Starbucks, Charbucks

Beware of Tangling With Corporate Giants.

New Hampshire coffee roaster Jim Clark makes a roast so dark that it's hardly fit to drink and sells it sparingly to a few diehards throughout New England. Still, for 14 years he's been in a "David and Goliath" legal battle with coffee giant Starbucks to continue to call it "Charbucks." Last December he won his third federal court case and awaits yet another, probably final appeal.

This case is important because most trademark disputes never get to court. Most small businesses hardly see the benefit and quietly settle. Most have no alternative because the process is long and costly. But Clark is not typical.

Along with his wife, Annie, he owns Black Bear Micro-Roastery, a tiny coffee roaster in the small town of Tuftonboro on the back side of Lake Winnipesaukee. They have one part-time employee and sales of less than $200,000 annually. Nearly all of their 22 specialty roasts are sold online directly to customers and through a few stores in northern New England – including the Lebanon Co-op Food Store. They thrive on being small, authentic and responsive to their customers. Back in 1996, some of Clark's customers asked for a stronger blend. So on a lark, he made one – so strong, Clark admits, "I won't drink it."

This nearly-burnt coffee (or as Clark calls it "a radical departure" from their other products) needed a warning, so Clark gave it a name that would stop customers in their tracks: "Charbucks," and added a warning: "You want it dark, you got it dark."

The name didn't sit well with Starbucks, who considered it both a threat to their good name and an insult to their famously dark-roasted coffee. On the day before Independence Day in 2001, after considerable and unsuccessful negotiations, Clark heard a knock at his door and it was a sheriff serving him a notice to "cease and desist" using the name. Starbucks was getting serious.

Starbucks, with $2 billion annual revenues, 4,000 retail coffee shops and a well-established brand, claimed that Clark was diluting the value of their trademark. A trademark, as defined by the federal government, is "a word, phrase, symbol or design, or a combination thereof, that identifies and distinguishes a source of goods." Consumers rely very heavily on trusted brands. Companies spend big bucks on branding – and are quick to defend their brands.

Corporations are routinely on the lookout for potential trademark infringements, and threats like the one Clark received are not usual, but few fight back. According to Gary Lambert, a Nashua attorney and state senator who specializes in trademark law, a trademark battle "often comes down to how much money you have" because many people can't bear the expense of a protracted legal battle.

He says he often advises small-business clients to "work it out," adding that "the quick fix is to change the name and move on. It may not be good for business in the short term, but it'll save a lot of money."

In a court filing, Starbucks says Black Bear's use of "Charbucks" mocked their name. They said the term "char immediately creates an image in the minds of many consumers of charred coffee beans – obviously a negative connotation." The name, they also said, is so similar to Starbucks that consumers will "instantly think of Starbucks."

This whole dispute, Clark says, revolves around about 25 lb. of coffee (which sells for $6.46 for 8 oz.). His "microscopic use" of the name hardly hurts or confuses anyone, he says. But none of this is the issue, he says. Clark is motivated by an inward determination to not be bullied by a big corporation. "I could care less about that name," he says, "It's the principle."

Clark is inspired to fight by his World War II-era uncle, who fought on the beaches of Normandy during D-Day for America's principles. "I have an obligation to fight," he says. "It's been the toughest thing I've ever done."

Clark's business insurance coverage included personal injury and advertising coverage, which covers legal claims of things like slander, libel and trademark infringement. This got him started, but he needed more legal help – help that he couldn't afford. "Pro-bono" help came from Christopher Cole and John-Mark Turner, attorneys with the Manchester law firm of Sheehan Phinney Bass + Green.

Cole admits the name does poke fun at Starbucks, but doesn't dilute or weaken the name. During the 1990s a Boston-based coffee chain called Coffee Connection sparred publicly with Starbucks by calling the company "Charbucks" because of their penchant for dark roast. Eventually, the company sold out to Starbucks. The website defines "Charbucks" as slang for Starbucks "because they burn their coffee and produce trendy 'coffee' addicts."

This is an important, but simple case, Cole says. "The law is what the law is," he says, "There are no consumers who are confused." Federal Judge Laura Taylor Swain agreed: "The Charbucks marks are only weakly associated with (and) minimally similar to the Starbucks marks and, thus, are not likely to impair the distinctiveness of the famous Starbucks mark."

With three wins (as well as two reversals), Clark sees an end in sight. He promises he will not compromise. There will be "tremendous pressure to settle," he added, often with the question: "Isn't there some piece of machinery that you need?" When asked his advice to others facing a similar situation, he answers, "I hate to say it, settle. Get it behind you. It's been a nightmare." In the future, he says, he'll be more careful picking names.

Despite his success, there's no bravado in Clark's voice when he says, "Nobody thought we'd ever get this far." At this point, he's winning, but what will he win? "Nothing," he says, "Zero."

Categories: NH Law