Grubhub relishes victory against preliminary injunction

The US Court of Appeals for the Seventh Circuit has upheld the denial of a preliminary injunction motion in a trademark infringement dispute. It concluded that the district court made no error in finding that the trademark owner failed to show a likelihood of success on its reverse confusion theory (Grubhub Inc v Relish Labs LLC, Case 22/1950, 12 September 2023, Lee, Jackson-Akiwumi, Wood, JJ).

Case background

Relish Labs and the Kroger Company (Home Chef) create and deliver meal kits with pre-portioned ingredients that their customers can cook at home. In 2014, Home Chef began using its HC HOME mark, which is protected by five federal trademark registrations. Home Chef has spent more than $450 million on advertising and reached $1 billion in annual sales in October 2021.

Grubhub is an online food ordering and delivery service that provides on-demand order management, dispatching and procurement. In June 2021, Grubhub was acquired by Netherlands-based Just Eat Takeaway (JET), an international food delivery company that typically combines its JET HOUSE mark with the marks of its local brands.

Before finalising its acquisition of Grubhub, JET filed an international trademark application for the JET HOUSE mark. However, the USPTO examiner preliminarily rejected the application as it found the mark to be ‘confusingly similar’ to Home Chef’s HOME mark. JET did not respond and withdrew the application. After acquiring Grubhub, JET adopted the Grubhub house logo, which it then combined with its own HOUSE mark. Grubhub introduced the new logo in July 2021 and has spent millions of dollars since in rebranding it.

Legal action

After receiving a cease-and-desist letter from Home Chef, Grubhub sued, seeking a declaratory judgment that its logo did not infringe upon Home Chef’s marks. Home Chef countered with a motion for preliminary injunction, which was referred to a magistrate judge. The magistrate judge recommended that the district court grant Home Chef preliminary injunctive relief, but the court rejected the recommendation and denied Home Chef’s motion, finding that it had failed to show a likelihood of success on the merits. Home Chef appealed.

On appeal, the Seventh Circuit began by addressing which Grubhub mark was at issue: the JET HOUSE mark alone, or the Grubhub house logo (which incorporated the logo portion of the JET HOUSE mark). The court noted that Grubhub had not used the JET HOUSE mark without the Grubhub brand name in the United States; thus, it agreed with the district court that the accused mark was the Grubhub house logo.

Reverse confusion criteria

Turning to Home Chef’s reverse confusion theory, the Seventh Circuit addressed the relevant four factors from its seven-factor test articulated in Uncommon v Spigen (2017):

• the similarity of the marks;
• the strength of Grubhub’s mark;
• actual confusion; and
• Grubhub’s intent.

As to the similarity of the marks, Home Chef argued that by ignoring the USPTO’s preliminary decision against the JET HOUSE mark, the district court had erred in “painstakingly dissecting” the marks in a side-by-side comparison, rather than considering how a consumer would view them in the marketplace. However, the district court found that the Grubhub word mark was the most salient portion of the accused mark and thus would sufficiently differentiate the two. The Seventh Circuit acknowledged that the presence of a brand name is less relevant in the context of reverse confusion: the consumer would not see Grubhub’s name when encountering a Home Chef product. Despite this, the Grubhub brand name could not be discounted entirely because the parties’ house marks and product offerings are not identical. Further, the USPTO’s finding that the marks were confusingly similar concerned the JET HOUSE mark, not the Grubhub house logo. Thus, the Seventh Circuit found that the district court made no error in finding that Home Chef failed to show that the similarity of the marks favoured a finding of likelihood of infringement.

The Seventh Circuit next considered the commercial and conceptual strength of the Grubhub house logo relative to Home Chef’s protected marks. The court noted that this was not a typical reverse confusion case as both parties were well known and had spent significant resources on advertising. As a result, the district court found that there was insufficient evidence that Grubhub would likely overwhelm Home Chef’s protected marks.

Further, the Seventh Circuit found that the district court did not err in assessing Home Chef’s evidence of actual confusion. An anonymous tweet featuring screenshots of the parties’ mobile app icons, and a Facebook message asking if Home Chef and Grubhub had merged, provided sufficient evidence. The district court had dismissed these as de minimis, putting greater stock in two Eveready consumer surveys provided by Grubhub.

Last, the Seventh Circuit turned to Grubhub’s intent in adopting the accused mark, regarding which the district court weighed against the likelihood of confusion. The court noted that intent is largely irrelevant in a reverse confusion case and that bad intent is not essential to prove infringement. However, where it can be shown that a junior user culpably disregarded the known rights of the senior user, that evidence can support an inference of consumer confusion. In any event, the court explained that the intent factor can never weigh against the claimant - unintentional infringement is infringement nonetheless. Therefore, the Seventh Circuit ruled that the district court erred in finding that the intent factor weighed against a likelihood of confusion.

Key findings

Considering the relevant factors together, the Seventh Circuit upheld the district court’s determination that Home Chef failed to make a strong showing of likelihood of success on the merits. Grubhub’s mark, despite similarity to Home Chef’s logo, has been allowed to continue its use under JET.