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Dispute Over Krusty Krab Restaurant Lands in Fifth Circuit

By William Vogeler, Esq. on February 15, 2018 | Last updated on March 21, 2019

Kids know that SpongeBob SquarePants would protect The Krusty Krab's secret recipe.

Some seasoned judges don't know that, however, even in a lawsuit over "The Krusty Krab." Viacom, which created the cartoon crab shack on Nickelodeon, wants to keep a businessman from using the name for his planned restaurants.

The big problem is, Viacom didn't trademark the name. But another problem is, the judges don't know SpongeBob.

Don't Know SpongeBob

In Viacom International v. IJR Capital Investments, a judge ruled last year that the restaurateur can't trademark "The Krusty Krab." It would confuse consumers, he said.

But IJR Capital Investments appealed, and the parties recently argued about it before the U.S. Fifth Circuit Court of Appeals. It was going swimmingly, until Judge Priscilla Owen took a stab at questioning the appellant's attorney.

"You're saying you can build a restaurant and put 'Krispy, Krusty Krab,' on the outside as long as it looks different from the cartoon drawing of the 'Krusty Krab' restaurant in 'Square?'" she tried. "I can't keep all this straight."

Attorney Christopher Schaefer did not correct her, but asserted that consumers would not be confused. The cartoon restaurant is just a backdrop on a show, and the real restaurants don't exist yet anyway.

Big-Time SpongeBob

The cartoon character has soaked up quite a bit for Viacom. The show has made more than $12 billion in merchandising, ballooned into two feature films and sold more than $470 million in tickets.

Viacom sued to protect its property after it discovered IJR Capital filed its trademark application in 2014. The company sent a "cease-and-desist" notice, but IJR said, in a manner of speaking, "fish or cut bait."

"The trademark office allowed my client's trademark application, so the trademark office didn't find a likelihood of confusion," said attorney Karen Bryant Tripp.

So maybe they know SpongeBob, or at least the difference between one crab shack and another.

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