Ninth Circuit revives Trader Joe’s trademark lawsuit against union

Hillel Aron

(CN) — Trader Joe’s trademark lawsuit against a union that represents a smattering of its employees is back on the menu after the Ninth Circuit Court of Appeals on Monday found that a district judge improperly dismissed the action.

Founded in 1967, Trader Joe’s is a tiki-themed supermarket with more than 600 stores in the U.S. and a fervent cult following. Now owned by a German company, most of its products are made by the company itself, making them cheaper to consumers. Store employees are organized along nautical themes — the manager of the store is called “the captain,” and the other employees are called “crew members.”

In 2022, crew members unionized in the small town of Hadley, Massachusetts, founding Trader Joe’s United. Crews in three other stores have since followed suit, including one in Oakland, California.

Trader Joe’s United sells merch, including shirts, buttons and $32 tote bags, bearing the union’s logo: a fist holding a box cutter, with the name of the union written in the supermarket’s trademarked red font. Trader Joe’s also sells tote bags, much-loved by its devoted fanbase.

The supermarket sued its fledgling union in 2023, charging that the union’s tote bags were “likely to cause consumer confusion” with the store’s own bags, which “have garnered tremendous consumer attention and serve as a valuable source of organic marketing.”

“Unauthorized use of Trader Joe’s valuable trademarks on merchandise sold to the general public is irreparably harming and, unless enjoined, will continue to irreparably harm, Trader Joe’s and its trademarks, business, reputation, and goodwill,” the chain wrote in is complaint.

In January 2024, U.S. District Judge Hernán Vera agreed to the union’s motion to dismiss the lawsuit, writing that he failed to see “compelling similarities in any of the designs” and noting several differences, as well as the fact that the union’s accessories were sold only on its website. Besides, the Joe Biden appointee added: “Courts have often found that a labor union’s use of an employer’s trademark as part of communications about the employer’s labor practices is unlikely to cause confusion in context.”

The judge also found that federal law didn’t give Trader Joe’s jurisdiction for injunctive relief, since the matter grew out of a labor dispute. He dismissed the case and ordered the supermarket to pay $112,622.12 in attorneys’ fees.

A three-judge panel from the Ninth Circuit disagreed, finding that the two sets of products could indeed confuse customers.

“To begin, Trader Joe’s and TJU’s marks are strikingly similar,” U.S. Circuit Judge Gabriel Sanchez wrote in the ruling. “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.”

The Biden appointee added: “The name “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.”

U.S. Circuit Judge Holly Thomas, another Biden appointee, and U.S. District Judge James Donato, a Barack Obama appointee sitting on the appeals panel by designation, also signed off on the ruling. The case now heads back to district court, where it can proceed toward trial.