New Zealand: "Dumb Starbucks" - trade mark parody or infringement - ingenious, or, well dumb?

The recent opening of a small American coffee shop in Los Feliz, Los Angeles has received overwhelming international media attention.

Branding itself as "Dumb Starbucks", the shop appeared to copy the whole 'Starbucks experience' – using the logo, green lettering, menus, coffee cups, right down to the CDs – normally present in an actual Starbucks café.

The catch is, each and every signature 'Starbucks' item was prefixed by the word 'Dumb'.

Alleged parody exception to infringement

In a "Dumb Starbucks Legal FAQ" present in-store and circulated in the media, Dumb Starbucks admitted it was "not affiliated in any way with Starbucks Corporation. We are simply using their name and logo for marketing purposes".

It went on to allege Dumb Starbucks' actions do not amount to trade mark infringement¹ because "[b]y adding the word 'dumb', we are technically 'making fun' of Starbucks, which allows us to use their trademarks under a law known as 'fair use'".

While it has since come to light that the replica café is owned by Nathan Fielder, host of Nathan For You, the business venture is likely to be featured in an upcoming TV show. The legal advice they appear to be relying on seems to be somewhat confused, highlighting the issue of where to draw the line between rightful parody and infringement.

Parody and satire exceptions to intellectual property law

Various jurisdictions provide exceptions to copyright and trade mark infringement on the basis that the use is 'parody' or 'satire'. The rationale behind these exceptions is that for such commentary to take place, it is necessary for the trade mark or copyrighted original work to be used to an extent so that the subject of humour or criticism is identifiable.

Therefore in clear cases of parody breaches of intellectual property² rights can be outweighed by the right to freedom of speech.

The position on parody in New Zealand

While there is no explicit statutory exception for parody of trade marks set out in the Trade Marks Act 2002, whether use of a mark would be considered infringement depends on whether it is considered to be use 'in trade'. If a 'Dumb Starbucks' popped up in New Zealand arguing it is a parody but explicitly stating its intention to use the mark "for marketing purposes", this could be considered use 'in trade' and therefore amount to trade mark infringement.

Any breach of the Fair Trading Act 1986 would depend on the likelihood of the relevant public being misled or deceived into thinking the shop was in fact a real Starbucks.

The 'fair use' exception, which Dumb Starbucks appears to rely upon, is an exception available in some cases of copyright infringement. In New Zealand, the Copyright Act 1994 provides an exception for 'fair dealing' for the purposes of criticism, review and news reporting. This exception can protect parodies of original works (such as spoofs of literary, dramatic, musical or artistic works, sound recordings and films) from infringement provided that the work is accompanied by sufficient acknowledgement.

But this avenue would not be appropriate in cases of potential trade mark infringement, like in the Dumb Starbucks case.

Conclusion

The distinction between parody and improper use of intellectual property rights can strike a fine line.

Where the line is drawn between parody and ripping off work or free-riding on another's reputation will depend on the context in which the parody takes place. The surrounding circumstances, including the purpose of the commentary will be taken into account.

If it is necessary to use the mark to identify a brand or a substantial amount of a work to identify the original work in order to contribute to some sort of comedic or social commentary, it is more likely fall within a parody exception.

If the use is clear intentional free-riding or ripping off, it is less likely that it will be considered parody.

In the case of Dumb Starbucks, potential trade mark infringement is perhaps the least of its troubles as the café has since been closed down by health inspectors.

Footnotes

¹Refers to the commission of a prohibited act with respect to a patented invention without permission from the patentee. In New Zealand, the Deed of Letters Patent confers on the patentee a monopoly to make, use, vend or exercise the invention in New Zealand. Performing any of these acts without the permission of the patentee will amount to an infringement if the patent is current and in force. Permission will typically be granted in the form of a license. Remedies for infringement can include an injunction to restrain further infringement, payment of damages suffered by the patentee as a consequence of the infringement or payment by the infringer of any profit he/she/it made by virtue of the infringement, and legal costs.
²Refers to the ownership of an intangible thing - the innovative idea behind a new technology, product, process, design or plant variety, and other intangibles such as trade secrets, goodwill and reputation, and trade marks. Although intangible, the law recognises intellectual property as a form of property which can be sold, licensed, damaged or trespassed upon. Intellectual property encompasses patents, designs, trade marks and copyright.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

James & Wells Intellectual Property, three time winner of the New Zealand Intellectual Property Laws Award and first IP firm in the world to achieve CEMARS® certification.