(Image via Getty)
The Eastern District of Texas has long been known as the forum of choice for patent holders looking for a payday. While the past few years have seen the Eastern District get displaced from its pedestal as the most popular patent court — based primarily on TC Heartland’s major shift in patent venue law, as well as the rise of the Western District as an attractive forum for patent holders with the ability to sue defendants in Texas — the district still retains a favorable impression as a plaintiff-friendly choice, especially for nonpracticing entities. It is a bit unusual, however, to see the Eastern District of Texas as the selected forum for a much broader, albeit nonpatent, IP dispute involving a couple of Silicon Valley-based combatants. But unusual does not mean never — and we now have a juicy IP battle involving two high-profile grocery delivery companies to savor.
The first salvo was fired by perhaps the best-known name in grocery delivery, Instacart. While I suspect that Instacart’s popularity has gone up recently due to customer concerns about shopping in grocery stores during the Covid-19 pandemic, the sensibility around the grocery delivery space indicates an expectation of even more growth going forward. With a key driver of that growth being improved technology, just as it is for a host of companies looking to leverage technology to provide services for customers. But with increased commercial potential comes increased competition, putting a premium on Instacart being able to maintain its lead over rivals. Key to that effort for Instacart is the strength of its technical platform, as well as the goodwill it has generated from its brand-building efforts. At the same time, when a well-funded challenger arises that appears to have appropriated material from Instacart to get a head start in the ongoing race, aggressive litigation steps are both expected and called for.
And aggressive litigation steps are exactly what Instacart has recently taken, in a move that has garnered a significant amount of (welcome, considering the importance of controlling the narrative around litigation filings against competitors) media attention. From its announcement that it had filed a complaint against competitor Cornershop, to making strongly worded accusations that Cornershop had engaged in a “systematic effort to steal Instacart’s IP,” to moving for a preliminary injunction — Instacart has chosen the all-out-war route from the outset in an attempt to hobble a dangerous competitor. Even though Cornershop responded to Instacart’s cease-and-desist letter in just one day, with a representation that it had “ceased the activities” it was accused of, that was not enough to avert the lawsuit and preliminary injunction filing just two days later. The aggressive timing becomes a lot more understandable, however, when one factors in that: 1) Cornershop is owned by services-via-app behemoth Uber, and 2) had recently launched service in Texas and Florida, marking its first foray into direct competition with Instacart.
At the heart of Instacart’s complaint is that it has solved a critical problem facing grocery delivery services, namely that good images of every product for sale at any given grocery store simply don’t exist. To address that problem, Instacart claims that it empowered regular people to help fill gaps in the images database for each retailer with its Mobile Photo Studio, which allows regular users to upload images of products to Instacart for processing and eventual inclusion in Instacart’s product catalog. Indeed, “Instacart claims it spent “tens of millions of dollars” and “and a tireless amount of effort” to build its catalog, which features items from more than 30,000 stores across its footprint.” Unsurprisingly, Instacart claims copyright ownership in many of the images contained in its catalog, while complaining vigorously that Cornershop has disregarded its legal rights in those images as part of a sustained campaign to “scrape” Instacart’s catalog as the basis of its own.
In fact, Instacart accuses Cornershop of a systematic campaign to profit off the sweat equity and financial investment that went into building Instacart’s catalog. From lifting of images, to changing of file names to mask the origin of the files, to soliciting engineers with experience in “advanced scraping” — Instacart’s complaint tells a media-friendly story of a competitor looking to take advantage of the market leader’s investments for its own benefit as it looks to launch in the critical United States market. At the same time, we can expect that Cornershop, and its parent Uber, will mount a vigorous defense to Instacart’s claims while quickly pivoting toward increased investment in building out Cornershop’s catalog free of any further accusations of impropriety. Instacart’s preliminary injunction motion, if granted, could go a long way toward forcing Cornershop’s hand in that direction.
Ultimately, Instacart’s filing heralds the start of what will likely be a years-long fight for supremacy in the grocery delivery space. For now, it appears that at least part of the battle will take place in an East Texas courtroom, with the promise of both sides fighting vigorously in support of their legal claims. It is definitely too soon to predict which side will prevail — either in court or in the battle for customer attention — but there is at least precedent for an Uber-backed company buying its way out of significant IP trouble, in the form of the Waymo trade secret battle in the recent past. For now at least, Instacart is hoping that the court will deliver it an injunction to help seal the message that Cornershop is the stale alternative to Instacart’s fresh and reliable service.
Please feel free to send comments or questions to me at gkroub@kskiplaw.com or via Twitter: @gkroub. Any topic suggestions or thoughts are most welcome.
Gaston Kroub lives in Brooklyn and is a founding partner of Kroub, Silbersher & Kolmykov PLLC, an intellectual property litigation boutique, and Markman Advisors LLC, a leading consultancy on patent issues for the investment community. Gaston’s practice focuses on intellectual property litigation and related counseling, with a strong focus on patent matters. You can reach him at gkroub@kskiplaw.com or follow him on Twitter: @gkroub.