Tex.
App.—Austin 2011, pet. denied))).
2 See, e.g., 15 U.S.C. § 1125(a)(1)(A); Streamline, 851 F.3d at 450; Nola Spice Designs,
LLC v. Haydel Enters., Inc., 783 F.3d 527, 536 (5th Cir. 2015).
3 Nola Spice Designs, 783 F.3d at 536 (citing Xtreme Lashes, LLC v. Xtended Beauty,
Inc., 576 F.3d 221, 226 (5th Cir. 2009)).
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A trademark infringement action cannot be sustained unless the mark
is legally protectable. 4 While Viacom has never registered The Krusty Krab
mark, the Supreme Court has held that the Lanham Act “protects qualifying
unregistered marks.” 5 The Lanham Act provides that the term “trademark”
includes “any word, name, symbol, or device, or any combination thereof” that
is used or intended to be used “to identify and distinguish” one’s goods “from
those manufactured or sold by others.” 6 Viacom’s mark is legally protectable
if it establishes ownership by demonstrating that it uses The Krusty Krab as
a source identifier. 7 Often this court has bypassed the use inquiry and
conducted only a distinctiveness analysis. 8 However, the two issues are
separate questions, 9 and because the use-as-a-source-indicator requirement is
4 Elvis Presley Enters., Inc. v. Capece, 141 F.3d 188, 194 (5th Cir. 1998) (“[T]he
threshold requirement [is] that the plaintiff must possess a protectible mark, which must be
satisfied before infringement can be actionable.”).
5 Sugar Busters LLC v. Brennan, 177 F.3d 258, 267 (5th Cir. 1999) (citing Two Pesos,
Inc. v. Taco Cabana, Inc., 505 U.S. 763, 768 (1992)).
6 15 U.S.C. § 1127; see also RESTATEMENT (THIRD) OF UNFAIR COMPETITION § 9 (1995)
(“A trademark is a word . . . that is used in a manner that identifies those goods or services
and distinguishes them from the goods or services of others.”).
7 See Blue Bell, Inc. v. Farah Mfg. Co., 508 F.2d 1260, 1265-66 (5th Cir. 1975) (“[T]he
question of use adequate to establish appropriation remains one to be decided on the facts of
each case, and that evidence showing, first, adoption, and, second, use in a way sufficiently
public to identify or distinguish the marked goods in an appropriate segment of the public
mind as those of the adopter of the mark, is competent to establish ownership.” (quoting New
England Duplicating Co. v. Mendes, 190 F.2d 415, 418 (1st Cir. 1951))); see also Nextel
Commc’ns, Inc. v. Motorola, Inc., 91 U.S.P.Q.2d 1393, 1404 (T.T.A.B. 2009) (defining
trademark as a word used “to indicate the source of the goods” (quoting 15 U.S.C. § 1127)).
8 See Streamline Prod. Sys., Inc. v. Streamline Mfg., Inc., 851 F.3d 440, 451 (5th Cir.
2017) (beginning the analysis of a trademark infringement claim for a registered mark with
a distinctiveness inquiry); Nola Spice Designs, LLC v. Haydel Enters., Inc., 783 F.3d 527, 537
(5th Cir. 2015) (same); Bd. of Supervisors for La. State Univ. Agric. & Mech. Coll. v. Smack
Apparel Co., 550 F.3d 465, 475 (5th Cir. 2008) (same for an unregistered mark).
9 See 1 J. THOMAS MCCARTHY, TRADEMARKS & UNFAIR COMPETITION § 3.4 (5th ed.
2017) [hereinafter MCCARTHY] (“While the issue of use as a trademark is similar to the issues
of inherent distinctiveness and secondary meaning, it is a separate question.”).
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at issue in this case Viacom must establish both use and distinctiveness. 10 We
first consider the use of The Krusty Krab mark. Whether Viacom actually uses
The Krusty Krab as a source identifier is a question of fact. 11
III
While registration of a mark is “prima facie evidence of . . . the
registrant’s ownership of the mark,” 12 ownership “is established by use, not by
registration.” 13 An ownership right “accrues when goods bearing the mark are
placed on the market.” 14 Viacom’s mark clearly appears on goods in the
market, such as The Krusty Krab playsets and aquarium ornaments. The
question in this case, however, is whether Viacom uses The Krusty Krab to
indicate origin 15 because the purpose of trademark law is to “prevent[]
competitors from copying ‘a source-identifying mark.’” 16
Before we assess whether Viacom uses The Krusty Krab as a source
identifier, we address a threshold question: Can specific elements from within
a television show—as opposed to the title of the show itself—receive trademark
protection? We conclude that they can. While this court has never explored
this precise issue, we have affirmed a judgment against the junior use of Conan
10 See Nextel, 91 U.S.P.Q.2d at 1407 (holding that a chirping sound could not acquire
secondary meaning unless it was used as a trademark).
11 See Self-Realization Fellowship Church v. Ananda Church of Self-Realization, 59
F.3d 902, 907 (5th Cir. 1995) (holding that there was no genuine dispute of material fact that
a party had not used a phrase to identify its products); cf. Rock & Roll Hall of Fame &
Museum, Inc. v. Gentile Prods., 134 F.3d 749, 753-755 (6th Cir. 1998) (examining evidence on
this question at the preliminary injunction stage).
12 15 U.S.C. § 1115(a).
13 Union Nat’l Bank of Tex., Laredo, Tex. v. Union Nat’l Bank of Tex., Austin, Tex., 909
F.2d 839, 842 (5th Cir. 1990).
14 Blue Bell, Inc. v. Farah Mfg. Co., 508 F.2d 1260, 1265 (5th Cir. 1975); see U.S.
PATENT AND TRADEMARK OFFICE, TRADEMARK MANUAL OF EXAMINING PROCEDURE § 901
(21th ed. 2017) [hereinafter TRADEMARK MAN. OF EXAM. PROC.].
15 See 15 U.S.C. § 1127 (stating that a trademark “indicate[s] the source of the goods”).
16 Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23, 34 (2003) (quoting
Qualitex Co. v. Jacobson Prods. Co., 514 U.S. 159, 163-64 (1995)).
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the Barbarian—the title character of a comic book series—in a restaurant
concept. 17 This holding suggests that trademark protection may be granted to
certain characters, places, and elements of a broader entertainment entity.
Additionally, other courts have unequivocally extended this protection to
fictional elements of entertainment franchises. In Warner Bros., Inc. v. Gay
Toys, Inc., 18 the Second Circuit held that trademark protection may extend “to
the specific ingredients of a successful T.V. series.” 19 The Second Circuit held
in that case that the General Lee—an orange muscle car with a Confederate
flag emblem that was “prominently featured” on the successful television series
“The Dukes of Hazzard”—fell “within the ambit of Section 43(a)” of the
Lanham Act. 20 Subsequently, the Seventh Circuit also affirmed an injunction
barring the junior user from making a model of the “General Lee.” 21 The
underlying purposes of trademark are to protect goodwill and “to protect
consumers against confusion and monopoly,” and “to protect the investment of
producers in their trade names to which goodwill may have accrued and which
goodwill free-riders may attempt to appropriate by using the first producer’s
mark, or one that is deceptively similar.” 22 Extending trademark protection to
elements of television shows that serve as source identifiers can serve those
purposes.
The success of “SpongeBob Square Pants” is not in dispute, but use
within a popular television series does not necessarily mean that the mark is
17 Conan Props., Inc. v. Conans Pizza, Inc., 752 F.2d 145, 148, 150 (5th Cir. 1985).
18 658 F.2d 76 (2d Cir. 1981).
19 Id. at 78.
20 Id. at 77-78.
21 See Processed Plastic Co. v. Warner Commc’ns, Inc., 675 F.2d 852 (7th Cir. 1982).
22 Union Nat’l Bank of Tex., Laredo, Tex. v. Union Nat’l Bank of Tex., Austin, Tex., 909
F.2d 839, 843-44 (5th Cir. 1990).
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used as a source identifier. 23 “The salient question” is whether The Krusty
Krab mark, “as used, will be recognized in itself as an indication of origin for
the particular product or service.” 24 If the mark “creates a separate and
distinct commercial impression . . . [it] performs the trademark function of
identifying the source.” 25 In evaluating whether elements of a television series
are trademarks, the focus is on the role that the element plays within the show
and not the overall success or recognition of the show itself. When an element
only occasionally appears in a successful television series, the
indication-of-origin requirement may not be met. 26
For instance, in Paramount Pictures Corp. v. Romulan Invasions,
Paramount (a subsidiary of Viacom) sought trademark protection on the
Romulan mark, a fictional alien race in the “Star Trek” series. 27 The Romulan
mark was featured in television episodes, movies, books, licensed plastic
spaceship models and dolls, puzzles, games, and more. 28 The Trademark Trial
and Appeal Board (T.T.A.B.) concluded that the mark was “only” used “from
time to time” and held that Paramount “failed to establish any use of the term
23 See Paramount Pictures Corp. v. Romulan Invasions, 7 U.S.P.Q.2d 1897, 1900
(T.T.A.B. 1988) (holding that the term Romulan from “Star Trek” does not fulfill “the
requirement that a mark identify and distinguish the goods or services”).
24 In re Morganroth, 208 U.S.P.Q. 284, 287 (T.T.A.B. 1980) (emphasis added); see also
1 MCCARTHY § 3.4 (“The key question is whether, as actually used, the designation is likely
to be recognized in and of itself as an indication of origin for this particular product or
service.” (citing Textron Inc. v. Cardinal Eng’g Corp., 164 U.S.P.Q. 397, 399 (T.T.A.B. 1969)));
TRADEMARK MAN. OF EXAM. PROC. § 1301.02 (“It is the perception of the ordinary customer
that determines whether the asserted mark functions as a service mark, not the applicant's
intent, hope, or expectation that it do so.”).
25 In re Chem. Dynamics, Inc., 839 F.2d 1569, 1571 (Fed. Cir. 1988); see also 1
MCCARTHY § 3.4 (citing The Procter & Gamble Co. v. Keystone Auto. Warehouse, Inc., 191
U.S.P.Q. 468, 474 (T.T.A.B. 1976)).
26 See Romulan Invasions, 7 U.S.P.Q.2d at 1899.
27 Id. at 1897.
28 Id.
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Romulan . . . as a mark to distinguish its services.” 29 Star Trek fans may
vehemently disagree with this analysis as a factual matter. However, we cite
this decision to illustrate the conceptual aspects of the law in this area.
When an element plays a more central role in a franchise, trademark
protection is ordinarily granted. For example, the Southern District of New
York held that the Daily Planet, the employer of Clark Kent in “Superman,”
was a common law trademark because “[t]he totality of evidence demonstrates
that the Daily Planet has over the years become inextricably woven into the
fabric of the Superman story.” 30 Twenty-five years later, the Southern District
of New York also held that Kryptonite—a registered trademark—was a
protectable ingredient of the broader “Superman” franchise because it is “a
staple of the Superman character and story,” the mark “is immediately
recognized or associated with the character Superman,” and it “identif[ies] the
entertainment and other goods and services created, distributed and/or
licensed by or on behalf of DC Comics.” 31 Likewise, the Second and Seventh
Circuits granted trademark protection to the General Lee from “The Dukes of
Hazzard” because of its critical role in the television series. 32 The Fifth Circuit
has upheld trademark protection for a cartoon character that was central to
the comic strip. 33
The Krusty Krab is analogous to protected marks like the Daily Planet,
General Lee, and Conan the Barbarian. The mark is integral to “SpongeBob
SquarePants,” as it appears in over 80% of episodes, plays a prominent role in
29 Id. at 1899-1900.
30 DC Comics, Inc. v. Powers, 465 F. Supp. 843, 847 (S.D.N.Y. 1978).
31 DC Comics v. Kryptonite Corp., 336 F. Supp. 2d 324, 332 (S.D.N.Y. 2004).
32 See Processed Plastic Co. v. Warner Commc’ns, Inc., 675 F.2d 852 (7th Cir. 1982);
Warner Bros, Inc. v. Gay Toys, Inc., 658 F.2d 76 (2d Cir. 1981).
33 See Conan Props., Inc. v. Conans Pizza, Inc., 752 F.2d 145, 150 (5th Cir. 1985) (the
cartoon Conan the Barbarian).
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the SpongeBob films and musical, and is featured online, in video games, and
on licensed merchandise. 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.
Viacom has extensively licensed The Krusty Krab mark. A “trade or
service mark may be acquired through its use by controlled licensees.” 34 Even
if only the licensee uses the mark, “[o]wnership rights in a trademark or service
mark can be acquired and maintained through the use of the mark by a
controlled licensee.” 35 The record verifies that The Krusty Krab appears on
many consumer products including: reusable SpongeBob-themed stickers;
multiple Krusty Krab playsets from brands like Lego; an aquarium ornament;
a video game; and shirts, among other products. On most of those products,
The Krusty Krab is featured prominently and contributes in identifying the
good. This licensing regime has generated millions of dollars for Viacom and
provides further evidence that Viacom uses The Krusty Krab as a source
identifier and therefore owns the mark.
That the mark typically appears alongside the “SpongeBob
SquarePants” trademark does not threaten its status as a trademark. Both
the Federal Circuit and the T.T.A.B. have held that a “word mark does not lose
its strength as a trademark when the manufacturer[’s mark] is identified along
with the branded product.” 36 For example, Pop-Tarts received trademark
protection even though the “primary or house mark ‘KELLOGG’ always
appears on the labels, packages, and advertising material” because Pop-Tarts
was “likely to create a commercial impression separate and apart from
34 Turner v. HMH Publ’g Co., 380 F.2d 224, 229 (5th Cir. 1967).
35 3 MCCARTHY § 18:46.
36 Bridgestone Ams. Tire Ops., LLC v. Fed. Corp., 673 F.3d 1330, 1336 (Fed. Cir. 2012);
Kellogg Co. v. Gen. Foods Corp., 166 U.S.P.Q. 281, 282-83 (T.T.A.B. 1970).
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‘KELLOGG.’” 37 Likewise, The Krusty Krab creates a distinct commercial
impression signifying to consumers that products like Krusty Krab playsets or
aquarium ornaments originate from the famous fictional restaurant that
employs their beloved sea sponge character. The primary “SpongeBob
SquarePants” mark does not hinder The Krusty Krab in performing the
trademark function of identifying source.
Viacom’s ownership of the mark is not undermined by the word mark’s
varying styles, fonts, and sizes on the licensed products. Other circuits have
observed that “[c]onsistent and repetitive use of a designation as an indicator
of source is the hallmark of a trademark.” 38 The Krusty Krab is a word mark—
not a design mark—so the focus is whether the words themselves are
consistently used as an indicator of source. While the title, font, and
prominence of the mark are inconsistent, the words “Krusty Krab” are
consistently used on the licensed goods and support Viacom’s ownership claim.
The Krusty Krab’s key role in “SpongeBob SquarePants” coupled with
the consistent use of the mark on licensed products establishes ownership of
the mark because of its immediate recognition as an identifier of the source for
goods and services.
IV
While Viacom has established ownership of the mark through its use as
a source identifier, Viacom must also prove that The Krusty Krab mark is
37Kellogg, 166 U.S.P.Q. at 282-83.
38Rock & Roll Hall of Fame v. Gentile Prods., 134 F.3d 749, 753-56 (6th Cir. 1998)
(denying trademark protection on the architectural design of the building because the design
was not consistently emphasized); see also MicroStrategy Inc. v. Motorola, Inc., 245 F.3d 335,
342-43 (4th Cir. 2001) (holding that the phrase “Intelligence Everywhere” was not used as a
mark in part because the word mark was used in “limited, sporadic, and inconsistent” ways).
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distinctive in order to establish that it is legally protectable. 39
“[A] mark can be distinctive in one of two ways.” 40 “[A] mark is
inherently distinctive if ‘[its] intrinsic nature serves to identify a particular
source.’” 41 Even if a mark is not inherently distinctive, it can acquire
distinctiveness “if it has developed secondary meaning.” 42 The district court
held that Viacom failed to demonstrate that its mark is inherently distinctive,
but that The Krusty Krab had acquired distinctiveness through secondary
meaning. Because we agree that the mark has acquired distinctiveness
through secondary meaning, we pretermit consideration of whether the mark
is inherently distinctive.
A mark develops secondary meaning “when, in the minds of the public,
the primary significance of a [mark] is to identify the source of the product
rather than the product itself.” 43 One commentator has explained that “[i]n
determining what can qualify as a trademark, it is crucial that the designation
in question perform the job of identifying and distinguishing the goods or
39 See 15 U.S.C. § 1127 (defining trademark as a word used “to identify and distinguish
his or her goods”); Amazing Spaces, Inc. v. Metro Mini Storage, 608 F.3d 225, 237 (5th Cir.
2010) (“To be protectable, a mark must be distinctive.” (quoting Am. Rice, Inc. v. Producers
Rice Mill, Inc., 518 F.3d 321, 329 (5th Cir. 2008))); see also Streamline Prod. Sys., Inc. v.
Streamline Mfg., Inc., 851 F.3d 440, 451 (5th Cir. 2017) (undertaking a distinctiveness
inquiry in the analysis of a trademark infringement claim for a registered mark); Nola Spice
Designs, LLC v. Haydel Enters., Inc., 783 F.3d 527, 537 (5th Cir. 2015) (same); Bd. of
Supervisors for La. State Univ. Agric. & Mech. Coll. v. Smack Apparel Co., 550 F.3d 465, 476
(5th Cir. 2008) (same for an unregistered mark).
40 See Wal-Mart Stores, Inc. v. Samara Bros., Inc., 529 U.S. 205, 210-11 (2000).
41 Id. at 210 (quoting Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 768 (1992))
(alteration in original).
42 Id. at 211.
43 Test Masters Educ. Servs., Inc. v. Robin Singh Educ. Servs., Inc., 799 F.3d 437, 445
(5th Cir. 2015) (quoting Smack Apparel Co., 550 F.3d at 476) (alteration in original).
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services with which the symbol appears.” 44 To determine whether a mark has
acquired secondary meaning, courts consider the following seven factors:
(1) length and manner of use of the mark or trade dress, (2) volume
of sales, (3) amount and manner of advertising, (4) nature of use of
the mark or trade dress in newspapers and magazines,
(5) consumer-survey evidence, (6) direct consumer testimony, and
(7) the defendant's intent in copying the [mark]. 45
Several “factors in combination may show that” a mark has developed
secondary meaning “even if each factor alone would not.” 46
Whether a mark has acquired secondary meaning is a question of fact. 47
At summary judgment, this court considers whether IJR raised a fact question
as to secondary meaning—i.e. whether consumers associate The Krusty Krab
only with Viacom. 48 Viacom’s “burden of demonstrating secondary meaning ‘is
substantial and requires a high degree of proof.’” 49 Nonetheless, summary
judgment may be granted if the “record compels the conclusion that the movant
is entitled to judgment as a matter of law.” 50
The first factor—length and manner of use—supports Viacom. The
Krusty Krab appeared in the pilot episode of “SpongeBob SquarePants”
eighteen years ago. Over 80% of the episodes aired from 1999 through today
have included The Krusty Krab, and it is a central element of the SpongeBob
44 1 MCCARTHY § 3:1.
45 Test Masters, 799 F.3d at 445 (quoting Smack Apparel Co., 550 F.3d at 476)
(alteration in original).
46 Id. (quoting Smack Apparel Co., 550 F.3d at 476).
47 Amazing Spaces, Inc. v. Metro Mini Storage, 608 F.3d 225, 234 (5th Cir. 2010).
48 Test Masters, 799 F.3d at 447 (stating that a court must determine whether a party
“raised a dispute of fact as to whether consumers associate the mark with only its company”).
49 Nola Spice Designs, LLC v. Haydel Enters., Inc., 783 F.3d 527, 544 (5th Cir. 2015)
(quoting Test Masters Educ. Servs., Inc. v. Singh, 428 F.3d 559, 567 (5th Cir. 2005)).
50 See Amazing Spaces, 608 F.3d at 234 (quoting Smack Apparel Co., 550 F.3d at 474)
(affirming a grant of summary judgment on acquired distinctiveness while recognizing that
distinctiveness is evaluated by a preponderance of the evidence).
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universe. The recurrent use of The Krusty Krab over the past eighteen years
in a widely viewed television program is undisputed, as is the manner of use.
As for volume of sales, Viacom has earned millions on licensed products
that display The Krusty Krab mark, and two feature films in the SpongeBob
franchise—which prominently featured The Krusty Krab—grossed a combined
$470 million. This court has considered the sale of items grossing $30,500 to
be low volume, 51 but has affirmed a finding of secondary meaning on review of
a summary judgment when sales totaled $93 million. 52
The relevant question with regard to factor three—the amount and
manner of advertising—“is not the extent of the promotional efforts, but their
effectiveness in altering the meaning of [the mark] to the consuming public.” 53
There have been numerous print and Internet advertisements for The Krusty
Krab-licensed products, and $197 million was spent in promotional
expenditures for the two “SpongeBob SquarePants” feature films. The
effectiveness of this advertising is evident from the success of product sales
and the films. Though the effectiveness of the advertising as to The Krusty
Krab mark, specifically, has not been directly proven, its depiction in
advertisements is such that the public would recognize the mark as more than
an artistic backdrop.
With respect to the nature and use of the mark in media—factor four–
The Krusty Krab is often referenced by the press. The mark frequently
appears on the “SpongeBob SquarePants” social media platforms and is
51 Nola Spice Designs, 783 F.3d at 544.
52 Smack Apparel, 550 F.3d at 472, 478.
53 Zatarains, Inc. v. Oak Grove Smokehouse, Inc., 698 F.2d 786, 795 (5th Cir. 1983)
(quoting Aloe Creme Labs., Inc. v. Milsan, Inc., 423 F.2d 845, 850 (5th Cir. 1970)) (emphases
in original and alteration added), abrogated on other grounds by KP Permanent Make-Up,
Inc. v. Lasting Impression I, Inc., 543 U.S. 111 (2004).
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integrated into the SpongeBob website and mobile app. This evidence supports
Viacom’s assertion that its word mark has acquired secondary meaning. 54
The record does not contain consumer-survey evidence as to whether The
Krusty Krab has acquired secondary meaning, but “survey evidence is not
required to establish secondary meaning.” 55 There is no direct consumer
testimony nor any consideration of IJR’s intent in the distinctiveness inquiry.
Therefore, there is no evidence pertaining to factors five and six. The evidence
regarding IJR’s intent in copying the mark is discussed in more detail below.
That evidence is inconclusive.
IJR does not dispute the underlying facts but asserts that they merely
establish that the public recognizes “SpongeBob SquarePants” as a distinct
source of products; according to IJR, The Krusty Krab is just a cartoon
restaurant. This is not a reasonable inference from the undisputed evidence.
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. 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. Viacom’s
mark has acquired distinctiveness through secondary meaning as a matter of
law.
54 See Test Masters Educ. Servs., Inc. v. Robin Singh Educ. Servs., Inc., 799 F.3d 437,
446 (5th Cir. 2015).
55 Nola Spice Designs, 783 F.3d at 546.
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V
Viacom must also prove that IJR’s use of The Krusty Krab creates a
likelihood of confusion as to source, affiliation, or sponsorship. 56 It has met
that burden.
To establish a likelihood of confusion, Viacom must show “a probability
of confusion, which is more than a mere possibility of confusion.” 57 Word
association with Viacom’s The Krusty Krab is insufficient to establish a
probable likelihood of confusion, and the court “must ‘consider the marks in
the context that a customer perceives them in the marketplace.’” 58 To assess
whether use of a mark creates a likelihood of confusion as to affiliation,
sponsorship, or source, this court considers the so-called “digits of confusion.” 59
The digits form a “flexible and nonexhaustive list” 60 that includes the following
seven factors:
(1) the type of mark allegedly infringed; (2) the similarity between
the two marks; (3) the similarity of the products or services; (4) the
identity of retail outlets and purchasers; (5) the identity of the
advertising media used; (6) the defendant’s intent; and (7) any
evidence of actual confusion. 61
At times, our court has listed eight factors, the additional one being “the degree
of care exercised by potential purchasers.” 62 However, neither of the parties in
56 See 15 U.S.C. § 1125(a)(1).
57 Elvis Presley Enters., Inc. v. Capece, 141 F.3d 188, 193 (5th Cir. 1998).
58 Scott Fetzer Co. v. House of Vacuums Inc., 381 F.3d 477, 485 (5th Cir. 2004) (quoting
Elvis Presley, 141 F.3d at 197).
59 Bd. of Supervisors for La. State Univ. Agric. and Mech. Coll. v. Smack Apparel Co.,
550 F.3d 465, 478 (5th Cir. 2008) (quoting Westchester Media v. PRL USA Holdings, Inc., 214
F.3d 658, 664 (5th Cir. 2000)).
60 House of Vacuums, 381 F.3d at 485.
61 Id. at 484-85; see also Elvis Presley, 141 F.3d at 194; Amstar Corp. v. Domino’s Pizza,
Inc., 615 F.2d 252, 259 (5th Cir. 1980).
62 Streamline Prod. Sys., Inc. v. Streamline Mfg., Inc., 851 F.3d 440, 453 (5th Cir.
2017); accord Am. Rice, Inc. v. Producers Rice Mill, Inc., 518 F.3d 321, 329 (5th Cir. 2008).
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the present case, nor the district court, has discussed that factor. In any event,
“[n]o single factor is dispositive, and a finding of a likelihood of confusion need
not be supported by a majority of the factors.” 63
Likelihood of confusion is a question of fact. 64 However, “summary
judgment is proper if the ‘record compels the conclusion that the movant is
entitled to judgment as a matter of law.’” 65 The district court held “that all of
the factors support a likelihood of confusion” and ruled in Viacom’s favor.
Because all inferences must be made in the non-movant’s favor at summary
judgment, 66 the district court erred in finding that every digit of confusion
weighs in Viacom’s favor. Nonetheless, Viacom has established that as a
matter of law there is a likelihood of confusion between the two marks.
Context is critical to a likelihood-of-confusion analysis, and we “must
consider the application of each digit in light of the specific circumstances of
the case; otherwise, we risk inadvertently lowering the standard of
confusion.” 67 Because of the posture of this case, context is limited as IJR has
not yet opened its restaurant. However, IJR has filed an intent-to-use
trademark application for the name “The Krusty Krab” in restaurant services.
It has also taken steps towards opening the restaurant such as leasing
property, procuring equipment, purchasing domain names, and developing a
comprehensive business plan. This court must not divine the theme and
details of the restaurant, but the record contains sufficient context to conduct
a likelihood-of-confusion analysis.
63 Smack Apparel, 550 F.3d at 478.
64 Xtreme Lashes, LLC v. Xtended Beauty, Inc., 576 F.3d 221, 227 (5th Cir. 2009).
65 Id. at 227 (quoting Smack Apparel, 550 F.3d at 474).
66 Id. at 226.
67 Scott Fetzer Co. v. House of Vacuums Inc., 381 F.3d 477, 485 (5th Cir. 2004).
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“The first digit, the type of mark, refers to the strength of the mark.” 68
In evaluating the strength of The Krusty Krab mark, the focus is on Viacom’s
mark. 69 The more distinctive a mark, the stronger the mark. 70 Strong marks
are entitled to more protection because there is a greater likelihood “that
consumers will confuse the junior user’s use with that of the senior user.” 71
Viacom’s mark is strong because it has acquired distinctiveness through
secondary meaning. 72 Therefore the first digit weighs in favor of a likelihood
of confusion.
The second digit is the similarity of the marks. Assessing the similarity
of the marks “requires consideration of the marks’ appearance, sound, and
meaning.” 73 “Even if two marks are distinguishable, we ask whether, under
the circumstances of use, the marks are similar enough that a reasonable
person could believe the two products have a common origin or association.” 74
Viacom’s The Krusty Krab is a word mark, and IJR’s mark has identical
spelling and pronunciation, including the unconventional use of K’s instead of
C’s. While marks can share a key word and still be “stylistically and
typographically distinguishable” so as to produce different commercial
impressions, 75 IJR’s mark is verbatim the same and there is no genuine issue
68Smack Apparel, 550 F.3d at 478-79.
69Elvis Presley Enters., Inc. v. Capece, 141 F.3d 188, 201 (5th Cir. 1998) (“In looking
at the strength of the mark, the focus is the senior user’s mark.”).
70 Streamline Prod. Sys., Inc. v. Streamline Mfg., Inc., 851 F.3d 440, 454 (5th Cir.
2017).
71 Elvis Presley, 141 F.3d at 201.
72 See supra Part IV; see also Wal-Mart Stores, Inc. v. Samara Bros., Inc., 529 U.S.
205, 211 (2000) (holding that a mark is distinctive “if it has developed secondary meaning”);
Xtreme Lashes, LLC v. Xtended Beauty, Inc., 576 F.3d 221, 227 (5th Cir. 2009) (suggesting
that factor one supports trademark protection if the mark had acquired secondary meaning).
73 Streamline, 851 F.3d at 454 (quoting Smack Apparel, 550 F.3d at 479).
74 Id. (quoting Xtreme Lashes, 576 F.3d at 228).
75 Amstar Corp. v. Domino’s Pizza, Inc., 615 F.2d 252, 260-61 (5th Cir. 1980) (Domino’s
Pizza and Domino’s Sugar).
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of material fact with respect to this digit of confusion. Logos for the two marks
may differ, but the words themselves are indistinguishable and would likely
confuse consumers as to the source, affiliation or sponsorship of IJR’s The
Krusty Krab restaurant.
The third digit in the likelihood of confusion analysis is the similarity of
the products or services. The more similar the products and services, the
greater the likelihood of confusion. 76 Viacom’s The Krusty Krab has a distinct
theme as a fictional hamburger restaurant, whereas IJR has not fully
developed a theme for its planned seafood restaurant. Existing context
suggests that the restaurants will have little thematic overlap. For example,
IJR’s business plan never references SpongeBob, and IJR’s sample menu
serves po-boys and boiled seafood, not fast food hamburgers. While there is
little evidence of thematic overlap between the restaurants, IJR nevertheless
plans to open a restaurant, and given the success of SpongeBob, that indicates
a likelihood of confusion.
Furthermore, “[t]he danger of affiliation or sponsorship confusion
increases when the junior user’s services are in a market that is one into which
the senior user would naturally expand.” 77 In Conan Properties, Inc. v. Conans
Pizza, Inc., this court recognized the logical extension of fictional characters to
restaurants, explaining that “today’s consumers expect [cartoon character]
endorsements and act favorably toward them” in the restaurant setting. 78
Here, both marks already identify restaurants. Furthermore Viacom could
naturally develop a real The Krusty Krab restaurant based on the fictional
eatery, as its subsidiary did when it licensed Bubba Gump Shrimp Co., a
76 Streamline, 851 F.3d at 454-55 (5th Cir. 2017) (quoting Xtreme Lashes, 576 F.3d at
229).
77 Elvis Presley Enters., Inc. v. Capece, 141 F.3d 188, 202 (5th Cir. 1998).
78 752 F.2d 145, 150 (5th Cir. 1985).
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fictional business in the movie “Forrest Gump,” to create a chain of real seafood
restaurants. A reasonable jury would find that factor three favors a likelihood
of confusion.
The fourth digit is the identity of retail outlets and purchasers. The
greater the overlap between retail outlets and purchasers, the greater the
likelihood of confusion. 79 IJR does not yet have a retail outlet or customers,
but its business plan and Ramos’s testimony provide context. IJR plans to
open restaurants in California and Texas, and it intends to target “the general
public,” particularly “families, singles, and students . . . as well as the area’s
work force.” At this general level of abstraction, Viacom also targets the
general public, including residents of California and Texas. Based on this
broad overlap, the district court found that factor four weighed in Viacom’s
favor. However, there are substantial differences in the retail outlets and the
predominant purchasers that mitigate the possibility of confusion.
The retail outlets have little overlap, as Viacom presumably targets
television viewers, toy stores, and online retailers, whereas IJR’s services will
only be available in brick-and-mortar restaurants. This court previously held
that when a senior user distributes primarily through grocery stores and a
junior user distributes exclusively through fast food outlets, there are basic
differences in modes of distribution even if the senior user also distributes
some of its product through fast food outlets. 80 Likewise, Viacom and IJR
would have different retail outlets even if there were marginal overlap.
There is some overlap in purchasers—IJR targets families, two-thirds of
SpongeBob viewers are children, and one-third of viewers are technically
79 Streamline, 851 F.3d at 455 (“The smaller the overlap between the retail outlets for
and the predominant consumers of [plaintiff’s] and [defendant’s] goods, the smaller the
possibility of confusion.”).
80 Domino’s Pizza, 615 F.2d at 262.
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adults—but the core consumers of each mark are dissimilar. Purchaser
identity is similar, for example, when the competing marks both target trained
cosmetologists 81 or drillers of natural gas. 82 By contrast, substantial
dissimilarities existed when the junior user’s fast-food pizza patrons were
“primarily young (85.6% under 35 years of age), single (61%) males (63.3%),”
while the senior user’s purchasers of sugar in grocery stores were
“predominately middle-aged housewives.” 83 There is no empirical data in the
present case, and it is not clear how much the identity of consumers and
purchasers would overlap. SpongeBob predominately targets children and
young adults through mostly digital channels, whereas IJR’s retail outlets
would be physical restaurants. However, it is reasonable to infer that some
children who are SpongeBob fans would influence their parents’ or caretakers’
decision to eat at a Krusty Krab restaurant, and that adult SpongeBob fans
might well dine at a Krusty Krab restaurant, at least once, due to the name.
But the extent of the overlap between purchasers cannot be gauged adequately
on the record before us.
The fifth digit of confusion is the identity of advertising media. “The
greater the similarity in the [advertising] campaigns, the greater the likelihood
of confusion.” 84 Ramos has testified, and IJR’s business plan confirms, that
IJR will advertise through traditional media such as television and print, as
well as online media including social networks and “Google ads.” Viacom
81 Xtreme Lashes, LLC v. Xtended Beauty, Inc., 576 F.3d 221, 229 (5th Cir. 2009).
82 See Streamline, 851 F.3d at 455 (holding that because the equipment could
eventually end up in the same customers hands, the digit of confusion moved from against
likelihood of confusion to neutral).
83 Domino’s Pizza, 615 F.2d at 262.
84 Streamline, 851 F.3d at 455 (quoting Exxon Corp. v. Tex. Motor Exch. of Hous., Inc.,
628 F.2d 500, 506 (5th Cir. 1980)) (emphasis in original).
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advertises “SpongeBob SquarePants” on television—and through it The
Krusty Krab mark—and it also promotes the mark online.
This court has held that when “[b]oth companies use print
advertisements, direct mailings, and Internet promotion” it “supports an
inference that the parties use similar advertising and marketing channels.” 85
On the other hand, when one mark advertises nationally and the other mark
advertises locally in a specialized manner, there are significant differences
between the advertising media used. 86 Absent any existing advertising by IJR,
it is difficult to assess the similarity between the campaigns. We have held
that this digit was “minimally probative” when a defendant did not advertise
and the record “was unable to provide much information about these ads.” 87
Likewise, while there is substantial overlap in the abstract, without specific
advertising content, digit five does not weigh in favor of a likelihood of
confusion.
The sixth digit is the defendant’s intent. “Although not necessary to a
finding of likelihood of confusion, a defendant’s intent to confuse may alone be
sufficient to justify an inference that there is a likelihood of confusion.” 88 If
there is no evidence of intent to confuse, then this factor is neutral. 89 The
relevant inquiry is whether IJR intended to derive benefits from Viacom’s
reputation by using The Krusty Krab mark. 90 Evidence that a defendant
85 Xtreme Lashes, 576 F.3d at 229.
86 Domino’s Pizza, 615 F.2d at 262.
87 Bd. of Supervisors for La. State Univ. Agric. and Mech. Coll. v. Smack Apparel Co.,
550 F.3d 465, 481 (5th Cir. 2008).
88 Streamline, 851 F.3d at 455 (quoting Smack Apparel, 550 F.3d at 481).
89 Xtreme Lashes, 576 F.3d at 229; see also Elvis Presley Enters., Inc. v. Capece, 141
F.3d 188, 203 (5th Cir. 1998) (“If the defendant acted in good faith, then this digit of confusion
becomes a nonfactor in the likelihood-of-confusion analysis, rather than weighing in favor of
a likelihood of confusion.”). But cf. Streamline, 851 F.3d at 456-57 (holding that because there
was no intent to confuse, “this digit weighs against finding a likelihood of confusion”).
90 Streamline, 851 F.3d at 455.
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intends to “pass off” its product as that of another can be found through
imitation of packaging, similar distribution methods, and more. 91
The district court acknowledged that it was “not clear” whether Ramos
intended to derive benefits from Viacom’s reputation. Nonetheless, it held that
IJR acted in bad faith because Murillo associated the phrase The Krusty Krab
with “SpongeBob SquarePants” and Ramos was aware of Viacom’s use of the
mark before he submitted his trademark application. Murillo’s word
association, without more, does not establish bad faith at summary judgment.
Furthermore, while some courts would infer that Ramos’s selection of a mark
with knowledge of another’s use is a signal of intent, 92 this court has held that,
“‘mere awareness’ of the senior user’s mark does not ‘establish[] . . . bad
intent.’” 93 Also, Murillo averred that he never mentioned SpongeBob during
his discussions with Ramos, and IJR asserted that the original Crusted Crab
name was created to reference seafood with a crust on it and that the spelling
modification was a stylistic decision.
While a jury may disbelieve IJR, at the summary judgment stage there
is a genuine issue of material fact as to whether IJR intended to derive benefits
from Viacom’s The Krusty Krab. IJR asserts that it spontaneously developed
its name, and this court has held that organic creation of a mark shows lack of
intent and does not support a likelihood of confusion. 94 IJR utilized only one
91 Domino’s Pizza, 615 F.2d at 263.
92 See, e.g., Fleischmann Distilling Corp. v. Maier Brewing Co., 314 F.2d 149 (9th Cir.
1963).
Streamline, 851 F.3d at 456 (quoting Conan Props., Inc. v. Conans Pizza, Inc., 752
93
F.2d 145, 150 (5th Cir. 1985)) (alterations in original); see also 4 MCCARTHY § 23:115 (citing
cases from the Second, Sixth, Seventh, Tenth, and Federal Circuits) (“‘[M]ere knowledge or
awareness of the senior user’s mark is not the same as an intent to confuse customers.”).
94 Streamline, 851 F.3d at 456 (noting that when the junior use chose its name, it was
unaware of the senior user’s existence); Domino’s Pizza, 615 F.2d at 263 (holding that there
was no evidence of intent because even though the junior user was aware of Domino sugar,
he was simply shortening the prior name of the restaurant).
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element of the show—The Krusty Krab name—a name that Viacom did not
register. These facts are more favorable to IJR than to the Conans Pizza junior
user, but even when there was a “pervasive, inescapable aura of CONAN THE
BARBARIAN,” 95 this court held that “sufficient doubt exists regarding
whether that use was designed to capitalize on [plaintiff’s] goodwill.” 96 At
summary judgment, this court must “disregard all evidence favorable to the
moving party that the jury is not required to believe,” 97 and “construe all the
evidence and reasonable inferences deduced therefrom in a light most
favorable to [IJR].” 98 The district court erred in inferring bad intent, as
evidence of IJR’s malevolence is circumstantial. Accordingly, this digit does
not support a finding of a likelihood of confusion.
The seventh digit is evidence of actual confusion. This is the “best
evidence of a likelihood of confusion.” 99 Even if initial consumer confusion is
quickly dispelled, this initial misunderstanding is evidence of confusion. 100 “To
show actual confusion, a plaintiff may rely on anecdotal instances of consumer
confusion or consumer surveys.” 101 Viacom commissioned Dr. Blair to perform
a consumer survey, and it found that 30% of respondents indicated that a
restaurant named The Krusty Krab was “operated by, affiliated or connected
with, or approved or sponsored by Viacom” and that 35% of respondents
associated such a restaurant with Viacom. There is also anecdotal evidence of
95 Conan Props., Inc. v. Conans Pizza, Inc., 752 F.2d 145, 150 (5th Cir. 1985).
96 Id. at 151.
97 Moore v. Willis Indep. Sch. Dist, 233 F.3d 871, 874 (5th Cir. 2000).
98 Xtreme Lashes, LLC v. Xtended Beauty, Inc., 576 F.3d 221, 226 (5th Cir. 2009)
(quoting Int’l Shortstop, Inc. v. Rally’s Inc., 939 F.2d 1257, 1260 (5th Cir. 1991)).
99 Elvis Presley Enters., Inc. v. Capece, 141 F.3d 188, 203-04 (5th Cir. 1998) (quoting
Domino’s Pizza, 615 F.2d at 263).
100 Id. at 204.
101 Scott Fetzer Co. v. House of Vacuums Inc., 381 F.3d 477, 486 (5th Cir. 2004)
(citations omitted).
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confusion: Ivan Murillo admitted that The Krusty Krab calls to mind
“SpongeBob SquarePants,” and an IJR investor mentioned SpongeBob “out of
the blue” while discussing the restaurant.
The district court admitted Dr. Blair’s report over IJR’s objections—
which this court reviews for abuse of discretion 102—and held that the survey
results were “sufficient” to weigh in favor of a likelihood of confusion.
Consumer surveys may evidence confusion at levels less than 30%. 103
However, when survey results are “substantially defective,” confusion levels of
57% and 71% are insufficient to evidence actual confusion. 104 Therefore, we
must consider whether Dr. Blair’s survey was substantially defective.
“Usually, methodological flaws in a survey bear on the weight the survey
should receive, not the survey’s admissibility.” 105 However, “a survey can be
‘so badly flawed that it cannot be used to demonstrate . . . the likelihood of
consumer confusion.’” 106 This court has concluded that when participants were
non-representative and questioning procedures were improper, the surveys
were so seriously flawed that no reasonable jury could consider them as
evidence of confusion. 107 This case presents no such representativeness
102 Moore v. Ashland Chem. Inc., 151 F.3d 269, 274 (5th Cir. 1998) (en banc) (citing
Gen. Elec. Co. v. Joiner, 522 U.S. 136 (1997); see also Daubert v. Merrell Dow Pharm., Inc.,
509 U.S. 579 (1993)).
103 Exxon Corp. v. Tex. Motor Exch. of Hous., Inc., 628 F.2d 500, 507 (5th Cir. 1980)
(finding that 15% and 23% levels of confusion are “strong evidence indicating a likelihood of
confusion”).
104 Domino’s Pizza, 615 F.2d at 263 (dismissing a survey that found that 71% percent
of participants thought that a company named Domino’s Pizza, if it made other products,
would make sugar); see House of Vacuums, 381 F.3d at 488 (dismissing a survey in which
57% of participants said they assumed an affiliation or association between the two marks).
105 House of Vacuums, 381 F.3d at 488.
106 Id. at 488 (quoting Universal City Studios, Inc. v. Nintendo Co., Ltd., 746 F.2d 112,
118 (2d Cir. 1984)).
107 See id. at 487-88 (concluding the survey was flawed because it suggested a
connection between the marks and it only surveyed purchasers of the plaintiff’s product
bearing the mark); Domino’s Pizza, 615 F.2d at 264 (asking overly open-ended questions such
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concerns. However, parts of the survey resembled a word-association test. Dr.
Blair utilized the widely accepted Eveready format when conducting his
survey. 108 But the survey asked if “THE KRUSTY KRAB restaurant [is]
affiliated or connected with any other company or organization.” This invites
word association, and “a mere word-association test is entitled to little
weight.” 109 Yet these methodological flaws affect only the weight the survey
should receive; they do not rise to the level of a substantial defect, and the
district court did not abuse its discretion in admitting Dr. Blair’s report.
This court has “set a low bar . . . stating that a plaintiff need provide
‘very little proof of actual confusion . . . to prove likelihood of confusion.’” 110
Construing all evidence in IJR’s favor, Blair’s survey has probative value and
there is anecdotal evidence of actual confusion. We therefore conclude that
this digit weighs in favor of a likelihood of confusion.
The record shows that there is no genuine issue of material fact as to
likelihood of confusion. The digits of confusion—particularly the strength of
Viacom’s mark, the identical spelling and pronunciation of the marks, both
marks’ identification of restaurants, and evidence of actual confusion—dictate
that IJR’s use of the mark infringes on Viacom’s trademark. By creating a
connection in the consumer’s mind between IJR’s restaurant-in-development
as whether Domino’s Pizza brought anything else to mind and surveying only the
demographic that purchased the plaintiff’s products bearing the mark).
108 6 MCCARTHY § 32:174 (noting that the format accepted in Union Carbide Corp. v.
Ever-Ready, Inc., 531 F.2d 366 (7th Cir. 1976) has “become a standard and widely accepted
format to prove the likelihood or non-likelihood of confusion”).
109 Domino’s Pizza, 615 F.2d at 264 (quoting Holiday Inns, Inc. v. Holiday Out in Am.,
481 F.2d 445, 448 (5th Cir. 1973)); see also 4 MCCARTHY § 23:9 (“‘Confusion’ means more than
that the junior user’s mark merely ‘calls to mind’ the senior user’s mark.”).
110 Streamline Prod. Sys. Inc. v. Streamline Mfg., Inc., 851 F.3d 440, 457 (5th Cir.
2017) (quoting Xtreme Lashes, LLC v. Xtended Beauty, Inc., 576 F.3d 221, 229 (5th Cir.
2009)).
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Case: 17-20334 Document: 00514482390 Page: 28 Date Filed: 05/22/2018
No. 17-20334
and The Krusty Krab from “SpongeBob SquarePants,” there is an
impermissible likelihood of confusion as to source, affiliation, or sponsorship.
While this holding does not grant trademark protection to Viacom in
every context, third parties cannot appropriate the goodwill and reputation of
The Krusty Krab by naming a restaurant The Krusty Krab absent a showing
that the restaurant was developed in a context sufficient to avoid any
likelihood of consumer confusion. This case squarely falls within the protection
of the Lanham Act and consumers would affiliate Viacom’s legally protectable
The Krusty Krab mark with IJR’s seafood restaurant by the same name.
* * *
For the foregoing reasons, we AFFIRM the judgment of the district court.
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