Viacom v IJR Capital (SpongeBob SquarePants Trademark case)

Anna Robinson of Brooks Kushman PC (a preeminent intellectual-property law firm in Southfield, Michigan) explains, in the most recent edition of the Michigan Bar Journal, how a firm can establish a property interest in elements of a fictional world.

In Viacom v. IJR Capital Investments, the US Court of Appeals for the Fifth Circuit decided that Viacom, the owner of the children's cartoon franchise, "SpongeBob SquarePants", had established a trademark in "The Krusty Krab" mark and, therefore, that IJR Capital Investments did not have the right to open a "Krusty Krab" restaurant. (In SpongeBob SquarePants, SpongeBob works as a fry-cook at the fictional Krusty Krab restaurant owned by Mr. Krabs. This restaurant serves Krabby Patty burgers containing a protected, secret ingredient to various patrons including fish and other sea creatures.)

The Court considered two main questions: (1) whether Viacom owns a legally protectable mark in The Krusty Krab and (2) whether IJR’s use of the mark creates a likelihood of confusion as to source, affiliation, or sponsorship.

To answer the first question, the Court had to analyse whether Viacom used "The Krusty Krab" to indicate origin because the purpose of trademark law is to "prevent[ ] competitors from copying a source-identifying mark." The Court found that "[t]he 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." "The mark is integral to 'SpongeBob SquarePants,' as it appears in over 80% of episodes, plays a prominent role in the SpongeBob films and musical, and is featured online, in video games, and on licensed merchandise."

Moreover, "The court also held that Viacom established that The Krusty Krab had acquired distinctiveness through the applicable 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].'"

Ultimately, the Court decided that "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."