The Charbucks Saga: How Starbucks Lost Its Dilution-by-Blurring Claim

Starbucks Corp. v. Wolfe’s Borough Coffee, Inc., No. 12-364-cv, 736 F.3d 198 (2d Cir. 2013), decided November 15, 2013 in an opinion by Judge Lohier, is the capstone of a dilution dispute that ran for more than a decade. Starbucks sought to enjoin a small New Hampshire roaster, Black Bear Micro Roastery, from selling coffee under the names “Charbucks Blend,” “Mister Charbucks,” and “Mr. Charbucks.” Despite the fame of its mark, Starbucks lost on dilution by blurring — and the opinion is now a standard reference for how the Trademark Dilution Revision Act’s six blurring factors actually operate when applied to real evidence.

At a glance

• Case: Starbucks Corp. v. Wolfe’s Borough Coffee, Inc., No. 12-364-cv, 736 F.3d 198 (2d Cir. 2013)
• Court: U.S. Court of Appeals for the Second Circuit
• Decided: November 15, 2013; opinion by Judge Lohier (joined by Judges Katzmann and Kearse)
• Holding: Starbucks failed to prove the “Charbucks” marks were likely to dilute its famous marks by blurring; minimal similarity and weak associative evidence outweighed the senior mark’s fame
• Disposition: District court’s judgment for the defendant affirmed

A decade of litigation

The fight began in 2001 and produced multiple appellate decisions before reaching its 2013 conclusion. Black Bear, doing business as Wolfe’s Borough Coffee, is a family micro-roastery that named a dark roast “Charbucks” — a play on the common gibe that Starbucks roasts its beans nearly to the point of being charred. Starbucks asserted dilution by blurring under both federal and New York law, along with infringement and tarnishment theories. An earlier Second Circuit decision in the same litigation (Starbucks II, 588 F.3d 97 (2d Cir. 2009)) had remanded for the district court to reweigh the blurring factors under the TDRA, correcting earlier analytical missteps — including the mistaken notions that the marks had to be “substantially similar” and that bad-faith intent and actual confusion were prerequisites for blurring. By the time the case returned to the Second Circuit in 2013, the only question was whether, applying the statutory factors correctly, Starbucks had carried its burden.

Working the six blurring factors

The TDRA, 15 U.S.C. § 1125(c)(2)(B), lists six non-exhaustive factors relevant to dilution by blurring: (1) the degree of similarity between the marks; (2) the degree of inherent or acquired distinctiveness of the famous mark; (3) the extent to which the owner is engaging in substantially exclusive use; (4) the degree of recognition of the famous mark; (5) whether the junior user intended to create an association; and (6) any actual association between the marks. The court evaluated each.

Factors two, three, and four favored Starbucks decisively. The STARBUCKS mark is highly distinctive, used substantially exclusively, and enormously well recognized — fame was never in doubt. The case turned instead on the remaining factors, and above all on the first.

On similarity, the court agreed with the district court that the marks were only minimally similar. The names “Charbucks” and “Starbucks” share a syllable, but Black Bear never sold “Charbucks” in isolation; it sold “Charbucks Blend,” “Mister Charbucks,” and “Mr. Charbucks,” in packaging and trade dress markedly different from Starbucks’ — a different logo, different color scheme, and prominent house branding. The court treated similarity as a factor of considerable weight in the blurring calculus and found the modest overlap insufficient to drive an inference of dilution.

Intent and association: the decisive weaknesses

On intent (factor five), the court accepted that Black Bear had intended to evoke an association with Starbucks — the name is a deliberate riff. But the court drew a careful line, consistent with its earlier rulings: an intent merely to call the famous mark to mind, or even to play on it, is not the same as a bad-faith intent to trade on its goodwill or to create the kind of association that impairs distinctiveness. The factor was found to favor Starbucks only weakly, because the record showed an intent to amuse and evoke rather than to deceive or to capture the senior mark’s selling power.

The sixth factor — actual association — proved fatal. Starbucks’ principal evidence was a telephone survey in which a portion of respondents, when asked what came to mind on hearing “Charbucks,” mentioned Starbucks. The court found the survey of limited probative value: it tested the word “Charbucks” in isolation, divorced from the actual marketplace names and packaging Black Bear used, and it measured bare mental association rather than the kind of association likely to impair the distinctiveness of the Starbucks marks. Echoing the conceptual distinction first drawn in Moseley — that recall is not the same as dilution — the court concluded that Starbucks had shown, at most, a weak association and had not demonstrated a likelihood of blurring. Balancing all six factors, the strong showings on fame and distinctiveness could not overcome the minimal similarity and the thin associative proof.

Open questions

The opinion sharpens, without fully resolving, a recurring problem in blurring litigation: how to evidence “association” in a way that proves likely impairment rather than mere recall. The court faulted Starbucks’ survey for testing the junior term in a vacuum, but it did not prescribe what a sufficient survey would look like — leaving practitioners to design instruments that capture marketplace conditions and tie association to distinctiveness harm. The decision also underscores the outsized role of the similarity factor: although the TDRA does not require “substantial similarity,” Charbucks shows that low similarity can be nearly dispositive even for an extraordinarily famous mark, raising the question of how much weight any single factor should carry in a test that is nominally a holistic balance.

Implications

• Fame is necessary but not sufficient. A famous mark wins factors two through four almost automatically, yet can still lose on blurring if similarity is low and association evidence is weak — exactly what happened to Starbucks.
• Survey design is decisive. Evidence that tests a junior term stripped of its real-world packaging and house marks may be discounted; surveys should replicate marketplace conditions and connect association to impairment of distinctiveness.
• Intent to evoke is not intent to dilute. An acknowledged intent to call a famous mark to mind, including through humor, does not by itself satisfy the intent factor in a way that drives liability.

Frequently asked questions

Did Starbucks lose because its mark was not famous? No. The court accepted that the Starbucks marks are famous, distinctive, and substantially exclusive. Starbucks lost because the marks were only minimally similar and its evidence of actual association was weak.

Was the Charbucks survey enough to prove dilution? No. The court found the survey of limited value because it tested “Charbucks” in isolation rather than as actually marketed (“Charbucks Blend,” “Mister Charbucks”) and measured mere mental recall rather than likely impairment of distinctiveness.

Does the TDRA require the marks to be substantially similar? No. An earlier decision in this litigation rejected a “substantial similarity” requirement for blurring. But this case shows that a low degree of similarity remains a heavily weighted factor that can defeat a claim even absent a strict threshold.

Authorities and sources

• Starbucks Corp. v. Wolfe’s Borough Coffee, Inc., No. 12-364-cv, 736 F.3d 198 (2d Cir. Nov. 15, 2013). Opinion via Justia and FindLaw.
• Prior appeal establishing the governing framework: Starbucks Corp. v. Wolfe’s Borough Coffee, Inc., 588 F.3d 97 (2d Cir. 2009), summarized at Quimbee.
• Practitioner analysis: Lexology, “‘Charbucks’ is not a blurring trademark dilution of ‘Starbucks’”.