Starbucks Plays It Smart With 'Dumb Starbucks' TM

, Corporate Counsel

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In the end it was the Los Angeles County Health Department—not intellectual property law—that forced the “Dumb Starbucks” coffee shop in Los Angeles to close.

A satirical pop-up coffee shop called “Dumb Starbucks” opened in Los Angeles last weekend, garnering tons of media attention because it had the look and feel of a real Starbucks—but had the word “Dumb” preceding the Starbucks name on everything from a “Dumb Frappuccino” to a “Dumb Venti.” It turns out the shop was a publicity stunt by Comedy Central reality-TV show host Nathan Fielder, whose show, “Nathan for You,” revolves around Fielder giving prank advice to small business owners.

But before the Comedy Central connection was known, Starbucks Corp. made statements about its protected trademark, saying the company could not legally use its name. And Dumb Starbucks posted an FAQ in its store, defending the use of the name by saying it was parody. “Although we are a fully functioning coffee shop, for legal reasons Dumb Starbucks needs to be categorized as a work of parody art,” the FAQ said. “So, in the eyes of the law, our ‘coffee shop’ is actually an art gallery and the ‘coffee’ you’re buying is considered the art.”

It later posted a YouTube video with the same message. The shop never sold its coffee or anything else. For the few days it was operating, Dumb Starbucks offered its items for free. The health department closed the shop for operating without a license.

The uncertainty of trademark law makes it difficult to determine whether the Dumb Starbucks parody argument would prevail in court. But even if Starbucks could make a good case for trademark infringement, it might be better off doing nothing, lawyers say.

“You have to think of the ramifications,” Haynes and Boone partner and trademark practice group chair Purvi Patel told CorpCounsel.com. “It’s usually not a good idea for big companies to go after small ones—even if they have a legal case.”

Legally, a brand owner has to prove that the alleged infringing product is likely to cause confusion. Starbucks would probably have a tough time showing that, Patel said. A brand owner could also try to prove dilution of its brand, and in this case Starbucks could possibly win, Patel said.

But Patel, who has never represented Starbucks, said she and her colleagues have debated what they would advise a client to do in similar circumstances. Some felt it best to do nothing. Others said the brand owner should send a nice letter asking the infringer to stop. And still others said the brand owner should go all out—sending a demand letter and pursuing a preliminary injunction.

Jonathan Moskin, a partner who specializes in intellectual property at Foley & Lardner, said big companies are often better off letting the infringement slide—especially if action is likely to bring negative attention. “These are usually lose-lose propositions for brand owners,” he said. “If they win, they’re seen as beating up on an artist, and if they lose, then they come away with a black eye.”

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