Ninth Circuit Reaffirms Laches as an Equitable Defense in Trademark Cancellation Actions
In Cosmetic Warriors v. Pinkette Clothing, the Ninth Circuit addressed the availability of laches in trademark infringement and cancellation actions under the Lanham Act.
Cosmetic Warriors Limited (CWL) is a cosmetics retail company, which owns almost 1000 LUSH retail stores worldwide and has been operating in the U.S. since 2002. CWL owns multiple U.S. trademark registrations, including registrations of LUSH on perfumes and hair services.
Pinkette Clothing was formed in 2003 as a young women’s clothing company operating with various labels. One such label is LUSH, which the company has used from 2003 onward and for which Pinkette obtained a trademark registration for clothing in 2010. There was no opposition to Pinkette’s application, which was published in the Trademark Official Gazette, despite the fact that CWL’s outside counsel was aware of the application.
In 2014, CWL attempted to obtain a trademark registration for use of LUSH on clothing in the U.S., but was rejected on account of Pinkette’s preexisting registration. It was not until June 2015, about five years after Pinkette’s registration, that CWL filed a petition to cancel Pinkette’s trademark with the Trademark Trial and Appeal Board. After the petition was filed, Pinkette filed an action in federal district court, seeking a declaratory judgement of non-infringement, to which CWL counterclaimed, seeking injunctive relief and cancellation of Pinkette’s mark. In its defense, Pinkette argued that laches applied, claiming that CWL unduly delayed in asserting its rights.
The equitable doctrine of laches serves to protect parties who may be prejudiced by the unreasonable delay of a plaintiff in making his legal claim. Laches prevents a plaintiff from unreasonably postponing the assertion of a legal claim when material conditions change, witnesses or evidence are lost, or the defendant changes his position as a result of the delay, such that allowing the claims to proceed would be unjust to the defendant. Put simply, laches prevents plaintiffs from exercising a lack of diligence in bringing a claim.
Within the last several years, the Supreme Court, in Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S. Ct. 1962 (2014) and SCA Hygiene Products v. First Quality Baby Products, LLC, 137 S. Ct. 954 (2017) has limited the equitable defense of laches under both the Copyright Act and the Patent Act. Specifically, in Petrella, the Court eliminated, in the absence of extraordinary circumstances, the availability of laches in copyright infringement actions brought within the three-year statute of limitations established by § 507(b). In SCA Hygiene, the Court, relying on Petrella, found that § 286 of the Patent Act barred relief “for any infringement committed more than six years prior to the filing of the complaint,” and that laches could not be used to bar relief of any claims brought within the six-year period.
Distinguishing Petrella and SCA Hygiene, the Ninth Circuit held that because the Lanham Act expressly authorizes laches as a defense to cancellation and does not contain a statute of limitations provision, the concerns addressed by the Supreme Court decisions do not apply to Lanham Act claims. Thus, laches remains available as an equitable defense in trademark infringement and cancellation claims.
CWL, relying on Petrella and SCA Hygiene, argued that laches could not bar its claims for cancellation, since § 14 of the Lanham Act (15 U.S.C. § 1064) sets a five-year period for bringing cancellation actions, and the five-year period had not passed when CWL asserted its claim. The district court, and the Ninth Circuit on appeal, rejected this argument, finding that the five-year deadline of § 14 is not a statute of limitations, which bars actions brought after the expiration of a set period of time. Instead, it merely limits the grounds on which cancellation may be sought after five years.
Based on this analysis, the Ninth Circuit found that the principle at work in the Supreme Court decisions - a concern of judicial override of a statute of limitations – does not apply to the Lanham Act, which has no statute of limitations. Consequently, the defense of laches is available in actions under the Lanham Act, and applied in this case, as CWL should have known about its claims in 2010, but waited nearly four years to bring those claims. The Ninth Circuit affirmed the district court’s finding that CWL’s claims were barred.
As this case illustrates, diligent enforcement is vitally important to any trademark protection strategy. If Lanham Act plaintiffs delay in asserting their rights, they may face the equitable defense of laches.
