Is This "The End" for Unicorn Beverages? Starbucks Sued Over Unicorn Frappuccino

On May 3, 2017, a New York-based coffee and beverage shop by the name of The End Brooklyn filed suit in the Eastern District of New York against Starbucks Corporation asserting that the recent phenom UNICORN FRAPPUCCINO frozen blended beverage infringed its rights in the trademark UNICORN LATTE blended fruit juice beverage.

In December 2016, The End started selling a blended fruit juice beverage featuring fanciful pink and blue colors and topped with sprinkles called the UNICORN LATTE. Thanks to an aggressive viral marketing campaign and tremendous social media interest, this whimsical beverage became an overnight success, receiving press coverage in the New York Times, the Huffington Post, and on NBC NY. The End filed an application to register its UNICORN LATTE mark with the U.S. Patent and Trademark Office (USPTO) in January. By the end of January, The End asserts the UNICORN LATTE beverage accounted for 25% of its entire revenue.

On April 17, 2017, Starbucks rolled out a pink and blue blended beverage that it called the UNICORN FRAPPUCCINO. The UNICORN FRAPPUCCINO was aggressively marketed on social media and promoted as being a temporary offering that helped whip the millions of Starbucks-loving Americans (and their children) into an absolute frenzy to get one at one of the 13,000 Starbucks stores in the United States. Like The End's UNICORN LATTE, it was also an overnight success.

The End is seeking relief on a number of bases under federal and state law based on the doctrine of reverse confusion. Reverse confusion occurs when the junior user (often a larger, more well-known entity) floods the market with its use of a confusingly similar mark and it deprives the senior user of its trademark and the goodwill it has established in the marketplace. In this scenario, consumers who are familiar with the junior user's mark mistakenly believe the junior user is the same as or is connected or affiliated with the senior user. The same elements of likelihood of confusion analysis apply, but it is confusion of the senior user's customers that is relevant in this type of case (i.e., if consumers of the senior user's product mistakenly believe the senior user's product is affiliated with the junior user.) The rationale behind a cause of action for reverse confusion is that rights belong to the first to use a mark no matter how small or localized that use is, and those rights cannot be disregarded or taken away by a larger, more well-funded second-comer.

In this case, The End alleges actual confusion of its customers who believe the UNICORN LATTE beverage is affiliated with Starbucks, including inquiries from customers about its relationship with Starbucks. The End also points to numerous instances of social medial posts for #UNICORNLATTE alongside pictures of the Starbucks UNICORN FRAPPUCCINO product. In addition to its claims of marketplace confusion, The End also claims that its valuable goodwill in the UNICORN LATTE mark for a healthy blended fruit juice beverage has been damaged by some negative press reaction to the Starbucks product being sugary and unhealthy and claims that it tastes bad in the opinion of some consumers.

While this case presents a number of very interesting legal questions, what is perhaps equally fascinating is the role that social media use has played, both in building up the recognition of the UNICORN LATTE and UNICORN FRAPPUCCINO marks in the marketplace, but also as a platform that documents the marketplace confusion. We will have to stay tuned to find out whether the relief requested by The End is as elusive as the unicorn or if this becomes another notable case based on the theory of reverse confusion.