Opinion
Civil Action No. CV-02-0013 (DGT)
June 14, 2004
MEMORANDUM ORDER
Plaintiffs Toyota Jidosha Kabushiki Kaisha, also doing business as Toyota Motor Corporation, and its subsidiary Toyota Motor Sales, U.S.A., Inc. (collectively "Toyota" or "plaintiffs") filed this suit against defendants Aliments Lexus Foods, Inc. ("Aliments") and Howell Associates, Inc. ("Howell") (collectively "defendants") on January 2, 2002, alleging trademark and service mark dilution, trademark and service mark infringement, trade name infringement, and unfair competition, pursuant to 15 U.S.C. § 1125(a)(1), 1125(c) and 1114(c), N.Y. Gen. Bus. Law § 360-1, and at common law. Plaintiffs seek injunctive relief, costs and attorney fees.
Pending before the court is defendants' motion for summary judgment pursuant to Fed.R.Civ. on the basis that the action is barred under equitable principles of estoppel by laches and/or acquiescence. For the following reasons, defendants' motion is denied.
Background
The following facts are undisputed unless otherwise indicated. Plaintiff Toyota Motor Sales, U.S.A. is a California corporation whose principal offices are in California. Amended Complaint ("Am. Compl.") ¶ 3. Toyota Motor Sales is a wholly-owned subsidiary of co-plaintiff Toyota Jidosha Kabushiki Kaisha ("Toyota Japan") a Japanese corporation doing business as Toyota Motor Corporation. Id. Toyota has manufactured and sold luxury automobiles in the U.S. under the trademark LEXUS since 1989. See Plaintiffs' Rule 56.1 Statement ("Pls.' Rule 56.1 Start.") ¶ 1. Toyota also registered LEXUS as a trademark for automobiles in the United States Patent and Trademark Office ("USPTO") under Registration No. 1,574,718, which was issued on January 2, 1990. Am. Compl. ¶ 12.
From 1992 through 1994, Toyota also registered LEXUS as a trademark for, among other things, cellular telephones, key rings, sunglasses, ballpoint pens, umbrellas, drinking cups, certain apparel, and golf equipment and accessories. During this time period, Toyota also registered LEXUS as a service mark for repair and maintenance services for automotive vehicles and automotive vehicles, and retail sales of used automobiles. Am Compl. ¶¶ 13-17.
Defendant Aliments Lexus Foods, Inc. is a Canadian company which has been in the business of bottling, packaging, and packing fruit juice products since 1990. See Memorandum of Law in Support of Defendants' Motion for Summary Judgment ("Defs.' Mem.") Ex. 1, ¶ 3. Fruit juice is Aliments' sole product. See Defs.' Rule 56.1 Stmt. ¶ 28. Defendant Howell Associates, Inc., a U.S. company, is a food broker for sales of LEXUS fruit juices in the U.S. for Aliments. See id. ¶ 1.
Aliments was initially incorporated on July 4, 1990 as "173964 CANADA Inc.," a name which was assigned by the company's lawyers in preparation for filing, but was later changed to "Lexus Foods" in 1991 or 1992. Defs.' Mem. Ex. 1, ¶ 3; Groff Decl. Ex. 8 at 3. Although the parties dispute whether the name "Lexus" was selected in good faith, Raoul Landry ("Landry"), the company's president, asserted that he and the company's vice-president, Roger Guglia ("Guglia") decided to use "Lexus" because "it was easy to pronounce and did not require translation." Defs.' Mem. Ex. A, ¶ 5.
On April 27, 1992, Aliments filed an application with the Canadian Trademarks Office to register the name LEXUS for use with fruit juices in Canada. Guglia testified that he had obtained an oral opinion from Canadian counsel that the mark LEXUS was available for use and registration for fruit juices in Canada. Defs.' Rule 56.1 Stmt. ¶ 2. Toyota contested the application by filing a statement of opposition on February 10, 1993. Id. ¶¶ 1, 3. In the course of the opposition proceeding, Guglia submitted an affidavit dated August 12, 1994, in which he detailed the nature and extent of the use made of LEXUS with fruit juices by Aliments in Canada since 1992. Defs.' Mem. Ex. A, ¶ 9; Ex. 1.
At an unspecified date in 1993, Aliments made one shipment of LEXUS juice products into the U.S. Defs.' Mem. Ex. A, ¶ 11. Prior to commencing regular shipments into the U.S. in 1995, Guglia, through a business associate, sought and obtained a legal opinion on the availability of LEXUS for use in the U.S. market as a name for fruit juices. Id. By opinion dated June 12, 1995, counsel indicated that LEXUS was available as a trademark for fruit juice. According to Aliments, the company never sought to register the LEXUS mark in the U.S. because they believed that Toyota was objecting to Aliments' registration of LEXUS for fruit juices in Canada but did not object to their use of LEXUS as their trade name or mark for fruit juices. Id. ¶ 13. Indeed, throughout the history of the Canadian opposition proceedings, Toyota never issued a cease-and-desist demand upon Aliments with respect to their use of the LEXUS mark. Id. ¶ 10. To avoid "another legal battle" with Toyota, Aliments' president, Raoul Landry, therefore decided not to register LEXUS as a mark for fruit juices in the U.S.,Id.
Counsel's letter considered only whether Aliments' use of the mark LEXUS was likely to cause confusion with respect to other marks such as LEXIS, LEXIN, and TEXUS that were registered for commercially related goods. Specifically, counsel's letter informed Aliments that a previously filed application for LEXIS could possibly bar the registration of LEXUS for fruit juices in the U.S. and provided information on filing a notice of opposition. The letter did not discuss Toyota's use of the mark LEXUS for automobiles and other products and therefore did not address whether using LEXUS for juices would create a conflict with Toyota. See Defs.' Mem. Ex. 2.
Accordingly, on June 26, 1995, Aliments began regular shipments of LEXUS branded juices to the U.S. Id. ¶¶ 11-12. Howell Associates handled the distribution of LEXUS juices in the U.S. on behalf of Aliments. Declaration of Allison S. Groff ("Groff Decl."), Ex. 16 at 49. Between 1995 and May 2002, annual sales of LEXUS fruit juices in the U.S. grew to approximately U.S. $180,000. Defs.' Rule 56.1 Stmt. ¶ 17. By 2001, the U.S. constituted the largest single market for Aliments' LEXUS fruit juices. Id. ¶ 18.
There is a discrepancy in defendants' submissions with respect to annual sales of LEXUS fruit juices in the U.S. This assertion from defendants' Rule 56.1 Statement cites to paragraph 17 of the affidavit of Raoul Landry, annexed as Exhibit A in defendants' memorandum of law in support of its summary judgment motion. Paragraph 17 of Landry's affidavit, however, states the following: "Between June 1995 and 2001, annual sales of LEXUS fruit juices in the U.S. grew to almost $2.5 million U.S."
On July 22, 1997, the Trademarks Opposition Board of the Canadian Trademarks Office dismissed Toyota's opposition and found in favor of Aliments. Groff Decl., Ex. 9. Toyota appealed the dismissal of their opposition to the Federal Court of Canada, Trial Division. Id., Ex. 10.
While the appeal before the Canadian trial court was pending, Howard Duchin ("Duchin"), an employee of Howell Associates, attended a promotional event entitled "A Taste of Lexus" at the Belmont Racetrack in New York in August 1999. Id., Ex. 16 at 49; Defs.' Mem. Ex. C. "A Taste of Lexus" was a professional event sponsored by Lexus dealers to introduce and promote new models of Toyota's Lexus automobiles. Groff Decl., Ex. 16 at 49-50. At the event, Duchin gave a Lexus representative his business card and discussed with him the possibility of using Aliments' Lexus juices to help promote Toyota's Lexus automobiles. Id., Ex. 16 at 50-52. The Lexus representative informed Duchin that he would look into the idea and contact him, but no further communication ensued.Id., Ex. 16 at 51-52. Toyota asserts that this was the first time any Toyota entity became aware of any activity by Aliments Lexus in the U.S.Id., Ex. 15 at 104. As a result of Duchin's conversation with the Lexus representative at the "Taste of Lexus" event, Toyota requested outside counsel to investigate the use of the mark LEXUS for fruit juices in the U.S. Id., Ex. 15 at 111. In the meantime, on August 31, 1999, the Canadian trial court reversed the Opposition Board's decision. Id., Ex. 10. Aliments then appealed the trial court's decision to the Canadian Federal Court of Appeal. Id., Ex. 11. While Aliments' appeal before the Canadian appellate court was pending, Toyota received and reviewed the initial portion of outside counsel's investigation results from January until April 2000. Pls.' Rule 56 Stmt. ¶ 8.
On November 20, 2000, the Canadian appeals court reversed the trial court's decision and found for Aliments. Groff Decl., Ex. 11. The Canadian Supreme Court ultimately denied Toyota's request for leave to appeal on July 12, 2001.Id., Ex. 12.
In April 2001, Toyota sent a cease and desist letter to Howell, objecting to the use of the mark LEXUS in the U.S. Pls.' Rule 56 Stmt. ¶ 9. According to Toyota, a primary factor affecting the timing of the April 2001 demand letter was the fact that Toyota had prevailed on the first level of review in the opposition proceeding, which was now on appeal before the Canadian appellate court. Groff Decl. Ex. 15 at 111. After obtaining the advice of counsel, Aliments sent a response letter to Toyota in May 2001 stating that they believed there was no likelihood of confusion and declining to comply with Toyota's demand. See Defs.' Mem., Ex. A ¶ 15. On January 7, 2002, Toyota commenced the instant suit.
Discussion (1) Acquiescence
Defendants move for summary judgment on their first affirmative defense of acquiescence, arguing that plaintiffs knew as early as 1994 that defendants were using the LEXUS mark for fruit juices in Canada, yet waited until 2001 before demanding that plaintiffs cease use of the mark in Canada or in the U.S. See Defs.' Mem. at 9. This "silence," in addition to Toyota's opposition to Aliments' registering (as opposed to using) the LEXUS mark in Canada, indicated that Toyota acquiesced to Aliments' use of the LEXUS mark. See id. Plaintiffs counter that defendants have failed to produce evidence demonstrating that Toyota indicated their consent through affirmative conduct. Plaintiffs further argue that Toyota's decision to not file suit in Canada to enjoin Aliments' use of the mark is not the type of affirmative conduct that supports an acquiescence defense. Plaintiffs' Memorandum in Opposition to Defendants' Motion for Summary Judgment ("Pls.' Mem.") at 5-6.
Acquiescence refers to "cases where the trademark owner, by affirmative word or deed, conveys its implied consent to another." TMT North Am., Inc. v. Magic Touch, 124 F.3d 876, 885 (7th Cir. 1997) (quoting 2 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition § 31:41 (4th ed. 1997)). Acquiescence, unlike laches, implies active consent to an infringing use of the mark. ProFitness Physical Therapy Ctr. v. Pro-Fit Orthopedic and Sports Physical Therapy P.C., 314 F.3d 62, 67 (2d Cir. 2002)). A determination of acquiescence turns on "a consideration of the circumstances of each particular case and a balancing of the interests and equities of the parties." Carl Zeiss Stiftung v. VEB Carl Zeiss Jena, 433 F.2d 686, 703 (2d Cir. 1970). To establish the defense of acquiescence, three elements must be met: "(1) the senior user actively represented that it would not assert a right or a claim; (2) the delay between the active representation and assertion of the right or claim was not excusable; and (3) the delay caused the defendant undue prejudice."Deere Co. v. MTD Holdings, Inc., No. 00 Civ. 5936, 2004 WL 324890, at *22 (S.D.N.Y. Feb. 19, 2004) (quoting ProFitness, 314 F.3d at 67). Active consent, in turn, is implied by "conduct on the plaintiff's part that amount[s] to an assurance to the defendant, express or implied, that the plaintiff would not assert his trademark rights against the defendant."ProFitness, 314 F.3d at 68 (quoting Carl Zeiss Stiftung, 433 F.2d at 704).
The sole evidence that Aliments proffers in support of its acquiescence defense is: (1) that Toyota never made any demand upon Aliments to cease use of LEXUS until 2001; and (2) that Aliments believed Toyota was only objecting to its Canadian registration of LEXUS for fruit juices and not to their use of the mark. Although Aliments correctly contends that "acquiescence can be found where there is a course of conduct leading Defendants to believe that Plaintiffs did not object is . . . well grounded in the law," see Defs.' Reply Mem. at 3, Aliments' evidence can be construed as inaction on Toyota's part, not "a course of conduct." Furthermore, Aliments' belief that Toyota, in filing an opposition to their application, was only objecting to Aliments' registration of the LEXUS mark for fruit juice is not tantamount to evidence of affirmative conduct on Toyota's part. At best, the reasonableness and credibility of Aliments' belief as to the nature of Toyota's objection are questions of fact that are more appropriately evaluated by a fact — finder. More significantly, Aliments' president admitted he was unaware of any affirmative conduct which indicated that Toyota did not object to the use of LEXUS for fruit juices in Canada. Groff Decl., Ex. 14, at 100.
Since "silence is far from `active acquiescence'" in trademark infringement actions, Aliments has not offered uncontroverted evidence that Toyota actively acquiesced in Aliments' use of the LEXUS mark for juice products in Canada and the U.S., See, e.g., Deere Co., 2004 WL 324890, at *19, 22 (finding that plaintiff had not acquiesced to defendant's use of unique color scheme on its lawn equipment, where sole evidence of active acquiescence was that plaintiff never raised this issue in a prior complaint against the defendant alleging Lanham Act violations, unfair competition and dilution). For these reasons, defendants' summary judgment motion as to their affirmative defense of acquiescence is denied.
(2) Laches
Defendants additionally move for summary judgment on their second affirmative defense of laches. "Laches is an equitable defense which bars injunctive relief where a plaintiff unreasonably delays in commencing an action." Tri-Star Pictures, Inc. v. Leisure Time Prods., B.V., 17 F.3d 38, 44 (2d Cir. 1994). While laches is an equitable defense, it can bar both injunctive relief and monetary relief in a trademark infringement action. Deere Co., 2004 WL 324890, at *18. To establish a defense of laches, defendants must show that: (1) plaintiffs had knowledge of the objectionable usage; (2) plaintiffs inexcusably delayed in taking action; and (3) defendants will be prejudiced if plaintiffs were permitted inequitably to assert their rights by their delay in bringing this suit. Id. (quoting Fourth Toro Family Ltd. P'ship v. PV Bakery, Inc., 88 F. Supp.2d 188, 196 (S.D.N.Y. 2000)). In addition, defendants must show that they adopted their mark in good faith. Cuban Cigar Brands N.V. v. Upmann Int'l, Inc., 457 F. Supp. 1090, 1098 (S.D.N.Y. 1978). "The inquiry is a factual one," and the issue of whether laches bars a plaintiff from equitable relief is entirely within the trial court's discretion. Tri-Star Pictures, Inc., 17 F.3d at 44.
Contrary to defendants' assertion, the record does not clearly show that plaintiffs' claims should be foreclosed by laches as a matter of law. It is undisputed that, in August 1999, Toyota became aware that LEXUS juice products were being sold in the U.S. when Howell's president approached a Toyota representative at the "Taste of Lexus" event. Under Second Circuit law, a presumption of unreasonable delay for taking action arises if the plaintiff fails to bring suit within the six-year New York statute of limitations for fraud, which is the statute of limitations most analogous to trademark infringement. Conopco, Inc. v. Campbell Soup Co., 95 F.3d 187, 191 (2d Cir. 1996). In addition, the statute of limitations applicable to a laches defense in a trademark dilution claim is three years. Charles Atlas, Ltd. v. DC Comics, Inc., 112 F. Supp.2d 330, 334 n. 7 (S.D.N.Y. 2000). If the relevant time period is within the statute of limitations, there is a presumption that laches does not apply and defendants have the burden to establish otherwise.Conopco, 95 F.3d at 191. However, if the relevant time period is outside the statute of limitations, there is a presumption that laches does apply, and plaintiffs have the burden of establishing otherwise. Id.
If the parties were to agree that Toyota's time to take action began to run as of the "Taste of Lexus" event in August 1999 and ended when Toyota issued its cease and desist letter in April 2001, a period of approximately twenty months, there is no presumption of unreasonable delay for the trademark dilution and the infringement claims since twenty months is well within the applicable three- and six-year statutes of limitations. Since the delay is less than the analogous statutes of limitations, defendants maintain the burden of showing that the delay was unreasonable. However, defendants provide no argument or facts to overcome this burden. Instead Toyota's argument that the twenty-month "delay" was reasonable under the circumstances is persuasive. Toyota asserts that, while the company reviewed the investigation results of LEXUS juices in the U.S. from January until April 2000, Toyota was also the prevailing party in the Canadian opposition proceeding. Pls.' Mem. at 11. According to Toyota, the pendency of that appeal affected the timing of its April 2001 cease and desist letter, in that if Toyota prevailed in the final Canadian appeal, Aliments would be compelled to stop using the LEXUS mark in Canada and possibly discontinue its exports to the U.S. or change the name of its products. Id.
Notwithstanding the August 1999 "Taste of Lexus" event, defendants charge that Toyota should have known of the sale of LEXUS juice products in June 1995, when Aliments began regular shipments of LEXUS fruit juices to the U.S. Ascribing constructive knowledge as of June 1995 would mean that Toyota's time for filing its April 2001 cease and desist letter fell approximately two months short of the six-year statute of limitations for trademark infringement, and well over three years beyond the three-year statute of limitations for trademark dilution. Because these longer "delays" affect the presumption of laches in this case, the issue is whether Toyota should have known that the LEXUS mark was being used for juice products in the U.S. as early as June 1995.
Although proof of knowledge is usually required for the defense of laches, a plaintiff can still be barred if "the defendant's conduct has been open and no adequate justification for ignorance is offered."Chandon Champagne Corp. v. San Marino Wine Corp., 335 F.2d 531, 535 (2d Cir. 1964). "[W]here the question of laches is in issue, the plaintiff is chargeable with such knowledge as he might have obtained upon inquiry, provided the facts already known to him were such as to put upon a man of ordinary intelligence the duty of inquiry." Johnston v. Standard Mining Co., 148 U.S. 360, 370 (1893); Polaroid Corp. v. Polarad Elec. Corp., 182 F. Supp. 350, 355 (E.D.N.Y. 1960), aff'd, 287 F.2d 492 (2d Cir. 1961) (applying this standard in a trademark infringement case).
In support of their position that Toyota should be charged with constructive knowledge as of June 1995, defendants pont out that plaintiffs knew Aliments was using LEXUS as its trade name in Canada as early as February 1993, and that plaintiffs knew Aliments was using LEXUS for its fruit juices in Canada as early as August 1994, when Guglia submitted an affidavit in the course of the Canadian opposition proceeding detailing the use made of LEXUS with fruit juices in Canada.See Defs.' Mem. at 4, 8. Defendants have also proffered a U.S. State Department profile of Canada dated June 2002 which characterizes the U.S.-Canadian relationship as "perhaps the closest and most extensive in the world," with a "staggering volume of trade — the equivalent of $1.4 billion a day in goods, services, and investment income. . . ." See Defs.' Ex. B. Due to this trading relationship, and a "reasonable expectation" that Aliments would expand its sales into the U.S., defendants assert that Toyota at least had a duty to inquire. Defs.' Mem. at 8.
With respect to this duty to require, Aliments challenges the adequacy of Toyota's enforcement efforts and faults the company for failing to engage in any independent investigation prior to the events of August 1999. In particular, Aliments points to the deposition testimony of Martin Smith, the managing counsel in the legal department of Toyota Motor Sales, U.S. A. Smith testified that, when he first joined the department in 1991, Toyota's primary means of finding potential infringers of the LEXUS mark was to receive information from Lexus field personnel, Lexus dealers, other infringers, other customers, and outside counsel. Defs.' Ex. D at 62. Toyota employees also conducted searches and performed some investigative work to ascertain potentially infringing uses of the LEXUS mark and to look for applications for use of the same mark.Id. at 69. Smith also affirms that, since 1991, Toyota has filed civil actions in courts and inter paries registration proceedings in the USPTO to contest infringing and diluting misuses of the LEXUS mark, and from 1991 through 2002, there were at least 500 different enforcement matters involving the alleged misuse of the LEXUS mark in the U.S. See Declaration of Martin L. Smith ("Smith Decl.") ¶¶ 3-4.
In light of these enforcement efforts and the opposition proceedings in Canada, it is indeed strange that Toyota never engaged in any independent investigation prior to 1999. Nonetheless, defendants provide no authority for their argument that a legal duty to inquire must be assumed under the circumstances, and we decline to impose such a duty upon Toyota at this time. Instead, viewing the record in the light most favorable to Toyota, there is a genuine issue of material fact as to when Toyota should have known about Aliments' use of LEXUS for juices sold in the U.S.
Specifically, aside from the acts or lack thereof of Toyota and its counsel during the pendency of the Canadian action, there are questions of fact as to the openness of Aliments' U.S. sales activities beginning in June 1995. Plaintiffs point out that the papers filed in the Canadian proceeding did not disclose any reference to any sale of LEXUS juice products in the U.S. in 1995. See Groff Decl. ¶ 4(o). Furthermore, plaintiffs also note that Howell Associates' president, Howard Duchin, testified that LEXUS juice products in the U.S. were sold only to institutional food service distributors, and not to any supermarket chains, drugstore chains, or restaurants. Groff Decl. Ex. 16 at 31. This limited distribution of LEXUS juices in the U.S. conceivably may not have come immediately to Toyota's attention. Furthermore, the existence of a strong bilateral trade relationship does not automatically create an inference that a Canadian company such as Aliments can be expected to export its products to the U.S. at an indeterminate time. Under these circumstances, a reasonable fact-finder could conclude that Toyota had no constructive knowledge of Aliments' use of the mark in 1995.
These facts are distinguishable from those cases where the plaintiff was charged with constructive notice of an infringing use. For example, in Chattanoga Mfg., Inc. v. Nike, Inc., the Seventh Circuit upheld the district court's holding on summary judgment that plaintiff had constructive notice of defendant Nike's alleged infringement of the trademark JORDAN. In that case, it was undisputed that Nike had launched a prominent, national advertising campaign for its Michael Jordan-endorsed products, and plaintiff conceded that the U.S. media referred to products identified or associated with Michael Jordan with the term "Jordan." 301 F.3d 789, 793 (7th Cir. 2002). In Chandon Champagne Corp., the Second Circuit upheld the district court's dismissal of plaintiffs' complaint on laches grounds, noting that plaintiffs had the opportunity to discover the prior existence of defendant's federal registration of the trademark "Pierre Perignon," and that advertisements and the official minimum resale prices of defendant's product had been published in trade journals at least 9 years earlier. 335 F.2d at 535. And following a bench trial in McDonald's Corp. v. Druck and Gerner, the district court found that plaintiff McDonald's had constructive knowledge of defendant's use of the mark "McDental" for its dental practice, where defendant's business was located in a "highly trafficked" shopping mall less than one mile away from a McDonald's franchise, defendant had engaged in widespread advertising in various media, and McDonald's employees were regularly present in the same geographic area as defendant's business. 814 F. Supp. 1127, 1137 (N.D.N.Y. 1993).
In this case, defendants offer no other fact to support a finding of constructive knowledge, other than their argument that Toyota, which already knew that LEXUS juices were being sold in Canada, should have known and should have investigated the possibility that Aliments would someday sell LEXUS juices in the U.S. because of the U.S.-Canadian trading relationship. It should also be noted that Aliments never registered LEXUS as a mark for juices in the U.S., and the record does not reflect the extent to which LEXUS juices were marketed in the U.S. in 1995, the extent of public awareness of LEXUS juices in the U.S., or other indicia that would put an ordinary person on notice of an infringing use. Given the dispute of material fact on the issue of constructive knowledge, summary judgment cannot be granted as to defendants' laches defense.
Under the Lanham Act, federal registration of a trademark is deemed constructive notice of the registrant's claim of ownership of their trademark. 15 U.S.C. § 1072; Oreck Corp. v. Thomson Consumer Elec., 796 F. Supp. 1152, 1161-62 (S.D. Ind. 1992).
(3) Unclean Hands
Plaintiffs argue that defendants' "unclean hands" in selecting the LEXUS mark for juice products precludes them raising the acquiescence and laches defenses. Although this argument is moot, given the dismissal of defendants' summary judgment motion as to both defenses, it will nonetheless be addressed here for the sake of thoroughness.
"Under the doctrine of unclean hands, a court `may decline to exercise its equitable powers in favor of a party whose unconscionable act . . . has immediate and necessary relation to the matter that he seeks in respect of the matter in litigation.'" Nat'l Baseball Hall of Fame and Museum, Inc. v. All Sports Promotions Group, Inc., 99-CIV-3635, 2001 U.S. Dist. LEXIS 1592, at *33 (S.D.N.Y. Feb. 20, 2001) (quotingAris-Isotoner Gloves, Inc. v. Berkshire Fashions, Inc., 792 F. Supp. 969, 969 (S.D.N.Y. 1992)). A party asserting acquiescence or laches as a defense must therefore have clean hands. Hermes Int'l v. Lederer de Paris Fifth Ave., Inc., 219 F.3d 104, 107 (2d Cir. 2000); Nat'l Baseball, 2001 U.S. Dist. LEXIS 1592, at *33. See, e.g., Hermes Int'l, 219 F.3d at 107 (defendants who intentionally traded off of the plaintiff's mark and protected products could not invoke doctrine of laches as a defense);Dial-A-Mattress, 841 F. Supp. at 1357 (defendants who were fully aware of plaintiff's claim of superior rights in mark could not succeed on laches defense); McDonald's Corp., 814 F. Supp. at 1138 (defendants failed to establish laches defense, where defendants' intention was to capitalize on and benefit from plaintiff's marketing techniques).
Based on the present record, there is a genuine issue of material fact as to whether Aliments adopted the mark LEXUS in good faith. On the one hand, plaintiffs cite to statements made by Aliments' vice president, Robert Guglia, that one of the principal reasons Aliments adopted LEXUS was because it "represented a quality name." Groff Decl., Ex. 8 at 3. Aliments' president, Raoul Landry, also testified at his deposition that, other than Toyota's LEXUS automobile, he was not aware of other reasons why the LEXUS name was associated with quality. Groff Decl., Ex. 14 at 27-28. Plaintiffs also point out that Landry and Guglia admitted they knew of the LEXUS name before selecting the LEXUS mark for their products. Groff Decl., Ex. 8 at 4; Ex. 14 at 25. Defendants, on the other hand, point to Guglia's explanation that the name LEXUS represented a quality name because the word also had no meaning in English or French, could be pronounced in different languages, and did not require translation. Defs.' Reply Mem. Ex. E at 3-4; Ex. F at 27-28; Ex. G at 24. Guglia also testified that he disagreed with Landry's 2002 testimony that LEXUS meant "quality" in automobiles and claimed he knew nothing about the quality of LEXUS automobiles when Aliments adopted that name in 1991. Defs.' Reply Mem. Ex. F at 29-31.
Accordingly, there is a genuine issue of material fact as to defendants' good faith in adopting the LEXUS mark. However, other issues of material fact with respect to defendants' laches defense — i.e., whether Toyota should have known of the potentially infringing use of the LEXUS mark in the U.S. in 1995 — preclude granting summary judgment in defendants' favor on the laches defense.
Conclusion
For the foregoing reasons, defendants' motion for summary judgment is denied.SO ORDERED.