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Ninth Circuit:

Trader Joe’s Trademark Action Against Union Is Revived

Opinion Says Products Sold by Group Bore Striking Similarities to Grocery Giant’s Marks, Trial Judge’s Characterization of Matter as Labor Dispute Was Premature

By a MetNews Staff Writer

Depicted above is a screenshot from the plaintiff’s complaint, depicting a tote bag sold at Trader Joe’s stores bearing the company’s protected logo (left) and one offered for purchase on the employee labor union’s website (right). Yesterday, the Ninth U.S. Circuit Court of Appeals reversed a dismissal of the grocery giant’s complaint asserting trademark infringement claims, saying that the plaintiff had shown sufficient similarities between merchandise to survive a pleading challenge.

The Ninth U.S. Circuit Court of Appeals yesterday resurrected a complaint filed by Trader Joe’s Company against a recently formed employee union over merchandise sold on the group’s website bearing the corporate name, finding that the products bore striking similarities to the grocery giant’s protected marks and that the trial judge erred in characterizing the matter as a “labor dispute” for which the plaintiff may not seek injunctive relief.

Saying that District Court Judge Hernán D. Vera of the Central District of California erred in finding no plausible likelihood of consumer confusion in the defendant’s use of the mark as a matter of law, the panel declared:

“This is not one of the rare trademark infringement cases in which there is no plausible likelihood that a reasonably prudent consumer would be confused about the origin of the goods allegedly bearing the Trader Joe’s distinctive marks.”

Yesterday’s opinion, authored by Circuit Judge Gabriel P. Sanchez and joined in by Circuit Judge Holly A. Thomas and District Court Judge James Donato of the Northern District of California, sitting by designation, also took issue with Vera’s conclusion that “this case is an attempt to weaponize the legal system to gain advantage in an ongoing labor dispute,” saying:

“It was premature for the district court to reach this conclusion at this early stage of the litigation…..[N]o record has been developed to establish whether the trademark infringement claims and the nature of the injunctive relief sought by Trader Joe’s relate to or grow out of the parties’ labor dispute.”

Move to Unionize

The litigation arose after employees at a Hadley, Massachusetts location voted to collectively bargain with the employer under the name “Trader Joes United” (“TJU”) in July 2022, becoming the first store in the chain’s history to unionize. Employees at other stores owned and operated by the company, which is incorporated under the laws of California with headquarters in Monrovia, followed suit.

Sometime in June 2023, TJU’s website began to offer various products for purchase, including clothing, mugs, buttons, and reusable tote bags. According to Trader Joe’s, some of the items “use the TRADER JOE’S…stylized word mark, the unique Trader Joe’s typeface and red coloring, and/or the concentric circle design and general composition of the registered…logo.”

On June 27, the grocer sent TJU a cease-and-desist letter requesting that the union stop any further sales of the purportedly infringing products. After the group refused, Trader Joe’s filed a complaint in July, asserting claims for trademark infringement under the Lanham Act and related causes of action.

In the pleading, Trader Joe’s sought an order permanently enjoining TJU from using the company’s trademarks in connection with the sale of the commercial merchandise but added that it was making no demand that the union “stop using the phrase ‘Trader Joe’s’ for the purpose of…communicating [its] message or…identifying” the group.

TJU moved to dismiss the pleading under Federal Rule of Civil Procedure 12(b)(6), arguing that the lawsuit is a retaliatory measure for an unlawful labor practices complaint filed by the National Labor Relations Board a few days earlier and that there is no plausible likelihood that the union’s products—containing a raised fist holding a box cutter—would be confused with the grocery chain’s marks.

Vera agreed with the defendant and granted the motion. Yesterday’s opinion reverses the dismissal.

Statutory Intersection

Sanchez wrote:

“This case lies at the intersection of two federal statutes, the Norris-LaGuardia Act (“NLGA”), 29 U.S.C. §101 et seq., which restricts the power of federal courts to issue injunctions in labor disputes under certain circumstances, and the Lanham Act, 15 U.S.C. § 1051 et seq., which protects trademark owners against infringement, dilution, and unfair competition by other parties.”

Addressing the trademark infringement claim, he noted that “[t]o prevail on its trademark infringement claim, Trader Joe’s must establish…that the defendant’s use of the mark is likely to cause consumer confusion,” an analysis which involves considering the strength and similarities of the marks, the type of goods at issue, the proximity of the goods, marketing channels, the likelihood of expansion of product lines, and any evidence of actual mix-ups.

Tackling those factors, the jurist pointed out that “[t]he stronger a mark—meaning the more likely it is to be remembered and associated in the public mind with the mark’s owner—the greater the protection it is accorded by the trademark laws” and said that “TJU does not dispute[] that Trader Joe’s mark is strong.”

As to the similarities between the marks, he opined:

“Trader Joe’s and TJU’s marks are strikingly similar. The name ‘Trader Joe’s’ in both parties’ marks uses capitalized lettering, the same red color and similarly stylized fonts, and both marks are found within concentric circles.”

Relatedness of Goods

Turning to the relatedness of the goods, Sanchez remarked:

“The district court found that the reusable tote bag is the only product currently sold by both parties. But we have held that the ‘basic premise—that a trademark provides protection only when the defendant uses the mark on directly competing goods—is no longer good law.’…[T]he district court erred in taking too narrow of an approach by focusing solely on reusable tote bags, rather than considering a broader category of similar non-grocery goods.”

He added:

“While Trader Joe’s may not currently sell t-shirts or mugs, such items are sufficiently complementary in nature to tote bags that consumers may nevertheless be confused about the source or sponsorship of these products if they are labeled with a mark similar to Trader Joe’s. Even if we confined our analysis to the parties’ tote bags, these products are clearly related and identical in use and function….Viewing the allegations in the light most favorable to Trader Joe’s, the proximity of the goods weighs in favor of a likelihood of confusion.”

Saying that the “remaining factors were neutral,” the judge pointed out that “dismissal of trademark disputes at the pleading stage is generally disfavored.”

Related to Critiques

Rejecting the union’s assertion that consumers are unlikely to be confused between the marks because the group’s merchandise is connected to its critiques of the company, Sanchez said:

“[T]he district court emphasized the context in which TJU’s products are sold—on the union’s website which is openly critical of the company’s labor practices. The district court reasoned that consumers are unlikely to be confused about the relatedness of the products given that they are connected to union organization efforts….”

He continued:

“Context does matter, but the district court overlooked a key distinction….The cases cited by the district court dealt not with the [merchandising] of consumer goods, but with a union’s use of its employer’s name for the sole purpose of identifying the union and discussing its cause….Here, in contrast, Trader Joe’s alleges that its ‘demand is directed solely at [TJU’s] commercial use of Trader Joe’s trademarks on merchandise sold to consumers,’ including products allegedly bearing Trader Joe’s unique typeface, red lettering, and concentric circle design.”

As to the union’s claim that the raised fist—which it characterizes as a “social justice image”—found on its products suffices to distinguish the marks, he reasoned:

“How a reasonable consumer might interpret the image of a raised fist holding a boxcutter is a question of fact that cannot be resolved at the pleading stage. Therefore, despite some differences between the marks at issue, the similarities discussed above are sufficient to establish a plausible likelihood of confusion.”

NLGA Bar

As to the contention that the NLGA acts as a bar to the relief sought by Trader Joe’s, Sanchez wrote:

“The NLGA defines a labor dispute as ‘any controversy concerning terms or conditions of employment, or concerning the association or representation of persons in negotiating, fixing, maintaining, changing, or seeking to arrange terms or conditions of employment.’ ”

Saying that Vera’s conclusion that the complaint arose out of a labor dispute was “premature,” he wrote:

“Neither party has moved for preliminary injunctive relief and Trader Joe’s has yet to establish its entitlement to such relief by prevailing on any of its claims….The parties dispute the significance of the timing of Trader Joe’s lawsuit and its earlier demand letter to TJU; these disagreements underscore that such issues are not capable of resolution at the pleading stage.”

He declared that “[w]e therefore vacate the district court’s holding that it lacks jurisdiction to enter injunctive relief in this matter” and reversed an order awarding the union $112,622.12 in attorney fees.

The case is Trader Joe’s Company v. Trader Joe’s United, 24-720.