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Dumb Starbucks Needs Some Smarter Lawyers

Last weekend, a coffee shop looking very much like Starbucks (NASDAQ: SBUX  ) opened its doors in Los Angeles. The shop's logo, and the vast majority of its menu, looked like it was copied directly from Starbucks, with one exception: Everything had the word "Dumb" in front of it. "Dumb Starbucks" drew increasing attention on social media over the course of the weekend as people began to wonder who was behind the Starbucks knockoff.

On Monday, "Dumb Starbucks" was revealed to be the brainchild of comedian Nathan Fielder. At a 4 p.m. press conference -- incidentally, about an hour before the health department closed Dumb Starbucks for operating without a valid health permit -- Fielder stated that he planned an expansion to Brooklyn.

If Fielder wants "Dumb Starbucks" to make it to the Big Apple, he's going to need some better lawyers. According to a video statement and an FAQ posted in the store, Dumb Starbucks claims to be using the Starbucks name and logo under the fair use doctrine as a legally protected "parody" of Starbucks. However, it's not quite that easy to get around trademark law.

A parody of Starbucks
In its FAQ, Dumb Starbucks states that while the coffee shop is in fact a business, for legal purposes it is actually a work of parody art. The shop goes on to compare "Dumb Starbucks" to the works of parody singer Weird Al Yankovic.

Not surprisingly, while the real Starbucks took a lighthearted view of their new "competitor," company representatives also told Dumb Starbucks to stop violating Starbucks' trademarks. While Fielder and his baristas may think they've covered their bases by labeling everything "dumb," they're still almost certainly on the wrong side of the law.

Is it really a parody?
First, Weird Al always gets permission from artists whose songs he parodies. While there have been occasional mix-ups, and he is probably covered by parody law in any case, Weird Al has held back songs when the original performers didn't consent to a parody. This is a good practice because Weird Al is already in a gray area of parody law; most of his songs don't really make fun of the original artist (which is the type of art that parody law tries to protect).

Second, there are significant differences between copyright law (which applies to Weird Al's songs) and trademark law (which applies to Dumb Starbucks). The Dumb Starbucks legal FAQ seemed to miss the distinction between copyrights and trademarks. Notre Dame law professor Mark P. McKenna pointed out to NBC News that trademark law does not have the same parody exception as copyright law.

The menu adds "Dumb" before just about every item on the Starbucks menu. Photo source: Dumb Starbucks.

Third, there wasn't very much parody involved in Dumb Starbucks, aside from liberally throwing the word "Dumb" around. According to Aaron J. Moss, an intellectual property lawyer at Los Angeles law firm Greenberg Glusker, as cited in the L.A. Times, "Simply calling something a 'parody' does not provide some kind of magical protection against infringement."

The Dumb Starbucks FAQ made it very clear that the only reason for using the Starbucks name and logo was to take advantage of the brand's marketing value. In fact, Dumb Starbucks told its customers that it did not actually think Starbucks was dumb.

The ethos of "plausible deniability" that Dumb Starbucks was going for is not enough to make it a parody. In a true "Dumb Starbucks" parody store, the barista would make you repeat your order three times, you'd get overcharged, your pastry would come out burnt, and you'd end up with the wrong drink anyway. Unfortunately, while that might be a more defensible parody of Starbucks, it probably wouldn't attract too many repeat customers.

Dumb Starbucks in the balance
For now, the future of Dumb Starbucks is in the hands of the Los Angeles County Department of Public Health. (Apparently, it didn't buy Nathan Fielder's argument that the cafe could classify itself as an art gallery to avoid health department inspections.) The department scheduled a hearing with Fielder for Tuesday morning.

Even if Dumb Starbucks can resolve its regulatory issues, it will still be in hot water due to its infringement of Starbucks' trademarks. Starbucks probably hopes that "Dumb Starbucks" will die off on its own, so it can avoid litigation. However, Starbucks can't allow other cafes to lure coffee drinkers by latching on to the Starbucks name. Ultimately, that's going to spell the doom of Dumb Starbucks.

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Adam Levine-Weinberg

Adam Levine-Weinberg is a senior Industrials/Consumer Goods specialist with The Motley Fool. He is an avid stock-market watcher and a value investor at heart. He primarily covers airline, auto, retail, and tech stocks. Follow him on Twitter for the latest news and commentary on the airline industry!

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9/1/2015 4:00 PM
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