please the court my name is christopher schaefer and i'm here because my client made one very simple act he filed an intent to use application for a trademark now the district court judge granted summary judgment motion for viacom eliminating it and finding a trademark infringement my client is guilty for and liable for trademark infringement for doing no more than filing an intent to use application is not a cancellation but it is trademark infringement now to get here is kind of fantastical first district court had to find that mere backdrop ornamental usage within a television show qualifies in passes the high threshold for a trademark into the district court then had to go on and find a likelihood of confusion and cast aside the long jurisprudence of this circuit as well as the country and ignore that there was no context of use now in its findings the district court made a critical but understandable mistake it easily conflated various problems property rights and the children's cartoon shown with sponge bob doesn't doesn't this really all come down to the issue of source identification yes and schaefer yes that's exactly what it comes down to and we're arguing one that viacom has not proven especially not to no fact issue at the summary judgment level that its use of krusty krab in the mere words krusty krab not the artistic expression of cr as it's used within the t v show qualifies as a trademark viacom has shown absolutely no evidence that it has used krusty krab alone in fact all of the evidence that viacom shows shows that it is used a within the sponge bob square pants universe and that is all this circuit already has well established law for determining whether you have a trademark and that is would the consumers perceive this first and foremost to connect a source with a product or service i don't know what a krusty krab is i don't know what you can buy from a crusty crab if you don't tell us what's in the record there were some surveys that were conducted is that right or there was a survey then that goes to the likelihood of confusion and to that survey specifically your honor one it was a mere association test but we don't even have to get there and if you if i you allow me i'll like to at first address that they don't have a property right in krusty krab first and foremost and if you don't have a property right for trademark in the mere words krusty krab then there can be no likelihood of confusion that is well established law in the circuit now even to that survey your honor the survey does not consider context of use in this circuit as well as many circuits around the country repeatedly hole that you must consider the context of use because it is the overall impression and it's not just the context of use by my client but also the context of use by viacom here you have a cartoon with very peculiar colors characters shapes and designs not not only the fact that they've never used the mere words krusty krab it's always part of the artistic expression this cartoon backdrop that they use and the district court referred to it as an ornamental backdrop now our client all he's done is filed an intent to use for the words krusty kra we don't have a restaurant we don't have elect location we don't have a theme we don't have hardly anything and yet still the court found a likelihood of confusion further summary judgment we have at least raised an issue of fact here the judge inferred an intent to copy on my client because supposedly after he created the word he saw on a search that it popped up when you  with sponge bob square pants cartoons but that belies the real reason that he created the word which is also in the record when they deposed him he told them when you do a seafood boil the crust of the seizing on top of crab is where he got the name and krusty krab now we are looking for this court to hold simply the law that is well established one you cannot get a trademark for mere ornamental backdrop use within a cartoon show it must be used and consumers must actually perceive it to primarily identify a source with a group of products and services and two that there can be no likelihood of confusion if you do not consider real context because context can both distinguish as well as create a likelihood of confusion where if you just mechanistically apply the rules there would be not in this court roots said repeatedly we do not mechanistically apply these tests we look to their overall purpose which is what would consumers actually perceive now viacom does not have a trademark in the simple words krusty krab it's never used the mere words krusty krab it's got a cartoon show within that cartoon show there's an ornamental backdrop which is this fictional restaurant of sorts viacom likes to claim that because sponge bob has made lots of money and that they have spent lots of money on sponge bob that this somehow translates to a trademark right in the m krab we cannot allow such an expansion of the law the law is very clear you have to use it as a trademark and the law is also very clear we do not look to the extent of money spent we look to its effect and if you look at the evidence presented by viacom it shows that they spend a lot of money on sponge bob square pants what about that the superman kryptonite case and the of hazard the car yes ma'am warner brothers we get a second circuit case in one nine hundred eighty one in that case the circuit court found that the group of symbols which was intensely copied by the defendant they purposely wanted it to look like the dukes of hazzard they copied not the mere words but the exact car the color the numbering and the unique i guess not unique but the rebel flag symbol on the roof again critical to its analysis was the fact that the defendants actually intended to draw on the goodwill created by the dukes of hazzard also critical to that is they did not use application for the mere words krusty krab which by the way are suggestive of a seafood restaurant ok now the other cases the d c cases they like to bring up d c versus powers the daily planet case again that one that's just a district court that is not it was the opinion was not written for presidential purposes i don't know exactly how d c comics actually used the daily planet but critical in there was they did not say they have a trademark right and daily planet but there was a likelihood of confusion because the newspaper the real one that was created daily play and it copied the symbol of the daily planet from the comet exactly it used drawings from superman had articles about superman and that this totality this copying of the theme in context is what created a likelihood of confusion we have none of that here all we have is intent to use of mere words that is absolutely all that we have but we have an intent to open a restaurant or a building with the name krusty krab it's not like you're creating crumbs to put on a grocery market shelf and a box says krusty krab correct your honor we do hope at some point to open a restaurant with that entitled the krusty krab but we don't know what it would be like yet we have not been able to get that far because as soon as we file the intent to use biocon filed the suit and we put my client put on hold all of his further business pursuit we don't know where it will be we don't know what the look will be and let's be clear here you're saying you can build a restaurant and put chris christie crap on the outside isn't it looks different from the cartoon drawing of the krusty krab restaurant square i know exactly what you mean yes your honor is long again the ultimate test would consumers be confused and we have at least raced in fact issue we think is a matter of law that you cannot at this stage find a likelihood of confusion when your is no context of use this court held an elvis vs co piece that the context was critical in fact overruled for your own as error the district court because the district court did not consider the context appropriately in that case a bar wanted to open called the velvet elvis and within the bar was tons of elvis paraphernalia it was pizzeria was found to infringe on conan the barbarian is because within the pizza was the restaurant was riddled with nothing but conan the barbarian paraphernalia movie poster statues in the life we would submit that had that restaurant here instead of having conan's pizza with barbarian paraphernalia had they had say i don't know orange hair and a talk show host theme and maybe some simpsons reference it wouldn't be conan the barbarian are going for trademark infringement would be conan o'brien context is critical to these analysis and it's further important that we should not put a huge chilling effect by allowing someone to be liable for trademark infringement for doing no more than filing an intent to use what what relief then are you shaking here on appeal i understand it you know you don't like a summary judgment what what what would we tell the district court to do if we were to agree with you multiple holdings your honor only one of which we need to to win this appeal we would like to see this court to hold as a matter of law that you cannot have a likelihood of confusion without considering and if there is no context good to consider the case is not right for adjudication so you're asked there what are the consequences in the real world of a funny good there's been a trademark infringement you can't build a restaurant what else  i'm sorry what are the real world consequences of the finding that there's been trademark infringement oh my client would have been found guilty of tried trademark infringement he would have an injunction against using it in all forms and he would be liable for restaurant colic krusty krab yes ma'am that would be one of the consequences but others on there if they were to pursue damages we'd have to litigate whether there were damages in fact because he has not used it i can't imagine there being any harm at this stage so to my knowledge it would only be the permanent injunction of in the impairment of his freedom to use it but there would also be if he were to lose this case the chilling effect because what we would have done is set the standard that if you file an intent to use you can be found and hauled into court not to cancel your trademark but for trademark infringement and that carries a much bigger weight in kind of undermines the very purpose of having an intent to use function at the federal level further if this court were to actually find in favor of viacom it would require that they allow a trademark for mere ornamental background use within a cartoon show the name on products yes went to points that first their products are sponge bob products and if you look at all of their evidence and we've highlighted many of them and would love for them to bring any any product that does not have that uses krusty deal out of raw meat on the star trek people i didn't say you couldn't have did no did no way no how could you yes your honor and if they used krusty krab correctly they could do it but they don't it has to be first and foremost to disk in which a source of underlying goods and services not name of the product and that's what it is everywhere they use it's untitled sponge bob and i receive my times out of if i may finish but they don't even use the words of the product sometimes it's just a replica of this artistic background expression they don't and that again the test is to consumers use it first and foremost to identify source not describe the product thank you very much when i get this is just a question of course  tampa's you say you're full time for a bottle but when i ask you about what relief you were seeking i expected you to say among other things that you would want to jury trial and source of jennifer cation but it sounds like from your answer that you're saying that's a question of law not a question of facts would it it's it's not subject to to a jury trial explain that to us not at all your honor the whether there is a trademark first is a question of fact for a jury we think that you can find is a matter of law that they have not met they have not provided any facts that so no jury could conclude in other words summary judgment in favor of us no jury could conclude that this would be perceived as a trademark because they have provided absolutely zero use where it is used in a trademark and not to describe at the very a product such as the sponge bob monopoly in sponge bob movie in sponge bob cartoon i cannot buy a krusty krab anything it's a sponge bob and it made the picked the the krusty krab in which case it merely describing it thank you and so again i'm i'm trying to understand where we are here i thought this was i thought your case was built largely on fact issues and if this is not not ready for summary judgment because there are there issues to be determined by fact finder tell us whether there are issues to be determined by fact founder or if not why not yes or on at the very least if you don't think that we win as a matter of law because they have not proven anything to our side we've at least raised the issue that a jury would also agree with us that they don't find it to be a trademark and therefore it isn't a fact issue and i'd like to close with a quote from mccarthy that this court has used several times if it is not readily apparent from its use that it is a trademark than it is not one question should not this offer i can't keep these cases strike did you fall across motion for summary judgment as a matter of law yes we did it the district court level  thank you mr very much mr milli thank you good afternoon and may please the court i'm steve myleene counsel for viacom the plaintiff below and appellee here i want to start by correcting some facts that are not in dispute the krusty krab is not a backdrop and it's not born a mental it's the central ingredient of the sponge bob square pants show it's the restaurant in the show where sponge bob works and it appears in over eighty percent of the episodes the reason we're here is because i jr thinks that they can open a real life restaurant and call it the krusty krab this is a straightforward case of trademark infringement unfair competition it involves exactly the type of conduct the trademark laws are designed to stop judge miller properly granted summary judgment for viacom on its federal unfair competition claims that's common law state trademark infringement claims the undisputed facts overwhelmingly support the district court's conclusion on both elements of those claims one the viacom has strong and protect all rights in the mark the krusty krab and two that there's a likelihood of confusion the ruling below that viacom owns a valid trademark in the krusty krab is not an extension of trademark law as i jr suggests nor does it present issues of first impression or two independent bases that support fully support the district court's opinion on this point first the district court correctly found that viacom has established ownership through its sales and licensing of consumer products indeed viacom has used the krusty krab market through licensees who've made extensive sales of authorized krusty krab products judge joan you mentioned the aquarium which is a replica of the krusty krab restaurant from the show it appears in its in its form that it appears in the show and it makes bubbles in new york where there's a cake topper that's the krusty krab these are the names of the products the sticker packages in the play sets at age six and seven of our preferred other examples and there's many other products he says and every one of those instances sponge bob is on there as well i believe that in the vast majority of them sponge bob is on there with as well there are some t shirts that are sold at universal studios that just have the krusty krab without sponge bob i believe again those are in the record we cited a case in our brief we cited a number of cases are brief involving house marks it's simply not the case that because sponge bob is on there that means krusty krab is not a mark that were the case kellogg's pop tarts would it which is one of the cases in our brief pop tarts is certainly a mark and it always appears with kellogg so and there's there are several other examples we gave of that the the bridgestone for ren attires pretty much any product mark for a company that has a strong brand has a strong house market is going to have multiple marks on the product so that doesn't that doesn't get in there  so the second the second basis is the krusty krab is a central ingredient or is the district or put it a recurring element of the wildly popular sponge bob square pants show courts have long recognized and protected trademark rights in such fictional elements of entertainment media you mentioned the second circuit's warner brothers case from one thousand nine hundred one about the dukes of hazzard car the generally it has an interesting quote they said trademark protection has been held to extend to the specific ingredients of a t v a successful t v series it's exactly what we have here other good examples are the superman cases that you mentioned particularly the daily planet that i'll discuss a little bit more in a second here and the kryptoni cases and this court's conan's piece a case it did have issues of they copied other elements of that but that case recognize that cartoon characters are used in licensing programs to promote everything from children's toys to fast food restaurants and that many consumers expect such endorsements and act favorably towards them so either of these bases is sufficient on its own to establish that viacom has protected all rights in the market the krusty krab it does identify the source of goods and services that viacom provides and together both bases cement viacom's mark in the mind of consumers on this point about the validity of the market like to briefly highlight three important cases first is that d c comics powers case that i mentioned involving the daily planet it's at page one thousand and twenty of our brief it's a one nine hundred seventy eight case from the southern district of new york and it is a published opinion i don't know of any indication that it was not for president so i'm not sure what that reference was about he just meant that it's a district court opinion so it's doesn't have binding presidential value beyond just the parties to that case i will take that as what he meant that it certainly and i i'm certainly not arguing his binding but i think it's very persuasive authority given the strong factual similarities here number one the daily planet is where superman works the krusty krab is where sponge bob works both are unregistered common law marks that are central ingredients of their respective shows the court emphasized that the daily planet played a key role in the development of the superman character similarly the krusty krab plays a role in sponge bob character development he spends a lot of time there or has a lot of crazy antics and as i mentioned it appears in over eighty percent of the up cells the defendant in that case used to mark for a newspaper called the daily planet so it was a fictional paper versus a real life paper here we have a fictional restaurant versus a real life restaurant the second case i'd like to mention is this court smack apparel case which i know judge are evil you know and will remember  well that's another case acknowledging common law trademark rights in elements that the public identifies with the trademark owner in that case it was color schemes and other indicia of the school's football team this court affirmed summary judgment of trademark infringement based on a likelihood of confusion we believe the courts should do the same thing in this case finally i want to point out judge joan you mentioned the romulan invasions case that appellant relies on pretty american grain manufacturing company the site for that is seventy seven us p q second twelve twenty and the reason that that's important is that the applicant in that case made the same argument they argued that romulan invasion stands for the proposition that earlier use of the term as an element of a literary work does not establish trademark use the board rejected that argument and said that this case that the romulan invasions case does not extend to any sort of general principle like that they noted that opposers mark kryptonite had been the subject of trademark licensing agreements and it's been used as a trademark pursuant to such licenses on products just like we have here now i don't can never have trademark rights in an element of a type of a television show i'd also like to point out that the krusty krab is a peculiar name for a restaurant crusty is not really an appetizing word and spelling crab with a k certainly doesn't denote fine dining in fact i believe that the strange name and spelling is what makes it fit so well in the sponge bob universe this is after all a show about a talking sponge that show became a cultural phenomenon making literally billions of impressions spawning two major motion pictures and a live musical which by the way is now on broadway a whole generation of children and their parents have grown up watching it over the last eighteen years and the krusty krab sponge bob squid worth and the owner mr krabs work making crappy paddies the central element of that show it's so important to the show that time dot com named the krusty krab or the eighteen most influential fictional companies of all time so now when people hear the name the krusty krab particularly in connection with a restaurant many of them think of sponge bob judge miller recognized this he analyzed the undisputed facts joined explicitly reference source identification but he did recycle a says that talk about the purpose of trademarks to identify source but wouldn't that be a metal mean to cut you off but i mean  wouldn't would when ted be a pretty serious flaw in the opinion i don't understand how this area of law can be examined in the context of this case without thoroughly looking into the whole concept of sour source identification is a it's a legal determination that you need to make based on the facts that are at issue and you don't hear a lot of trademark cases going into a lot of analysis over  was this a source identifier the question is was it used in a manner consistent with the trademark and with the public perceive it as being as identifying the product and connecting it to a particular company and in  fact he by finding that that viacom had secondary meaning in the mark he in fact did find that consumers identify that mark with a single source that's what secondary meaning is and that's acquired distinctiveness is a synonym so i mean we may be we may be arguing about syntax or about semantics of whether he specifically said and i find it as a source identifying function but by finding that it had secondary meaning he did implicitly find that it identifies viacom as that identifies a single source as the maker of that product in this case viacom so having established a protected will mark the next question the district court correctly addressed is the likelihood confusion if i jr were to carry out its threat to open a restaurant there is no doubt that a significant and actionable number of consumers would be confused would think that it's a licensed or otherwise affiliated by sponge bob the district court correctly found that if you were to open a restaurant and called the krusty krab a lot of people would expect that to be connected with sponge bob dr blair survey proved this point measuring thirty percent net confusion and the district court properly credited those results dr blair is a very experienced expert you can see his report his surveys have been relied on by courts in the circuit and elsewhere as detailed in our briefing he independently designed the survey to measure the likelihood confusion i jr chose not to depose him jr did not hire an expert of their own they didn't present a survey of their own and they didn't even present an expert to criticize him their criticisms are purely attorney argument and dr blair is far more qualified than any of us to and on what constitutes a good likelihood of confusion surveyed and he did that in this case the district court also analyzed each of the eight likelihood of confusion factors and determine that all of the factors support a likelihood of confusion is we have never said that context is unnecessary we absolutely agree with the district court who said and i quote context here is critical because a consumer seeing either viacom's or i jr's marks will likely think of a restaurant and i would say that in making that finding by saying that consumers who hear the krusty krab will likely think of a restaurant the judge was affirming that connection that consumers have that anything named the krusty krab is going to be a restaurant and the only krusty krab restaurant is the one and so i believe that ties into the source identifying concern that you had as well so any claim that viacom or the district court did not consider context is baseless the same context the fees and other argument that appellate makes and that is that viacom is seeking or the district court gave us absolute trademark protection in any context again the context is appellant wants to open restaurants name the krusty krab we're not talking about a used car lot or some other completely unrelated business but the exact same type of business as fictional restaurant  has a valid mark and since i jr's threaten the use of that mark is likely to cause confusion both elements of viacom's claims are met and the district court properly granted summary judgment i do want to note that there's a little yes that what i was about to mention are some letters that were attached as exhibits one and two to our complaint those are in the record very early on and those themselves reference the  newspaper articles that alerted our client that to the idea that mr ramos was planning to open these restaurants also in the record as he completed a lease in california and he had a he had what he bought restaurant equipment in simply file an intent to use and then sit back and say i wonder if anyone's going to care about this he was actively making preparations to to open a restaurant judge own with respect to your earlier question about  damages where there may have been some confusion there is in our complaint we did make a claim for damages based on the assumption that he was going to go forward and open his restaurant and then we would be seeking damages certainly we would not argue that any damages have accrued as you know that's a question that the district court asked me and i'll tell you the same thing i told him that would be a different case i think we would have to analyze that i would say very bluntly that would not be nearly as strong a case as this one or he uses  used it with two k s there's an interesting footnote in the district court's opinion about the relative aesthetic pleasing value of seized versus  but anyway it would be a different case i certainly think spelling it with two cases much more egregious lastly i'd like to address viacom's dilution claim there was some discussion in both of appellants briefs  about the fact that the district court dismissed viacom's dilution claim i'm sorry denied summary judgment on the dilution claim in viacom voluntarily dismissed that's true but it wasn't the denial was not based on any sort of substantive determination about our rights like that the krusty krab mark was not famous instead he denied summary judgment on the basis that because they had not used the market there was no dilution to to find  actionable and we did agree to dismiss the claim because as long as he's not using it scuse me we're not worried about any any dilution but that dismissal does not impact any substantive issues in this case that's all that i feel like i really need to cover your honors i'd like to start with what exactly we're asking for and that is a ruling that we can get sent back to the district court that they do not have at this they have that viacom has not proven itself to pass s judgment and ownership rights for trademarks in the mere words of krusty krab or or in addition that viacom cannot prove likelihood of confusion without considering relevant intangible context of ukes at the very least we have we believe if you don't want to rule in that in that explicit manner that we've raised the fact issue that this should go to a jury now what is this what is this being one that they have a trademark right in the krusty krab or two that there's a likelihood of confusion absent relevant context and this is something i've i'd like to bring up as well this relevant cont t mr mclean referenced ellice you versus smack in that case this circuit held that it wasn't just the mere colors of use on the clothing it was also the fact that they were using it with an intent to refer to the different colleges and that these colors did in fact refer to the colleges it wasn't just clothing in purple and gold it was purple and gold clothing that involved football scores ellis used football schedule in other context that referred to the school now viacom asserts that it uses krusty krab because it's involved in a product but that is not a trademark use it must the consumer must perceive in a distinctly commercial manner that it is connected between a source and a product it cannot be the product itself and that's their only use in fact more than that sometimes these products don't even have the word krusty krab on the box they don't mention it at all take their example of the monopoly game it's intitled sponge bob monopoly very clear right there on the front packaging nobody's going to go buy a krusty krab monopoly because it doesn't exist it's use within the board game and this instance cannot qualify because no consumer could use that to distinguish the good they don't know until they've already purchased it and that applies to all of their products they have to prove that the primary not just it's associated with but the primary meaning is that it is quite connect a source with a underlying good in service and they have not proven that further they want to ignore the context that their artistic expression which the word mere words have never been used absent these drawings is a fictional restaurant with a unique color scheme under the water we would assert and any jury would see that if we want a didn't have the same color scheme if we didn't have anything at all relating to sponge bob that no one would presume these suggestive words for a seafood restaurant krusty krab would refer to the t v show and he brought up joe when you brought up about using c s for krusty krab we run into a difficulty there if we use sees then krusty krab becomes descriptive or potentially generic in which case we cannot obtain a trademark in those words we use the k s because of the there  pleasing and they allow a suggestive mark which is protected by now they mention that they have license krusty krab but they have provided zero evidence that those licenses are explicit trademark use for the mere words krusty krab at best those are the a right to copy things from the sponge bob universe they have shown no use absent the sponge bob yet they want us to perform an analysis on their likelihood of confusion where they only have krusty krab their own survey by dr blair several of the those interviewed asked is this a real thing or fictional one is even quoted as saying if it's real than i have no idea it is a mere word association test they did not mention that this would be real they did not show in any way that there was nothing a can to sponge bob square pants this court has held routinely that mere word association test are not applicable in his recently is am starving versus domino's pizza where they presented a domino's pizza box and asked what do you think this refers to and then people with seventy percent mentioned domino sugar in the course said that is an incorrect test i see that my time is up thank you very much yes thank you miss schaefer your case and all of today's case