Starbucks vs. Charbucks: So Much More than a Boring Trademark Violation Case

The roasters of “Charbucks” blend coffee have won yet another round in an ongoing legal battle with Starbucks.

A New York appellate court last week held up a previous district court ruling that denied an injunction against New Hampshire’s Black Bear Micro Roastery, which uses the brand names “Mister Charbucks” and “Charbucks 33 Blend” for two of its darkest-roasted coffees.

The two companies have been in a legal scuff over the use of the names several times over the past 10 years, with Starbucks failing at each step to prove that the Charbucks moniker achieves “dilution by blurring,” defined by the appellate court as the “association arising from the similarity between a mark or trade name and a famous mark that impairs the distinctiveness of the famous mark.”

This is truly a David vs. Goliath case. Owned and operated by Jim and Annie Clark, Black Bear is a micro that primarily fulfills online orders, while maintaining accounts at a small handful of New England supermarkets and one other New Hampshire retail location. Starbucks, meanwhile, had $13.29 billion in revenue in 2012. But the company has been fiercely protective of its approximately 56 trademarks related to Starbucks logos and branding. As the latest court ruling points out, the company spent some $136 million between 2000 and 2003 to develop its marks.

The case itself is quite straightforward — it may be of interest to legal types as an interesting case study on “dilution by blurring” as potential trademark violation — but the story of Black Bear and its use of the Charbucks name is incredibly interesting. Here the Clarks provide some background on how the name came about:

During the fall of 1996, one of customers (a Boston, MA area retailer) told us that they had been brewing and serving our Country French blend.  They told us that some of their customers were asking if we had anything that was darker roasted.  Country French was our darkest roast at the time, and we were amazed that Boston area consumers would be asking for anything darker.  New England coffee consumers traditionally don’t prefer dark roasted coffee.

We had developed our reputation on roasting coffee only to the point necessary to bring out the full flavor profile that any particular variety or blend had to offer.  Consequently, we were very resistant to roasting anything darker than our Country French, which we regarded as very dark.

After months of requests, we finally decided to give them what they wanted.  After all, we are in business and we have a responsibility to be responsive to our customers.  However, we were very nervous about producing a product that would be such a radical departure from the rest of our products, even our Country French blend.

We felt a strong, ethical obligation to label the product in a very distinctive manner that would alert any consumer to be fully aware of what was in the bag before purchasing it.

Next the Clarks share their thoughts on one of specialty coffee’s most compelling controversies, the sale of George Howell‘s Coffee Connection to Starbucks in 1996:

The term “Charbucks” had been in widespread usage for many years all over the United States, but during the early 90s, it was being used intensively in the Boston, MA area.  George Howell, former owner of the, now non-existent Coffee Connection, had brought it into prominence in the Boston area.

The Coffee Connection was the most popular coffee roastery in Boston, and was known, and highly revered, for roasting coffee in a manner identical to the way we do, that is, not “over roasting” coffee.  George Howell, founder and owner of the Coffee Connection, regarded Starbucks as the antithesis to what he believed in.  By 1994, the Coffee Connection had expanded to twenty-one retail outlets, and Starbucks was actively attempting to purchase the chain.  Since George felt so strongly that Starbucks “over roasted” all of their coffee, he began to refer to Starbucks as “Charbucks” extensively.

At the time, the expansion of the Coffee Connection, George had been expressing concerns about maintaining the quality control that he believed in. Starbucks finally offered enough money (about twenty-three million) to George, persuade him to sell the Coffee Connection to Starbucks.

Many Boston area coffee consumers were horrified at the possibility that Starbucks roasting methods would ruin their cherished Coffee Connection products.  Starbucks had developed a huge following by roasting coffee considerably darker than many Boston area coffee connoisseurs felt was reasonable.

In an effort to allay consumer fears, George Howell appeared side by side with Starbucks CEO, Howard Schultz, in a news conference shortly after the deal had been announced.  The two assured local consumers that Starbucks would preserve the integrity of the Coffee Connection products.

Starbucks proceeded to wipe out any trace of the Coffee Connection in a matter of a few years, leaving the Coffee Connection devotees with nothing but a memory.  The former customers of the Coffee Connection were left with a profound sense of betrayal and outrage.  Usage of the term “Charbucks” became an emotional mantra in the Boston area.  We have to assume that George Howell was quite sincere in his assurances during that news conference, and that he was as betrayed, as were his former customers.  We also cannot assume that there was any intent at the time, on the part of Starbucks, to do what they did.  Whether one supports their actions or not, any business has the perfect right to alter its business strategy at any time it wants.

During the spring of 1997, it seemed to us that naming our new dark roasted coffee “Charbucks Blend” could not have been a more perfect way for us to grab the attention of consumers.