In Cosmetic Warriors v. Pinkette Clothing, the U.S. Court of Appeals for the Ninth Circuit filed an opinion a couple weeks ago, reconfirming that the equitable defense of laches (unreasonable and prejudicial delay in bringing a lawsuit) applies in trademark cancellation actions, even though the U.S. Supreme Court has recently curtailed that defense in copyright and patent cases, and even if such an action is brought within the five-year window for bringing certain types of cancellation claims under the Lanham Act, 15 U.S.C. § 1064.

In this case, Cosmetic Warriors, makers of LUSH brand cosmetics, filed a lawsuit against a fashion company, Pinkette Clothing, that markets LUSH-branded clothing, claiming trademark infringement and seeking cancellation of its trademark registration. But the Ninth Circuit affirmed that Cosmetic Warriors waited too long (nearly five years) to bring its case after it “should have known about its claims.” According to well-established precedent, because the Lanham Act contains no statute of limitations, courts apply a presumption in favor of laches if the plaintiff’s delay is longer than the most analogous state statute of limitations. The Ninth Circuit concluded that California’s analogous four-year statute of limitations for trademark infringement actions applied. Therefore, because Cosmetic Warriors’ delay was beyond four years, the court held a “strong presumption in favor of laches” applied.

Cosmetic Warriors argued that laches could not bar its claims for cancellation, based on a five-year period for cancellation actions specified in 15 U.S.C. § 1064, and based on recent U.S. Supreme Court precedent limiting the defense of laches in copyright and patent infringement actions, Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S. Ct. 1962 (2014) (Copyright Act), and SCA Hygiene Products v. First Quality Baby Products, LLC, 137 S. Ct. 954 (2017) (Patent Act).

The Ninth Circuit rejected Cosmetic Warriors’ arguments based on the Supreme Court precedent from copyright and patent cases, stating, “the principle at work in those cases—a concern over laches overriding a statute of limitations—does not apply here, where the Lanham Act has no statute of limitations and expressly makes laches a defense to cancellation,” see 15 U.S.C. § 1069. Regarding the five-year deadline of 15 U.S.C. § 1064, the court held “[t]here is no question that [15 U.S.C. § 1064] is not a statute of limitations in the usual sense of barring an action entirely once a defined period expires”; rather, that statute “merely limits the grounds on which cancellation may be sought. A petition brought within five years of registration may assert any ground …. By contrast, a petition brought five years after registration (against an incontestable mark) may only assert one of several enumerated grounds.”

This opinion by the Ninth Circuit accords with similar precedent from other federal courts and follows the position of the leading trademark treatise, McCarthy on Trademarks §§ 20:74, 76. It is another reminder to trademark owners and practitioners of the importance of monitoring for infringing uses, and acting quickly to initiate enforcement actions. As in this case, and according to the maxim often quoted by courts, “[t]hose who sleep on their rights, lose them.”

The popular cloud storage system Dropbox recently won summary judgment against Thru, Inc.’s claim of trademark infringement.

Dropbox.com

Thru operates a secure file sharing system called Thru Dropbox.  See the screenshot from their website below.

Thru website

Dropbox filed a trademark application to register the DROPBOX mark in 2009, but was hit with a flurry of oppositions by other companies such as Officeware, the owner of the FilesAnywhere service, Yousendit, Inc. (which has changed its name to Hightail), and others.  Dropbox was ultimately successful on those oppositions and obtained its trademark registration for DROPBOX in 2014.  Thru did not file an opposition to Dropbox’s 2009 trademark application.

Last year, Dropbox filed a lawsuit against Thru, seeking declaratory relief that its use and registration of the DROPBOX trademark does not infringe upon Thru’s purported trademark rights.  Thru counterclaimed for trademark infringement, alleging that it had priority to the DROPBOX mark based on use as early as May 2004, and that Dropbox did not start using its DROPBOX mark until 2008.  Later in proceedings, Dropbox moved for summary judgment on Thru’s counterclaim.  Dropbox argued that Thru’s claim was barred by the doctrine of laches because Thru unreasonably delayed in making its claim and this delay prejudiced Dropbox.

The summary judgment decision, issued on Tuesday by Judge Edward Chen of the Northern District of California, agreed that Thru’s trademark infringement claim was barred by the doctrine of laches.  More specifically, the court held that Thru’s delay was unreasonable and prejudiced Dropbox because:

Thru purposefully delayed bringing suit in an attempt to increase its leverage over Dropbox and thus the value of its claims. . . . If a trial resulted in a determination that Thru owned superior rights to the “dropbox” trademark, the costs to Dropbox would be massively greater today than they would have been years ago, because of Dropbox’s continued investment in its brand.

The court further explained that:

[A] delay of this sort is precisely what laches is designed to guard against; Thru cannot simply “sleep on [its] rights,” allowing multiple other parties to expend significant resources litigating over rights that Thru believes it owns, only to belatedly pursue the victorious party.

In response to Dropbox’s laches defense, Thru argued that its delay was not unreasonable because Thru wasn’t aware of the Dropbox business in 2009; rather, Thru contended it had not heard of Dropbox until the summer of 2011 (at which point Dropbox had 40 million users).  The court disagreed, finding that Thru’s limitations period began in June 2009, at which point Dropbox had 1 million users and had been widely covered by the media.  The court concluded that Thru’s contention that it wasn’t aware of Dropbox in 2009 was “simply not credible,” based in part on emails among high-ranking Thru officers in June 2009 discussing Dropbox and deposition testimony regarding those emails.

Back in 2009, while I was still in school, I recall the growing popularity and name recognition of the Dropbox program among friends and other students, to backup documents and share files with each other.  What do you think?  Had you heard of Dropbox back in 2009?

In its list of 500 Greatest Albums of All Time, the Rolling Stone ranked the 1967 album The Velvet Underground & Nico at number 13 – not bad for the band’s very first album.  The album had a simple cover, some would say iconic, cover:

 

And get this: the banana peel was actually a sticker that you could peel off to reveal a pink pop art unpeeled banana underneath! Although, based on my baseball card experiences, I’m sure it ruined the resale value. Whether it was a marketing ploy, or just something that the band or Andy Warhol thought would be fun, I don’t know. I do know that it is a great combination of pop art with interactive/participatory art and combined with music!

I’ve owned the album (cd) for maybe 10 to 15 years. It’s good, but I admit I never listened to it frequently, and not for a long time. I do remember always being slightly confused as to the relation between Velvet Underground and Andy Warhol was. Although I was interested in the answer, the interest never lasted long enough to look it up. That is, until recently when I found out trademark law was now involved.

Based on my confidential, verified, inside sources at Wikipedia, Andy Warhol became their manager in 1965 and helped them get a record deal. The band was sort of a “house band” at Warhol’s studio, some parties, and on his traveling art tour named Exploding Plastic Inevitable. He designed the banana drawing for the cover and was listed as a producer on the album.

Back to the law. The remaining members of the band filed a lawsuit against the Andy Warhol Foundation for the Visual Arts (the Warhol Foundation) for trademark infringement and requesting declaratory judgment regarding the ownership of the copyright in the banana image. You see, the Warhol Foundation had agreed to license the banana image to Apple for use with iPhone cases. The Velvet Underground was concerned that consumers would believe that the Velvet Underground had somehow endorsed or authorized this use since, they argued, the banana image had gained secondary meaning associating the banana image with the Velvet Underground.

So the question becomes: who owns the copyright and what effect does that have on any trademark rights? This is an interesting situation where the Warhol Foundation could have a valid copyright in the image, but the Velvet Underground could have a valid trademark in the same image. There are many issues regarding the copyright: was there an implied license, was it a work for hire, or, in my opinion the most likely to be applicable, whether laches prevents the Foundation from pursuing any claim. The Velvet Underground continued to sell the album with the banana design, used it in promoting their tours, registered it as a trademark in 1994 (but abandoned it by failing to file a Section 8 declaration… ouch), and even licensed its use in an Absolut Vodka ad:

Note that Absolut licensed the banana image from Velvet Underground, not from the Warhol Foundation. The ad easily could have read ABSOLUT WARHOL but, for whatever reason, Absolut either believed that the band owned the rights to the image, or in fact associated the mark with the band rather than Andy Warhol. If you read the Rolling Stone link you’ll have notice this line: Rejected as nihilistic by the love crowd in ’67, the Banana Album (so named for  its Warhol-designed cover) is the most pro­phetic rock album ever made.” This reference to “the Banana Album” (capitalized, no less) and “the most prophetic rock album ever made” comment in a prominent national music magazine is pretty good evidence to support a claim of secondary meaning. Plus, it doesn’t appear that Andy Warhol ever “used” the design as a mark.

Like most cases involving fun and interesting legal issues, the parties recently settled the case. While the facts in this situation are rare, it isn’t difficult to imagine a situation more plausible. A person or company could make unauthorized use (or ambiguously authorized use) of a copyrighted image as a trademark and achieve acquired distinctiveness in a short time through extensive (and successful) marketing and advertising efforts, especially through an effective digital/social media blitz. As far as I am aware, L.A. Gear still has the fastest time at the “Secondary Meaning” combine, clocking in at a crisp 5 months (L.A. Gear Inc. v. Thom McAn Shoe Co., 988 F.2d 117 (Fed. Cir. 1993)). That is quick enough to develop secondary meaning without a competing copyright claimant to lose their rights. So can an individual obtain a valid trademark exist even though each time it is reproduced it gives rise to a claim of copyright infringement? (assuming there are no contractual issues and that the copyright owner has made no use of the mark). It certainly wouldn’t make much financial sense, but it appears legally plausible.

Please note: I am not advising anyone to “borrow” another’s copyrighted image to use as a trademark just so we can see what happens. But I promise to write about it if you do.

 

         

Another interesting trademark case was filed last Thursday in Minnesota federal district court, captioned Rolex Watch U.S.A., Inc. v. Associated Partnership Ltd., d/b/a Rollx Vans and d/b/a www.RollxVans.com. Here is a pdf of the Complaint and the attached Exhibit.

The crowned plaintiff really needs no introduction. On the other hand, the defendant Rollx Vans is not exactly new on the scene either.

It appears from the Rollx Vans website that the family owned business has been around about 40 years, providing the very necessary and socially valued service of re-building, selling, and servicing new and used wheelchair accessible vans. In addition, YouTube has some pretty compelling video promoting the Rollx Vans business, described as "The nation’s leader in wheelchair accessible transportation." Rolex admits in the Complaint that the Rollx name it is now objecting to has been in use since about 2001.

Domain Tools, however, reveals the use may reach back further, as the <RollxVans.com> domain was first registered back in 1996, and Archive.org further reveals an active web page dating back to at least as early as December 12, 1998, so it will be interesting to see how the Rollx Vans first use date really shakes out to know how long the coexistence in the marketplace has been with Rolex without apparent conflict. Can you say laches?

Either way, the watchmaker should have some explaining to do in bringing the action now. Rolex appears to claim it "first learned" of Rollx Vans after the USPTO approved this mark for publication in the Official Gazette, back in June 2009, so I’m left wondering what kinds of trademark watch services it had in place to monitor the use of trademarks in the marketplace.

More on this case later, but what are your thoughts in the meantime?