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Pop-Up Infringement

Posted by James Juo | Jun 09, 2022 | 0 Comments

The animated television series “SpongeBob SquarePants” on Viacom's Nickelodeon network is about a sponge who lives in a pineapple under the sea, and works at the fictional The Krusty Krab restaurant. Viacom licenses The Krusty Krab to third parties for products such as Krusty Krab playsets from The LEGO Company.

Pixi Universal, LLC operates “pop-up” restaurants and bars in Houston, Texas. In May 2021, Viacom discovered that Pixi had recreated The Krusty Krab in the form of a pop-up restaurant and bar called “The Rusty Krab.”

The pop-up includes recreations of various iconic SpongeBob locals where customers can pose for photos, including SpongeBob's living room and bedroom and Mrs. Puff's Boating School. The pop-up also includes a rendering of, and appearances by, SpongeBob for customer interaction and photographs. SpongeBob SquarePants video further plays on multiple screens throughout the pop-up.

Pop-Up Restaurant Lawsuit

Viacom sued Pixi and its managing member Sanju Chand. An injunction against trademark and copyright infringement was issued in Viacom Int'l v. Pixi Universal, LLC, 2022 WL 909865 (S.D. Tex. Mar. 25, 2022).

As recognized by the Fifth Circuit, today's consumers act favorably toward cartoon character endorsements in the restaurant setting. Viacom Int'l v. IJR Capital Invs., L.L.C., 891 F.3d 178, 194 (5th Cir. 2018); Conan Props., Inc. v. Conans Pizza, Inc., 752 F.2d 145, 150 (5th Cir. 1985). And the Fifth Circuit also had found in Viacom, 891 F.3d at 188, that “The Krusty Krab's central role in the multi-billion dollar SpongeBob franchise is strong evidence that it is recognized in itself as an indication of origin for Viacom's licensed goods and television services.” 

Also, while parody is a fair use defense to copyright infringement, “[p]arody is not a defense to trademark infringement, but a factor to be considered when analyzing a likelihood of confusion.” Elvis Presley Enterprises, Inc. v. Capece, 141 F.3d 188, 198 (5th Cir. 1998). But the Court found this pop-up was no parody. “This is all to appropriate the goodwill of Viacom's intellectual property for the exclusive profit of Defendants.”

The Court granted a preliminary injunction to serve the public interest by protecting consumers from confusion and advancing the purposes of the Lanham Act and Copyright Act in restraining future infringement. Choice Hotels Int'l, Inc. v. Patel, 940 F. Supp. 2d 532, 543 (S.D. Tex. 2013); Malibu Media, LLC v. Escobar, No. CV H-18-1042, 2019 WL 1003391, at *4 (S.D. Tex. Feb. 28, 2019); see also 15 U.S.C. §§ 1116, 1125; 17 U.S.C. § 502(a).

A stipulated consent judgment entered on June 8, 2022, awarded statutory damages of $6M to Viacom. Sanju Chand was dismissed as part of the stipulated judgment, so he is not personally liable for the $6M, but is bound by the terms of the injunction under Federal Rule of Civil Procedure 65(d)(2)(C).

The attorneys at Thomas P. Howard, LLC enforce copyrights and trademarks or defending against infringement claims.

About the Author

James Juo

James Juo is an experienced intellectual property attorney. He has successfully litigated various intellectual property disputes involving patents, trademarks, copyrights, and trade secrets. He also has counseled clients on the scope and validity of patent and trademark rights.


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