Black Diamond Sportswear, Inc. v. Black Diamond Equipment, Ltd., (2nd Cir. 2007)
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06-3508-cv
Black Diamond Sportswear, Inc. v. Black Diamond Equipment, Ltd.
U N I T E D STATES COURT OF APPEALS
F O R THE SECOND CIRCUIT
S U M M A R Y ORDER
R U L IN G S BY SUMMAR Y ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO SUMM A R Y
O R D E R S FILED AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY TH I S CO U R T ' S
L O C A L RU L E 32.1 AN D F E D E R A L RU L E OF AP P E L L A T E PRO C E D U R E 32.1 . IN A BRIEF OR OTH E R
P A P E R IN WHICH A LITIGANT CITES A SU M M A R Y ORDER, IN EACH PARAGRAPH IN WHICH A
C IT A TI O N APPEARS, AT LEAST ONE CITATION MUST EITHER BE TO THE FEDERAL APPENDIX OR
B E ACCOM P A N I E D BY THE NO T A T I O N : "(SUMM A R Y ORDER)." A PARTY CITING A SUMMARY
O R D E R MUST SERVE A COPY OF THAT SUMM A R Y ORDER TOGETHER W I T H TH E PA P E R IN W H I C H THE SUM M A R Y OR D E R IS CITED ON ANY PARTY NOT REPRESENTED BY COU N S E L U N L E S S THE SUMMARY ORDER IS AVAILABL E IN AN ELE C T R O N I C DA T A B A S E W H I C H IS P U B L I C L Y ACCESSIBLE WITHO U T PAYM E N T OF FEE (SUCH AS THE DATABASE AVAILABLE AT H T T P : / / W W W . C A 2 . U S C O U R T S . G O V / O F THE ORD E R ON SUCH A DATABASE, THE CITATION MUST INCLUDE REFERENCE TO THAT D A T A B A S E AND THE DOCKET NUMBER OF THE CASE IN WHICH THE ORDER WAS ENTERED. A t a stated term of the United States Court of Appeals for the Second Circuit, held at t h e Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, in the City of New Y o r k , on the 5th day of October, two thousand seven. PRESENT: H O N O R A B L E JOSEPH M. McLAUGHLIN, H O N O R A B L E REENA RAGGI, C i r c u i t Judges, H O N O R A B L E JED S. RAKOFF, 1 D i s t r ic t Judge. BL AC K DIAMOND SPORTSWEAR, INC., P l a i n ti f f- A p p e l la n t, v. No . 06-3508-cv BL AC K DIAMOND EQUIPM EN T, LTD., D e f e n d a n t - A p p e ll e e. J A M E S G. GOGGIN (Peter S. Black, on A P P E A R I N G FOR APPELLANT: t h e brief), Verrill Dana, LLP, Portland, Maine.
A P P E A R I N G FOR APPELLEE: W I L LI A M N . B E R K O W I TZ , N eil M c G a r a g h a n , Bingham McCutchen LLP, B o s t o n , Massachusetts, R. Bradford Fa w ley, Downs Rachlin Martin PLLC, B ra t t l e b o r o , Vermont, Richard S. Luskin, B l a c k Diamond Equipment, Ltd., Salt L a k e City, Utah.
A p p e a l from the United States District Court for the District of Vermont (J. Garvan M urth a, Judge).
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND D E C R E E D that the judgment of the district court, entered on August 25, 2005, is A F F IR M E D .
Plain tiff Black Diamond Sportswear, Inc. ("BDS") appeals from an award of summary j ud g m en t to defendant Black Diamond Equipment, Ltd. ("BDE") on BDS's claims of trademark infringement, false designation of origin, and dilution under federal common law a n d the Lanham Act, 15U.S.C. §§ 1114, 1125. BDS contends that the district court erred in holding that its claims were barred by the equitable doctrine of laches because significant f a c t u a l disputes exist that preclude the application of that defense. BDS also asserts that, e v e n if laches does bar its claim for monetary damages, the district court should nevertheless h a v e granted its request for injunctive relief. We assume the parties' familiarity with the f a c t s and record of prior proceedings, which we reference only as necessary to explain our d e c i s io n .
Pr eli m in ar ily, we observe that the standard of review applicable to a grant of summary j u d g m e n t based on laches is unsettled in this circuit. See Ikelionwu v. United States, 150 F . 3 d 233, 236-37 (2d Cir. 1998) (discussing conflicting authority). We need not resolve this i s s u e , however, because the district court's judgment must be affirmed under either de novo o r abuse of discretion review.
A. T h e District Court Properly Applied Laches to Bar BDS's Claims It is well established that the defense of laches may be asserted in trademark i n f r in g e m e n t cases, see United States v. Milstein, 401 F.3d 53, 63 (2d Cir. 2005); Conopco, I n c . v. Campbell Soup Co., 95 F.3d 187, 193 (2d Cir. 1996), in which case the defense must b e resolved before reaching the merits of plaintiff's trademark claims, see Patsy's Brand, Inc. v . I.O.B. Realty, Inc., 317 F.3d 209, 216 (2d Cir. 2003). Laches will apply where (1) plaintiff h a d knowledge of defendant's use of its marks, (2) plaintiff inexcusably delayed in taking a c t io n with respect to defendant's use, and (3) defendant suffered prejudice as a result. See S a r a t o g a Vichy Spring Co., Inc. v. Lehman, 625 F.2d 1037, 1040 (2d Cir. 1980).
" A l t h o u g h laches is an equitable defense, employed instead of a statutory time-bar, a n a l o g o u s statutes of limitation remain an important determinant in the application of a l a c h e s defense." Conopco, Inc. v. Campbell Soup Co., 95 F.3d at 191. Because the Lanham A c t establishes no limitations period and because no corresponding federal statute of l i m i t a t i o n s exists, "we look to the most appropriate or the most analogous state statute of l i m it a t io n s for laches purposes." Id. (internal quotation marks omitted). That statute, in turn, d e t e r m in e s which party has the burden of proving or rebutting the laches defense.
[ P ] r io r to the running of the most closely analogous state statute of limitations there is no presumption of laches and the burden remains on the defendant to p r o v e the defense. Alternatively, once the analogous statute has run, a p r e s u m p t io n of laches will apply and plaintiff must show why the laches d e f e n s e ought not be applied in the case.
I d . In the instant case, the parties agree that Vermont's six-year statute of limitations for civil actio ns applies. See 12 V.S.A. § 511.
1. N o Genuine Issues of Material Fact Exist B D S contends that summary judgment was precluded by material factual disputes, spec ifically pertaining to (1) the extent of BDE's infringement of BDS's mark prior to 1998, ( 2 ) when BDS knew or should have known of such infringement, and (3) whether BDE has b e e n prejudiced by any delay in filing suit. According to BDS, BDE's infringement prior to 1 9 9 8 was de minimis and thus the laches period did not begin to run until 1998. Because B D S filed its lawsuit on October 15, 2003, within the analogous six-year state statute of l i m i t a ti o n s , BDS argues that BDE is not entitled to a presumption of laches and cannot meet i t s burden of proving the defense. We disagree.
A plaintiff is not "obligated to sue until its right to protection has ripened such that p l a i n ti f f knew or should have known, not simply that defendant was using the potentially o f f e n d i n g mark, but that plaintiff had a provable infringement claim against defendant." P h y s ic a l Therapy Ctr. v. Pro-Fit Orthopedic & Sports Physical Therapy, 314 F.3d 62, 70 (2d Cir. 2002). Under the doctrine of progressive encroachment, a plaintiff has "some latitude in the timing of its bringing suit" because the laches period begins to run, not at the first sign o f a de minimis infringing use, but rather, when "the likelihood of confusion looms large." I d . (internal quotation marks omitted). We have recognized that "any other rule would require each trademark owner to sue first and ask questions later, and would foster meritless l i ti g a t io n . " Id. (internal quotation marks and alteration omitted).
In granting summary judgment to BDE on its laches defense, the district court c o n c l u d e d that BDS engaged in unreasonable delay in bringing suit because "BDS had to be aware by the mid-1990s that a company using a similar mark was selling goods in direct c o m p e t i ti o n with it." W e agree. It is undisputed that BDE began using the Black Diamond m a r k in 1990, that BDS was aware of that fact, and that, prior to 1998, BDE sold skiwear produ cts -- including gloves, mittens, hats, and t-shirts -- that competed directly with BDS's g l o v e s , mittens, ski hats, and t-shirts. Although BDS contends that BDE's pre-1998 products "did not directly compete with the bulk of BDS's line," Appellant's Reply Br. at 18 (e m p hasis added), BDS fails to identify any "hard evidence" in the record supporting this a s s e r ti o n , D'Amico v. City of New York, 132 F.3d 145, 149 (2d Cir. 1998) (noting that at summ ary judgment, nonmoving party "must offer some hard evidence showing that its v e r s io n of the events is not wholly fanciful"). Even if BDS could identify such evidence, moreo ver, the doctrine of progressive encroachment only excuses delay in filing suit where "def enda nt, after beginning its use of the mark, redirected its business so that it more squa rely competed with plaintiff." Pro-Fit Orthopedic & Sports Physical Therapy, 314 F.3d a t 70 (emphasis added). In the instant case, BDE's products competed directly at the outset with those of BDS when it began selling skiwear in 1990. See Tillamook Country Smoker, I n c . v. Tillamook County Creamery Ass'n,
2. BDE Did Not Act in Bad Faith B D S also contends that the district court erred in applying laches because the record conta ins sufficient evidence to support a reasonable inference that BDE acted in bad faith.
It is well established that a defendant must have "clean hands" to assert the equitable defense of laches. Hermès Int'l v. Lederer De Paris Fifth Avenue, Inc., 219 F.3d 104, 107 (2d Cir. 2000); see Precision Instrument Mfg. Co. v. Automotive Maintenance Mach. Co., 324 U.S.
8 0 6 , 814 (1945) (observing that "he who comes into equity must come with clean hands" ( i n te r n a l quotation marks omitted)). Although "[b]ad faith may be inferred from the junior user's actual or constructive knowledge of the senior user's mark," Star Indus. v. Bacardi & Co. Ltd., 412 F.3d 373, 389 (2d Cir. 2005), a junior user's knowledge of the mark may still b e consistent with good faith unless the evidence indicates "an intent to promote confusion o r exploit good will or reputation," id. at 388.
As the district court correctly concluded, nothing in the record evidence supports a c o n c l u s io n that BDE's selection of the Black Diamond mark related to BDS's use of the mark or that BDE ever "sought to pass off its products as those of BDS." Although the d i s tr i c t court did not expressly address BDS's claim of reverse confusion, see id. at 388 n.3 ( e x p l a in i n g that reverse confusion occurs where "the junior user is able to amass such trademark strength in its imitative mark that the senior user's products become associated with the junior user in the minds of consumers"), the record evidence does not support a reaso nable inference that BDE intended to promote such confusion, for example, by flooding t h e market with its skiwear products and causing consumers to believe erroneously that BD S's goods were produced by BDE. See Lang v. Retirement Living Publishing Co., 949 F . 2 d 576, 583 (2d Cir. 1991) (observing that "[r]everse confusion is the misimpression that t h e junior user is the source of the senior user's goods" (internal quotation marks omtited)); s e e also Freedom Card, Inc. v. JPMorgan Chase & Co., 432 F.3d 463, 473 (3d Cir. 2005) ( " T h e offender in a reverse confusion case will typically exploit confusion to push the senior u s e r out of the market."). Accordingly, we conclude that the district court properly d e t e r m in e d at summary judgment that BDE did not act in bad faith and that BDS's claims w e r e barred by laches.
B. T h e District Court Correctly Denied Injunctive Relief B D S contends that, even if laches bars its claim for monetary damages, the district court should still have granted its request for injunctive relief. We have recognized that, e v e n where laches is a valid defense to damages, "a court may nonetheless grant injunctive r e l ie f if it determines that the likelihood of confusion is so great that it outweighs the effect o f plaintiff's delay in bringing suit." ProFitness Physical Therapy Ctr. v. Pro-Fit Orthopedic & Sports Physical Therapy, 314 F.3d at 68. The purpose of this exception to laches "is to vind icate the public interest in avoiding inevitable confusion in the marketplace." S u n A m e r i c a Corp. v. Sun Life Assurance Co., 77 F.3d 1325, 1334-36 (11th Cir. 1996). We h a v e noted that "the public's interest is especially significant when health and safety c o n c e r n s are implicated." Conopco, Inc. v. Campbell Soup Co., 95 F.3d at 194. That is not t h i s case.
Alth ou g h BDS's CEO testified that consumers have mistaken BDS for BDE numerous t i m e s at numerous retail trade shows, these instances involved customers' confusion about the existence of two companies called Black Diamond, rather than confusion about "mistaken p u r c h a s in g decisions." Lang v. Retirement Living Publishing Co., 949 F.2d at 583 (noting t h a t "trademark infringement protects only against mistaken purchasing decisions and not against confusion generally" (internal quotation marks omitted)). The only other evidence o f confusion in the record is the CEO's testimony that BDS received a pair of "Scarpa hiking b o o t s " from a consumer who was trying to return the merchandise to BDE. Given that BDE a n d BDS have both been selling skiwear for seventeen years, this isolated incident of postsale confusion, coupled with the lack of any record evidence suggesting a high likelihood of c o n f u s i o n or the existence of a compelling public interest, is clearly insufficient to override t h e defense of laches so as to mandate injunctive relief in this case.
W e have considered all of BDS's other arguments and find them to be without merit.
T h e judgment of the district court entered on August 25, 2005, is hereby AFFIRMED.
F O R THE COURT: C A T H E R IN E O'HAGAN WOLFE, CLERK OF COURT B y:
1 The Honorable Jed S. Rakoff, of the United States District Court for the Southern D i s t r ic t of New York, sitting by designation.
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This document cites
- U.S. Court of Appeals for the Second Circuit - Profitness Physical Therapy Center, Plaintiff-Appellant, v. Pro-Fit Orthopedic and Sports Physical Therapy P.C., Defendant-Appellee., 314 F.3d 62 (2nd Cir. 2002)
- U.S. Supreme Court - Johnston v. Standard Mining Co., 148 U.S. 360 (1893)
- U.S. Court of Appeals for the Eleventh Circuit - Sunamerica Corporation, a Delaware Corporation, F/K/a Sun Life Group of America, Sun Life Insurance Company of America, a Maryland Corporation, Plaintiffs-Counterdefendants-Appellants, v. Sun Life Assurance Company of Canada, a Canadian Corporation, Sun Life Assurance Company of Canada (U.S.), a Delaware Corporation, Defendants-Counterclaimants-Appellees., 77 F.3d 1325 (11th Cir. 1996)
- U.S. Court of Appeals for the Second Circuit - Vito D'Amico, Firefighter, Plaintiff-Appellant, v. the City of New York; Joseph F. Bruno, Former Fire Commissioner; Carlos Rivera, Current Fire Commissioner, the City of New York; Thomas Dunphy, Lieut.; Matthew Murtagh, Deputy Asst. Chief; Patricia Bartels, Asst. Fire Commissioner, Defendants-Appellees., 132 F.3d 145 (2nd Cir. 1998)
- U.S. Court of Appeals for the Second Circuit - Patsy'S Brand, Inc., Plaintiff-Appellee, v. I.O.B. Realty, Inc., Defendant-Cross-Defendant-Appellant, Patsy'S Inc., Frank Brija, John Brecevich, Defendants-Appellants. Patsy'S Brand, Inc., Plaintiff-Appellee, v. Andrew Spinnell, Esq., Appellant., 317 F.3d 209 (2nd Cir. 2003)
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