Ninth Circuit Vacates Trademark Infringement Win For Whole Foods
The U.S. Court of Appeals for the Ninth Circuit has vacated and remanded a lower court’s grant of summary judgment in favor of Whole Foods Market Inc. in a trademark infringement case related to the company’s “Eat Right America” promotion. Eat Right Foods Ltd. v. Whole Foods Mkt., Inc., No. 15-35524 (9th Cir., entered January 29, 2018). Plaintiff Eat Right Foods (ERF), a New Zealand-based maker of organic foods, registered U.S. marks for “EatRight” and “Eat Right” in 2001 and 2003; ERF has also sold a line of gluten-free cookies to Whole Foods.
In 2009, Whole Foods contracted with Nutritional Excellence, LLC, which previously did business as “Eat Right America,” to use a food-scoring system to advertise the nutritional value of products to shoppers. In early 2010, an ERF executive discovered Whole Foods using an “Eat Right America” promotion and contacted Whole Foods to suggest the grocery buy its brand outright. Later that year, ERF discovered that Nutritional Excellence had applied to register the “EatRight America” mark and opposed the application, later settling its claims with that company. Over the next two years, ERF and Whole Foods communicated multiple times about its dispute over the use of the ERF marks; in December 2013, ERF filed suit for trademark infringement, false designation of origin and unfair competition. The trial court granted summary judgment to Whole Foods, finding ERF’s claims barred by laches and acquiescence.
In its review, the Ninth Circuit noted that laches bars a trademark claim when “the trademark holder knowingly allowed the infringing mark to be used without objection for a lengthy period of time” and that to prove that laches bars a claim, “a defendant must ‘prove both an unreasonable delay by the plaintiff and prejudice to itself.’” ERF argued that any delay on its part was reasonable because of its attempts to settle its claims against Whole Foods without litigation; Whole Foods argued that ERF delayed filing suit in an effort to persuade the grocery to buy its brand. The district court agreed with Whole Foods that the delay was not reasonable, but the Ninth Circuit found that decision “violated the cardinal rule of summary judgment: that disputed issues of material fact must be resolved in favor of the non-moving party.”
The appeals court also held that the delay in filing did not prejudice Whole Foods, either with expectations-based or evidentiary prejudice. In addition, the court noted that the doctrine of acquiescence requires an affirmative act that conveys implied consent, an inexcusable delay and prejudice. Because the flaws in the district court’s reasoning in its laches analyses also affected its finding of acquiescence, the appeals court said “those issues alone would be enough for us to vacate the acquiescence finding and remand for further proceedings.”