The Second Circuit Court of Appeals recently partially overruled a lower court and held that Wolf Borough Coffee, Inc. d/b/a Black Bear Micro Roastery's "Charbuck's Blend" and "Mister Charbucks" coffee brands diluted Starbucks' famous "Starbucks" mark in violation of the Federal Trademark Dilution Act (FTDA). Starbucks alleged that Black Bear's use of its "Charbucks" marks constituted both trademark dilution by blurring and trademark infringement of its Starbucks trademark. Trademark infringement occurs when there is a likelihood of confusion with regard to the source or sponsorship of goods or services based on the use of similar marks in connection with similar goods or services. Trademark dilution by blurring, on the other hand, is an association arising from the similarity between a mark or trade name and a famous mark that impairs the distinctiveness of the famous mark. The lower court found for Black Bear on both counts, specifically noting that the marks were not "substantially similar," and that this fact "alone is sufficient to defeat Starbucks" blurring claim. In addition, the lower court also found that although Black Bear intended to create an association with Starbucks, this did not weigh against Black Bear because Black Bear did not act in bad faith. Finally, the lower court found that the absence of evidence of actual confusion weighed against Starbucks. The Second Circuit Court of Appeals affirmed the lower court's ruling that no trademark infringement occurred but overruled the lower court with regard to Starbucks' dilution claims, finding that Black Bear's Charbucks marks diluted Starbucks' marks. Specifically, the appellate court found that there is no requirement that the famous mark and diluting mark be "substantially similar," that there was no requirement of bad faith in the FTDA, and that evidence of actual confusion, or even a likelihood of confusion, is not relevant to trademark dilution. The appellate court also rejected Black Bear's parody defense, concluding that "Charbucks" is at most a subtle satire of the Starbucks marks.

Tip: Companies with well-known marks may be able to leverage the FTDA to stop the use of similar marks even when there is no likelihood of confusion and/or bad faith. Be careful when assuming parody will insulate your conduct, as First Amendment protection is narrowly provided in commercial advertising.