A California federal court ordered grocery store chain Trader Joe’s to pay more than $112,000 in legal fees after it tried to claim the defendant Trader Joe’s United, the labor union representing its employees, infringed its trademark.

In July 2023, Trader Joe’s brought suit against the Trader Joe’s United (Union), in the Central District of California, claiming the buttons, mugs, apparel, and reusable tote bags the Union was selling on its website bearing the words “Trader Joe’s United” would cause consumer confusion and dilute the Trader Joe’s family of trademarks.

The case considers the balance between the protection of trademarks and of the right of workers to organize, and in this instance highlights a plaintiff’s exposure in using the legal system in the context of a labor dispute.

Liability Determined

In January 2024, the district court dismissed the lawsuit, finding it unlikely that a consumer would confuse the Union’s goods with that of Trader Joe’s, observing that the Union’s goods could only be bought from the Union’s online store and what was really going on was that the lawsuit related to an ongoing labor dispute between Trader Joe’s and the Union.

The court explained “[i]t is simply not plausible to imagine a reasonable consumer going to the Union’s website, purchasing a Union-branded coffee mug, and mistakenly believing it to be sold by Trader Joe’s.” Further explaining, the court said that the lawsuit “is undoubtedly related to an existing labor dispute, and it strains credulity to believe that the present lawsuit … would have been filed absent the ongoing organizing efforts that Trader Joe’s employees have mounted (successfully) in multiple locations across the country.”

Pivoting from the infringement aspect, where the court further found that any impact by the Union’s merchandise sales was undoubtedly very slight, to the labor dispute which the court characterized as significant as to the “potential chilling effect” on the Union resulting from the infringement suit, the court further noted that the lawsuit was “dangerously close” to being frivolous or improper.

Legal Fees Assessed

Following the order of dismissal, the Union moved for its legal fees which the court granted on May 1, 2024, finding that the action constituted an “exceptional case” under the Trademark Act because of “its lack of substantive merit and the manner in which the case was litigated.” The Union was awarded $112,622.12 in fees. 

In the order, the court explained its motivation in granting fees: “Trader Joe’s claim that it was genuinely concerned about the dilution of its brand resulting from these trivial campaign mugs and buttons cannot be taken seriously,” and further noting that the ongoing labor dispute with the Union was “the obvious motivation behind the suit.” The court further explained: “Employers should be discouraged from bringing meritless claims against unions they are challenging at the ballot box.”

Lawsuit Appealed

Trader Joe’s has appealed the dismissal of its lawsuit. The eventual outcome may well affect how companies and their unionized employees proceed in the future given the complexity of trademark infringement and employee rights.