Two recent summary judgment decisions from district courts in the Ninth Circuit, Fitbug v. Fitbit, No. 13-1418, 2015 U.S. Dist. LEXIS 8775 (N.D. Cal. Jan. 26, 2015) and Eat Right Foods, Ltd v. Whole Foods Mkt., Inc., No. C13-2174, 2015 U.S. Dist. LEXIS 63578 (W.D. Wash. May 14, 2015), serve as stark reminders that brand owners who sleep on their rights can lose them. Under the equitable defense of laches, a trademark claim is barred if a defendant can show (1) unreasonable delay by plaintiff in bringing suit and (2) prejudice. In analyzing whether a delay was unreasonable, courts in the Ninth Circuit look to the limitations period for analogous state law claims. If the delay was longer than the statutory period, laches presumptively bars the claim.
In Eat Right, the U.S. District Court for the Western District of Washington found that laches barred plaintiff's claim over Whole Foods' use of the EATRIGHT mark. The Eat Right court looked to Washington's three year statute of limitations for common law trade name infringement. The Eat Right court found that plaintiff knew or should have known of the alleged infringement by early 2010, over three years before filing suit. Despite plaintiff's cease and desist letters, the court found that the period of delay nonetheless continued until plaintiff filed suit.
In Fitbug, the U.S. District Court for the Northern District of California found that laches barred plaintiff Fitbug's claims. In granting summary judgment, the court found that Fitbug knew or should have known of Fitbit after its launch in 2008, and that (despite sending a demand letter in late 2011) plaintiff's delay until 2013 to file suit was unreasonable. The parties in Fitbug disputed whether a four-year or two-year limitations period applied. Although the court did not decide the issue because the delay was longer than four years, the court found that the two year period likely governed.
The Fitbug court also squarely rejected plaintiff's argument that its delay was reasonable because defendant, a startup, might have gone out of business:
Fitbug's argument is that it should be permitted to wait and watch, with full knowledge of Fitbit's allegedly infringing use, as Fitbit invested substantial sums of money in advertising and building up goodwill in its allegedly infringing brand, only to intervene once those investments panned out. That result is not just inequitable, it is also inefficient, and renders this argument untenable.
Fitbug and Eat Right highlight important lessons for brand owners.
- First, brand owners should bear in mind that delay can kill their case entirely, particularly when the alleged infringer is making significant investments in the disputed mark.
- Second, in considering how much time is available to take action, parties should carefully consider which statute of limitations a court will apply.
- Third, parties should not assume that cease and desist letters will stop the laches clock. If in need of more time for pre-litigation negotiations, the brand owner should consider negotiating a tolling agreement.
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