Pinkette Clothing, Inc. v. Cosmetic Warriors Ltd.
894 F.3d 1015 (2018)
Rule of Law:
Laches is an available equitable defense to both trademark infringement and trademark cancellation claims under the Lanham Act, even for marks not yet incontestable, because the Lanham Act lacks a specific statute of limitations and explicitly permits the application of equitable principles in inter partes proceedings.
Facts:
- In the mid-1990s, Cosmetic Warriors Limited (CWL) began selling LUSH-branded cosmetics and related goods, adopting the name 'Lush' for its products.
- CWL opened its first LUSH retail store in Canada in 1996 and in the United States in 2002, and actively policed its LUSH mark across various goods and services.
- Between 2004 and 2013, CWL sold fewer than 1,000 LUSH-branded t-shirts, tank tops, or sweatshirts in the United States, primarily for promotional purposes, and never registered LUSH for clothing in the U.S.
- In 2003, Edward, Erica, and Daniel Kim started Pinkette Clothing, a company that sells young women’s clothing under the LUSH label.
- The Kims discovered CWL’s lush.com website selling cosmetics but determined that CWL did not sell clothing on its site, leading them to select lushclothing.com as Pinkette’s domain name.
- From September 2003 onward, Pinkette Clothing continuously sold LUSH-branded women’s clothing to major retailers in the United States and Canada, including Nordstrom.
- Pinkette Clothing's founders brainstormed the LUSH name independently and believed their use of the mark on clothing would not infringe on CWL’s trademark rights.
Procedural Posture:
- May 2009: Pinkette Clothing filed an application to register its LUSH trademark for clothing in the United States.
- July 2010: Pinkette Clothing's LUSH trademark for clothing was officially registered in the United States, providing constructive notice of its claim of ownership.
- December 2014: Cosmetic Warriors Limited (CWL) filed an application to register its LUSH trademark for clothing in the United States, which was rejected due to Pinkette Clothing's existing registration.
- June 2015: CWL filed a petition with the Trademark Trial and Appeal Board (TTAB) to cancel Pinkette Clothing's trademark registration.
- Pinkette Clothing then filed a lawsuit in a U.S. federal trial court (District Court for the Central District of California) seeking a declaratory judgment that it was not infringing on CWL's trademark and, alternatively, that laches barred CWL from asserting its rights.
- CWL responded with counterclaims in the federal trial court, alleging trademark infringement and seeking to cancel Pinkette Clothing's registration, among other claims.
- The federal trial court, upon joint motion by the parties, stayed the proceedings before the TTAB pending resolution of this federal court case.
- The trial court determined that a jury would decide CWL's infringement and cancellation claims and provide an advisory opinion on Pinkette Clothing's laches defense, with the court making the final decision on laches.
- The trial court granted Pinkette Clothing's motion in limine to prevent the jury from hearing evidence about its Canadian trademark registration application and cancellation petition, though CWL was allowed to present this evidence to the court after the jury was dismissed.
- Following a five-day trial, the jury returned a special verdict finding in favor of CWL on its infringement and cancellation claims but also finding (in an advisory capacity) in favor of Pinkette Clothing on its laches defense.
- The trial court, after considering additional evidence regarding laches, issued an oral decision holding that laches barred CWL's claims, subsequently denied CWL's motion for judgment in its favor (which requested a permanent injunction and an order to cancel Pinkette Clothing's registration), and entered judgment for Pinkette Clothing on all claims.
- CWL timely appealed the trial court's judgment to the U.S. Court of Appeals for the Ninth Circuit.
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Issue:
Does laches apply as a defense to a trademark cancellation claim brought under the Lanham Act within the five-year period before the mark becomes incontestable, given that the Lanham Act has no specific statute of limitations but expressly allows for equitable defenses?
Opinions:
Majority - Judge Bybee
Yes, laches is an available defense to a trademark cancellation claim brought under the Lanham Act, even within the five-year period before the mark becomes incontestable, because the Lanham Act has no statute of limitations and expressly provides for equitable defenses like laches. The court distinguished the Supreme Court's decisions in Petrella v. Metro-Goldwyn-Mayer, Inc. (Copyright Act) and SCA Hygiene Products v. First Quality Baby Products, LLC (Patent Act), which held that laches could not bar claims brought within federally prescribed statutes of limitations. The Ninth Circuit reasoned that the principle from those cases—a concern over laches overriding a statute of limitations—does not apply to the Lanham Act because it lacks a specific statute of limitations for infringement or cancellation and explicitly allows for equitable defenses, including laches, under 15 U.S.C. § 1069. The court clarified that 15 U.S.C. § 1064, which limits the grounds for cancellation after five years (incontestability), is not a statute of limitations but merely defines the available grounds for cancellation, allowing petitions to be brought 'at any time,' thereby leaving a gap for laches to fill. The court also affirmed that laches can bar injunctive relief in trademark cases, citing Prudential Insurance Company of America v. Gibraltar Financial Corporation of California and other precedents. Applying the two-step laches test, the court found a strong presumption of laches because CWL delayed beyond California's four-year analogous statute of limitations for trademark infringement, knowing of Pinkette’s registration in July 2010 but not filing a cancellation petition until June 2015. Evaluating the E-Systems factors, the court agreed with the district court that at least four factors (CWL's lack of diligence, minimal harm to CWL if relief denied, Pinkette’s good faith ignorance, and significant harm to Pinkette from CWL's delay) weighed in favor of applying laches. The court further rejected CWL’s arguments that Pinkette Clothing had 'unclean hands' or that the 'inevitable confusion doctrine' applied, finding no clear evidence of bad faith or public safety threat. Finally, the court upheld the exclusion of Canadian trademark evidence from the jury, as it was not relevant to U.S. infringement issues and its probative value was outweighed by potential for confusion.
Analysis:
This case clarifies the significant role of the laches defense in trademark law, distinguishing the Lanham Act from other intellectual property statutes with explicit statutes of limitations. It reinforces that courts retain discretion to apply equitable defenses like laches even against cancellation claims before a mark becomes incontestable, emphasizing the importance of timely enforcement of trademark rights. The decision provides essential guidance for trademark holders regarding their policing obligations and highlights the risks of prolonged inaction, particularly when a junior user develops its business in good faith.
