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Living in Los Angeles, it's sometimes difficult to distinguish reality and fiction. Superheroes walk the streets. Faux moons appear in the hills. Overnight, a neighbor's house is transformed into the set of a major motion picture. Automatic gunfire regularly breaks out downtown, from the set of a detective show on location. So when a coffee house opens its doors down the block that appears to be a blatant example of trademark infringement against a major coffee chain, it's challenging not to remain skeptical.
This has been the challenge since the "Dumb Starbucks Coffee" opened its doors last Friday in the Los Feliz neighborhood and began serving free coffee on Hillhurst Avenue. People have been wondering whether it is all part of an extravagant joke, an expensive art experiment, or an up close and personal issue-spotting test question for intellectual property law school students.
Dumb Starbucks' sign and logo closely track the green, black and white design of real-life Starbucks, complete with the iconic circular two-tailed mermaid logo, the only difference being the insertion of the word "dumb". Except for that addition, the cups, menus, tables, counter, and compact-disks-for-sale interior all closely resemble the real thing.
The new cafe immediately struck a chord among local hipsters. Within hours, they lined up around the block and have remained a neighborhood fixture for the last three days. Finding parking in the neighborhood has become next to impossible. This is not to say the coffee is any good. While Starbucks reportedly has not yet complained, customers certainly have. This is Los Feliz, after all, and these people know good coffee and know they have not found it here. Still, a steady stream of patrons flows through the shop, taking selfies on the way in, exiting with white paper cups in one hand, clutching Dumb Starbucks flyers in the other. The flyers attempt to justify the operation based on "parody law" and are titled "Frequently Asked Questions," though it is unclear how frequently any such questions were being asked; the place just opened.
Starbucks, so far silent, owns many copyright and trademark rights in connection with its ubiquitous coffee shops, coffee products, coffee making products, and so on. Just search the term "Starbucks" in the U.S. Patent and Trademark Office's records and scores of applications and registrations instantly appear. There can be little doubt that Dumb Starbucks' proprietors are aware of this and must expect that lawyers for the Starbucks Corporation will soon be knocking on their doors. According to the flyer, Dumb Starbucks is a "fully functioning coffee shop." But the establishment itself admits it is using the Starbucks "name and logo for marketing purposes" and seems to negate its own parody defense when it confirms it does not actually assert that "Starbucks is dumb." Rather, it continues, "we love Starbucks and look up to them as role models. Unfortunately, the only way to use their intellectual property under fair use is if we are making fun of them. So the 'dumb' comes out of necessity, not emnity." Thus,
[F]or legal reasons Dumb Starbucks needs to be categorized as a work of parody art. 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. But that’s for our lawyers to worry about. All you need to do is enjoy our delicious coffee! Dumb Starbucks may in the end spend whatever profits it ultimately makes on legal fees. And when that time comes, Starbucks' lawyers may find themselves arguing that Dumb Starbucks own explanation seems to be more a parody of "parody law" and the law of fair use than a message directing comment or criticism specifically at Starbucks – again, assuming this is not all a big hoax.
And perhaps that is the point, perhaps the proprietors just wanted to make people wonder what this place is, and what it all means. Given its stated purpose and strong reliance on parody and the defense of fair uses, it seemed it might be useful to address some of those issues here.
General Intellectual Property Concepts
Intellectual property commonly is understood to encompass copyright, trademark and patent rights, trade secrets, and related intangible property. Generally speaking, patents protect inventors' ideas by granting exclusive rights to patent owners for limited periods; copyrights protect authors' particular expressions of ideas by granting exclusive rights to the copyright owner, also for limited periods; trademarks protect the public from being confused about the source of goods and services by allowing businesses a perpetual monopoly to use their source identifying marks. These areas often overlap, as they do at Dumb Starbucks.
Those accused of infringing intellectual property rights often seek refuge under the doctrine of fair use, a defense to infringement under which, if successful, courts assume the plaintiff owns a valid intellectual property right but that the alleged infringer's conduct is nevertheless permitted because it falls outside the scope of what is protected. However, there are significant differences in its meanings under copyright law, trademark law, and the law of trade dress. And fair use itself is nothing if not ambiguous. Since before the Civil War, courts have readily acknowledged the difficulty of applying fair use standards and have equated them to the “metaphysics of the law.” Predicting the outcome of a case involving the fair use defense is hardly something on which to rely in creating a successful business model, unless the business is intended to generate substantial legal fees.
In short, what Dumb Starbucks calls "parody law" is not a distinct body of law. In trademark law, fair use has been described as one of several factors to be considered in determining whether a particular use will confuse the public about the source of goods and services. Under copyright law, on the other hand, fair use traditionally has been defined more broadly as “a privilege in others than the owner of the copyright to use the copyrighted material in a reasonable manner without his consent.”
Fair Use Under Trademark Law
Under trademark law, a distinction is drawn between "classic fair use" and "nominative fair use." Classic fair use concerns whether the alleged infringer has used someone else's mark to describe its own product or services (which can lead to confusion in the marketplace). For example, if one company registers a trademark and begins using it but another company was already using that mark in a particular region, the senior user is entitled to keep using it.
Nominative fair use, on the other hand, concerns whether the alleged infringer has used the other's mark to describe someone else's products for the purpose of, for example, comparing those goods to its own products. There is also a related concept of trademark dilution, which can “whittle away" the value of a trademark by "blurring" away the uniqueness and singularity of a mark or “tarnishing" it with negative associations.
Parody generally concerns "classic fair use" and is considered not so much a defense to claims of trademark infringement, rather, it is one of several factors that will be considered in determining whether the public will be confused about source of goods and services. Those factors include (1) the strength of the protected mark; (2) the proximity of the two parties' goods to each other; (3) the similarity of the marks; (4) evidence of actual customer confusion; (5) the marketing channels that are used by each party; (6) the type of goods involved and the degree of care likely to be exercised by purchasers; (7) defendant's intent in selecting the mark allegedly infringing mark – such as whether it was intended as a parody; and (8) likelihood of expansion of the respective product lines.
Further, under trademark law, a “true” parody may be required to be clear enough that there will be a clear distinction in the viewer's mind between the source of an actual product and the source of the parody. But if the purpose of the similarity is to capitalize on a famous mark's popularity for the defendant's own commercial use, the claim of parody will be disregarded.
Dumb Starbucks' flyer explains it is using the Starbucks name and logo for marketing purposes and essentially intends to market its shop based on Starbucks' goodwill. It also explains it has not actually targeted Starbucks with a parodic message and is only "technically" making fun of it in order to "use their intellectual property." While reasonable jurors may disagree, on its face Dumb Starbucks' use does not appear to constitute either classic or nominative fair use.
In addition to trademark infringement, Starbucks might allege a claim for "trade dress" infringement. Trade dress is a concept that extends trademark protection to product packaging and displays, and has specifically been found to protect a restaurant's decor, menu, layout and style of service where imitation is likely to cause consumer confusion. Parody also can qualify as a defense to a claim of trade dress infringement if it demonstrates that its parody simultaneously conveys the internally contradictory messages that it is both the original and not the original but instead is a parody of the original. Without accomplishing that, the risk is that the customer will be confused, in which case the fair use defense cannot apply.
Fair Use Under Copyright Law
The its fair use defense and parody concept differ under copyright law. If Starbucks were to assert a claim for copyright infringement (for example, based on unauthorized copying of the two-tailed mermaid / siren image in its logo) Dumb Starbucks would face additional hurdles.
In copyright law, fair use is considered an “equitable rule of reason” that requires a careful balancing of several factors in light of the purposes of copyright protection (which is designed to encourage creativity in the first place). It permits courts to avoid rigid application of the copyright law where doing so would stifle just such creativity. In determining fair use, the Copyright Act requires courts to consider and weigh four factors: (1) the purpose and character of the allegedly infringing use; (2) the nature of the copyrighted work; (3) the importance of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the accused use on the potential market for or value of the copyrighted work. These are not definitive but essentially act as guidelines in balancing the equities that should be considered in the circumstances of a particular case. The outcome in any particular case is anything but certain.
Copyright law considers parody a form of social and literary criticism and has a significant "free speech" value under the First Amendment. The heart of a parodist's work may depend on quoting from existing material or using some elements of a prior author's composition to create a new one that, at least in part, comments on the original works. In a parody, the original work is the target, as compared with satire, when the copyrighted work is merely a vehicle to poke fun at a different target. The court has found, for example, that a rhyming summary of highlights from the O.J. Simpson double murder trial that used Dr. Seuss' copyrights and trademarks in a work titled, "The Cat NOT in the Hat! A Parody by Dr. Juice," was not protected under the fair use doctrine, because neither Dr. Seuss nor the Cat in the Hat were the targets of the parody.
Controlling precedent in the Ninth Circuit Court of Appeals (which governs disputes in Los Angeles as well as Seattle, where Starbucks is based) also establishes that, in balancing a parodist's freedom of speech rights with the values underpinning copyright law, courts should apply the “conjure up” test. This requires one who asserts a parody / fair use defense to demonstrate it has used "no more than is necessary to 'recall' or 'conjure up' the object" of the parody.
While the Dumb Starbucks use of the Starbucks logo appears to directly target Starbucks, it remains to be determined what the actual message is and whether it fairly may be considered parody. Whatever defenses it may raise will be viewed in light of its comments in its flyer, which suggest it has not actually intended to criticize Starbucks at all. Moreover, Dumb Starbucks appears to have used a great deal of real-life Starbucks' works – its sign, logo, menu, shop design, and so on.
It also bears noting that it is not necessarily a defense that Dumb Starbucks may be giving away its products for free. While that may make it difficult to prove actual damages, under the Copyright Act, a plaintiff who has timely filed an application for copyright registration with the U.S. Copyright Office may be entitled to recover "statutory damages" without actually having to prove it suffered actual harm at all, regardless of whether money changed hands. Attorneys' fees also may be recoverable. And, of course, Starbucks may attempt to demonstrate it lost sales – and profits – as a result of the infringement.
Conclusion
Parody and the fair use defense apply differently under copyright and trademark law. When the defense is raised by an accused infringer, the results are unpredictable and somewhat subjective, to say the least. Given Dumb Starbucks' admitted desire to trade on Starbucks' name and goodwill, without criticizing it or offering a message that does anything but praise the original company, it may face a difficult challenge in attempting to justify its parody claim under either trademark, trade dress or copyright law. Or maybe this is all part of some extravagant comedy bit. That would seem to make more sense than Dumb Starbucks' claim that it is a "fully functioning coffee shop" offering "delicious coffee.” Discerning customers have been saying otherwise. Ultimately that may present a greater challenge to the coffee shop's long-term survival than any lawsuit.
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