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Eat Right Foods Ltd. v. Whole Foods Market, Inc.

United States Court of Appeals, Ninth Circuit

January 29, 2018

Eat Right Foods Ltd., Plaintiff-Counter-Defendant-Appellant,
Whole Foods Market, Inc., Defendant, and Whole Foods Market Services, Inc.; Whole Foods Market Pacific Northwest, Inc., Defendants-Counter-Claimants-Appellees.

          Argued and Submitted December 4, 2017 Seattle, Washington

         Appeal from the United States District Court No. 2:13-cv-02174-RSM for the Western District of Washington Ricardo S. Martinez, Chief Judge, Presiding

          Mark P. Walters (argued) and Lawrence D. Graham, Lowe Graham Jones PLLC, Seattle, Washington, for Plaintiff-Counter-Defendant-Appellant.

          Stephen P. Meleen (argued), Jered E. Matthysse, and Travis R. Wimberly, Pirkey Barber PLLC, Austin, Texas; Christopher Tompkins, Betts Patterson Mines, Seattle, Washington; for Defendants-Counter-Claimants-Appellees.

          Before: Richard C. Tallman and Paul J. Watford, Circuit Judges, and Richard F. Boulware II, [*] District Judge.



         The panel vacated the district court's grant of summary judgment in favor of the defendant in a trademark infringement case, affirmed the district court's denial of the plaintiff's cross-motion for summary judgment, and remanded with instructions.

         Eat Right Foods, which sold "EatRight"-branded cookies to Whole Foods for many years, alleged that Whole Foods infringed on its trademark by selling a variety of foods under the "EatRight America" mark.

         The panel concluded that disputed material facts establishing or defeating the affirmative defenses of laches and acquiescence had not been resolved. As to laches, the panel concluded that if the district court had credited Eat Right Foods' evidence that it waited to file suit because it was attempting to resolve its claims against Whole Foods without litigation, then the court might have come to a different conclusion about the reasonableness of the delay. The panel also vacated the district court's finding that Whole Foods suffered expectations-based prejudice. As to acquiescence, the panel held that the flaws in the district court's unreasonable delay and prejudice analyses also affected its acquiescence analysis. In addition, the district court failed to make factual findings regarding the extent and reasonableness of Whole Foods' reliance on Eat Right Foods' actions.



         Eat Right Foods Ltd. (ERF) appeals the district court's summary judgment dismissal of its claims against Whole Foods Market Services, Inc., and Whole Foods Market Pacific Northwest, Inc. (Whole Foods). ERF, which sold "EatRight"-branded cookies to Whole Foods for many years, argues that its former customer infringed on its trademark by selling a variety of foods under the "EatRight America" mark from 2010-2013. Whole Foods argues, and the district court held, that ERF's suit is barred by the affirmative defenses of laches and acquiescence. Because disputed material facts establishing or defeating the defenses must be resolved, we vacate the district court's decision and remand for further proceedings.


         ERF is a New Zealand company that sells organic foods. It has used the "EAT RIGHT" and "EATRIGHT" marks on its food products in the United States since 2001 and 2003, respectively. It owns registered trademarks for use of the "EATRIGHT" mark on several classes of goods, including certain types of snack foods.

         Whole Foods Market Services, Inc., and Whole Foods Market Pacific Northwest, Inc., are subsidiaries of Whole Foods Market, Inc., which operates hundreds of grocery stores throughout North America. From 2004 through 2013, ERF sold a line of gluten-free cookies to Whole Foods.

         Nutritional Excellence, LLC, is a health and nutrition company that once did business under the name "Eat Right America." In late 2009, Whole Foods contracted with Nutritional Excellence to use its patented Aggregate Nutrient Density Index (ANDI), a "food-scoring system" designed to communicate the nutritional value of foods to consumers. Whole Foods' agreement with Nutritional Excellence allowed it to display the ANDI scores of certain foods in its stores. Wherever an ANDI value was displayed, Whole Foods was required to display the "EatRight America" mark.[1]

         In early 2010, Whole Foods rolled out the ANDI system and launched an associated health-and-wellness program called "Health Starts Here" in all of its 289 stores. As part of "Health Starts Here, " Whole Foods promoted Nutritional Excellence's "Eat Right America" diet and nutrition program. The company issued a press release about ANDI and "Health Starts Here" on January 20, 2010, and it featured both initiatives prominently on its website. The ANDI logo and the "EatRight America" mark were displayed on promotional materials, including chalkboards outside stores and signs inside stores. The mark also appeared alongside the ANDI scores of a variety of foods, including bulk foods, produce, and prepared foods.

         In February or early March of 2010, ERF Managing Director Rebecca Douglas-Clifford, traveling from New Zealand, visited a Whole Foods store in San Francisco, California. She noticed the "EatRight America" mark on "books, DVDs and some promotional files, " but did not observe the mark on any food products.[2]

         In March 2010, Douglas-Clifford e-mailed Whole Foods counsel Chris Graff and stated that, "[o]n a recent trip to San Francisco I couldn't help but notice Whole Foods 'America's Healthiest Grocery Store' positioning and their alliance with Eat Right America . . . fantastic to see."[3] In the same e-mail, Douglas-Clifford asked Graff to discuss with Whole Foods officials the possibility of "Whole Foods purchasing our EATRIGHT brand."

         In November 2010, ERF became aware that Nutritional Excellence principal Kevin Leville was seeking to register the "EATRIGHT AMERICA" mark for "a variety of food products." Douglas-Clifford investigated and determined that Nutritional Excellence was selling snack bars online, but she did not discover that it had licensed use of the "EatRight America" mark to Whole Foods. ERF opposed Leville's registration before the Trademark Trial and Appeal Board (TTAB) from October 2011 through April 2013, arguing that use of the mark would confuse consumers.

         In February or March of 2011, Douglas-Clifford visited two Whole Foods stores. This time, she noticed the "EatRight America" mark on "a wide variety of food products." But it was not until the following September that she contacted Graff to discuss what she described as Whole Foods' "infringement" of her company's trademark, and Graff told her to "look to Nutritional Excellence for a remedy." Douglas-Clifford instead proposed that Graff "approach Whole Foods to inquire whether Whole Food[s] would agree to purchase our rights in the brand EATRIGHT, " and he told her he would talk to Whole Foods and "get back to" her.

         In February 2012, ERF counsel James Martin began communicating with Graff about Whole Foods' alleged infringement. On April 4, 2012, ERF sent Whole Foods a cease-and-desist letter asserting that ERF owned the rights to the "EATRIGHT" mark and Whole Foods had been using "a confusingly similar mark."

         On April 20, 2012, Graff responded that Whole Foods' use of the mark was licensed by Nutritional Excellence, but that because Whole Foods had "no desire to become involved in a trademark dispute" with ERF, it would "agree to cease its use of the designation Eat Right America" by the end of the year. The first line of the e-mail read "PRIVILEGED SETTLEMENT NEGOTIATIONS UNDER FED. R. EVID. § 408."

         Graff and Martin corresponded or spoke on the phone about the matter multiple times in April and June 2012. They discussed different options for resolving the dispute, including the possibility of Whole Foods funding ERF's legal battle against Nutritional Excellence or acquiring ERF's brand. Martin followed up with Graff in July and August.

         On September 26, 2012, Martin sent Graff a letter reiterating ERF's objection to Whole Foods' use of "EatRight America" and stating that despite Whole Foods' assurances that the mark was no longer in use, it was "continuing to be used widely in Whole Foods stores." The letter requested that Whole Foods "give serious consideration to acquisition of the EATRIGHT brand, " or "confirm that it will immediately cease all use of the infringing" mark.

         On October 9, 2012, Graff told Martin via e-mail that Whole Foods was "not interested in pursuing a possible acquisition of your client's EATRIGHT brand at this time."

         In November and December 2012, Douglas-Clifford corresponded with Whole Foods' Vice President of Business Development "regarding a potential brand purchase as a way to resolve outstanding infringement claims." In January 2013, Martin sent Graff a letter requesting that Whole Foods confirm that it had ceased using the "EatRight America" mark in stores. The next month, Graff repeated that Whole Foods was "not interested in pursuing" an acquisition of ERF's ...

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