At the End Brooklyn, a tiny coffee shop in the borough's Williamsburg neighborhood, a barista poured an opaque blue liquid into a plastic cup.
"We call it unicorn juice," the barista said, before layering on frothy coconut milk and topping the concoction with goji and pomegranate powders and fluorescent pink vegan sprinkles.
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The resulting drink, dubbed the Unicorn Latte, is the subject of a lawsuit between the End's parent company, Montauk Juice Factory Inc., and Starbucks Corp. In May, the owners of Montauk Juice Company sued the coffee giant, which for several days in April sold a drink called the Unicorn Frappuccino, for trademark infringement. Montauk Juice is asking for $10 million in damages.
The case's first court date is scheduled for July 25 in federal court in Suffolk County.
Montauk Juice contends that Starbucks infringed on its "distinctive and famous trademark" and confused its customers. The suit portrays multicolored chaos: Customers tagged the Frappuccino with #unicornlatte on Instagram. Media outlets mixed up the names. People wrongly thought the latte was inspired by the Frappuccino.
Since January, the Unicorn Latte has accounted for 25% of the End's revenue, the suit says. But now, according to the suit, the $9 drink "has suffered, and continues to suffer, brand dilution and tarnishment."
The latte and the Frappuccino feature shades of pink and blue, and brightly colored powders. Both were popular on social media. Neither contains coffee.
In legal documents, Starbucks disputed the fame of the latte and denied it had an obligation to get permission from the End. Furthermore, while Montauk Juice had submitted a trademark application, it was pending, Starbucks noted.
The two companies did agree that unicorn foods were popular. The complaint notes that "the Unicorn Latte fits with the current trend of colorful foods -- a relatively recent interest, particularly on the internet, with multicolored foods that includes Unicorn Noodles, Rainbow Bagels, Mermaid Toast, and even Unicorn Poop."
In legal documents, Starbucks concurred that unicorn-themed foods, including the poop and noodles, were trendy.
In an interview, Madeleine Murphy, co-founder and chief visionary officer of Montauk Juice, declined to comment on the lawsuit. But she said the key ingredient in the latte, which the suit calls "her greatest invention thus far," is a blue-green algae only harvested from a lake in Oregon.
"I love kale, but it's not magical like that," added Ms. Murphy, 32 years old, of the algae.
Asked for comment, a Starbucks spokeswoman said the claims were without merit and its Frappuccino was inspired by unicorn-themed food and drink on social media. It is no longer available in its stores, she said in a statement.
The suit is unusual because trademark cases more commonly involve a big company suing a smaller one, said Barton Beebe, a professor at New York University School of Law. He said Montauk Juice has a legitimate argument for what is called "reverse confusion," or customers believing its latte is a Starbucks knockoff.
Jane Ginsburg, a Columbia Law School professor, said if Starbucks was aware of Montauk Juice's latte, that could influence some judges' decision making because using the name could be seen as bad faith. "But the real question is whether or not the relevant public for the good is likely to be confused as to who is the source of the good," she added.
At the End last week, customers offered their own legal analyses.
"I guess if all places can have a chai latte, then they can also have a unicorn latte?" said Derick Whitson, a 26-year-old freelance photographer who was sipping peppermint tea.
Katie Dalebout, 27, said when she first heard about Starbucks's unicorn drink she wondered if it, too, contained superfoods such as the algae.
"It confused me," said Ms. Dalebout, a blogger and podcaster who was drinking a latte with cannabinoid oil. "I was like, 'Are they working together?' "
Write to Corinne Ramey at Corinne.Ramey@wsj.com
(END) Dow Jones Newswires
July 05, 2017 15:34 ET (19:34 GMT)