Perhaps in the spirit of Mr. Krabs — the Krusty Krab's penny-pinching owner who is deeply concerned about fending off any competition — Viacom International sued IJR Capital Investments after discovering its plans to open its own Krusty Krab in November 2015. The TV giant, which owns Nickelodeon, accused the entrepreneurs of trying to piggyback off the Krusty Krab's well-established fame and reputation in order to make money, claims that IJR Capital adamantly denied.
In an opinion last week, U.S. District Judge Gray H. Miller issued the blow to IJR, laying out in great detail how the fictional Krusty Krab — home to Mr. Krabs's famous Krabby Patty and where SpongeBob and his perpetually unenthused friend Squidward were employed — rose to distinguished prominence among the cartoon lovers of America.
For those out of touch with 2000s-era Nickelodeon, the undersea burger joint appeared on 249 episodes of SpongeBob SquarePants, appeared in SpongeBob videogames, on baseball hats and shirts, in books called Jokes from the Krusty Krab and Trouble at the Krusty Krab!, and has been manufactured as Lego sets, cake decorations, aquarium adornments and even costumes, according to Viacom. As a result, Miller concluded there's a good chance that restaurant-goers would confuse IJR's Krusty Krab seafood restaurant with the one forever located in SpongeBob's hometown, Bikini Bottom.
Javier Ramos, owner of IJR Capital Investments, told the Houston Press that he found Miller's ruling unfair, and that he planned to appeal it and fight Viacom to the end. Ramos said he had never heard of SpongeBob before conceiving of the seafood restaurant, and once he looked it up on the Internet, still didn't think Mr. SquarePants was a big enough deal for him to choose a different name.
“I don't think SpongeBob is that famous,” he said. “I think it's more of a niche fame. There's too many legal questions about whether it would be confusing or not, but I didn't think it would. I don't think anybody would drive by the Gulf Freeway and think, 'Hey, there's SpongeBob's restaurant.'”
IJR tried to argue that, since Viacom never specifically registered the Krusty Krab for a trademark, it was fair game for usage. Yet Judge Miller, citing case law, disagreed, saying that ownership of a mark is established by use and popularity in the marketplace, not registration.
He brought in SpongeBob to help explain this law in a useful footnote: “As SpongeBob Squarepants says, 'You don't need a license to drive a sandwich.'”
Ramos said he had tried to settle with Viacom and suggested new names for the restaurant such as “Crusty Crab” or “Krusted Krab,” but said Viacom continued to “bully” his company and would not agree to those names. (According to Miller's ruling, IJR's lawyers argued that calling the restaurant the Krusty Krab with K's was important because K's are more “aesthetically pleasing” than C's. In a footnote, the court defended the letter C as also aesthetically pleasing.)
Judge Miller did not grant Viacom's claims of dilution, in which Viacom argues that IJR's use of the Krusty Krab has already tarnished its reputation.
“The court imagines an appropriate reaction from SpongeBob SquarePants would be, 'Aw, tartar sauce,'” Miller wrote.