Just Goods, Inc. v. Eat Just, Inc.

Court of Appeals for the Ninth Circuit·Decided March 2, 2022·No. 20-15809·Unpublished

Opinion

NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS MAR 2 2022 MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS

FOR THE NINTH CIRCUIT

JUST GOODS, INC., a Delaware Nos. 20-17033 & 20-15809 corporation,

Plaintiff-counter- D.C. Nos. 3:18-cv-02198-WHO defendant-Appellee,

v. MEMORANDUM*

EAT JUST, INC., FKA Hampton Creek, Inc.; JOSHUA TETRICK, an Individual,

Defendants-counterclaimants -Appellants.

Appeal from the United States District Court for the Northern District of California William Horsley Orrick, District Judge, Presiding

Argued and Submitted October 22, 2021 San Francisco, California

Before: WATFORD and HURWITZ, Circuit Judges, and BAKER,** International Trade Judge. Partial Concurrence and Partial Dissent by Judge BAKER.

Eat Just, Inc. (“EJ”) entered into a contract (the “Term Sheet”) with Just

*

This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3.

**

The Honorable M. Miller Baker, Judge for the United States Court of International Trade, sitting by designation.

Goods, Inc. regarding use of the trade name JUST. The district court entered an amended judgment on March 30, 2020 (the “March 30 Order”) interpreting the Term Sheet, and entered an order on September 11, 2020 holding EJ in contempt of the March 30 Order. These consolidated appeals challenge both the March 30 Order and the contempt order. We affirm both.1 1. The district court faithfully read the Term Sheet’s text in determining that EJ was prohibited from reposting content referring to itself as JUST. The court correctly held that the Term Sheet allowed EJ to use the term in only three specified instances: “(1) in the Frame Logo, (2) as part of the names/phrases ‘Eat Just’ and ‘Make it Just,’ and (3) in text in conjunction with a generic product name (e.g., Just Egg).” Paragraph 1(c) only authorizes EJ to use JUST “in text” in certain specified instances, and other sections of the Term Sheet underscore that other in text uses are not authorized. For example, Paragraph 2 reads: “For the sake of clarity, [EJ] may refer in text to its brand as JUST, so long as JUST is used in connection with [EJ’s] generic product name (e.g., ‘Just Mayo[]’ . . . ).” (Emphasis added). The Term Sheet contains numerous other restrictions regarding EJ’s use of JUST in Paragraphs 3, 5, 9, 12, and 15. See Brobeck, Phleger & Harrison v. Telex Corp., 602 F.2d 866, 872 (9th Cir. 1979) (“We seek to interpret the contract in a manner that makes the

1 Just Goods, Inc.’s unopposed motion in No. 20-15809 to supplement the record on appeal is DENIED. Dkt. 38.

contract internally consistent.”).2 Because the Term Sheet was intended to settle a trademark dispute between the parties, the district court correctly concluded it would be an “end run” around the settlement to allow EJ freely to repost content referring to its own brand as JUST.

2. The district court also correctly held that the Term Sheet prohibits EJ from capitalizing the term JUST in the phrase “Make it JUST” and the corporate name “Eat JUST.” Capitalization of the term JUST varies throughout the Term Sheet, and the district court appropriately found that the “absence of capitalization” in particular provisions at issue was “intentional.” The court also correctly recognized that allowing EJ to capitalize JUST in its corporate name, or in the marketing phrases “Make it JUST” and “#MakeItJUST,” would be a “backdoor” to violation of the Term Sheet. Where, as here, the district court presided over the

2 The partial dissent mistakenly assumes that our interpretation of the Term Sheet rests on the ejusdem generis canon. See Dissent at 2–9. Our interpretation rests instead on the unambiguous text of the Term Sheet, which makes plain throughout that only three defined uses of the Mark were permitted. See Cal. Civ. Code § 1641 (“The whole of a contract is to be taken together, so as to give effect to every part, if reasonably practicable, each clause helping to interpret the other.”).

And, even if California’s so-called “tiebreaker rule” were relevant to our interpretation of the Term Sheet, see Dissent at 11–12, the result would not change. The contract begins in Paragraph 1 by stating that, “[e]xcept for internal use,” EJ will be “restrict[ed]” in its “use of JUST.” In the context of a settlement of an infringement suit, interpreting the Term Sheet to allow permitting any use of the Mark “in text” leads to an illogical reading of the agreement. See ASP Props. Grp., LP v. Fard, Inc., 133 Cal. App. 4th 1257, 1269 (2005); Cal. Civ. Code § 1652.

litigation giving rise to the settlement agreement, its interpretation of the agreement should be treated with “due respect” given the court’s “superior perspective.” Congregation ETZ Chaim v. City of Los Angeles, 371 F.3d 1122, 1124 (9th Cir. 2004).

3. The district court’s interpretation of the Term Sheet does not violate the First Amendment, as it only restricts the commercial use of a source identifier. See Mattel, Inc. v. MCA Records, Inc., 296 F.3d 894, 900 (9th Cir. 2002) (“Limited to this core purpose—avoiding confusion in the marketplace—a trademark owner’s property rights play well with the First Amendment.”).

4. The district court did not abuse its discretion by holding EJ in contempt of the March 30 Order. To do so, a court must find “by clear and convincing evidence that the contemnors violated a specific and definite order of the court.” FTC v. Affordable Media, 179 F.3d 1228, 1239 (9th Cir. 1999) (cleaned up). The order alleged to have been violated must “state in specific terms the acts that it required or prohibited.” Int’l Longshoremen’s Ass’n, Loc. 1291 v. Phila. Marine Trade Ass’n, 389 U.S. 64, 76 (1967) (cleaned up). After specifying the three permitted uses of the term JUST, the March 30 Order makes plain that “[o]ther uses of the term [JUST] violate the parties’ agreement.” EJ’s reposting of third-party content referring to its brand as JUST was thus an impermissible “use” under the March 30 Order. These violations were not based on a “good faith” interpretation

of the March 30 Order or a “reasonable effort . . . to comply.” In re Dual-Deck Video Cassette Recorder Antitrust Litig., 10 F.3d 693, 695 (9th Cir. 1993).

AFFIRMED.

Just Goods, Inc. v. Eat Just, Inc., FKA Hampton Creek, Inc., FILED

Nos. 20-17033 & 20-15809 MAR 2 2022

MOLLY C. DWYER, CLERK

BAKER, Judge, concurring in part and dissenting in part: U.S. COURT OF APPEALS

I join Part 3 of the memorandum disposition, and I concur in my colleagues’

conclusion that Eat Just, Inc. (EJ) violated the settlement Term Sheet between it and Just Goods, Inc. (JG), but only as to EJ’s use of “JUST” in nine identified stand- alone, attention-grabbing settings. I respectfully dissent from my colleagues’ determinations (i) that EJ otherwise violated the Term Sheet by using the term “JUST” in prose and capitalizing that word in certain uses and (ii) that EJ was in civil contempt for violating the district court’s order enforcing the Term Sheet.

1.

a. The crux of my disagreement with my colleagues involves Paragraph 1 of the Term Sheet:

1. Except for internal use by Defendants, Defendants will restrict their use of JUST to: (a) the “frame” logo (an example of which appears below), in which the letters “JU” appear stacked above the letters “ST”, and the preceding elements are enclosed in a rectangular frame (hereinafter, the “JUST Frame Logo”); (b) MAKE IT JUST, as provided below in Paragraph 3; or (c) in text (for example, in advertising or marketing copy so long as the JUST Frame Logo is present or in connection with generic names for their products in advertising or marketing copy, in descriptions, in governmental or other corporate filings, etc.). For the sake of clarity, the JUST Frame Logo may include a generic product name (e.g., “Egg”) or not.

(Emphasis added.)

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