Cognate's Trademark Blog

The Krusty Krab Trademark Dispute

How could we resist a Spongebob Squarepants TM story. The ABA Journals leads us under the sea and Viacom’s dispute with IJR  Capital Investments.

Viacom International v. IJR Capital Investments is the latest episode of this ongoing legal saga of close-call copycatism. IJR Capital attempted to open a restaurant called The Krusty Krab. The Krusty Krab is also a restaurant in SpongeBob SquarePants, known for its gastronomical masterpiece, The Krabby Patty. Despite its comedic success and iconic features, Viacom had never registered a trademark for The Krusty Krab.

The U.S. District Court for the Southern District of Texas did not approve of IJR Capital’s name choice. The court felt IJR’s restaurant would create some confusion for consumers given the pervasiveness of The Krusty Krab’s role in the SpongeBob series. IJR appealed the ruling, only to receive the same response from the New Orleans-based 5th U.S. Circuit Court of Appeals: Central components to trademark-protected entertainment vehicles can receive trademark protection under Section 43(a) of the Lanham Act. No registration required.

IJR argued that its use of the Krusty Krab name was proper because Viacom did not own a legally protectable trademark in the name, and that using the name for their restaurant would not confuse the public into thinking it was affiliated with SpongeBob SquarePants. IJR’s business plan stated the intention for the planned restaurant was to serve seafood. Given that their business plan never references SpongeBob and their sample menu serves po’ boys and boiled seafood, not fast-food hamburgers, IJR believed there would not be any confusion. IJR insisted that they never considered the show when discussing the restaurant name. They claim they began with the name Crusted Crab—an ode to the crusted glaze applied to their cooked seafood—but, as IJR’s counsel explained to the district court, they switched to The Krusty Krab because Ks are prettier than Cs.

Oh, please.

The facts in play patently favored Viacom’s case. They argued they did own a trademark in The Krusty Krab because the pervasiveness of the burger joint in the franchise has distinctively connected it to the SpongeBob universe. It played a prominent role in the pilot, as well as appearing in 166 of the show’s first 203 episodes and the two SpongeBob SquarePants feature films. The Krusty Krab was also licensed by Viacom for a wide variety of products, present in press references discussing the show, featured frequently on the SpongeBob SquarePants social media platforms, and made appearances in the SpongeBob mobile app.

Despite IJR’s attempt to distinguish its Krusty Krab on the basis of menu options, the fact that it is also a restaurant, albeit one lacking Mr. Krabs’ secret formula, makes the likelihood of confusion much greater. Even the IJR-affiliated individual who suggested the “Crusted Crab” name in the first place acknowledged that “those who see [The Krusty Krab] may think of the restaurant from SpongeBob SquarePants.”

The 5th Circuit easily found protection of The Krusty Krab. The court recognized that the Krusty Krab has been inextricably woven into Viacom’s story of a pineapple-dwelling sea sponge. Although the 5th Circuit disagreed with the district court that IJR acted in bad faith when selecting The Krusty Krab title, they could not ignore the fact that even those affiliated with IJR knew people would confuse their restaurant with Viacom’s fictitious establishment. IJR’s case was further hampered by the IJR’s owner’s confession that he knew of the name’s connection to SpongeBob before submitting his trademark application for The Krusty Krab.

Precedent also provided Viacom with some positive parallels to its own case. In DC Comics v. Powers, the Southern District of New York ruled in favor of DC Comics when the defendant tried to reboot his previously deceased magazine under the name The Daily Planet—the same name as the newspaper that employs Superman’s true identity, Clark Kent. A few years after that case, the 2nd Circuit granted trademark protection to the General Lee car from The Dukes of Hazzard when the defendant tried to claim its toy car was not based on the fictional vehicle despite the fact that the two were identical aside from reversed racing numbers (“10” vs. “01”) and a new name, The Dixie Racer.


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