Just Goods, Inc. v. Just, Inc.

Background

Just Goods, Inc. and the defendants entered into a binding Term Sheet settling their trademark lawsuit. The court had previously ordered the defendants to comply with that agreement and later held them in contempt for continued violations. The Ninth Circuit affirmed those earlier orders.

In a July 13 order, the court found that the defendants were again violating the Term Sheet by filing trademark applications for JUST EGG and EAT JUST in standard characters, using the social-media handle @justegg, and capitalizing and emphasizing “Just” in “Just Egg” marketing. The court gave the defendants 14 days to correct the violations and imposed a $5,000-per-day fine afterward until they could attest to compliance.

The defendants moved to stay, or pause, the July 13 order while appealing it. They said compliance would require extensive changes to social-media accounts, advertising, promotional materials, and physical product packaging, causing substantial costs and harm to their brand and business relationships. They also said that “JUST Egg” appeared on much of their existing packaging and that replacing it would take at least 12 months. The defendants conceded that their packaging did not comply with the July 13 order.

Legal standard

Under Federal Rule of Civil Procedure 62(d), the court considered four factors: the likelihood that the appeal would succeed, the likelihood of irreparable injury without a stay, harm to other interested parties, and the public interest. The defendants had the burden of showing that a stay was justified. The court used a sliding-scale approach but explained that the defendants first had to show a probable, not merely possible, irreparable injury.

Court’s analysis

The court found that the defendants did not make a strong showing that they would succeed on appeal. It rejected their argument that Just Goods had waived its objection to “JUST Egg” by failing to object to one use in a third-party Business Wire article. The court held that a single use was not enough to show an intentional relinquishment of a known right. It also found that additional evidence submitted during the stay briefing was not relevant to whether the July 13 order was correct because that evidence had not been presented before that order was issued.

The court also rejected the defendants’ argument that the Term Sheet allowed them to capitalize JUST in “JUST Egg” because the Term Sheet allowed use of the JUST frame logo. The court explained that the Term Sheet treated the frame logo and text uses differently. It concluded that selectively capitalizing JUST in “JUST Egg,” particularly while using “Just Egg” as the brand identity, was an impermissible way to reconnect the product with the uppercase JUST branding.

The court found that the defendants’ arguments about the @justegg social-media handle raised questions but were unlikely to succeed on appeal. The court did not reconsider the trademark-registration issue because the defendants did not seek a stay of that part of the July 13 order.

Regarding irreparable harm, the court found that most of the claimed injuries—such as the time and expense of reviewing and changing marketing materials—were calculable. It also described the harms as self-inflicted because they resulted from the defendants’ continued violations of the agreement and the court’s orders. The court noted that the defendants could choose to incur the daily fine, post a bond around it, and seek relief on appeal if they believed the appeal was likely to succeed.

The court treated the existing physical packaging differently. It stated that the July 13 order had not considered the hardship of immediately changing packaging already in stores and that this issue had not been raised in the earlier enforcement proceeding. The court concluded that the packaging still had to comply with the Term Sheet prospectively but required more time to correct than social-media handles and advertisements.

The court also concluded that the balance of harms and the public interest did not favor a stay. It found that the defendants’ continued use of “JUST Egg” violated the parties’ agreement and harmed Just Goods, which had entered the agreement to protect its brand identity. The court did not decide the merits of the underlying trademark dispute.

Attorney fees

The court deferred deciding attorney fees related to the motion because the appeal was still pending.

Disposition

The court’s conclusion states that the defendants’ motion to stay was GRANTED in part and DENIED in part. The $5,000-per-day fine continued to apply to all noncompliance with the July 13 order except physical packaging until October 30, 2023. The exception allowed existing inventory to be delivered to stores, but did not allow the defendants to manufacture additional nonconforming packaging. Nonconforming inventory delivered after October 30, 2023, would be subject to the fine. The defendants were ordered to file an affidavit under penalty of perjury by October 30, 2023, addressing compliance with the physical-packaging requirement.