Grubhub Inc. v. Relish Labs LLC

80 F.4th 835

GRUBHUB INC. and Takeaway.com Central Core B.V., Plaintiffs-Appellees, v. RELISH LABS LLC and The Kroger Co., Defendants-Appellants.

No. 22-1950

United States Court of Appeals, Seventh Circuit

Argued November 30, 2022

Decided September 12, 2023

Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 1:21-cv-5312 — Charles R. Norgle, Judge.

David Hal Bernstein, Jared I. Kagan, Attorneys, Debevoise & Plimpton LLP, New York, NY, Stephen A. Swedlow, Attorney, Quinn Emanuel Urquhart & Sullivan, LLP, Chicago, IL, Isaac J. Colunga, Attorney, Ice Miller LLP, Chicago, IL, for Plaintiffs-Appellees.

Shoba Pillay, Attorney, Jenner & Block LLP, Chicago, IL, William P. Atkins, Attorney, Pillsbury Winthrop Shaw Pittman LLP, McLean, VA, for Defendants-Appellants.

Before Wood, Jackson-Akiwumi, and Lee, Circuit Judges.

Lee, Circuit Judge.

Grubhub Inc. and Takeaway.com Central Core B.V. (collectively, "Grubhub") brought this suit seeking a declaratory judgment that their logo does not infringe the trademarks of Relish Labs LLC and The Kroger Company (collectively, "Home Chef"). Roughly one month later, Home Chef sought a preliminary injunction to enjoin Grubhub from using the logo. A magistrate judge recommended granting the injunction, but, upon review of Grubhub's objections, the district court rejected that recommendation and denied the injunction. Because we cannot say on this record that the district court clearly erred in concluding that Home Chef failed to show that consumers are likely to confuse its marks with Grubhub's logo when purchasing Home Chef's products, we affirm.

I. BACKGROUND

A. Home Chef

Since its inception in the basement of a Chicago apartment in 2013, Home Chef has curated meals and food products for its customers. According to its owner, Home Chef's business has been "creating and delivering meal kits for customers, including fresh, pre-portioned ingredients and easy-to-follow recipes, to help customers prepare and enjoy meals anyone can cook." In 2018, Home Chef merged with The Kroger Co. ("Kroger"). Kroger operates over 2,700 supermarkets under at least two dozen store names throughout the United States. The merger with Kroger allowed Home Chef to expand the availability of its meal kits and products nationwide. It delivers them directly to customers and offers them for sale in Kroger stores, through Kroger's website and mobile app, as well as through food delivery services such as DoorDash and Instacart. Today, Home Chef offers more than 500 products across a variety of categories including meal kits, heat-and-eat meals, ready-to-eat products, and seasonal meals.

In 2014, Home Chef began using its "HC Home Mark," which is protected by five federal trademark registrations: three for the HC Home Mark, alone, and two for the HC Home Mark accompanied with the "HOME CHEF" trade name (the "Home Chef Home Logo"). None of Home Chef's marks are limited as to color.

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HC Home Mark

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Home Chef Home Logo

Home Chef has spent more than $450 million on marketing and advertising using its marks to promote its products as convenient, low-cost alternatives to restaurant takeout. In October 2021, Home Chef reached $1 billion in annual sales.

B. Grubhub

Grubhub is a leading online food-ordering and delivery marketplace. Founded in 2004, Grubhub has connected more than 32 million diners with food from over 300,000 restaurants across the United States. In 2020 alone, Grubhub provided nearly $9 billion in gross food sales to these restaurants, processing more than 745,000 daily orders through its website and mobile app. Its services include, for example, on-demand order management and dispatching, procurement and development of restaurant-dedicated products, and onboarding delivery couriers. Grubhub owns numerous trademark registrations covering the GRUBHUB name and stylized variations.

On June 15, 2021, Grubhub was acquired by Netherlands-based Just Eat Takeaway.com ("JET"). JET owns many food-delivery brands worldwide and combines its "JET House Mark" with local brand names when conducting business in various countries. JET has used the JET House Mark in connection with its business since 2014.

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JET House Mark

In July 2020, roughly one year prior to finalizing its acquisition of Grubhub, JET filed an international trademark application for the JET House Mark, designating the United States as a country where it sought protection. In early 2021, the USPTO trademark examiner preliminarily rejected JET's application in a non-final office action, finding, among other things, that the JET House Mark is "highly similar" and "confusingly similar" to the HC Home Mark and Home Chef Home Logo. JET did not respond to the merits of the non-final office action, and in August 2021, affirmatively withdrew its U.S. trademark application. The application was deemed abandoned.

As part of its acquisition of Grubhub, JET adopted the "Grubhub House Logo," which combines the well-known GRUBHUB word mark with the JET House Mark. Grubhub also began using the "Seamless House Logo," which combines the JET House Mark with the SEAMLESS and GRUBHUB word marks.¹

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Grubhub House Logo

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Seamless House Logo

Like Home Chef, Grubhub has made significant investments in its branding. Grubhub first introduced the Grubhub House Logo at Chicago's Lollapalooza music festival in July 2021, with a broader rollout one month later. Grubhub has invested millions of dollars in rebranding its print and electronic materials across its entire business platform, and tens of thousands of its restaurant partners use the Grubhub House Logo. In the time between the July 2021 launch of the logo and Home Chef's motion for preliminary injunction, Grubhub processed over 72 million orders under its new logo.

C. District Court Proceedings

After receiving a cease-and-desist letter from Home Chef demanding that Grubhub stop using any form of the JET House Mark, Grubhub brought suit for a declaratory judgment that the Grubhub House Logo did not infringe any of Home Chef's marks. Roughly one month later, in early November 2021, Home Chef responded with a motion for a preliminary injunction. The case was referred to a magistrate judge who held a telephonic hearing on Home Chef's motion. Although no live testimony was taken, the judge questioned the parties and heard arguments for nearly three hours. The magistrate judge subsequently issued his Report and Recommendation (the "R&R"), recommending that the district court grant Home Chef preliminary injunctive relief.

Grubhub timely filed its objections to the R&R. After reviewing the contested portions of the R&R de novo, see28 U.S.C. § 636(b)(1), the district court sustained each of Grubhub's objections, rejected the magistrate judge's recommendation, and denied Home Chef's preliminary injunction motion. Home Chef appeals.

II. LEGAL STANDARD

A preliminary injunction may be granted where a movant shows that it is likely to succeed on the merits of its claims and that traditional legal remedies would be inadequate, such that it would suffer irreparable harm without injunctive relief. Life Spine, Inc. v. Aegis Spine, Inc., 8 F.4th 531, 539 (7th Cir. 2021). A likelihood of success on the merits must exceed "a mere possibility of success." Id. at 540 (quoting Ill. Republican Party v. Pritzker, 973 F.3d 760, 762 (7th Cir. 2020)). As we made clear in Pritzker, "an applicant for preliminary relief bears a significant burden, even though the Court recognizes that, at such a preliminary stage, the applicant need not show that it definitely will win the case." 973 F.3d at 763. Thus, while a movant need not prove its claims at this stage by a preponderance of the evidence, it must demonstrate at a minimum how it proposes to prove the key elements of its case. Id. In the context of trademark law, once the movant establishes a likelihood of success on the merits, it is statutorily entitled to a rebuttable presumption of irreparable harm. 15 U.S.C. § 1116(a).

Upon a showing of these threshold issues, the court weighs the harm of denying an injunction to the movant against the harm of granting an injunction to the non-movant. This is done using a sliding scale—the greater the movant's likelihood of success on the merits, the less the harms need be in its favor. Life Spine, 8 F.4th at 539. The court also considers the public interest. Id.

On appeal, we review a district court's decision to grant or deny a preliminary injunction for abuse of discretion. Id. Its legal conclusions are reviewed de novo, and its factual findings for clear error. Id. Absent any such errors, the district court's decision is afforded "great deference." Id. (quoting Speech First, Inc. v. Killeen, 968 F.3d 628, 638 (7th Cir. 2020)).

III. DISCUSSION

A. Trademark Infringement Generally

The purpose of trademark law is twofold. Most fundamentally, it protects consumers, ensuring they can be confident in making purchasing decisions based on marks they know and trust. See Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 782 n.15, 112 S.Ct. 2753, 120 L.Ed.2d 615 (1992) (Stevens, J., concurring). But trademark law also protects trademark owners who have spent the time, energy, and resources in presenting a product or service, ensuring that those investments are protected from misappropriation by "pirates and cheats." Id.; see Ameritech, Inc. v. Am. Info. Techs. Corp., 811 F.2d 960, 964 (6th Cir. 1987).

The ultimate question underlying trademark infringement is whether consumers are likely to be confused about the origin of products or services based on the promotion of those products or services using a particular mark. See Hesmer Foods, Inc. v. Campbell Soup Co., 346 F.2d 356, 359 (7th Cir. 1965); see also New W. Corp. v. NYM Co. of Cal...