PRL USA Holdings, Inc. v. United States Polo Association, Inc.
520 F.3d 109 (2008)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
Under Federal Rule of Evidence 408, evidence of conduct or statements made during compromise negotiations is admissible when offered for a purpose other than proving liability or the invalidity of a claim, such as establishing the affirmative defense of estoppel by acquiescence.
Facts:
- PRL USA Holdings, Inc. (PRL) has long used a trademark logo of a single mounted polo player for its Ralph Lauren clothing line.
- The United States Polo Association (USPA), the governing body for the sport of polo, licensed its own trademarks to Jordache, Ltd. for a clothing line.
- USPA and Jordache began using four new logos, each depicting two mounted polo players (the 'double horsemen marks').
- PRL and USPA engaged in settlement discussions in 1996 regarding various trademark disputes.
- During these discussions, USPA alleged that PRL gave assurances it would not object to USPA's use of a double horsemen mark.
- In reliance on these alleged assurances, USPA and Jordache spent over $41 million developing a clothing line featuring the mark.
- PRL's former general counsel denied ever consenting to the USPA's use of the double horsemen mark.
Procedural Posture:
- PRL USA Holdings, Inc. sued the United States Polo Association and Jordache, Ltd. in the U.S. District Court for the Southern District of New York for trademark infringement.
- Over PRL's objection, the district court admitted evidence of statements made during prior settlement negotiations.
- A jury found that one of the four accused marks (the solid double horsemen silhouette) infringed PRL's trademark, but the other three marks did not.
- The jury also rejected the defendants' affirmative defense of estoppel by acquiescence.
- The district court entered a final judgment consistent with the jury's verdict.
- PRL (appellant) appealed the portion of the judgment in favor of the defendants (appellees) to the U.S. Court of Appeals for the Second Circuit.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does admitting evidence from settlement negotiations to prove the affirmative defense of estoppel by acquiescence violate Federal Rule of Evidence 408's prohibition against using such evidence to prove the invalidity of a claim?
Opinions:
Majority - Leval, J.
No. Admitting evidence from settlement negotiations to prove the affirmative defense of estoppel by acquiescence does not violate Federal Rule of Evidence 408. The rule's exception allows for the admission of settlement evidence when it is offered for 'another purpose' distinct from proving the validity or invalidity of the primary claim itself. Here, the evidence was offered to prove estoppel, an affirmative defense whose elements are distinct from the elements of trademark infringement. To hold otherwise would deprive the rule's exception of all meaning, as all evidence is ultimately offered to defeat an adversary's position. Preventing a party from proving an estoppel defense that arose during settlement talks would unfairly curtail that defense and could allow one party to lull another into taking action and then sue them for it. The court also held that the district court did not err by refusing to give a 'safe distance' jury instruction for a past infringer in a new infringement action, as it would improperly alter the standard of liability from 'likelihood of confusion.' Finally, the exclusion of the 'Ralph Rip-Off' document was not an abuse of discretion under Rule 403, as its probative value was minimal and its potential for unfair prejudice was high.
Analysis:
This case clarifies the scope of Federal Rule of Evidence 408's exception for evidence offered for 'another purpose.' The court's decision establishes that a party can introduce evidence from settlement negotiations to support an affirmative defense, like estoppel, so long as the elements of that defense are distinct from the elements of the underlying claim. This prevents the rule from being used as a shield by a party who may have made assurances during negotiations and induced reliance. It reinforces the principle that the exception in Rule 408 is not swallowed by its general prohibition, thereby preserving important defenses that might otherwise be rendered unprovable.
Unlock the full brief for PRL USA Holdings, Inc. v. United States Polo Association, Inc.