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A Unicorn's Weight in Gold: The Importance of Trademark Clearance and Registration

Originally published in the ABA Young Lawyer's Division IP Section Committee Newsletter, Fall 2017, Vol. 1 No. 1, which can be accessed in its entirety here.

 

In April of this year, Starbucks, Inc., one of  the most well-known coffee brands in the world, released a Unicorn-themed Frappuccino® drink in an attempt to capitalize on the unicorn craze. As with most things Starbucks does, the drink received wide publicity.  The public had a mixed reaction to the drink—some were enthused by the drink’s bright colors and fanciful flavoring, while others, including some famous actresses and artists, expressed their “complete disgust” with the drink.


One small café in New York was particularly distraught about the drink. The End, which
is owned by the Montauk Juice Company, sells healthy organic drinks and juices out of
its store in Brooklyn. The End had recently created a drink called the Unicorn Latte®,
which featured a mix of colorful “superfood” ingredients such as cold-pressed ginger,
lemon juice, dates, cashews, maca root, blue-green algae, and vanilla bean. The End’s
product featured no cow’s milk, and so the use of the term “latte” appeared to be a spoof
of an actual latte.


In early 2017, The End’s Unicorn Latte had received increasing publicity for its unique
colors and health benefits, being featured and discussed in various local and even
national news outlets, such as the New York Times. High on the fame, The End’s
owners decided to apply to register the word mark “UNICORN LATTE” with the U.S.
Patent and Trademark Office in January 2017 (Serial No. 87308906).


A few months later, Starbucks’s released its limited-time Unicorn-themed drink. The
limited Frappuccino release has a distinct blue and pink color scheme with a sparkle top,
similar to the Unicorn Latte. A side-by-side comparison shows some of the similarities:

 

 

End’s complaint, filed on May 3, 2017, brought claims of trademark infringement, unfair
competition, trademark dilution and false designation of origin under the Lanham Act,
The End’s Unicorn Latte® Starbucks’s Unicorn Frappuccino common law trademark infringement claims, and state law claims. The End sought a permanent injunction against Starbucks’s use of the “UNICORN LATTE” or “UNICORN FRAPPUCCINO” mark, as well as damages in the form of Starbucks profits from the drink, which some estimate to have been over $10,000,000.

 

In September 2017, before the litigation could be resolved, the parties settled for an
undisclosed sum. 

 

Although we will likely never know the actual cost to Starbucks of its alleged
infringement, the lawsuit highlights the importance of a clear and thorough search for
other potentially infringing marks before any product release, especially one as
significant and unique as a limited-time drink offering from Starbucks. Since Montauk’s
mark was listed with the USPTO at the time the product was launched, it could be that
Starbucks had identified the Unicorn Latte mark in advance, but determined that the risk
of infringement was not likely.


If that’s the case, then this unicorn of an example also reminds small companies—and
their attorneys—that it is important to file an application for registration of a mark to
prevent large brands from co-opting their intellectual property whenever a new product
or a new brand is created. This is also a reminder for anyone coming out with a new
product to conduct a trademark availability assessment in order to avoid paying
potentially hefty settlement and/or litigation costs. It is a good idea to have a trademark
attorney involved at the outset to work together with the creative team for the product—
this will reduce the risk of not only future legal fees, but also of the cost of having to
rebrand. Securing, maintaining, and monitoring your trademark could be worth a
Unicorn’s weight in gold!


Michael Hewitt and Anna Nagornaia are associates at Dillingham & Murphy LLP in San
Francisco, California. Michael’s and Anna’s primary practices focus on providing corporate and business guidance to start-ups and small businesses, helping them formulate specific legal plans for their corporate, employment, or intellectual property needs.

 

Michael and Anna each graduated from the University of San Francisco School of Law and
participated in the school’s unique Entrepreneurial Ventures and Startups Clinic. Contact Anna Nagornaia at an@dillinghammurphy.com and Michael Hewitt at mhh@dillinghammurphy.com.

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