On the corner of Union and Metropolitan Avenues in Williamsburg, Brooklyn sits The End, a coffee and blended beverage shop. The store sells healthy colorful beverages such as the Radiance Beauty Latte, made with a ginger and turmeric-based radiance dust, and Bonfire Cider, an ayurvedic blend of carrot, apple, cayenne, turmeric, ginger and raw honey. In spring of 2016, The End’s manager, Madeline Murphy, invented the Unicorn Latte, a freshly made blended beverage containing cold pressed ginger, lemon juice, dates, cashews, maca root, blue-green algae and vanilla bean. After six months of development and consumer testing, The End launched the Unicorn Latte in December of 2016, and it has accounted for 25 percent of the store’s revenue since January 2017.
The beverage became an instant success. Unicorn Lattes were featured in The New York Times’ style magazine, The Huffington Post, TimeOut magazine, Metro UK, Lonely Planet, New York Live TV, NBC New York, Facebook and Instagram. New York taxi cabs even promoted the beverage in their backseat televisions. Unicorn Lattes have broad appeal: They’re relatively popular among health conscious drinkers because they do not contain cow’s milk, processed sugar or food dye, but the beverage also fits within the current trend of colorful foods such as Unicorn Noodles, Rainbow Bagels and Mermaid Toast. In January, Murphy registered the name “Unicorn Latte” with the United States Patent and Trademark Office to capitalize on her product’s potential.
The beverage may have been too successful. During mid-April, rumors began circulating that Starbucks would launch its own “flavor-changing, color-changing, totally not-made-up” coffee drink. Later that month, Starbucks aggressively launched, promoted and sold Unicorn Frappuccinos in 13,000 U.S. stores and 2,000 other stores in Canada and Mexico. This unholy concoction of milk, artificial sweeteners, color additives and fruit juice flavor concentrate contains 410 calories, 59 grams of sugar and 16 grams of fat.
In addition to having similar names, both coffee drinks featured brightly colored blue and pink hues. The End’s customers immediately became confused over the Unicorn Frappuccino’s origin. Customers also assumed that The End’s product was unhealthy after Starbuck’s Unicorn treat was mocked on social media for its odd appearance and disappointing taste. Although the beverages are nigh indistinguishable in appearance, Starbucks did not approach The End for permission to use the Unicorn Latte name. As a result, Murphy filed a federal lawsuit claiming that Starbucks infringed and diluted her trademark property under federal and state law.
Federal and New York law permit firms to prevail on trademark infringement and dilution claims so long as (1) the plaintiff owns a valid, protectable trademark name, (2) the defendant uses the trademark in commerce without the plaintiff’s authorization and (3) the defendant’s use of the trademark causes consumer confusion and harms the trademark’s reputation.
The End’s Unicorn Latte trademark was valid and protectable because it acquired distinctiveness through continuous and substantial use over time. Furthermore, there is no question that Starbucks imitated Madeline Murphy’s trademark in commerce. All that remains, therefore, is the consumer confusion criterion.
New York courts assess consumer confusion by examining several factors, such as: (1) trademark strength, (2) trademark similarity, (3) product proximity and competitiveness, (4) evidence of actual consumer confusion and (5) evidence that the imitative mark was adopted in bad faith.
Murphy’s Unicorn Latte trademark had acquired strong consumer recognition in the New York market. The Unicorn Latte and Unicorn Frappuccino are virtually indistinguishable from one another and were sold in the same market. The End’s customers were misled about the Unicorn Latte’s origin after Starbuck’s coffee campaign, and Starbucks made no effort to secure Murphy’s permission before launching its new beverage. Widespread consumer uncertainty, moreover, caused patrons to associate the Unicorn Frappuccino’s unhealthfulness with the Unicorn Latte. Katy Perry, for instance, was spotted “spitting out Starbuck’s Unicorn Frappuccino after one sip,” and Instagram users urged others to “forget the gross #UnicornLatte from @Starbucks!”
America thrives when its small businesses thrive. Intellectual property laws protect and reward ingenuity and creativity in our firms. Multinational companies play an important role in our society, but we cannot allow scale economies to stymie competitive startups that have better ideas and business methods. Starbucks’ trademark infringement must come to an end.
Contact Habib Olapade at holapade ‘at’ stanford.edu.