Judge Rules 'Krusty Krab' Restaurant Violates Viacom's 'SpongeBob' Rights

According to opinion, consumers would likely be confused that the defendant's joint is officially licensed like the Bubba Gump Shrimp Co.
Nickelodeon
'SpongeBob SquarePants'

Viacom has convinced a Texas federal judge that The Krusty Krab, the fictional fast-food joint on SpongeBob SquarePants is deserving of trademark rights and that an enterprise that wanted to open up a Krusty Krab restaurant has violated such rights. Maybe SpongeBob was wrong when he said, "You don't need a license to drive a sandwich," a movie quote footnoted in a summary judgment opinion out on Wednesday.

IJR Capital Investments was sued by the owner of Nickelodeon in January 2016, and in the aftermath, the defendant challenged Viacom's assertion of a trademark and the likelihood of confusion among consumers.

Viacom hadn't registered "The Krusty Krab" with the U.S. Patent and Trademark Office, but has used it continuously since 1999 in at least 166 TV episodes and two feature films. Plus, there's associated merchandise.

In examining whether Viacom possesses a valid mark, U.S. District Judge Gray Miller first considers whether an element of a television show can be protected and concludes it can, nodding to past decisions giving Warner Bros. a common law trademark over such words and phrases as "Kryptonite" and "Daily Planet" based on use.

"IJR counters that the SpongeBob character is not as well-known as Superman, but fails to include any authority (legal or otherwise) to support its argument that fictional titles are not afforded trademark protection," writes Miller. "Because 'The Krusty Krab' is a recurring element of the 'SpongeBob SquarePants' show, the court finds that the mark is eligible for trademark protection."

The judge also deems "Krusty Krab" to be distinctive by acquiring secondary meaning.

As for likelihood of confusion, Miller says the evidence presented is compelling.

"The court also finds it persuasive that both parties use the mark to describe a restaurant (albeit in Viacom's case it is a fictional restaurant under the sea where the namesake character works for restaurant owner Mr. Krabs)," states the opinion." Context here is critical because a consumer seeing either Viacom's or IJR's marks will likely think of a restaurant. Consumers may mistakenly believe that IJR's restaurant is an officially licensed or endorsed restaurant, similar to how … Viacom Inc., through its subsidiary Paramount Pictures Corporation has licensed its marks for restaurants, including Bubba Gump Shrimp Co., a seafood restaurant chain inspired by the 1994 film Forrest Gump."

Although Viacom is granted summary judgment on its motion for trademark infringement, the company is denied victory on a separate claim for trademark dilution. To the media conglomerate's claim that IJR has diminished the ability of the "Krusty Krab" mark to distinguish the source of the product, the judge nods to the fact that the defendant hadn't opened the restaurant yet. Miller writes, "Both federal and state dilution law require that another party use a famous mark in commerce and Viacom has not shown that IJR has used the mark in commerce."

Here's the full opinion.

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