Intellectual Property – Laches was defense to Lanham Act claim

Where a defendant that was sued for unfair competition under the Lanham Act argued the suit was filed too late, because a § 43(a) claim is equitable in nature, the affirmative defense of laches, rather than statute of limitations, was the correct legal standard.

Background

This appeal arises out of an action brought by Bayer Consumer Care AG alleging that Belmora LLC engaged in unfair competition in violation of § 43(a) of the Lanham Act. The district court held that Bayer’s § 43(a) claims were time-barred.

On appeal, Bayer contends that the district court erred in concluding that its § 43(a) and related state-law claims were time-barred. In its cross-appeal, Belmora argues that the district court erred in holding that its counterclaims failed as a matter of law. Belmora also contends that the district court erred in affirming the TTAB decision.

Laches

Because the Lanham Act does not contain an explicit limitations period for § 43(a) claims, the district court “[followed] the traditional practice of borrowing the most analogous statute of limitations from state law.” The district court concluded that the statute of limitations began running on Bayer’s claims as early as Sept. 19, 2004—the date on which the Patent and Trademark Office suspended Bayer’s competing application to register the FLANAX mark. Because Bayer filed its federal court complaint in June 2014, the district court held that Bayer “[missed] the statute of limitations by almost a decade.”

Bayer contends that the district court erred by reading a limitations period into the Lanham Act where none exists for § 43(a) claims. Bayer argues that laches, rather than a statute of limitations, is the appropriate defense to its claims. The court agrees.

Section 43(a) is a federal law for which a state statute of limitations would be an unsatisfactory vehicle for enforcement. Rather, the affirmative defense of laches, which applies to claims that are equitable in nature “provides a closer analogy than available state statutes.” The Lanham Act provides that § 43(a) claims for damages are “subject to the principles of equity” and that courts may grant injunctive relief to remedy § 43(a) violations “according to the principles of equity.” Other circuits have similarly emphasized “the equitable character of § 43(a) actions” in applying a laches defense to 43(a) claims. The district court therefore judged the timeliness of Bayer’s § 43(a) claims under an incorrect legal standard.

Tolling

In addition to its § 43(a) claims, Bayer brought unfair competition and false advertising claims under California law. At summary judgment, Bayer argued that the filing of its cancellation petition with the TTAB tolled the statute of limitations applicable to those claims. The district court never addressed Bayer’s tolling arguments or made any factual findings to determine whether Bayer’s claims were subject to tolling. Accordingly, the court remands for the district court to determine in the first instance whether those claims are subject to tolling and to make any further factual findings necessary to support that determination.

Counterclaims

Belmora brought the following counterclaims against Bayer: (1) trademark infringement in violation of the Lanham Act, (2) common-law trademark infringement, (3) unfair competition and false designation of origin in violation of § 43(a) of the Lanham Act and common law, (4) importation of unauthorized goods in violation of the Tariff Act of 1930, (5) importation of infringing goods in violation of the Lanham Act, (6) monopolization in violation of § 2 of the Sherman Act and (7) tortious interference with contract or prospective economic advantage. The district court concluded that Belmora failed to offer evidence to support each of its counterclaims. The court has little difficulty affirming that conclusion.

TTAB

The TTAB ordered the cancellation of Belmora’s registration, ruling that Belmora misrepresented the source of its goods in violation of § 14(3) of the Lanham Act. The district court affirmed the TTAB decision under the deferential substantial evidence standard of review.

The facts in the district court’s opinion support its conclusion that Belmora’s use of the FLANAX mark violated § 14(3). The district court recited sufficient facts showing that Belmora “[blatantly misused]” the mark “in a manner calculated to trade on [Bayer’s] goodwill and reputation.” Accordingly, the district court’s grant of summary judgment to Bayer on its request for affirmance of the TTAB decision is affirmed.

Affirmed in part, vacated in part and remanded with instructions.

Belmora LLC v. Bayer Consumer Care AG (Lawyers Weekly No. 001-027-21, 24 pp.) (Henry Franklin Floyd, J.) Appeal Nos. 18-2183 and 18-2232. Feb. 2, 2021. From E.D. Va. (Claude M. Hilton, S.J.) Jessica Andrea Ekhoff for Appellants/Cross-Appellees. Lewis Yelin for Amicus United States of America. Joel Geoffrey MacMull and Ronald David Coleman for Appellees/Cross-Appellants.