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SHOP SAFE Act: E-Commerce Trademark Enforcement Legislation Reintroduced in the House

by Christopher M. Bruno | Jun 27, 2024 | Trademarks

On June 11, 2024, Representatives Jerry Nadler (D-NY) and Darrell Issa (R-CA) of the US House of Representatives Judiciary Subcommittee on Courts, Intellectual Property, and the Internet reintroduced the Stopping Harmful Offers on Platforms by Screening Against Fakes in E-Commerce (SHOP SAFE) Act of 2024. The proposed legislation seeks to protect US consumers from unknowingly purchasing counterfeit goods by incentivizing e-commerce platforms to implement certain guidelines. If platforms fail to comply with the act, they could be subject to liability for the actions of third-party sellers.

The SHOP SAFE Act purports to address the growing threat of the online counterfeit marketplace. Consumers are increasingly shopping online, with estimated sales of more than $280 billion in US retail e-commerce for the first quarter of 2024. Counterfeiters have continued to target online consumers, yet under the current trademark regime, third-party counterfeit sellers are seldom held accountable for their role in the online marketplace. The legislation seeks to deter that threat by encouraging e-commerce practices that aim to better inform consumers and screen third-party sellers.

Under the SHOP SAFE Act as proposed, an e-commerce platform may be subject to a lawsuit when a third-party seller uses a counterfeit mark in commerce during a sale, offer, advertisement or distribution of a good that implicates health and safety on the platform. To reduce counterfeit offerings, the legislation purports to enlist platforms to actively monitor for trademark infringement.

The SHOP SAFE Act also would provide e-commerce platforms with a mechanism to protect themselves from contributory liability stemming from counterfeit offerings: a safe harbor if the e-commerce platform takes reasonable prophylactic measures to prevent infringing use of trademarks by a third-party seller. Best practices include imposing certain contractual limitations on third-party sellers, such as those related to:

Posting requirements and service of process in the United States.
Setting up proactive screening measures and processes to report and quickly disable and remove offerings of counterfeit goods.
Implementing written policies to terminate third-party accounts that repeatedly use counterfeit marks and to block those who attempt to rejoin.

Whether enactment of the SHOP SAFE Act would benefit the e-commence ecosystem is a matter of debate. Some contend that the measures are necessary to deputize platforms to better police the goods sold through their websites. Others claim that the legislation might be used to shut down, under the auspices of trademark enforcement, small businesses offering legitimate goods, especially because these businesses likely have fewer resources to challenge the platform’s determinations. As the SHOP SAFE Act has been previously introduced without movement, and given that this year is not primed for bipartisan action, it remains to be seen whether the act – which has companion US Senate legislation – moves forward toward passage.

Lauren Hong, a summer associate in the San Francisco office, also contributed to this article.

Drawing Can Teach Claim Limitations If “Clear on Its Face”

by Connor M. Larson | Apr 18, 2024 | Patents

Addressing when a drawing in a prior art reference includes a teaching that is “clear on its face,” the Director of the US Patent & Trademark Office vacated and remanded a Patent Trial & Appeal Board decision denying institution of an inter partes review (IPR) petition. MAHLE Behr Charleston Inc. v. Catalano, IPR2023-00861 (PTAB Decision Review, Apr. 5, 2024) (Vidal, PTO Dir.)

MAHLE Behr filed a petition requesting institution of an IPR, challenging claims of a patent owned by Catalano. The patent is directed to a device known as a sacrificial anode that prevents corrosion in motor vehicle radiators caused by electrolysis. One of the claim terms at issue requires the anode to be “within 10 inches” of another element. MAHLE argued that a figure in a prior art reference anticipated or rendered obvious several challenged claims.

The Board denied the institution after determining that MAHLE did not establish a reasonable likelihood that it would prevail with respect to at least one of the challenged claims. The Board cited the Federal Circuit’s 2000 decision in Hockerson-Halberstadt v. Avia Group International to explain that “[p]atent drawings do not define the precise proportions of the elements and may not be relied on to show particular sizes if the specification is completely silent on the issue.” The Board concluded that the figure relied on by MAHLE did not provide exact dimensions and thus could not be sufficient to render the claims invalid.

MAHLE filed a request for Director Review, which was granted. In its request, MAHLE argued that the Board erred in its application of Federal Circuit case law on the use of patent drawings as prior art teachings. The Director agreed, explaining that “the Board did not adequately address [MAHLE’s] arguments regarding what [the figure in the prior art] clearly shows or would have reasonably suggested to a person of ordinary skill in the art.” Federal Circuit case law established that a claim may be anticipated or rendered obvious by a figure in the prior art if the drawing clearly discloses the claim limitation. If “a person of skill in the art could derive the claimed dimensions from the patent’s disclosure, there is no additional requirement that the specification must explicitly disclose the precise proportions or particular sizes.”

The Director further explained that “the Board did not adequately address MAHLE’s arguments regarding what [the prior art figure] clearly shows or would have reasonably suggested to a person of ordinary skill in the art.” While the prior art figure did not disclose the precise proportions or measured quantity specified in the challenged claims, the figure showed the elements being located as claimed (necessarily within the 10 inches recited). The Director explained that the Board should have considered whether a person of ordinary skill in the art would have understood the figure to disclose the claimed elements being within 10 inches of each other.

The Director vacated the Board’s decision and remanded the petition with instructions to consider both what the prior art figure [...]

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Heightened Written Description Standard for Negative Limitations?

by Mandy H. Kim | Jun 30, 2022 | Patents

Addressing the issue of negative claim limitations, the US Court of Appeals for the Federal Circuit granted a petition for panel rehearing, vacated its prior decision (authored by now-retired Judge O’Malley) and reversed the district court’s finding that the patent was not invalid for inadequate written description. Novartis Pharms. v. Accord Healthcare Inc., Case No. 21-1070 (Fed. Cir. June 21, 2022) (Moore, C.J.; Hughes, J.) (Linn, J., dissenting).

This is the second time this Hatch-Waxman case has been before the Federal Circuit. Novartis sued HEC, alleging that HEC’s abbreviated new drug application infringed a patent directed to methods of treating remitting multiple sclerosis (RRMS) with fingolimod or a fingolimod salt at a daily dose of 0.5 mg without an immediately preceding loading dose. The district court found sufficient written description for the claimed 0.5 mg daily dose and no-loading dose negative limitation. In January 2022, the Federal Circuit affirmed the district court’s decision finding adequate written description.

HEC petitioned for panel rehearing. The Federal Circuit granted the petition, vacated its January 2022 decision and reversed the district court’s judgment finding adequate written description for the no-loading dose negative limitation. The majority explained that “silence is generally not disclosure” because “[i]f it were, then every later-added negative limitation would be supported so long as the patent makes no mention of it.” The majority also explained that implicit disclosure cannot satisfy the written description requirement if it would render the limitation obvious to a skilled artisan. The majority emphasized that while a negative limitation need not be recited in the specification in haec verba, there generally must be something in the specification that conveys to a skilled artisan that the inventor intended the exclusion—for example, a description of a reason to exclude the relevant element. Here, the majority found that the specification made no mention of the presence or absence of a loading dose. This silence cannot support a later-added claim limitation that precludes loading doses, particularly where there was no evidence that the patentee precluded the use of a loading dose and skilled artisans agreed that loading doses are sometimes given to RRMS patients.

Judge Linn (a member of the majority in the January 2022 opinion) dissented, arguing that the majority applied a heightened written description standard requiring not only a “reason to exclude” but a showing that the negative limitation was also “necessarily excluded.” He stated that the question was not whether the patentee precluded the use of a loading dose, but whether the claim limitation that precluded a loading dose was supported by the specification’s written description that disclosed only a daily dose. Judge Linn argued that disclosure along with the testimony of Novartis’s experts implied an absence of a loading dose to a skilled artisan, and that is all that is required for adequate written description. Citing precedent and the US Patent & Trademark Office’s guidance in the Manual of Patent Examining Procedure, he argued that newly added claims or claim limitations may be supported [...]

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This .SUCKS: Trademark Applications for Identical Characters Is a No-Go

by Jodi Benassi | Feb 10, 2022 | Trademarks

The US Court of Appeals for the Federal Circuit affirmed a Trademark Trial and Appeal Board (Board) decision affirming the US Patent and Trademark Office’s (PTO) refusal to register two trademark applications for “.SUCKS.” In Re: Vox Populi Registry Ltd., Case No. 21-1496 (Fed. Cir. Feb. 2, 2022) (Lourie, Dyk, Stoll, JJ.)

Vox is a domain registry operator that maintains the master database of all domain names registered in each top-level domain. Vox filed two trademark applications for identical characters, one as a standard character and the other as a stylized form of .SUCKS, as shown below.

The PTO refused Vox’s applications on the grounds that, when used in connection with the domain services, each failed to function as a trademark. Vox appealed to the Board. The Board concluded that .SUCKS, whether as a standard mark or in the stylized form, would not be perceived as a source identifier. Vox appealed the Board’s decision only with respect to the stylized form of .SUCKS.

On appeal, the Federal Circuit noted that although Vox did not appeal the rejection of the standard character application, it spent much of its opening brief arguing that the standard character functions as a mark. As such, the Court reviewed the Board’s decision with respect to the standard character mark .SUCKS under the substantial evidence standard. Substantial evidence “means only such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” The Court found that substantial evidence supported the Board’s finding that consumers will view .SUCKS as only a non-source identifying part of a domain name, rather than as a trademark. The Court cited evidence reviewed by the Board, including Vox’s website, online articles and advertisements showing that .SUCKS refers to a product rather than as an identifiable provider or service. Ultimately, the Court found that the Board reasonably weighed the evidence.

The Federal Circuit next addressed the question of whether the stylized design of .SUCKS is registerable. The Court found no error in the Board’s analysis of whether the stylized form creates a separate commercial impression, where “all of the characters in the mark are the same height and width and are merely displayed in a font style that was once mandated by the technological limitations of computer screens.” Because the stylized design was not inherently distinctive, the Court rejected Vox’s application, thus affirming the Board’s decision in full.

Silence May Be Sufficient Written Description Disclosure for Negative Limitation

by Mandy H. Kim | Jan 13, 2022 | Patents

Addressing the issue of written description in a Hatch-Waxman litigation, the US Court of Appeals for the Federal Circuit affirmed the district court’s finding that the patent adequately described the claimed daily dose and no-loading dose negative limitation. Novartis Pharms. v. Accord Healthcare Inc., Case No. 21-1070 (Fed. Cir. Jan. 3, 2022) (Linn, O’Malley, JJ.) (Moore, CJ, dissenting).

Novartis’s Gilenya is a 0.5 mg daily dose of fingolimod hydrochloride medication used to treat relapsing remitting multiple sclerosis (RRMS). HEC filed an abbreviated new drug application (ANDA) seeking approval to market a generic version of Gilenya. Novartis sued, alleging that HEC’s ANDA infringed a patent directed to methods of treating RRMS with fingolimod or a fingolimod salt at a daily dosage of 0.5 mg without an immediately preceding loading dose.

The specification described the results of an Experimental Autoimmune Encephalomyelitis (EAE) experiment induced in Lewis rats showing that fingolimod hydrochloride inhibited disease relapse when administered daily at a dose of 0.3 mg/kg or administered orally at 0.3 mg/kg every second or third day or once a week, and a prophetic human clinical trial in which RRMS patients would receive 0.5, 1.25 or 2.5 mg of fingolimod hydrochloride per day for two to six months. The specification did not mention a loading dose associated with either the EAE experiment or the prophetic trial. It was undisputed that loading doses were well known in the prior art and used in some medications for the treatment of multiple sclerosis.

The district court found that HEC had not shown that the patent was invalid for insufficient written description for the claimed 0.5 mg daily dose or the no-loading dose negative limitation. The district court also found sufficient written description in the EAE experiment and/or prophetic trial and credited the testimony of two of Novartis’s expert witnesses. HEC appealed.

The Federal Circuit affirmed the district court’s decision. Turning first to the daily dose limitation, the majority held that the prophetic trial described daily dosages of 0.5, 1.25 or 2.5 mg and found no clear error by the district court in crediting expert testimony converting the lowest daily rat dose described in the EAE experiment to arrive at the claimed 0.5 mg daily human dose. Reciting Ariad, the Court explained that a “disclosure need not recite the claimed invention in haec verba” and further, that “[b]laze marks” are not necessary where the claimed species is expressly described in the specification, as the 0.5 mg daily dose was here.

Turning to the no-loading dose negative limitation, the majority disagreed with HEC’s arguments that there was no written description because the specification contained zero recitation of a loading dose or its potential benefits or disadvantages, and because the district court inconsistently found that a prior art abstract (Kappos 2006) did not anticipate the claims because it was silent as to loading doses. The Court explained that there is no “new and heightened standard for negative claim limitations.” The majority acknowledged that silence alone is insufficient disclosure but emphasized that [...]

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Injunctive Relief Available Even Where Laches Bars Trademark Infringement, Unfair Competition Damage Claims

by Paul Devinsky | Aug 12, 2021 | Trademarks

The US Court of Appeals for the 11th Circuit affirmed a district court’s conclusion that laches barred an advertising and marketing company’s claims for monetary damages for trademark infringement and unfair competition, but remanded the case for assessment of injunctive relief to protect the public’s interest in avoiding confusion between two similarly named companies operating in the advertising sector. Pinnacle Advertising and Marketing Group, Inc. v. Pinnacle Advertising and Marketing Group, LLC, Case No. 19-15167 (11th Cir. Aug. 2, 2021) (Branch, J.)

Pinnacle Advertising and Marketing Group (Pinnacle Illinois) is an Illinois-based company and owner of two registered trademarks including the name “Pinnacle.” Pinnacle Illinois learned of a Florida-based company operating under almost the same name that was also in the advertising and marketing space—Pinnacle Advertising and Marketing Group (Pinnacle Florida) —through potential clients and a magazine’s accidental conflation of the two unrelated companies. Several years later, Pinnacle Illinois sued Pinnacle Florida for trademark infringement, unfair competition and cybersquatting. Pinnacle Florida filed a counterclaim seeking to cancel Pinnacle Illinois’s trademark registrations and also alleged that Pinnacle Illinois’s claims were barred by the doctrine of laches.

Following a jury trial, the district court granted Pinnacle Florida’s motion for judgment as a matter of law on Pinnacle Illinois’s cybersquatting claim. The jury returned a verdict in favor of Pinnacle Illinois on its claims for trademark infringement and unfair competition, awarding Pinnacle Illinois $550,000 in damages. The district court then granted Pinnacle Florida’s motion for judgment as a matter of law on its laches defense, concluding that Pinnacle Illinois’s trademark infringement and unfair competition claims were barred by laches because it waited more than four years to bring suit after it should have known that it had a potential infringement claim against Pinnacle Florida. The district court also cancelled Pinnacle Illinois’s registrations because it concluded that Pinnacle Illinois’s marks were merely descriptive and lacked secondary meaning. Pinnacle Illinois appealed.

Pinnacle Illinois argued that the district court abused its discretion in finding that Pinnacle Illinois’s claims were barred by laches, and that even if laches did bar Pinnacle Illinois’s claims for money damages, the district court should have considered whether injunctive relief was proper to protect the public’s interest in avoiding confusion between the two companies. Pinnacle Illinois also argued that the district court erred when it cancelled its registrations without regard to the jury’s findings of distinctiveness and protectability or the presumption of distinctiveness afforded to its registered marks.

The 11th Circuit found that the district court did not abuse its discretion in determining that laches barred Pinnacle Illinois from bringing its trademark infringement and unfair competition claims for monetary damages. Pinnacle Illinois sued after the Florida four-year statute of limitations had passed, and the Court found that the company was not excused for its delay because it did not communicate with Pinnacle Florida about the infringement until it filed suit. Pinnacle Florida also suffered economic prejudice because it invested significant time and money, including around $2 million, in developing its business under [...]

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It’s an Old Tune: Third-Party-Use Evidence From Long Ago Can Support Genericness

by Joshua Revilla | Jul 18, 2024 | Trademarks

The US Court of Appeals for the Fifth Circuit found that the district court abused its discretion in wholesale exclusion of evidence on the issue of genericness. The evidence was offered to show prior use of a trade dress from more than five years prior to an alleged infringer’s first use of a mark. Gibson Inc. v. Armadillo Distribution Enterprises, Inc., Case No. 22-40587 (5th Cir. July 8, 2024) (Stewart, Clement, Ho, JJ.)

Gibson filed trademark infringement and counterfeiting claims against Armadillo Distribution Enterprises in 2019, alleging that Armadillo infringed four of Gibson’s trademarked guitar body shapes, one guitar headstock shape and two word marks. Just before trial, the district court made several evidentiary rulings on the parties’ motions in limine, including one in which Gibson sought to exclude all arguments and evidence related to advertisements or sales of third-party guitars before 1992, arguing they had limited probative value and were unduly prejudicial. Gibson argued that any third-party-use evidence should be restricted to a five-year period from 1992 to 1997. In its first exclusion order, the district court found that evidence of third-party use was relevant to determining whether a mark was generic or unprotectable but concluded that the probative value of the evidence from before the 1990s was low and found that the five-year cutoff date was reasonable. Armadillo objected to that ruling, leading to oral argument and a second exclusion order upholding the first order. The district court relied on Federal Rule of Evidence (FRE) 403 and the 2018 Federal Circuit ruling in Converse v. International Trade Commission to support this wholesale exclusion of evidence prior to 1992.

The parties proceeded to trial in mid-2022. A jury found that Armadillo infringed all of the trademarks other than one word mark and found that Armadillo marketed counterfeits. Armadillo appealed based on the district court’s exclusion of decades of third-party-use evidence. Armadillo asserted that this evidence was central to Armadillo’s counterclaim seeking cancellation of the marks and its main defense of genericness.

The Fifth Circuit first considered the district court’s reliance on Converse and determined that the district court abused its discretion in excluding the third-party evidence predating 1992. Armadillo argued that reliance on Converse was error because that case concerned secondary meaning and not genericness. Gibson countered that genericness and secondary meaning are closely related issues and that the five-year period predating infringement is the most logical measuring line. Alternatively, Gibson argued that 15 U.S.C. § 1064 would bar evidence predating 1992 because it provides that a petition to cancel a mark’s registration must be filed within five years from the date of registration of the mark.

The Fifth Circuit found that Converse did not rule that third-party-use evidence from more than five years prior to the alleged infringer’s first use was irrelevant to the issue of genericness and did not compel a strict five-year limitation of third-party-use evidence. The Court further reasoned that under Converse, evidence of prior use is relevant if such use was likely to have [...]

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Family Feud: Counterclaims Too Little, Too Late

by Kathleen Lynch | Jun 27, 2024 | Copyrights

The US Court of Appeals for the Seventh Circuit affirmed a district court’s ruling that aggrieved family members’ counterclaims for various intellectual property matters were long overdue and subject to a laches defense. Sumrall v. LeSEA, Inc., Case No. 23-2833 (7th Cir. June 12, 2024) (Scudder, Pryor, St. Eve, JJ.)

During Lester Frank Sumrall’s life, he created a legacy that began as a church, later blossoming into the Lester Sumrall Evangelical Association (LeSEA). Through LeSEA, Sumrall delivered his ministry from Indiana to the rest of the world via television, travel, writings and media productions. These works, including books and films (many of which Sumrall registered for copyrights in his or LeSEA’s name) are the subject of dispute. Particularly in dispute was the ownership of the “Traveler Photo,” a picture that Sumrall’s grandson Lester took during a ministry trip to China while Lester worked for LeSEA.

Sumrall’s death raised issues regarding succession. After his death, Sumrall’s sons, Peter, Stephen and Frank, took over LeSEA. Peter and Stephen relayed to Frank and others that Sumrall left all his assets to the ministry. Eight years later, Lester researched Indiana’s intestate succession law. Believing that Sumrall died without a will, Lester thought Frank should have inherited one-third of Sumrall’s estate. Under this belief, Frank granted Lester power of attorney to legally pursue his interest in the estate. For 12 years, Lester took no further legal action.

After learning that Sumrall did indeed have a will, Lester petitioned an Indiana probate court to open an estate for Sumrall in 2017. One of Lester’s cousins produced the will that granted some personal items to Sumrall’s grandchildren, with the remainder of his estate divided among his sons equally. The probate court denied the petition, reasoning that the estate was devoid of assets.

This case began with LeSEA’s trademark infringement claims against Lester and a competitor Lester created, the LeSEA Broadcasting Corporation. Those claims were resolved after Lester stopped using LeSEA’s name and therefore were not on appeal.

At issue in the appeal were counterclaims brought by the Lester Sumrall Family Trust against LeSEA, LeSEA’s affiliate corporations, and Lester’s uncles and cousins who are currently involved in the ministry (collectively, LeSEA). Lester and the trust asserted that:

LeSEA unrightfully took ownership of Sumrall’s copyrights.
LeSEA unlawfully used the Traveler Photo in its materials.
The trust was entitled to damages for its state law claims.
LeSEA unlawfully continued to use Sumrall’s right of publicity.

The Seventh Circuit rejected the appellants’ assertion that they owned Sumrall’s copyrighted works. The Court ruled that the appellants’ copyright claim arose under the Copyright Act, which bars suits three years after they accrue. The Court explained that an ownership claim accrues “when plain and express repudiation of co-ownership is communicated to the claimant.” Here, repudiation occurred when Sumrall died 28 years prior to the counterclaim and Stephen and Peter declared in “plain and express” terms that LeSEA owned the copyrights and the remainder of the estate.

As for the Traveler Photo, the [...]

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For Statutory Equivalents, Even One Means May Be Enough

by Ian J. Howard | Jun 6, 2024 | Patents

A US Patent & Trademark Office (PTO) appeals review panel decided that a means-plus-function (M+F) claim element supported by the disclosure of only a single species is not invalid for indefiniteness or lack of written description, even if the specification lacks other disclosed statutory corresponding equivalents. Ex parte Chamberlain, Appeal No. 22-001944 (App. Review Panel, May 21, 2024) (Vidal, Dir.; Udupa, Boalick, APJs) (per curiam).

The independent claims of the patent application at issue involved methods of treating patients with “anti-C5 antibod[ies]” that include amino acid substitutions devised to increase the in vivo half-life of the antibody. Each claim involved similar preambles: “A method of treating a patient by administering an anti-C5 antibody comprising . . . .” One of the independent claims was in Jepson form, whereas the other included a M+F limitation.

Following rejections by the examiner and the applicant’s appeal to the Patent Trial & Appeal Board, the Board entered new grounds of rejection finding both claims invalid under 35 U.S.C. § 112, ¶1 (written description) and affirmed the examiner’s rejection of the claims for obviousness-type double patenting. The Board also entered a new ground of rejection finding the claim including the M+F claim element indefinite under 35 U.S.C. § 112, ¶2. Following the applicant’s appeal to the Federal Circuit, the PTO took the unusual step of petitioning the Federal Circuit to “administratively remand [the case] to the Office in order to convene an Appeals Review Panel to clarify the Office’s position on the proper analysis of ‘Jepson-format and means-plus-function claims in the field of biotechnology, and particularly in the antibody art’ and ‘to issue a revised decision.’”

On remand, the panel affirmed the Board’s determinations that written description was lacking but overturned the Board’s finding of indefiniteness for the claim including the M+F element. In doing so, the panel offered useful commentary on the invalidity standard for M+F claim elements as well as the implications that a limiting preamble may have on invalidity.

The panel found the “treating a patient” preamble recitation limiting in both claims. For the Jepson claim, the preamble was per se limiting. However, the panel went on to find that, even independent of the Jepson claim format, the “treating a patient” phrase would be limiting. Outside the Jepson context, the panel characterized the inquiry of determining whether a preamble limits the body of the claim as a highly contextual one. According to the panel, the “treating a patient” term did not merely provide “circumstances in which the method may be useful” but instead constituted “the raison d’être of the claimed method itself.” The “treating a patient” language was necessary to “give life, meaning, and vitality” to limitations in the body of the claim involving increasing the in vivo half-life of the antibodies and administering the antibodies.

Having determined that the “treating a patient” recitation was limiting, the panel found that the limitation was overbroad compared to the scope of the patent’s disclosure, and thus the Jepson format claim lacked adequate written description. Read in light of [...]

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A Lesson in Laches: You Waited Too Long to Start Your Kar

by Sarah Bro | May 2, 2024 | Trademarks

After the district court, on remand, held that laches did not bar relief, the US Court of Appeals for the Third Circuit again determined that the district court abused its discretion by not properly applying the presumption in favor of laches and issued an order to vacate and remand with instructions to dismiss a charity’s trademark infringement claims with prejudice. Kars 4 Kids Inc. v. America Can!, Case Nos. 23-1273; -1281 (3rd Cir. Apr. 17, 2024) (Bibas, Porter, Fisher, JJ.)

Kars 4 Kids and America Can! Cars for Kids are charities that sell donated vehicles to fund children’s education programs and have been engaged in a trademark dispute since 2003. Both parties have alleged federal and state trademark infringement, unfair competition and trademark dilution over their respective KARS 4 KIDS and CARS FOR KIDS trademarks. The parties were last before the Third Circuit in 2021, when the Court held that America Can was first to use its CARS FOR KIDS trademark in Texas, and Kars 4 Kids waived any challenge to the validity of America Can’s marks. In that 2021 decision, the Third Circuit also vacated the district court judgment in part and remanded the case for the district court to reexamine its laches and disgorgement conclusions, which had been decided in favor of America Can.

The Lanham Act does not contain a statute of limitations. Instead, it subjects all claims to the principles of equity. To determine whether laches bars a claim, a court considers two elements: whether the plaintiff inexcusably delayed in bringing suit, and whether the defendant was prejudiced as a result of the delay. With respect to the burden of proof for the laches claim at issue, America Can and Kars 4 Kids agreed that their Lanham Act claims were properly analogous to New Jersey’s six-year fraud statute. Therefore, because America Can first discovered the Kars 4 Kids trademark in Texas in 2003 and did not bring counterclaims until 2015, America Can was subject to a presumption that its claims were barred by laches unless it was able to prove both that its delay in filing suit was excusable and that it did not prejudice Kars 4 Kids.

On the issue of delay, the Third Circuit found that the district court erred because it did not find that America Can met its burden of establishing that its delay in bringing suit was excusable and that a reasonable person in its shoes would have waited to file suit. Instead, the district court improperly placed the burden on Kars 4 Kids to establish whether its advertisements in Texas were viewed by a sufficient number of Texans so as to put America Can on notice. As the Third Circuit explained, this was error. The district court should have held America Can to the burden of persuasion to show that it was not sufficiently aware of Kars 4 Kids’s use of its mark in Texas and to show what it did to identify and stop any potentially [...]

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