A recent opinion from the U.S. District Court for the Northern District of California consists of a discussion of the doctrine of laches – a sort of equitable statute of limitations – and how it can make trademark policing and enforcement a tricky business, in some cases. In Saul Zaentz Co. v. Wozniak Travel, Inc., 2008 WL 2949423, the plaintiff who was the owner of the rights in various trademarks and copyrights related to J.R.R. Tolkien’s Middle Earth literature, filed a trademark infringement lawsuit against the defendant, who operates a travel agency based and operating largely within Minnesota called Hobbit Travel, which began operations in 1976. The defendant subsequently filed a motion for summary judgment arguing that the plaintiff’s suit should be barred as a matter of law due to the plaintiff’s unreasonable delay in bringing suit. The court agreed.

The plaintiff argued that its outside trademark counsel first became aware of the unauthorized use of the plaintiff’s “Hobbit” mark in November 2003 and that its delay in filing suit in September 2006 was not unreasonable. However, the court noted that the plaintiff should have known of the existence of Hobbit Travel at least as early as 1988, when it received the results of a trademark use report from its attorneys what included mention of Hobbit Travel. Subsequent reports in 1992 and 2000 also disclosed Hobbit Travel’s use of the plaintiff’s mark and its steadily increasing, and significant, market presence. However, the plaintiff did not act on these reports. The court characterized this delay as unreasonable and granted the defendant’s motion for summary judgment, dismissing all of the plaintiff’s claims.

There is no federal statute of limitations for trademark infringement claims. Instead, defendants frequently raise the equitable laches defense in order to convince the court that the action is time-barred. As the court discusses in the Wozniak opinion, a defendant raising laches as a defense must show (1) that the plaintiff's delay in filing suit was unreasonable, and (2) that the plaintiff would suffer prejudice caused by the delay if the suit were to continue. In determining whether a delay is unreasonable, courts look to a number of factors, which, according to the court, in the Ninth Circuit, include: “(1) strength and value of the trademark rights asserted; (2) plaintiff's diligence in enforcing mark; (3) harm to senior user if relief is denied; (4) good faith ignorance by junior user; (5) competition between senior and junior users; and (6) extent of harm suffered by the junior user because of senior user's delay.” The factors may vary from circuit to circuit, but the inquiry is always a fact-intensive one.

This case is a good reminder that courts expect businesses to behave as though they are serious about policing their marks if those businesses expect to have easy access to remedies against alleged infringement. Diligence begins with regular and reasonably frequent trademark searches. From there, it includes a careful review of existing uses of a mark and consultation with counsel regarding the value of pursuing action against any unauthorized use. It may not make sense to file suit against every alleged infringer who fails to respond to a cease and desist letter, but the trademark owner must be very deliberate about making enforcement decisions where a failure to prosecute could lead to loss of the claim due to laches. Where the lines become blurry, as they frequently do in trademark matters, it is best to consult with a knowledgeable attorney.

Posted by Mariqus Alexander at 09/10/2008 12:13:13 PM |