By Brian Craig, J.D.
A seller of organic foods claiming infringement of the EatRight mark failed to show that its delay in suing was reasonable.
The U.S. Court of Appeals for the Ninth Circuit has concluded that trademark infringement claims brought against grocery store chain Whole Foods by a seller of organic foods, alleging that Whole Foods’ slogan "EatRight America" infringed its "EAT RIGHT" and "EATRIGHT" marks, were barred by laches. The Ninth Circuit held that the district court could find Eat Right had constructive notice of Whole Foods’ alleged infringement in early 2010 when Whole Foods first publicized the Eat Right America campaign on its website and rolled out the campaign in its stores. The appeals court also found insufficient evidence of willful infringement by Whole Foods to rebut the presumption of laches (Eat Right Foods Ltd. v. Whole Foods Market, Inc., July 29, 2019, per curiam).
Eat Right Foods alleged that it used the trademark "EAT RIGHT" since 2001 and the trademark "EATRIGHT" since 2003. It further alleged that from 2004 to 2013, defendants Whole Foods Market Services, and Whole Foods Market Pacific Northwest, subsidiaries of Whole Foods Market (collectively, "Whole Foods"), operated hundreds of grocery stores in North America and sold products produced by Eat Right and sold under the trademark "EATRIGHT." Eat Right alleged that Whole Foods has since sold and marketed products using a trademark confusingly similar to "EATRIGHT" without authorization, in violation of the Lanham Act and Washington’s Consumer Protection Act.
In January 2018, the Ninth Circuit vacated the district court’s decision on summary judgment, finding the district court erred in failing to consider evidence that the complaining food seller reasonably delayed filing suit in order to pursue settlement negotiations with Whole Foods. In May 2018, the federal district court in Seattle again determined that trademark infringement claims brought against Whole Foods by were barred by laches and acquiescence. Eat Right Foods appealed a second time to the Ninth Circuit.
Laches. This time around, the Ninth Circuit held that the districtcourt could permissibly find Eat Right hadconstructive notice of Whole Foods’ alleged infringement for the laches defense to apply. In Eat Right Foods Ltd. v. Whole Foods Mkt., Inc. (Eat Right I), 880 F.3d 1109 (9th Cir. 2018), the Ninth Circuit instructed the district court to analyze the reasonableness of Eat Right’s delay. To rebut the presumption with the laches defense, Eat Right needed to show that its delay in suing was nonetheless reasonable. While the appeals court was not persuaded that the district court consistently followed this command on remand, nonetheless, the panel found no abuse in discretion by the district court. In 2010, Whole Foods first publicized the Eat Right America campaign on its website and rolled out the campaign in its stores. The district court did not abuse its discretion by identifying the start of the laches period as early 2010, and so Eat Right’s delay in filing suit exceeded Washington state’s three-year statute of limitation for trade name infringement.
Additionally, the Ninth Circuit held that a defendant asserting the laches defense must also show prejudice to itself during the plaintiff’s delay in filing suit. Whole Foods said in April 2012 that it would phase out the "Eat Right America" campaign to avoid a trademark dispute. Here, the district court acted within its discretion to rely on this evidence and conclude that Whole Foods would have acted differently had Eat Right filed suit earlier. Therefore, the strong presumption of laches applies.
The appeals court also concluded that Eat Right failed to show sufficient evidence of willful infringement by Whole Foods to rebut the presumption of laches. A plaintiff can prevail on the unclean hands counter-defense to laches only if the court is left with a firm conviction that the defendant acted willfully. The Ninth Circuit recognized that this is a demanding standard. Eat Right’s circumstantial evidence that Whole Foods must have known it was infringing because it carried Eat Right cookies was not sufficient to show unclean hands. Though Whole Foods’ hands were not as "clean as snow," neither did its actions rise to the level of unclean hands.
Because the Ninth Circuit affirmed the district court on laches, the Ninth Circuit did not address acquiescence.
This case is No. 2:13-cv-02174-RSM.
Attorneys: Lawrence Dean Graham (Lowe Graham Jones PLLC) for Eat Right Foods Ltd.
Companies: Eat Right Foods Ltd.; Whole Foods Market Services, Inc.; Whole Foods Market Pacific Northwest Inc.
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