United States District Court, D. Connecticut
MEMORANDUM AND ORDER
CHARLES S. HAIGHT, JR. SENIOR UNITED STATES DISTRICT JUDGE
According
to the Court's prior Omnibus Ruling on Summary
Judgment Motions ("SJ Ruling"), CSL Silicones,
Inc. ("CSL") asked that the Court find that
"Midsun's infringement is intentional and
willful." CSL Silicones, Inc. v. Midsun
Grp. Inc., 301 F.Supp.3d 328, 362 (D. Conn. 2018). Such
a finding, it is said, "would affect the measure of
damages and fees that CSL would be entitled to, if it
prevailed in this litigation." Id. The Ruling
said that since questions of fact existed as to, inter
alia, "whether Midsun acted in good
faith in its adoption of the 570 and 579 marks,
summary judgment on the issue of willful
infringement" is not appropriate. Id.
Next,
CSL sought summary judgment on Midsun's affirmative
defenses. CSL argued that "Midsun cannot prevail on its
defenses of laches, acquiescence or
equitable estoppel due to Midsun's intentional
infringement, or 'unclean
hands,' and because
Midsun cannot establish the necessary elements of each
defense." Id. at 363 (emphasis added).
These
two propositions are stated in the disjunctive. The first
proposition is that of unclean hands. As to that issue, the
Court said in the Ruling: "As an initial matter, the
Court addresses CSL's contention that Midsun's
'unclean hands' bars invocation of its equitable
defenses." Id. at 363. The Ruling then observed
that "the Court has already determined that material
questions of fact exist as to whether Midsun
intentionally infringed on CSL's
marks," so that "whether Midsun may maintain its
equitable defenses, in the light of its
potentially dirty hands, is a question to be
resolved another day." Id. at 364. The Court
cited a case from the Southern District of New York, which
held that "because a material issue of fact exists as to
whether intentional infringement occurred,
Defendant may not prevail on its equitable defenses in
summary judgment, because it may not be permitted to raise
them at all." Id. (quoting Emmpresa Cubana
Del Tavaco v. Culbro Corp., 213 F.Supp.2d 247, 273
(S.D.N.Y. 2002)).
Which
gives rise to this question: Who decides whether Midsun
committed the sort of intentional
infringement which prevents it from raising an
equitable defense like laches? The Court has
held that this question cannot be answered summarily; it must
be tried; but who will try it? The Court, as an equitable
question, or a jury, as a legal question?
If this
particular issue is for the jury, that is presumably because
the sixth Polaroid factor inquires into an allegedly
infringing defendant's "good faith," where
"the only relevant intent is intent to confuse"
purchasers as to the source of the product. Polaroid
Corp. v. Polarad Elecs. Corp., 287 F.2d 492 (2d Cir.
1961), cert. denied, 368 U.S. 820 (1961). The SJ
Ruling concluded that "[i]t cannot be said that
Midsun's first use of the marks under the distribution
agreements, in connection with CSL's product, was done in
bad faith." 301 F.Supp.3d at 360. In
Polaroid parlance, a defendant adopts a
plaintiff's trademark in "good faith" or
"bad faith"; there is no moral middle ground. Thus
the Second Circuit said in Arrow Fastener Co. v. Stanley
Works, 59 F.2d 384, 397 (2d Cir. 1995): "Prior
knowledge of a senior user's trade mark does not
necessarily give rise to an inference of bad faith and may be
consistent with good faith."
At this
point in its quoted analysis, the SJ Ruling says: "CSL
may not prevail on summary judgment on Midsun's equitable
defenses, based on the unclean hands
doctrine. However, CSL asserts other,
independent grounds for summary judgment on
Midsun's defenses. The Court will address each defense in
turn." 301 F.Supp.3d at 364. The first defense the Court
discussed is laches.
Laches
is an equitable defense whose necessary elements are by now
well established. Laches "bars a plaintiff's
equitable claim where he is guilty of unreasonable and
inexcusable delay that has resulted in prejudice to the
defendant." Ivani Contracting Corp. v. City of New
York, 103 F.3d 257, 259 (2d Cir. 1997) (quotation marks
and citation omitted). The SJ Ruling cites Second Circuit
authority for this proposition: "To prove a laches
defense, a defendant must show that '[1] that plaintiff
had knowledge of defendant's use of its marks, [2] that
plaintiff inexcusably delayed in taking action with respect
thereto, and [3] that defendant will be prejudiced by
permitting plaintiff inequitably to assert its rights at this
time.'"301 F.Supp.3d at 364 (quoting Vaad
L'Hafotzas Sichos, Inc. v. Kehot Publ'n Soc'y, a
div. of Merkos L'Inyonei Chinuch, Inc., 697
Fed.Appx. 63, 64 (2d Cir. 2017)).
On the
question of a plaintiff's delay in taking action, Lanham
Act trademark infringement cases like this one look to
analogous state limitations statutes. In Federal Treasury
Enterprise Sojuzplodoimport v. Spirits International
B.V., 809 F.3d 737 (2d Cir. 2016), the Second Circuit
said in an opinion by Judge Jacobs: "Laches is an
equitable defense. Because the Lanham Act does not prescribe
a statute of limitations, federal courts often look to the
most appropriate or most analogous state statute of
limitation to determine when the presumption of laches
applies to Lanham Act claims." Id. at 745-46
(citation and internal quotation marks omitted), cert.
denied, 137 S.Ct. 160 (2016).
In
Second Circuit laches jurisprudence, the concept of a
"presumption of laches" keyed into an analogous
state limitations statute had its genesis in Judge
Friendly's seminal opinion in Larios v. Victory
Carriers, Inc., 316 F.2d 63 (2d Cir. 1963), an admiralty
case, where Judge Friendly said that "in deciding
whether maritime claims are barred by laches, courts of
admiralty will use local limitation statutes as a
rule-of-thumb," which "seems to put it right";
he then delivered this much-cited formula: "When the
suit has been brought after the expiration of the state
limitation period, a court applying maritime law asks why the
case should be allowed to proceed; when the suit, although
perhaps long delayed, has nevertheless been brought within
the state limitation period, the court asks why it should not
be." Id. at 66. That formula remains the
touchstone in admiralty cases; Larios was cited and
its formula quoted in Leopard Marine & Trading, Ltd.
v. Easy Street Ltd., No. 16-1356-CV, ___F.3d ___, 2018
WL 3400524 at *14 (2d Cir. July 13, 2018) (fuel
supplier's in rem action against vessel to
enforce maritime lien barred by laches where plaintiff's
unreasonable delay prejudiced defendant shipowner). In
Federal Treasury Enterprise, the Second Circuit
applied the formula in a Lanham Act case; Judge Jacobs'
opinion phrased it thus:
If the most closely analogous state statute of limitations
has not run, the presumption of laches does not attach and
the defendant bears the burden of proving the defense. But
once the analogous state statute of limitations has run, the
burden shifts to the plaintiff to show why laches should not
apply.
809 F.3d at 746 (internal citations omitted).
In the
SJ Ruling in this case, I applied that formula to
Midsun's laches defense, and concluded that "[t]o
determine which party has the burden of proof, the Court
looks to Connecticut's three-year statute of limitations
for fraud." 301 F.Supp.3d at 365. That conclusion places
the burden of proof on the issue of laches upon CSL, for
these reasons:
CSL filed its complaint on December 17, 2014, thus the
relevant date for the purposes of laches is December 17,
2011. It is undisputed that CSL was aware of Midsun's
allegedly infringing conduct by 2000, when CSL wrote to
Midsun to complain of Midsun's use of the marks in
connection with Midsun's own product. It therefore
follows that the presumption of laches applies ...