Viacom International, Inc. v. IJR Capital Investme
891 F.3d 178
5th Cir.2018Background
- Viacom owns and exploits the SpongeBob SquarePants franchise; The Krusty Krab (a fictional restaurant) appears in most episodes, two feature films, games, a musical, apps, and licensed merchandise generating millions in revenue. Viacom has licensed The Krusty Krab on toys, apparel, and other consumer goods but has not operated a real restaurant under that name.
- In 2014 IJR (through owner Javier Ramos) decided to open seafood restaurants and adopted the name THE KRUSTY KRAB (after an earlier working name “Crusted Crab”), filed an intent-to-use federal trademark application, drafted a business plan, purchased domains, leased property, and delayed opening after Viacom’s cease-and-desist.
- Viacom sued in January 2016 asserting common-law trademark infringement (Texas) and Lanham Act unfair competition, alleging ownership of a protectable mark, acquired distinctiveness, and that IJR’s planned restaurants would create a likelihood of confusion; Viacom submitted licensing evidence and a consumer survey showing 30–35% perceived association.
- The district court denied IJR’s Daubert motion against the survey expert, granted summary judgment to Viacom on trademark infringement and unfair competition, finding ownership, secondary meaning, and likelihood of confusion; IJR appealed.
- The Fifth Circuit affirmed: it held The Krusty Krab can function as a protectable mark (fictional element used as a source identifier), that Viacom proved secondary meaning as a matter of law, and that IJR’s identical mark for restaurant services would likely cause consumer confusion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Viacom owns a legally protectable mark in “The Krusty Krab” | Viacom: mark used on licensed goods and prominent in the franchise; functions as a source identifier | IJR: name is merely a fictional restaurant within a show and Viacom never used it as a trademark for restaurants | Court: Viacom owns the mark — use on licensed products and centrality in the franchise show The Krusty Krab functions as a source identifier |
| Whether the mark is distinctive (secondary meaning) | Viacom: long, repeated use, licensing revenue, promotion, press references show the public associates the phrase with Viacom | IJR: public recognizes SpongeBob as the source, not the Krusty Krab specifically; no direct consumer testimony | Court: The Krusty Krab acquired distinctiveness as a matter of law based on the relevant factors (length/manner of use, sales, advertising, media presence) |
| Whether IJR’s planned restaurant would create a likelihood of confusion | Viacom: identical word mark, both relate to restaurants, survey/anecdotes show actual confusion, and Viacom could reasonably expand to real restaurants | IJR: different theme (seafood vs. fictional hamburger joint), no actual operation yet, selection was organic and not in bad faith | Court: Likelihood of confusion exists as matter of law — strength of mark, identical wording, restaurant context, and survey/anecdotal evidence establish probable confusion (some digits neutral) |
| Admissibility/weight of consumer survey (evidence of actual confusion) | Viacom: survey (Eveready format) shows 30–35% association and is admissible | IJR: survey flawed (word-association bias) and should be excluded or given little weight | Court: District court did not abuse discretion admitting the survey; methodological issues affect weight but not admissibility; survey and anecdotes support actual confusion factor |
Key Cases Cited
- Two Pesos, Inc. v. Taco Cabana, 505 U.S. 763 (1992) (Lanham Act protects qualifying unregistered marks and inherent distinctiveness principles)
- Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23 (2003) (trademark law protects source-identifying marks; purpose of preventing copying of source-identifying marks)
- Conan Props., Inc. v. Conans Pizza, 752 F.2d 145 (5th Cir. 1985) (fictional characters/elements may give rise to protectable marks in restaurant context)
- Warner Bros., Inc. v. Gay Toys, Inc., 658 F.2d 76 (2d Cir. 1981) (elements of a television series can be protected; the General Lee example)
- Elvis Presley Enters., Inc. v. Capece, 141 F.3d 188 (5th Cir. 1998) (likelihood-of-confusion standard and factors; actual confusion as persuasive evidence)
- Amstar Corp. v. Domino’s Pizza, Inc., 615 F.2d 252 (5th Cir. 1980) (assessing overlap of retail outlets and purchasers in confusion analysis)
- Streamline Prod. Sys., Inc. v. Streamline Mfg., Inc., 851 F.3d 440 (5th Cir. 2017) (recent Fifth Circuit framing of the digits-of-confusion test and trademark distinctiveness review)
- Xtreme Lashes, LLC v. Xtended Beauty, Inc., 576 F.3d 221 (5th Cir. 2009) (secondary-meaning factors and deference to survey evidence)