As reported by the Houston Press, Texan Rex Bell says that he named his reddish-coloured brew "Starbock Beer" because its taste reminded him of a combination of Lone Star and Shiner Bock suds.
Paperwork for Bell's trademark with the U.S. Treasury Department was flowing smoothly until July 2003 when Starbucks' lawyers demanded that the scrappy bar owner take back and shred all material associated with his Starbock Beer trademark application... or else.
The little guy in this fight argues that since Starbucks didn't inspire him to think up the name Starbock Beer, the coffee giant is wrong to bully him for his creativity. Even though his genius is limited to combining part of two existing beermakers' names, Bell will consider a cash buyout on condition that Starbucks then leaves him alone to make his beer. While they could accept a name like "Bockstar Beer", Starbucks lawyers insist that Starbock is too similar to the coffee retailer's name. This would confuse consumers, many of whom might perceive that Starbucks was also in the beer business. Starbucks name and logo were trademarked in 1997.
If a large multinational like Starbucks let a small operator get away with a trademark infringement, a precedent would be set for larger infractions on the international trade stage. As the dispute in Galveston plays out, legal experts say that these type of contests don't usually result in a stunning victory for the little guy.
Not that copycats ever stop trying.
In Russia, Starbucks was forced to delay its launch of coffeehouses because of a loophole in that country's trademark laws. Although Starbucks had registered with the Russian tradename authority in 1997, that registration was cancelled in 2002. The reason? Starbucks had not actively used its name to do business in Russia for more than 3 years.
A Russian copycat immediately took the Starbucks name and then registered the Starbucks trademark in Russia for itself. It wasn't until July 2005 that the Chamber on Patent Disputes overturned the Russian company's trademark. Even then, the Russian copycat vowed to continue the fight for Starbucks trademark in their homeland.
It was in China that Starbucks faced its greatest challenge. The Shanghai Xingbake chain of coffee shops use the same three Chinese characters in its name as Starbucks. In Chinese, "xing" means "star" and "bake" sounds very much like "bucks".
Shanghai Xingbake appeared to have a strong case because it had registered its Chinese name on March 9, 2000, well before Starbucks applied for its trademark in the People's Republic. As the China Law Blog explains, Chinese trademark rights are normally bestowed on the company that first files for a trademark.
Breaking with tradition, the Shanghai court ruled that, as the direct Chinese translation of "Starbucks", Xingbake infringed on the American coffeemaker's trademark even though the Chinese company was first to register its name. The reason is that Starbucks is a globally well-known trademark which justified an exception to China's first-to-file trademark rule.
And The Winner Is...
According to trademark and copyright experts, only about 1 percent of trademark infringement cases go to trial. Typically the multinational corporation's finances dwarf those of the defendant, who often faces bankruptcy due to the strains and distractions that a lawsuit can place on a small operator's business. So the big company typically wins in the early rounds of a legal action.
Yet Starbucks' fumbled trademark registration in Russia shows that even large multinational corporations have to diligently study local rules that govern trademarks and regulations.
In China, Starbucks won an exceptional ruling on strength of the fact that Starbucks is one of the world's best known brands and is well-recognized in China as well. Foreign companies doing business in China are wise to register their trademarks first. Otherwise they risk losing their brand names to copycats who beat them to the registration office.
The lessons learned from all of Starbucks' victories show that trademark lawsuits can be both lengthy and prohibitively expensive, particularly for smaller companies that depend on international trade.
Backed by much deeper financial and legal resources, a world-leading brand like Starbucks can defend its trademarks vigorously around the globe.
