Case: Grocery Outlet Inc. v. Albertson’s Inc., No. 06-16380 (9th Cir. 8/9/07)

The One Sentence Summary: Ninth Circuit affirmed the district court’s granting of a preliminary injunction to Albertson’s, based on the possibility of irreparable injury and the strong likelihood of its prevailing on the merits despite competitor Grocery Outlet’s asserted defense of abandonment of “Lucky” trademark by nonuse.

What They Were Fighting About: Grocery Outlet, a competitor of Albertson’s in the retail grocery industry, contended that Albertson’s abandoned the “Lucky” trademark by publicly announcing after a 1999 merger that “Lucky” stores were being converted to Albertson’s stores. Albertson’s sought a preliminary injunction for trademark infringement in the Northern District of California to restrain Grocery from using the “Lucky” mark. The district court granted the motion, finding at the preliminary injunction stage that Albertson’s legally owned the “Lucky” mark and rejecting Grocery’s abandonment defense. Grocery appealed.

Court Holdings:

  • Ninth Circuit held that the district court did not abuse its discretion in finding that Albertson’s demonstrated a strong likelihood of success on its trademark infringement claim and the possibility of irreparable injury in the absence of a preliminary injunction.
  • On appeal, Grocery did not dispute that its use of the “Lucky” mark for retail grocery services was likely to cause consumer confusion. Thus, whether Albertson’s was likely to succeed on the merits turned on whether Grocery’s abandonment defense would be successful.
  • Abandonment by nonuse is a defense under the Lanham Act that requires proof of both the mark owner’s discontinuance of trademark use and intent not to resume such use.
  • Ninth Circuit concluded that Albertson’s offered sufficient evidence of its intent, during the short period of alleged nonuse, to resume use of the “Lucky” mark within the reasonably foreseeable future. Accordingly, the district court did not abuse its discretion in rejecting Grocery’s defense of abandonment at the preliminary injunction stage.
  • On the standard of proof for the abandonment defense, Grocery adopted the clear and convincing evidence standard in its briefing in the district court. The Ninth Circuit found Grocery to have waived any challenge on this point and decided not to resolve the disputed issue of whether the standard of proof is preponderance of the evidence or clear and convincing evidence.
  • Two circuit judges agreed with the court’s per curiam opinion but wrote separate concurring opinions to express their divergent views on the standard of proof for an abandonment defense under the Lanham Act. While the court’s per curiam opinion did not discuss the issue, the concurring opinions provide future litigants in Ninth Circuit courts with their legal arguments for either a preponderance of the evidence or a clear and convincing evidence standard of proof.