Opinion
Case No. 3:02CV7335
December 17, 2003
ORDER
This is a trademark infringement case brought by plaintiff Pearpoint Limited ("Pearpoint") against defendant SRECO-Flexible, Inc. ("SRECO"). Pearpoint alleges that SRECO is using the trademark "Flexicam" in violation of Pearpoint's rights.
This court has jurisdiction pursuant to 28 U.S.C. § 1331. Pending is defendant's motion for summary judgment based on its defenses of laches and acquiescence. For the following reasons, that motion will be granted in part and denied in part.
BACKGROUND
Plaintiff Pearpoint is a British company engaged in the business of designing and manufacturing video pipeline inspection systems. Plaintiff owns and uses the trademark "Flexiscan" to describe some of its products, which it sells abroad and in the United States. Neither party disputes the fact that plaintiff owns the trademark Flexiscan and has registered it with the United States Patent and Trademark Office.
Defendant SRECO is a domestic company that manufactures sewer cleaning products. One of defendant's largest selling products is a flexible video camera system called "Flexicam," which is designed to allow customers to locate and inspect pipes. Defendant has used the name Flexicam to describe its video system products since 1995, and has built a considerable business on its Flexicam products.
Plaintiff alleges that defendant's use of the mark "Flexicam" infringes on its use of the mark "Flexiscan" because the marks are "confusingly similar" and describe similar products. (Doc. 1, at 3). Plaintiff first contacted defendant in March, 1995 claiming that defendant's use of the then-new Flexicam mark violated plaintiff's rights in its Flexiscan mark Defendant's counsel replied with a letter asserting that defendant did not believe that the marks were confusingly similar, but that, at any rate, defendant would cease to use the mark Flexicam to describe its video inspection products. (Doc. 25 Exh. F, at 1-3). Defendant sent a letter to plaintiff in November, 1995 confirming that defendant had ceased use of the mark Flexicam, and enclosed an advertisement depicting defendant's product and the term "Mini Camera" in place of "Flexicam." (Doc. 25 Exh. J, at 2-3). Plaintiff alleges that it relied on this assurance and believed that defendant had discontinued its use of the mark Flexicam.
In January, 1997, plaintiff alleges it discovered that one of defendant's advertisements in a trade journal contained the word "Flexi-cam" to describe its video inspection products. Plaintiff sent another letter to defendant, expressing astonishment at the breach of its earlier agreement with defendant and reasserting its claim that the marks were confusingly similar. Defendant's counsel replied that she would "discuss the matter with [defendant]." (Doc. 26 Exh. M, at 2). In May, 1997, plaintiff sent another letter to defendant claiming surprise upon learning that defendant had issued additional literature using the mark "Flexicam" and again asking for response.
In June, 1997, counsel for defendant sent a letter explaining defendant's surprise both that plaintiff believed it had any agreement with defendant and that plaintiff believed defendant's use of Flexicam infringed on plaintiff's Flexiscan mark Defendant explained that "the marks are not identical," the "goods identified in Pearpoint's registration are not the same as Sreco's," and, finally, that "another entity owns a trademark registration for the mark FLEXICAM," meaning, "[o]bviously," that "Sreco cannot infringe Pearpoint's registration for a different mark if there exists a separate registration for an identical mark." (Doc. 26 Exh. R, at 1). This was apparently the last communication between the two parties for approximately five years.
In February, 2002, about seven years after defendant had begun using the mark Flexicam in relation to its products, defendant sent a letter to plaintiff alleging that plaintiff was now using the mark "Flexi-cam" in relation to products it was advertising in the United States. Defendant alleged that this use infringed its rights in "Flexicam," which had been established through its continuous use of and investment in the mark for seven years. Apparently, plaintiff had applied for registration of the mark "Flexi-cam" with the United States Patent and Trademark Office. The Flexicam mark was not registered to defendant or any other entity at that time.
It is not necessary to register a trademark with the United States Patent and Trademark Office to claim rights in that trademark. Registering is merely a way of providing constructive notice to others that a trademark has been established and is in use. It also creates a legal presumption of ownership in the mark This presumption, however, does not overcome the rights of another party with better rights to the mark. See United States Patent and Trademark Office, Basic Facts About Trademarks, available at http://www.uspto.gov/web/offices/toc/doc/basic/register.htrn.
In April, 2002, plaintiff sent defendant a letter, alleging that plaintiff owned trademarks in both Flexiscan and Flexicam, and asking defendant to cease using the Flexicam mark in relation to its products. In July, 2002, having received no response from defendant, plaintiff sent another letter to defendant, in which plaintiff advised defendant's attorneys that plaintiff had filed the instant lawsuit. Defendant's motion for summary judgment is based on the defenses of laches and acquiescence. Defendant alleges that plaintiff "knew of SRECO's aggressive, continuous, uninterrupted, and proactive use of the SRECO Flexicam™ mark for years." (Doc. 23, at 6). Despite this knowledge, defendant alleges, plaintiff failed to pursue its claims against defendant. Defendant points out that it had been five years since their last communication in 1997, well beyond Ohio's two year statute of limitations, and that plaintiff should therefore be barred from asking for relief. Defendant claims that to allow plaintiff's lawsuit to go forward would prejudice the defendant, which has been marketing and selling its products under the Flexicam name since 1995. Additionally, defendant alleges that plaintiff's failure to bring a lawsuit or to pursue its claim of confusing similarity during the five years between June, 1997 and April, 2002 amounts to "virtual abandonment of its claim and an assurance to defendant that plaintiff would not pursue a trademark infringement claim.
Defendant does not seek summary judgment on the merits of plaintiff's trademark infringement claim.
Plaintiff alleges that "[t]he equitable defense of laches should not be measured from periods of excusable or induced periods of delay nor should Defendant be rewarded for its misrepresentations and bad-faith conduct." (Doc. 46, at 4). Plaintiff claims that defendant's letter of June, 1997, which asserted that another party had approached defendant about possible infringement of the mark Flexicam, assured plaintiff that defendant knew it was in the wrong. Therefore, plaintiff did not pursue its rights at that time, apparently believing that defendant would discontinue its use of Flexicam. Plaintiff argues that a jury could find that the delay in filing was reasonable and excusable.
STANDARD OF REVIEW
Summary judgement must be entered "against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The moving party always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of the record which demonstrate the absence of a genuine issue of material fact Id. at 323. The burden then shifts to the nonmoving party who "must set forth specific facts showing that there is a genuine issue fortrial." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986) (quoting Fed.R.Civ.P. 56(e)).
Once the burden of production shifts, the party opposing summary judgment cannot rest on its pleadings or merely reassert its previous allegations. It is insufficient "simply [to] show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). Rather, Rule 56(e) "requires the nonmoving party to go beyond the [unverified] pleadings" and present some type of evidentiary material in support of its position. Celotex, 477 U.S. at 324.
In deciding the motion for summary judgment, the evidence of the non-moving party will be accepted as true, all doubts will be resolved against the moving party, all evidence will be construed in the light most favorable to the non-moving party, and all reasonable inferences will be drawn in the non-moving party's favor. Eastman Kodak Co. v. Technical Servs., Inc., 504 U.S. 451, 456 (1992). Summary judgment shall be rendered only if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. Fed. R Civ. P. 56(c).
DISCUSSION
Defendant alleges that it is entitled to summary judgment based on the doctrines of laches and acquiescence. Laches is "a negligent and unintentional failure to protect one's rights."Elvis Presley Enter., Inc. v. Elvisly Yours, Inc., 936 F.2d 889, 894 (6th Cir. 1991). Acquiescence, however, requires a showing that the plaintiff acted intentionally to assure defendant, expressly or impliedly, that plaintiff would not assert its trademark rights against it. Id. (citing Sweetheart Plastics, Inc. v. Detroit Forming, Inc., 743 F.2d 1039, 1046 (4th Cir. 1984)). Trademark law makes clear that a "laches or acquiescence defense does not divest the trademark owner of the right to use the mark but may deprive him or her of any remedy for infiinginguses by others. TMT North America, Inc. v. Magic Touch GmbH, 124 F.3d 876, 885 (7th Cir. 1997) (internal quotation omitted). Therefore, for the purposes of analyzing each defense, the court assumes that plaintiff's underlying trademark infringement claim is meritorious. Kellogg Co. v. Exxon Corp., 209 F.3d 562, 569 (6th Cir. 2000).A. Laches
"A party asserting laches must show: (1) lack of diligence by the party against whom the defense is asserted, and (2) prejudice to the party asserting it." Nartron Corp. v. STM icroelectronics, Inc., 305 F.3d 397, 408 (6th Cir. 2002) (citing Induct-O-Matic Corp. v. Inductotherm Corp., 747 F.2d 358, 367 (6th Cir. 1984)).
To evaluate whether a party has been diligent in protecting its trademark, a court looks to the state law statute of limitations for injury to personal property. Nartron, 305 F.3d at 408. In the Sixth Circuit, "there is a strong presumption that a plaintiff's delay is reasonable so long as the analogous statute of limitations has not elapsed." Elvis Presley Enter., 936 F.2d at 894. The Ohio statute of limitations for injuries to personal property is two years. Ohio Rev. Code § 2305.10.
"[A] delay beyond the . . . statutory period is presumptively prejudicial and unreasonable." Nartron, 305 F.3d at 408. The period of delay is measured from the time when plaintiff had "actual or constructive knowledge of the alleged infringing activity." Id. (quoting Dana Corp. v. IPC Ltd. Partnership, 674 F. Supp. 581, 583 (E.D. Mich. 1987)). To rebut the presumption that a delay beyond the statutory period is unreasonable and prejudicial, plaintiff must: "(1) rebut the presumption of prejudice; (2) establish that there was a good excuse for its delay; or (3) show that the defendant engaged in `particularly egregious conduct which would change the equities significantly in plaintiff's favor.'" Nartron, 305 F.3d at 409 (quoting Dana Corp., 674 F. Supp. at 583).
1. Plaintiff Had Knowledge of the Allegedly Infringing Activity in June, 1997
In the instant case, defendant asserts that plaintiff was aware of its alleged claim of trademark infringement beginning with its first letter to defendant in March, 1995. Plaintiff, however, was entitled to rely on defendant's representation to plaintiff that it would and did cease use of the Flexicam mark Regardless of defendant's actual intention regarding the agreement of July, 1995, in which defendant offered to resolve the matter by phasing out its use of Flexicam, plaintiff relied on defendant's representation and believed that the matter was resolved. Defendant may not now escape its obligations under that agreement by asserting that the agreement was proffered by an "unauthorized" SRECO representative. There is no evidence in the record to suggest that plaintiff knew or should have known that the letters it received from defendant's counsel were unauthorized, nor has defendant shown that it informed plaintiff of its intention to abrogate their agreement Therefore, plaintiff will not be charged with actual or constructive knowledge of a trademark infringement claim dating back to 1995.
Plaintiff, however, does not explain its delay in filing its claim after its correspondence with defendant in 1997. The only excuse plaintiff offers is found in a reference to a letter sent by defendant in June, 1997, in which counsel for defendant asserts that defendant does not believe its use of Flexicam infringes plaintiff's use of Flexiscan, and explains that another entity has "approached Sreco claiming trademark infringement." (Doc. 26 Exh. R, at 1). Plaintiff claims that it did not pursue its trademark rights against defendant at this time, essentially, because it assumed that the third party mentioned in defendant's letter would do so. Additionally, plaintiff reads the June, 1997 letter as admitting that defendant was infringing on the rights of that third party.
Regardless of the merit of the third party's claim against defendant, plaintiff may not now assert that it failed to pursue its claim against defendant because it believed that an unknown third party would assert its distinct claim against defendant Plaintiff's actions are judged by its diligence in pursuing its own claim. Plaintiff has offered no reason why it did not respond to defendant's June, 1997 letter. In that letter, defendant's counsel made clear that defendant believed plaintiff's claims were unfounded, stating, "I trust that Pearpoint now understands the limitations of its trademark rights and will withdraw its claim of trademark infringement" (Id. at 2). Defendant did not hide its intention to continue to use the Flexicam mark to market its products. At this point, plaintiff knew that defendant had violated the 1995 committment and was using the Flexicam mark Plaintiff had no reason to believe, based on defendant's assertions, that defendant intended to discontinue using the mark Indeed, defendant has shown that it openly and continuously used the Flexicam mark throughout the years 1997-2002, in competition with plaintiff's products. Plaintiff, therefore, is charged with knowledge of defendant's allegedly infringing activities from June, 1997.
2. The Period of Delay Was Unreasonable and Prejudicial
Plaintiff did not renew its claims against defendant until April, 2002, almost five years after its last correspondence with defendant. Because this period of time clearly exceeds the statute of limitations of two years, plaintiff's delay is presumptively unreasonable and prejudicial. See Nartron, 305 F.3d at 408-09. The fact that plaintiff filed an application to register the mark "Flexi-cam" with the United States Patent and Trademark Office during the period between June, 1997 and April, 2002 does not overcome the presumption. Plaintiff has offered no additional reasonable explanation for its delay; therefore, I find that plaintiff did not exercise diligence in pursuing its claim of trademark infringement.
Plaintiff has likewise offered no evidence to overcome the presumption that plaintiff's delay in bringing its claim is prejudicial to defendant. Defendant has been using the Flexicam mark to promote its products for over eight years. Moreover, defendant has presented evidence showing that it has invested heavily in the Flexicam mark and that a substantial portion of its total sales is based on its Flexicam line of products. Therefore, I find that plaintiff's unreasonable delay in filing suit is prejudicial to defendant.
Additionally, plaintiff has failed to show that defendant engaged in particularly egregious conduct during the delay. Although defendant's renunciation of its 1995 commitment to the plaintiff could be characterized as egregious, plaintiff has not presented evidence of any other egregious conduct by defendant during the almost five year period after it had knowledge of defendant's violation of the agreement and allegedly infringing use of Flexicam. During that time, plaintiff knew was using the Flexicam mark, with no intention to cease its use. Despite this knowledge, plaintiff did not act, nor does plaintiff allege that it made any attempt to contact defendant about its use of the allegedly infringing mark Therefore, any bad faith on defendant's part with regard to the 1995 commitment does not shift the equities significantly in plaintiff's favor.
Defendant's motion for summary judgment based on its laches claim will be granted
B. Acquiescence
"Although both laches and acquiescence require proof that the party seeking to enforce its trademark rights has unreasonably delayed pursuing litigation and, as a result, materially prejudiced the alleged infringer, acquiescence requires more." Kellogg Co. v. Exxon Corp., 209 F.3d 562, 569 (6th Cir. 2000). Acquiescence focuses not on a party's lack of action, but on its acts toward the defendant. Elvis Presley Enter., 936 F.2d at 895. Defendant needs to show that plaintiff's conduct toward it "amounted to an assurance that . . . [plaintiff] would not assert . . . [plaintiff's] trademark and common law rights." Id. at 895-96.
Defendant asserts the defense of acquiescence because defendant seeks to cut short plaintiff's request for injunctive relief. "Although laches precludes a plaintiff from recovering damages, it does not bar injunctive relief." Kellogg, 209 F.3d at 568. To defeat a claim for injunctive relief, defendant "must show that it had been misled by plaintiff through actual misconduct, intentional misleading silence, or conduct amounting to virtual abandonment of the trademark" Id. at 574.
In the instant case, defendant alleges that plaintiff's conduct amounts to virtual abandonment of its alleged rights in the mark "Flexicam." Defendant argues that plaintiff's silence between June, 1997 and April, 2002, coupled with the fact that defendant and plaintiff were in "head-to-head competition in many markets," (Doc. 23, at 16) amounts to conduct that impliedly assured defendant that plaintiff had abandoned its previous claim of trademark infringement.
Defendant's allegations, however, are substantially the same as its representations in support of its defense of laches. Defendant points out that plaintiff did nothing to pursue its claim, even though it had knowledge of plaintiff's continued use of the mark Flexicam, for five years. Defendant does not allege any communication between defendant and plaintiff during those five years, nor does defendant point to any affirmative conduct on plaintiff's part that would amount to an acknowledgment that plaintiff had abandoned its ownership of the Flexiscan mark
Plaintiff has shown that it maintained its United States Patent and Trademark Office registration for the Flexiscan mark throughout the five year period, even renewing the mark in 1998. Defendant, in response, argues that plaintiff's maintenance of its trademark does not "put in issue any of the facts material to the issue of Pearpoint's acquiescence and implied active consent to SRECO [sic] uninterrupted use of SRECO's FlexicamTM mark." (Doc. 47, at 13). Defendant misunderstands the doctrine of acquiescence. See Kellogg, 209 F.3d at 574; see also Pro Fitness Physical Therapy Ctr. v. Pro-Fit Orthopedic and Sports Physical Therapy P.C., 314 F.3d 62, 67-69 (2d Cir. 2002); TMT North America, 124 F.3d at 885-86 (7th Cir. 1997); Sara Lee Corp. v. Kayser-Roth Corp., 81 F.3d 455, 463 (4th Cir. 1996).
Acquiescence examines the conduct of the plaintiff to determine whether plaintiff evinced any intent to abandon its rights in the trademark it owned — in this case, whether plaintiff's conduct revealed any intent to abandon its Flexiscan trademark — and thereby convey its intent not to pursue its claim against defendant. The evidence of record reveals no intent or active consent to such abandonment on plaintiff's part during the five year delay period. Defendant argues that it never saw a reference to plaintiff's Flexiscan products in its advertisements, and that this proves abandonment. Plaintiff's maintenance of its registration of the Flexiscan trademark, however, creates a presumption of ownership and puts others on constructive notice of that ownership.
The fact that defendant did not see any advertisements or talk to others who knew of plaintiff's Flexiscan line does not, by itself, prove that plaintiff had abandoned its trademark Therefore, for the purposes of summary judgment, there is a genuine issue of material fact as to whether plaintiff maintained its ownership of the Flexiscan mark
Defendant's motion for summary judgment on its defense on acquiescence will be denied
CONCLUSION
In light of the foregoing, it is
ORDERED THAT
1. Defendant's motion for summary judgment as to the defense of laches be, and the same hereby is granted, and
2. Defendant's motion for summary judgment as to the defense of acquiescence be, and the same hereby is denied.
So ordered.