'Dumb Starbucks': Lawful parody or unlawful free-riding?

by NZ Lawyer14 Feb 2014
The opening of a Starbucks parody café in Los Angeles last weekend has received an overwhelming media response around the world, with the likes of Forbes magazine claiming it ‘may have been the dumbest stunt in coffee history. Or else the coolest, smoothest move since the Frappuccino itself’. But does the comedic endeavour have a legal leg to stand on? And could it have been pulled off in a New Zealand context?

Branding itself ‘Dumb Starbucks’, the shop appeared to copy the whole so-called ‘Starbucks experience’, using the mermaid logo, white and green letterhead, menus, coffee cups – even CDs, normally present in an actual Starbucks café.

The catch was, each and every signature ‘Starbucks’ item was prefixed by the word ‘Dumb’.

James & Wells Intellectual Property specialist firm representative, Sarah Rosanowski, says that in a ‘Dumb Starbucks Legal FAQ’ statement present in-store and circulated in the media, Dumb Starbucks admitted it was not affiliated in any way with Starbucks Corporation: “We are simply using their name and logo for marketing purposes.”

The statement went on to allege Dumb Starbucks’ actions did not amount to trademark infringement because “[b]y adding the word ‘Dumb’, we are technically ‘making fun’ of Starbucks, which allows us to use their trade marks under a law known as ‘fair use’”.

“While it has since come to light that the replica café is owned by Nathan Fielder, host of [US comedy television series] Nathan For You, the business venture is likely to be featured in an upcoming TV show,” said Rosanowski.

“The legal advice they appear to be relying on appears to highlight the difficult issue of where to draw the line between fair parody and infringement.”

Rosanowski says various jurisdictions provide exceptions to copyright and trademark infringement for fair use such as ‘parody’ or ‘satire’.  These exceptions seek to strike a balance between the rights of the trade mark owner and the rights of the community generally to engage in criticism, review, reporting of the news and the like.

“Therefore, in clear cases of parody what may otherwise appear to be breaches of intellectual property rights can be (in a sense) justified on the basis of freedom of speech.”
But how would a stunt like ‘Dumb Starbucks’ fare in New Zealand’s legal environment?

Rosanowski says that, while there is no explicit statutory exception for parody set out in the Trade Marks Act 2002, whether use of a mark would be considered infringement depends on whether it is considered to be used ‘as a trade mark’ i.e. to denote the source of goods or services. 

In such a case the Fair Trading Act would also need to be considered.

“Any breach of the Fair Trading Act 1986 would depend on the likelihood of the relevant public being misled or deceived into thinking the shop was in fact a real Starbucks.”
According to Rosanowski, ‘fair use’ exceptions are better known in the context of copyright infringement.

“In New Zealand, the Copyright Act 1994 provides an exception for ‘fair dealing’ for the purposes of criticism, review and news reporting. This exception can provide a defence to allegations of infringement over parodies of original works (such as spoofs of literary, dramatic, musical or artistic works, sound recordings and films), but the work should be accompanied by sufficient acknowledgement of the original.
Often, the distinction between parody and improper use of intellectual property rights is difficult to determine, admits Rosanowski.

“Where the line is drawn between lawful parody and unlawful free-riding on another’s trade marks or reputation will depend on the context in which the parody takes place. The surrounding circumstances, including the purpose of the commentary and likely audience will be taken into account,” she said.

However, in the case of ‘Dumb Starbucks’, potential trade mark infringement is perhaps the least of its troubles - the café has since been closed down by health inspectors.