Grubhub's listing of unaffiliated restaurants on its platform could infringe TM

Lynn Scott, LLC v. Grubhub Inc., 2024 WL 3673718, No. 20 C 6334 (N.D. Ill. Aug. 6, 2024)

Restaurants brought a putative class action alleging that Grubhub used their names and logos confusingly, asserting claims under the Lanham Act.

“Grubhub acts as an intermediary between consumers looking to order food and restaurants looking for additional customers.” Restaurants who partner with Grubhub pay it a percentage for “an additional way of generating orders, internet advertising, and a delivery infrastructure.” Plaintiffs alleged that, since its founding (2004), Grubhub only included restaurants on its platform who agreed to appear. Thus, consumers allegedly expected that “restaurants listed on Grubhub’s platform were working cooperatively with Grubhub to provide takeout and food delivery services.” But in 2019, Grubhub changed to add more than 150,000 restaurants, including plaintiffs’, without permission.

Grubhub allegedly used different colors on its mobile app to help drivers distinguish restaurants who were partners versus unaffiliated restaurants and further disguised its actions by having drivers place orders under customer names and pick them up from the regular customer area without mentioning Grubhub. Customers allegedly erroneously blamed the restaurants for negative dining experiences.

False association: Some plaintiffs failed to allege protectable trademarks, but this would be curable in an amended complaint. The court rejected plaintiffs’ argument that they could bring false association claims without alleging a protectable trademark; “§ 43(a) does not have boundless application as a remedy for unfair trade practices.” Belmora was factually and legally distinguishable; there was at least a valid foreign mark there.

And likely confusion was generally a factual question. Enough was alleged here, including “exact replicas” of names and logos. For actual confusion, plaintiffs alleged “multiple accounts of customers who received poor service from Grubhub and, in turn, blamed Plaintiffs,” e.g., for an “outdated” menu on Grubhub that meant that orders couldn’t be fulfilled correctly. [I take it the court wouldn’t find confusion plausible if it was a newspaper review that became outdated. The usual multifactor test isn’t really suitable for that (or anyway, all the work in rejecting the plausibility of that theory comes from the unrelatedness of the goods and services).]

False advertising: Plaintiffs alleged that (1) use of Plaintiffs’ names and logos, (2) false representations that Plaintiffs’ restaurants are working alongside Grubhub, and (3) false and misleading statements made in connection with Grubhub’s use of the names and logos, such as statements that Plaintiffs’ restaurants were closed and the posting of incorrect pricing and menu items, constituted false advertising. Without discussing materiality, the court found this adequate.