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.

#Trademarkclearance #TrademarkRegistration #IntellectualPropertySanFrancisco #TrademarkLawSanFrancisco #UnicornLatte

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