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Starbucks Corp. v. Heller

United States District Court, Central District of California

November 26, 2014

STARBUCKS CORPORATION d/b/a STARBUCKS COFFEE COMPANY, Plaintiff,
v.
HOWARD HELLER, SPECIALTY COFFEES INTERNATIONAL, LLC, CAFÉ NU INTERNATIONAL, INC., Defendants.

FINDINGS OF FACT AND CONCLUSIONS OF LAW SUPPORTING ENTRY OF PRELIMINARY INJUNCTION

MARGARET M. MORROW UNITED STATES DISTRICT JUDGE

Starbucks filed this action on August 28, 2014, alleging claims for trademark infringement, trademark dilution, unfair competition, false designation of origin, false description and representation, trademark counterfeiting, copyright infringement and violations of integrity of copyright management information. On September 3, 2014, Starbucks filed a motion for preliminary injunction. Defendants failed to answer the complaint and their defaults were entered on October 28, 2014. Defendants also failed to oppose the motion for preliminary injunction. This order constitutes the court’s findings of fact and conclusions of law concerning the motion.

FINDINGS OF FACT

A. The Parties

1. Starbucks Corporation is a Washington corporation with its principal place in Seattle, Washington. Since 1971, it, or its predecessor in interest, has continuously conducted business under the trade names “Starbucks, ” “Starbucks Coffee Company, ” and “Starbucks Coffee.” Starbucks Corporation is the owner of multiple federally registered trademarks promoting and protecting the Starbucks brand.

2. Howard Heller is a California resident, who was served with process at 880 West 1st St., Apt. 606W, Los Angeles, California 90012. Heller is apparently the manager, founder, and proprietor of Specialty Coffees International, LLC and/or Café Nu International, Inc.

3. Specialty Coffees International, LLC (“Specialty Coffees”) is a Nevada limited liability company. Café Nu International, Inc. (“Café Nu”) is a Nevada domestic corporation.

B. Starbucks

4. Starbucks is a leading purveyor of fine Arabica coffee. The company, which began in 1971 as a single, Seattle-based dry goods store, has grown to approximately 12, 000 retail locations in the United States, and more than 8, 000 retail locations in over 60 foreign countries.[1]

5. Starbucks owes its worldwide success to its strong reputation for fresh-roasted specialty coffees, brewed coffees, espresso beverages and other products and services it provides. Starbucks is also widely recognized for its knowledgeable staff and superior service.[2]

6. Starbucks is the owner of numerous, valid, and incontestable United States trademark registrations comprised of or incorporating iterations of the “Starbucks” and “Starbucks Coffee” names, the Siren Logo, and Cup Designs (the “Starbucks Marks”). These have been registered in more than 180 countries.[3]

7. Starbucks has registered the original artistic work on its logos with the United States Copyright Office.[4]

8. These registrations recognize the exclusive rights held by Starbucks in the Starbucks Marks and Copyrights.

9. Each Starbucks store prominently displays the Starbucks Marks and Copyrights.[5]

10. Starbucks serves coffee and other beverages through hundreds of authorized accounts and via its store.starbucks.com website. These channels prominently display the Starbucks Marks.[6]

11. The Starbucks Facebook page has more than 37 million likes and more than 20 million visits. The Starbucks Twitter account has more than 6 million followers. Both platforms prominently feature the Starbucks Marks.[7]

12. Numerous television programs and movies have prominently featured the Starbucks Marks, including Parks & Rec, The Voice, Ellen, Real Time, The Devil Wears Prada, Zoolander, License to Wed, The Proposal, Clueless, 127 Hours, and You’ve Got Mail.[8]

13. The famous and highly distinctive nature of the Starbucks Marks is epitomized by the 2014 report by BrandZ, ranking Starbucks as the 31st Most Valuable Global Brand.[9]

14. Starbucks polices and monitors all of its distribution channels to ensure strict compliance with Starbucks’ intellectual property policies.[10]

15. Starbucks Corporation’s “foodservice channels” provide Starbucks beverages to consumers on airplane flights, in offices, at restaurants, and through university, college, hotel, hospital, and cruise line catering services.[11]

16. Starbucks is highly selective in choosing what food service accounts it engages. It considers many qualitative factors, and dictates certain categories of locations that fall outside the boundaries of acceptable Starbucks locations due to the potential for an experience inconsistent with the high quality expected of the Starbucks brand. These include convenience store locations.[12]

17. Food service accounts may serve a number of products, ; Starbucks provides THE accounts with various approved ingredients to use in these products.[13] Starbucks also provides the accounts with storage, serving, cleaning, and preparation supplies and labels and marketing.[14]

18. Quality control of food service accounts is of the highest concern to Starbucks. The accounts are contractually required to use Starbucks-supplied recipes that set forth the ingredients, proportions, and process for making beverages. To control the quality of beverages, Starbucks has set numerous coffee standards, specifically approves the types of machines that can be used to produce beverages, requires only authorized representatives or agents to calibrate machines, and specially approves machines for accounts to use to prepare their beverages.[15]

19. Starbucks has not approved food service accounts to use machines that allow individuals to make their own espresso-based beverages.[16]

20. To distinguish a food service account from a Starbucks store, Starbucks food service accounts use the “We Proudly Serve Starbucks®” slogan. Starbucks closely tracks use of this slogan. Food service accounts may only use the slogan as depicted and must use non-Starbucks branding as their principal branding, so that consumers understand that the account, not Starbucks, is preparing and serving the beverage.[17]

21. Starbucks has the right to cancel any food service account that fails to adhere to Starbucks brand guidelines.[18]

C. Uncontested Facts Regarding Defendants’ Unlawful Use of the Starbucks Marks and Copyrights

22. Defendants market, advertise, sell, and offer to sell commercial coffee dispensing machines, most commonly known as the Trieste, under various company names through various websites and online advertisements and videos, all displaying the Starbucks Marks and Copyrights without authorization from Starbucks.[19]

23. Starbucks has sent defendants numerous cease-and-desist letters since 2011 objecting to their infringing use of the Starbucks Marks.[20] Heller, the founder of both Specialty Coffees and Café Nu, responded to the first cease-and-desist letter, but has ignored subsequent letters from Starbucks.[21]

24. Despite repeated warnings from Starbucks not to use the Starbucks Marks, defendants have continued their infringing activities. Infringing uses of the Starbucks Marks and Copyrights have been found in at least the following locations since 2012 and are believed to be accounts of or otherwise doing business with defendants, or distributors that are conducting infringing activities with the authorization of defendants:[22]

a. Alfredo’s Mexican Food’s (“Alfredo’s”), in El Monte, California;[23]
b. The website Craigslist.com;[24]
c. The website Franchise.com;[25]
d. The website EasternMassWorks.com;[26]
e. Sherwood Shell, Baton Rouge, Louisiana;[27]
f. Morrow’s Food Mart, Krotz Springs, Louisiana;[28]
g. Howie Glynn & Sons Convenience Store, Salem, New Hampshire;[29]
h. Mr. Express Fuel, Houston, Texas.[30]i. Vlero gas station in ...

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