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Starbucks Corp. v. Wolfe's Borough Coffee

September 28, 2004

STARBUCKS CORP. AND STARBUCKS U.S. BRANDS, INC., PLAINTIFFS,
v.
WOLFE'S BOROUGH COFFEE, INC. D/B/A BLACK BEAR MICRO ROASTERY, DEFENDANT.



The opinion of the court was delivered by: Laura Taylor Swain, United States District Judge

OPINION AND ORDER

Before the Court are cross-motions for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure in this action arising from the use by Defendant Wolfe's Borough Coffee, Inc., d/b/a Black Bear Micro Roastery ("Black Bear" or "Defendant"), of the names "Charbucks Blend" and "Mister Charbucks" for a blend of dark roasted coffee that Black Bear is allegedly selling in direct competition with Plaintiffs' Starbucks coffee products. Plaintiffs Starbucks Corporation and Starbucks U.S. Brands, Inc. (collectively, "Plaintiffs") move for judgment as a matter of law on their federal and state trademark dilution claims, brought pursuant to the Federal Trademark Dilution Act ("FTDA"), 15 U.S.C. §§ 1125(c), and 1127 and New York Gen. Bus. Law § 360-l, their federal trademark infringement and unfair competition claims, brought pursuant to the Lanham Act, 15 U.S.C. §§ 1114(1) and 1125(a), their deceptive acts and business practices and false advertising claims, brought pursuant to New York Gen. Bus. Law §§ 349 and 350, and their common law unfair competition claim. Defendant opposes Plaintiffs' motion in its entirety and cross-moves for summary judgment,*fn2 seeking dismissal of each of the aforementioned claims.

The Court has jurisdiction of the federal claims asserted in this action pursuant to 28 U.S.C. §§ 1331 and 1338(a), as well as 28 U.S.C. § 1332(a). The Court has jurisdiction of Plaintiffs' state claims pursuant to 28 U.S.C. §§ 1367 and 1338(b).

The Court has considered throughly all of the parties' submissions and arguments relating to the motions. For the following reasons, Plaintiffs' motion for summary judgment is denied and Defendant's motion for summary judgment is granted in part and denied in part.

BACKGROUND*fn3

Plaintiff Starbucks Corporation is a large and very well-known vendor of specialty coffees and coffee products. Starbucks Corporation has grown over the last 30-plus years from a single coffee shop into a chain of thousands of retail stores located across the United States and Canada, and in numerous other countries around the world. (Declaration of Sheri Marzolf, dated July 17, 2002 ("Marzolf Decl.") at ¶ 1, Exh. 6 to Affirmation of Barbra S. Levy, dated July 19, 2002 ("Levy Aff.").) Starbucks Corporation also supplies premium coffees to hundreds of restaurants and other accounts all over the globe. (Id.) Starbucks' revenues for fiscal year 2001 exceeded $2.5 billion. (Id.)

Since 1971, Starbucks Corporation has done business under the trade names "Starbucks," "Starbucks Coffee Company" and "Starbucks Coffee," and has used the "STARBUCKS" trademark (the "Starbucks mark") both as the name of the company and as an identifier of its goods and services. (Id. at ¶ 4.) The Starbucks mark is the subject of more than 56 trademark registrations issued by the United States Patent and Trademark Office, and has been registered in over 100 foreign countries. (Id.) Starbucks has expended substantial energy, time and money promoting the Starbucks mark throughout the United States and abroad. (Id. at ¶ 5.)

Ownership of the Starbucks mark is vested in Plaintiff Starbucks U.S. Brands, Inc., a wholly-owned subsidiary of Starbucks Corporation. Starbucks Corporation is a licensee of all of the trademarks owned by Starbucks U.S. Brands, Inc. (Id. at ¶ 4.)

The thousands of Starbucks retail stores located around the world sell coffee, cappuccino, espresso-based beverages and teas brewed on site, blended beverages, numerous varieties of Starbucks brand roasted coffees, baked goods and other branded merchandise. Each of the retail stores prominently displays the Starbucks mark on exterior signs and at a variety of other locations throughout the store. (Id. at 6.) In addition, Starbucks has licensed Host Marriott Services Corporation to operate over 150 coffee kiosks in major American and Canadian airports. The kiosks, which sell Starbucks brand coffees and other beverages prepared on site, utilize the Starbucks mark in a manner similar to the retail stores described above. (Id. at ¶ 7.) Starbucks brand coffee and espresso beverages are also sold from dedicated retail areas in hundreds of Barnes & Noble Bookstores, which prominently display the Starbucks mark, and Starbucks has entered into license agreements with major supermarkets, including Safeway and Albertson's, for the sale of Starbucks products. (Id. at ¶¶ 8-9.) Starbucks also sells its coffee to hundreds of restaurants, as well as numerous airlines, sports and entertainment venues, movie theaters, hotels and cruise lines. Starbucks permits all of these customers to indicate on menus and in promotional items that they are serving Starbucks brand coffees. Such customers are also permitted to use the Starbucks mark on cups and coffee dispensers, and in promotional materials. (Id. at ¶ 10.) In addition, Starbucks distributes several exclusive coffee blends, a brand of ice cream and two coffee drinks, all displaying the Starbucks mark, for sale at grocery stores and other retailers, and operates a heavily trafficked website which utilizes the Starbucks mark throughout the site. (Id. at ¶¶ 11-12.)

Defendant Black Bear, a company with annual gross revenues that are generally less than $200,000 per year, manufactures and sells to the public roasted coffee beans and related goods.*fn4 (Affidavit of James O. Clark, dated August 16, 2002 ("Clark Aff."), at ¶ 25.) Black Bear's coffee is sold only in retail grocery stores, where labeled and packaged Black Bear products are made available on shelves, and by direct order either online at Black Bear's website or via telephone/fax. (Id. at ¶ 33.) Black Bear's company logo, which is prominently displayed on its website, includes a graphic representation of a recumbent bear and the words "The Black Bear Micro Roastery." (Id. at ¶ 23.)

In February 1997, Black Bear developed a dark roasted blend of coffee named "Charbucks Blend," which it began selling and shipping to customers on April 7, 1997. (Deposition of James O. Clark, taken April 18, 2002 ("Clark Dep.") at 14-15, Exh. 5 to Levy Aff.) In or about April 2001, Black Bear changed the product's name from "Charbucks Blend" to "Mister Charbucks." (Id. at 44.) At the time Black Bear began making and selling its Charbucks Blend, Black Bear was aware of the Starbucks mark, which had already become a valid trademark. As of the time in 2002 when the instant motion papers were filed, Black Bear was still manufacturing and selling the aforementioned blend of dark roasted coffee under the name "Mister Charbucks." (Clark Aff. at ¶ 11.) *fn5 From April 8, 1997 until August 14, 2002, Black Bear's sales of Charbucks Blend/Mister Charbucks coffee totaled $35,649.61, or less than $7,000 per year. (Id. at ¶ 29.) Black Bear's only commercial use of the Charbucks name is in relation to the labeling and sales of its "Mister Charbucks" blend of coffee. (Id. at ¶ 28.)

The "Mister Charbucks" label incorporates three graphic representations of a "proper British gentleman," as well as the words "Mister Charbucks," "Roasted to the extreme... For those who like the extreme...," "Pre-Ground," and "Gourmet Coffee By The Black Bear Micro Roastery Center Tuftonboro, New Hampshire." (Id. at ¶ 24.)

In August 1997, Starbucks first contacted Black Bear regarding Black Bear's use of the term "Charbucks." (Id. at ¶ 43.) Starbucks notified Black Bear that it objected to the use of the term "Charbucks" on the ground that it was disparaging and dilutive of the Starbucks mark, and demanded that Black Bear cease and desist from all further use of the Charbucks mark. The parties entered into extensive negotiations and reached an agreement in principle whereby Black Bear would terminate use of the name Charbucks, but Black Bear ultimately declined to finalize the agreement and continued to sell its Charbucks Blend coffee. (Pls' R.56.1 Stmt. at ¶ 49; Def's Stmt. of Add. Mat. Facts Pursuant to R.56.1 at 6.) Starbucks did not file the instant lawsuit until July 2001. (Pls' Obj. and Resp. to Def's R.56.1 Stmt. at 8.)

DISCUSSION

Summary Judgment Standard

Summary judgment"shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). The Court's role is not to "weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). "A factual issue is genuine if it can reasonably be resolved in favor of either party," and "[a] fact is material if it can affect the outcome of the action based on the governing law." David v. N.Y.P.D. 42nd Precinct Warrant Squad, No. 02 Civ. 2581, 2004 WL 1878777, at *3 (S.D.N.Y. Aug. 23, 2004) (citing Anderson, 477 U.S. at 248, 250). Initially, the burden is on the moving party to "demonstrate the absence of any genuine issues of material fact." Harrison v. Potter, 323 F. Supp. 2d 593, 599 (S.D.N.Y. 2004) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)). If the moving party satisfies its burden, the burden then "shifts to the nonmoving party to offer specific evidence showing that a genuine issue for trial exists." Am. Home Assurance v. Zim Jamaica, 296 F. Supp. 2d 494, 498-99 (S.D.N.Y. 2003). In resolving a motion for summary judgment, "the Court must view the evidence in a light that is favorable to the non-moving party and draw all reasonable inferences in favor of that party." Harrison, 323 F. Supp. ...


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