Viacom Victory in Suit Underscores Importance of IP rights

Disclaimers be damned. A Texas pop-up bar has lost an intellectual property suit against Viacom – the owners of the SpongeBob SquarePants brand – for copyright infringement, despite numerous posted warnings throughout the temporary establishment that the bar was in no way affiliated with the character, Nickelodeon, or any related IP.

Rusty Krab v. Krusty Krab

Owner Sam Chand opened the ‘Rusty Krab’ bar in downtown Houston, with food and drinks named after characters and well-known phrases from the popular kids show, including “Bikini Bottom,” “Secret Formula,” and “Pineapple Under the Sea.” Viacom argued that such usage not only violated the show’s copyright, but it also disregarded their licensing policy of child-focused trademarks being used for alcoholic beverages.

Chand argued that the pop-up bar and its branding therein was merely an homage to a widely beloved program and that his ample use of disclaimers denying official affiliation with the show should be sufficient protection. However, the judge disagreed, citing the use of official SpongeBob trinkets and paraphernalia, as well as costumed actors dressed as the show’s characters within the bar itself and branding that closely aped the original beyond reasonable parameters of tribute or homage. For example, the character works at a restaurant called the Krusty Krab, whose logo is red, bubble-like letters superimposed onto a giant clam. Chand’s ‘Rusty Krab’ bar logo was nearly identical, except for the missing ‘K’.

The Thin Grey Line of IP Rights

Judge Ewing Werlein awarded Viacom $6 million in damages, ordered Chand’s company to transfer all related website domain names to Viacom, and barred him from attempting to make use of any SpongeBob-related trademarks in the future. The judgement was an across-the-board win for intellectual property rights and a notable outcome when it pertains to roundabout efforts by proprietors and/or businesses attempting to subvert said rights.

Imitating a popular IP is a common method by which bad actors attempt to sidestep copyright issues and reap financial benefits of an established property that they did not create. This is typical with entertainment, as well as saleable products. Discount stores routinely sell products that mimic or remind customers of another, more popular, more expensive alternative.

However, while these are generally of inferior quality and far less desirable than the original, these products utilize several methods to avoid copyright infringement, including markedly different naming, color schemes, and packaging. While the product itself might seem dangerously similar to the trademarked original, these differences are enough to skirt IP law and set it apart as its own creation of sorts.

Protecting Your Ideas and Assets

The greatest idea in the world won’t benefit the person who brings it to life unless they are able to properly harness its potential during its infancy and protect it once it comes to fruition. For every successful IP like Ghostbusters, there are 100 companies making knockoff ‘Spookchasers’ toys in an effort to take a piece of the revenue pie. These impersonations are easy enough to spot, and rightfully so. If not for patents, intellectual property law, and other creative protections, there would be no stopping anyone from mimicking your innovation down to the letter until nobody could tell the difference between the real deal and a stolen copy.

What can make intellectual property law a difficult line to walk for the average businessperson is understanding where that line is drawn. Why is the ‘Rusty Crab’ guilty of copyright infringement but the soldier toy at the dollar store not in violation of the G.I. Joe trademark? Where does reverence for a popular property end and theft begin?

These questions and more require an accomplished and professional firm to help navigate the often-tricky landscape of IP law. At Richards Rodriguez & Skeith, our intellectual property attorneys can help you apply for patents and register trademarks, service marks, and copyrights. We can help you manage your IP assets, assist with licensing, distribution, and publishing, and, if necessary, defend your property rights by litigating in court. Contact us today to discuss protecting your firm’s valuable intellectual property assets.