Trader Joe’s Launches Trademark Fight Amid Wider Union Battles

Trader Joe’s Co.'s recent trademark lawsuit against a union treads into the murky intersection of intellectual property and labor law, potentially testing the strength of the company’s infringement claims and the workers’ argument that the litigation amounts to retribution.

Trader Joe’s United, which formed last year and represents some of the grocery chain’s employees in three states, faces trademark claims over merchandise graphically bearing the company’s trademarks that go beyond identifying the union. The grocer’s complaint, filed in California federal court earlier this month, says the “purely commercial” sales “to the public is irreparably harming.”

The union called the lawsuit “retaliation” and “simply one more act of union-busting.”

The dispute comes amid a continued wave of labor organizing, with several newer unions incorporating company names in their monikers, such as the Amazon Labor Union, Starbucks Workers United, and Apple Retail Union. Medieval Times USA last year brought trademark infringement accusations against a union.

The Trader Joe’s dispute will turn on how a union-company relationship will affect a consumer confusion analysis—used to determine infringement—and whether First Amendment free speech rights will offer the union a defense. Shifting interpretations of labor law and whether employees can use a company’s marks add further wrinkles.

Those questions aren’t particularly well-trodden legal areas in the specific context of company-versus-union trademark disputes, attorneys and academics said.

“You would think there’d be a straightforward answer, but there’s not,” said intellectual property law professor William McGeveran of the University of Minnesota.

That uncertainty and the fact-specific nature of trademark disputes makes venturing into that territory an expensive proposition, which can disadvantage the union, McGeveran said.

The facts in the Trader Joe’s case appear to leave both sides enough arguments to get past summary judgment and to trial, IP attorney Kenneth G. Parker of Haynes and Boone LLP said of the “once in a lifetime case.” But that’s assuming the parties locked in a labor dispute wanted to litigate the merits of the trademark claims to the finish, he said.

“There’s a larger battlefield associated with this case. And I think what’s going on in that larger battlefield is going to dictate what happens in this case,” Parker said.

Consumers United in Confusion?

The doctrine of nominative fair use, which protects referential use of trademarks, lets unions like Trader Joe’s United use the company name to identify themselves, lawyers say. But the union has also sold reusable tote bags, apparel, mugs, and buttons that include the font from Trader Joe’s trademark as well as other design elements.

“It gets trickier when they start selling merchandise that appears to bear a logo, the trade dress, that circle with the stylized font,” IP professor Elizabeth A. Rowe of the University of Virginia said. “It’s sort of in the eye of the beholder and eye of the fact finder how similar they are.”

Source: Court filings in Trader Joe’s trademark lawsuit.

“The fact that it’s a union, it’s significant. But it’s an entity, and it’s selling stuff like a retail store,” said IP attorney Rod S. Berman of Jeffer Mangels Butler & Mitchell LLP. “I think it’s infringing, not 100% clear.”

The confusion question that emerges includes whether the average consumer would see union merchandise and automatically realize the company had no association with it. That could hinge on how the query is framed for the particular relevant consumers. Rowe also said “context is often very important,” including how prominent the company’s name is relative to the union aspect.

One thing that may hurt the union’s confusion argument may be its choice to use “United” rather than “Union,” Parker said.

“If it said ‘Union,’ there probably wouldn’t be a confusion case,” Parker said. “United is the name of the union, but united is also an adjective. It creates an impression that Trader Joe’s is united by something, about some cause.”

But McGeveran said selling the goods at a union website or at union event makes consumer confusion extremely unlikely. In addition, he said the First Amendment should factor in strongly.

Whether it’s selling gear or giving it away, the union is clearly voicing criticism of the company even if it’s not so obvious as saying “Trader Joe’s Sucks,” he said.

“There shouldn’t be a requirement for how you refer to a mark-holder, that you have to be extremely blatant or get silenced,” he said.

Trader Joe’s didn’t respond to a request for comment.

Court-Ordered Blocks

While mere confusion is enough to establish infringement, if the store wants to block Trader Joe’s United’s merchandise sales, it would have to establish irreparable harm to secure a court injunction, Parker said. If Trader Joe’s claims the bags cause false association with the union, it would undercut its consumer confusion argument for its infringement claim.

Multiple attorneys said Trader Joe’s would likely argue post-sale confusion, which the US Court of Appeals for the Ninth Circuit has recognized. While initial purchasers of a product may know that a company had nothing to do with the items because of the circumstances of the sale, it’s possible that others see the product being used and wrongly assume a link.

But McGeveran called post-sale confusion “incoherent” and said cases have cast doubt on the entire premise.

Parker added that such confusion would essentially have to be demonstrated outside of the store context, where most would know what the merchandise signifies—plus where employees displaying union gear would be heavily protected by the First Amendment and labor law.

“The survey is going to have to be very precise and nuanced,” Parker said of an effort to find evidence of post-sale confusion.

Labor Landscape

As with Medieval Times’ October trademark lawsuit against a union, the Trader Joe’s IP dispute falls within broader labor fights.

Trader Joe’s employees have scored mixed results in their organizing bids nationwide. Some have staged walkouts this summer, and their union has filed dozens of unfair labor practice charges against the company with the National Labor Relations Board. Meanwhile, some Medieval Times workers in California have gone on strike.

The Medieval Times trademark case—which has a motion to dismiss pending as the company pushes for immediate discovery—also involves allegedly infringing use of company trademarks and imagery on Medieval Times Performers United merchandise. It also invokes use on a website, social media, and a fundraising performance by members at a brewery.

The Medieval Times union’s motion to dismiss accused the company of “weaponizing” the courts “in retaliation” for union activities, adding that such suits are routinely dismissed.

Medieval Times responded that the union was engaging in activity that isn’t protected by labor law and is “what trademark laws are meant to prevent.”

Employers and unions have wrestled in the past over trademark use. While unions invoke trademarks in their activities, employers sometimes endeavor to restrict use of their marks and other IP through workplace rules, which can lead to disputes over whether such rules pass legal muster.

NLRB’s Stance

The NLRB, which administers federal labor law, assesses employer policies under the legal framework from its 2017 ruling in Boeing. That standard turns on whether the policy in question could interfere with labor law rights, based on a balancing of the potential impact on those rights against an employer’s justification for the rule.

The labor board’s top lawyer during the Trump administration told his deputies in the field that rules prohibiting workers from using the company logo for any reason are presumptively lawful under Boeing. He reasoned in a guidance memo that “usually employees will understand this type of rule as protecting the employer’s intellectual property from commercial and other” uses unrelated to worker activism.

But President Joe Biden fired NLRB General Counsel Peter Robb on Inauguration Day. Robb’s temporary replacement then rescinded Robb’s guidance memo on Boeing.

The NLRB has a fully briefed case pending in which the agency’s current GC, Jennifer Abruzzo, calls for replacing the Boeing framework with the more worker-friendly standard that was previously in place. That test focuses on whether a worker would reasonably interpret the rule to bar exercising labor law rights.

Employer rules prohibiting the use of their trademarks are unlikely to survive NLRB review under that standard if it’s revived, said Steven Suflas, a management-side attorney with Holland & Hart LLP.

“Disney sues mom and pop bakeries who use Mickey Mouse on cakes, but all of a sudden, unions will be able to,” said Suflas, who litigated a trademark case at the NLRB. “It leaves you in a Wild West landscape.”

Circuit courts have limited precedent regarding union use of company trademarks. A decades-old Ninth Circuit case protected a union’s right to enforce its own mark against a company that used it without permission, but said the union’s use of the business’s mark in an illegal secondary boycott wasn’t privileged under labor law.

Parker said Trader Joe’s could flip that premise and say it should be able to enforce its mark too.

In the backdrop, too, are public relations concerns. While a union may feel pressure from the monetary costs of litigation, the company may see its image damaged by the perception that it’s filing meritless or trivial litigation to punish the union or gain leverage.

Berman added that even if Trader Joe’s won an injunction, it’d be automatically appealable, lengthening the window between the suit and any effect.

“We’re talking about a year before a ruling from the Ninth Circuit,” Berman said. “It seems to me that there are bigger and better things to fight about.”

The case is Trader Joe’s Co. v. Trader Joe’s United, C.D. Cal., No. 23-cv-05664.