STARBUCKS CORPORATION, a Washington corporation, Starbucks U.S. Brands LLC, Plaintiffs-Counter-Defendants-Appellants,
WOLFE'S BOROUGH COFFEE, INC., a New Hampshire corporation, d/b/a Black Bear Micro Roastery, Defendant-Counter-Claimant-Appellee.
Argued: Jan. 9, 2013.
David E. Sipiora, Matthew Christian Holohan, Kilpatrick Townsend & Stockton LLP, Denver, CO, for Plaintiffs-Counter-Defendants-Appellants.
John-Mark Turner, Christopher Cole, Sheehan, Phinney, Bass Green, P.A., Manchester, NH, for Defendant-Counter-Claimant-Appellee.
Before: KATZMANN, Chief Judge, KEARSE and LOHIER, Circuit Judges.
LOHIER, Circuit Judge:
Starbucks Corporation and Starbucks U.S. Brands LLC (together, " Starbucks" ) appeal from a judgment of the United States District Court for the Southern District of New York (Swain, J.) denying Starbucks' request for an injunction pursuant to the Federal Trademark Dilution Act of 1995 (" FTDA" ), 15 U.S.C. § 1125(c), prohibiting Wolfe's Borough Coffee, Inc., doing business as Black Bear Micro Roastery (" Black Bear" ), from using Black Bear's " Mister Charbucks," " Mr. Charbucks," and " Charbucks Blend" marks (the " Charbucks Marks" ). After a bench trial followed by additional briefing from the parties upon remand from this Court, the District Court concluded that Starbucks failed to prove that the Charbucks Marks are likely to dilute Starbucks' famous " Starbucks" marks (the " Starbucks Marks" ) and denied Starbucks' request for an injunction.
On appeal, Starbucks argues that the District Court erred in finding only minimal similarity and weak evidence of actual association between the Charbucks Marks and the Starbucks Marks. Starbucks also contends that the District Court erred in balancing the statutory dilution factors by giving no weight at all to three of the factors— the strong distinctiveness, exclusive use, and high degree of recognition of the Starbucks Marks— and placing undue weight on the minimal similarity between the marks.
For the following reasons, we conclude that the District Court did not err in its factual findings, and, balancing the statutory factors de novo, we agree with the District Court that Starbucks failed to prove a likelihood of dilution. We therefore affirm.
We assume familiarity with the underlying facts and long procedural history of the case, which are set forth in our previous opinions, Starbucks Corp. v. Wolfe's Borough Coffee, Inc., 477 F.3d 765 (2d Cir.2007) (" Starbucks II " ), and Starbucks Corp. v. Wolfe's Borough Coffee, Inc., 588 F.3d 97 (2d Cir.2009) (" Starbucks IV " ). We recount them here only as necessary to explain our disposition of this appeal.
As of 2005, when the bench trial occurred, Starbucks had grown from a single coffee shop in Seattle in 1971 to a singularly prominent global purveyor of specialty coffee and coffee products, with 8,700 retail locations worldwide and revenues of $5.3 billion for fiscal year 2004. Starbucks U.S. Brands is the owner, and Starbucks Corporation a licensee, of at least 56 valid United States trademark registrations that include the Starbucks Marks. The Starbucks Marks are displayed on signs and at multiple locations in each Starbucks store, as well as on the Starbucks website.
Starbucks has devoted substantial time, effort, and money to advertising and promoting the Starbucks Marks. From fiscal year 2000 to 2003, Starbucks spent over $136 million on advertising, promotion, and related marketing activities, essentially all of which featured the Starbucks Marks. Starbucks actively polices the Starbucks Marks, demanding that infringing uses be terminated and, where necessary, commencing litigation. Well before Black Bear used the term " Charbucks" as part of any product name, the Starbucks Marks were " famous" within the meaning of the FTDA. See 15 U.S.C. § 1125(c)(2)(A).
Black Bear manufactures and sells roasted coffee beans and related goods via mail and internet order, at a limited number of New England supermarkets, and at a single New Hampshire retail outlet. In 1997 Black Bear developed a coffee blend named " Charbucks Blend" ; it now sells a dark-roast coffee called " Mister Charbucks" or " Mr. Charbucks." When Black Bear began manufacturing coffee using the Charbucks Marks, it was aware of the Starbucks Marks. One of the reasons Black Bear used the term " Charbucks" was the public perception that Starbucks roasted its beans unusually darkly. Soon after Black Bear began to sell Charbucks Blend, Starbucks demanded that it cease using the Charbucks Marks. Black Bear nevertheless continued to sell coffee under the Charbucks Marks, and in 2001 Starbucks started this action claiming, among other things, trademark dilution in violation of 15 U.S.C. §§ 1125(c), 1127.
The District Court held a two-day bench trial in March 2005. At trial, two matters of significance to this appeal occurred. First, Black Bear's founder, James O. Clark III, testified that the name " Charbucks" had previously been used during " the coffee wars in Boston between Starbucks and the Coffee Connection," a Boston-based company. Second, Starbucks introduced the testimony of Warren J. Mitofsky, a scientist in the field of consumer research and polling. Mitofsky explained the results of a telephone survey he had conducted of six hundred participants, designed to be representative of the United States population. The survey found that when asked, " What is the first thing that comes to your mind when you hear the name ‘ Charbucks,’ spelled C-H-A-R-B-U-C-K-S?," 30.5 percent of participants answered " Starbucks," while 9 percent answered " coffee."  When the participants were asked, " Can you name any company or store that you think might offer a product called ‘ Charbucks'?," 3.1 percent responded " Starbucks," and another 1.3 percent responded " coffee house."  Mitofsky concluded that " [t]he number one association of the name ‘ Charbucks' in the minds of consumers is with the brand ‘ Starbucks.’ " Commenting on the scope of his survey, Mitofsky also stated: " [I]f you want to know the reaction to the name Charbucks, then the telephone is perfectly adequate. If you want to measure the reaction or the familiarity with other visual cues, then it's not the right method." Starbucks IV, 588 F.3d at 104.
In December 2005 the District Court ruled in favor of Black Bear and dismissed Starbucks' complaint. See Starbucks Corp. v. Wolfe's Borough Coffee, Inc., No. 01 Civ. 5981, 2005 WL 3527126 (S.D.N.Y. Dec. 23, 2005) (" Starbucks I " ). The District Court determined that there was neither actual dilution, which would establish a violation of federal trademark law, nor a likelihood of dilution, which would establish a violation of New York trademark law.
Starbucks appealed. While the appeal was pending, Congress passed the Trademark Dilution Revision Act of 2006 (" TDRA" ), which amended the FTDA to clarify that the owner of a famous mark seeking an injunction need prove only that the defendant's mark " is likely to cause dilution ... of the famous mark, regardless of the presence or absence of actual or likely confusion, of competition, or of actual economic injury." 15 U.S.C. § 1125(c)(1). The TDRA further redefined " dilution by blurring" as " association arising from the similarity between a mark
or trade name and a famous mark that impairs the distinctiveness of the famous mark." Id. § 1125(c)(2)(B). The statute provides the following direction to courts:
In determining whether a mark or trade name is likely to cause dilution by blurring, the court may consider all relevant factors, including the following:
(i) The degree of similarity between the mark or trade name and the famous mark.
(ii) The degree of inherent or acquired distinctiveness of the famous mark.
(iii) The extent to which the owner of the famous mark is engaging in substantially exclusive use of the mark.
(iv) The degree of recognition of the famous mark.
(v) Whether the user of the mark or trade name intended to create an association ...