Opinion
No. 99 Civ. 10199 (GBD).
July 30, 2004
MEMORANDUM OPINION AND ORDER
Plaintiff PRL USA Holdings, Inc. (hereinafter "plaintiff") commenced this action against United States Polo Association, Ltd. (hereinafter "USPA, Ltd."), Jordache, Ltd. (hereinafter "Jordache"), LV Enterprises, Inc. (hereinafter "LV"), USPA Properties, Inc. (hereinafter "USPA Properties") and United States Polo Association, Inc. (hereinafter "USPA") (collectively hereinafter "defendants"), and others for alleged violations of the Lanham Act and related claims based on defendants' alleged infringement of plaintiff's trademarks. In their Answers, defendants asserted the affirmative defenses of waiver, estoppel and laches. Both plaintiff and defendants moved for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure based on defendants' affirmative defenses of acquiescence and laches. Plaintiff moves for summary judgment on defendants' affirmative defenses of laches and acquiescence as these defenses relate to the double horseman mark, arguing that plaintiff's claims against defendants regarding such mark are not barred by such defenses. Defendants move for summary judgment based on the affirmative defenses of laches and acquiescence, arguing that plaintiff's claims against defendants as they relate to the double horseman mark are barred by such defenses. For the reasons set forth below, both plaintiff's and defendants' motions for summary judgment are DENIED.
By Order dated September 18, 2003, plaintiff and defendants dismissed with prejudice all claims and counterclaims with exception of the claims asserted by plaintiff in regards to the double horseman mark as against United States Polo Association, Inc., United States Polo Association Properties, Inc., Jordache, Ltd., L.V. Enterprises, Inc., and United States Polo Association, Ltd. Therefore, the double horseman mark is the only remaining graphic, mark or logo that is in dispute in this litigation and this opinion only bears on those portions of plaintiff's and defendants' summary judgment motions that address the double horseman mark.
BACKGROUND
Plaintiff's Allegations of Facts
Plaintiff PRL USA Holdings, Inc. is the owner of the "world famous `Polo' family of trademarks." (Plaintiff's Memorandum In Opposition to the USPA and Jordache Defendants' Joint Motion for Summary Judgment, "P.M.O.", 2). In 1996, USPA began a search for prospective licensees and began negotiating with plaintiff for a "worldwide settlement" in order to reach an agreement regarding the use of various marks. (Ferguson Ex. 14, 16). In the context of this settlement discussion, Merle Jenkins (Jenkins), the President of USPA Properties, reported to the Chairman of USPA in a March 1996 letter that he had submitted a depiction of a new USPA logo showing two polo players with mallets (the "double horseman mark") to plaintiff and its counsel, and that he had received a "preliminary reaction" from PRL which led him to be reasonably optimistic of a settlement, but that "[n]othing is final and there are numerous difficult details to work out." (Ferguson Ex. 14 at 4).
In a June 1996 letter to the Chairman of USPA, Jenkins reported that settlement negotiations with plaintiff had broken off and then resumed, admitting in the letter that "I have learned not to assume anything about Polo Ralph Lauren until I have a signed agreement." (Ferguson Ex. 16 at 2). In a September 1996 letter to the Chairman, Jenkins stated that "our experience with Ralph Lauren is that they do not consider themselves bound by an oral agreement." (Bernstein Ex. 2 at 3, Ex. 3 at 15-16). The settlement negotiations were never completed and no settlement was ever reached.
In February 1997, Jenkins reported to the Chairman that plaintiff was opposed to the double horseman mark and that the "decade long battle with Ralph Lauren [would] be heating up." (Bernstein Ex. 4 at 5). After reaching an agreement with a master licensee, Jenkins reported that the most favorable news about the new licensee was that he would not be using the single or double horseman marks in the face of plaintiff's opposition. (Id.). Jenkins stated that this strategy would "minimize not only their problems but also our problems in dealing with the counter offensive from Polo Ralph Lauren when it comes." (Id.). He also stated that "we are proceeding with the registration of our active horseman marks both single and double in the face of the opposition of Lauren." (Id.). In his deposition testimony of February 1997, Jenkins stated that USPA "was very wary of the costs represented by litigation with Ralph Lauren and we considered it likely that Ralph Lauren would sue us if we used any designs at all of an active horseman." (Bernstein Ex. 1 at 67-68).
In May 1996, around the same time period as the settlement negotiations with plaintiff, defendant USPA filed an intent to use trademark application with the United States Patent and Trademark Office ("PTO") for the double horseman mark. (Ferguson Ex. 15). On December 20, 1996, plaintiff filed a request for a thirty day extension of time to oppose the application in connection with its use on clothing, but ultimately, did not file an opposition. (Ferguson Ex. 18, 41). Defendant USPA "abandoned" its application for the double horseman polo player symbol by failing to file the requisite Statement of Use with the PTO. (Bernstein Ex. 1 at 146-50). When defendant USPA did file a new application for the double horseman mark for an expanded category of goods in February 1999, plaintiff opposed the application. (Bernstein Ex. 5 at 109-13; Ferguson Ex. 32, 34).
In August 1998, defendant USPA's licensee entered into a sublicense with LV, an entity of Jordache, for the production of USPA apparel in the United States. (Mintz Aff. ¶ 12; Ferguson Ex. 27). In a memorandum to Jenkins, USPA's licensee explained that "we finally found the company with more than enough funding . . . [w]ho is not afraid of Ralph Lauren." (Bernstein Ex. 7).
On September 24, 1999, in the course of settlement negotiations, plaintiff indicated that as part of a settlement, it might consent to the use of a double horseman logo in some form, although plaintiff's Assistant General Counsel, "had not yet seen actual USPA products bearing that mark." (P.M.O., 13; Bernstein Ex. 5 at 564-66). Negotiations between plaintiff and defendant USPA continued into the year 2000. (P.M.O., 14). When negotiations broke down in early March 2000, plaintiff "immediately" filed the amended complaint in this action, naming USPA, USPA Properties and Jordache as defendants. (Id.). Defendants' Allegations of Facts
Defendant USPA is a nonprofit organization established in 1890 that governs the sport of Polo in North America, promulgates and revises the rules of Polo, organizes the principal tournaments and establishes player handicaps. (Jenkins Dep. 11, 14, 18-20). The USPA also supports 23 college club polo programs and traveling polo instructors. (Id., at 19). The USPA has approximately 3,500 members and is comprised of approximately 300 member clubs. (Id., at 15). As the governing body of Polo in the United States, the USPA represents the United States in international competition. (Jenkins Aff. ¶ 2). USPA's licensing program is managed by USPA Properties, which is a wholly-owned subsidiary of USPA. (Jenkins Dep. 7). USPA Properties' role is to manage USPA's licenses and trademarks. (Id.). USPA Properties pays USPA royalties for the use of USPA's registered trademarks. (Jenkins Aff. ¶ 3). USPA uses these royalties to support its activities as the governing body of the sport of Polo. (Id.).
In the 1980's, the USPA, through USPA Properties, began a sports merchandising program, licensing its trademarks for production on apparel. (Jenkins Dep. 31-32). In 1984, one of USPA Properties' licensees used certain USPA trademarks in a way that infringed plaintiff's trademarks. (Jenkins Aff. ¶ 5). USPA and plaintiff then engaged in litigation, the result being a court order in 1984 enjoining USPA from using "POLO, POLO BY RALPH LAUREN" and plaintiff's Polo Player Symbol. (Jenkins Dep. 32, 37; Ferguson Ex. 12). The order did permit USPA to build a licensing program around its name, as well as use a mounted polo player or equestrian or equine symbol. (Ferguson Ex. 12). Since the 1984 order, USPA Properties has monitored the use and development of USPA's trademarks by its licensees in an effort to avoid confusion between USPA trademarks and plaintiff's trademarks. (Jenkins Aff. ¶ 6). USPA Properties has used the 1984 order as its guideline in developing new marks, logos and graphics. (Id.). Licensing agreements entered into by USPA and USPA Properties since the 1984 order contain language incorporating the order's prohibitions. (Memorandum of Points and Authorities In Support of United States Polo Association, Inc., USPA Properties, Inc., Jordache, Ltd., L.V. Enterprises, Inc. and U.S. Polo Association, Ltd.'s Motion for Summary Judgment, "D.M.S.J.," 5). Each licensee must consent to abide by these prohibitions in utilizing and developing USPA marks. (Jenkins Aff. ¶ 6).
From 1984 through 1996, plaintiff and USPA were in conflict due to the fact that plaintiff continued to oppose USPA Properties' efforts to register its trademarks in many areas throughout the world, including Japan, Taiwan and Canada. (Id., ¶ 8). In 1994 and 1995, USPA filed three trademark applications seeking registration of logos depicting a single mounted polo player. (Id., at 10). After the PTO approved the logos and they were published in the PTO's Official Gazette, plaintiff opposed all three applications, filing its opposition to one of the marks in June 1995 and to the other two logos in November 1995. (Id.). In an effort to create a logo that would be "even more distinct from PRL's single polo pony with a mounted player," USPA Properties "developed a graphic, inspired by a picture of two mounted polo players, challenging each other for a ball in an open field (the `double horseman mark')." (D.M.S.J., 7;Jenkins Aff. ¶ 11).
"In a further effort to avoid any disputes with PRL," Jenkins met with plaintiff's Assistant General Counsel, who is in charge of monitoring and enforcing plaintiff's intellectual property rights. (Sporn Dep. 561-62; Jenkins Aff. ¶ 12). In this meeting, Jenkins explained USPA's plans for a sports merchandising program and showed the design for the double horseman mark, explaining USPA Properties' proposed use of the mark, including the fact that it was going to be used on clothing in graphic presentations and in embroidered form. (Id.). In March 1996, Jenkins sent an embroidery of the double horseman mark. (Jenkins Aff. ¶ 13). Plaintiff's Assistant General Counsel "acknowledged that the double horseman mark was dissimilar from the PRL polo player logo" and raised no objection to its use by USPA at that time. (D.M.S.J., 8; Sporn Dep. 109-110; Ferguson Exs. 14, 16). On the basis of these discussions with plaintiff, USPA filed an intent to use trademark application in the PTO for the registration of the double horseman mark under international classes 14, 18 and 25 for jewelry, leather goods and clothing. (Ferguson Ex. 15).
After reviewing the double horseman mark, the PTO determined that the mark did not infringe any registered trademarks and on November 26, 1996, the mark was published for opposition in the Official Gazette of the PTO for classes 14, 18 and 25, thereby giving any interested parties 30 days to file a notice of opposition. (Ferguson Ex. 17). On December 20, 1996, plaintiff filed a request for a 30-day extension of time to file a notice of opposition to the double horseman mark. (Ferguson Ex. 18). After the 30 days, plaintiff "made a conscious decision" to not oppose the application for classes 14, 18 and 25. (Ferguson Ex. 41; Sporn Dep. 364). On May 27, 1997, having received no opposition, the PTO issued a notice of allowance for the double horseman mark application. (Ferguson Ex. 20). On January 1, 1998, USPA began using the mark on watches and filed a Statement of Use with the PTO that it was doing so. (Ferguson Exs. 23, 26). At that point, the PTO divided the double horseman mark trademark application into one for actual use (watches) and one for intent to use (clothing and leather goods). (Ferguson Ex. 25). On September 8, 1998, the PTO issued a registration for the double horseman mark on watches, a registration that has never been opposed by plaintiff. (Ferguson Ex. 1; Jenkins Aff. ¶ 16). On November 25, 1998, USPA filed an application for the double horseman mark in international class 3 (cosmetics and fragrances). (Ferguson Ex. 30; Jenkins Aff. ¶ 16).
On August 31, 1998, the president of USPA Ltd., entered into an agreement with LV Enterprises, Inc. ("LV"), an entity owned by the owners of Jordache and their children, whereby certain USPA marks were sublicensed to LV. (Ferguson Ex. 27). The president, Jenkins and LV discussed the fact that USPA had received a notice of allowance from the PTO for the use of the double horseman mark. (Mintz Dep. 75; Mintz Aff. ¶ 18). In December 1998, USPA informed the president that Jordache could begin using the double horseman mark on clothing. (Ferguson Ex. 43; Mintz Aff. ¶ 18). Jordache immediately then began a full-scale production of its USPA line of clothing. (Mintz Aff. ¶ 19). In the late summer of 1998, Jordache's design team began developing the first USPA line of clothing designed for young men in the 15 to 25 age range for the fall 1999 season. (Mintz Aff. ¶ 17). That fall season line went into production in 1998. (Id.).
In February 1999, Jordache displayed its USPA line at trade shows, including the "Magic Show," the largest American retail industry show held annually in Las Vegas. (Doherty Dep. 47; Jenkins Dep. 137; Mintz Aff. ¶ 20). At this show, Jordache rented eighteen adjacent boots, built twenty-foot walls, displayed samples of its USPA apparel throughout the booths, both inside and outside the walls. (Mintz Aff. ¶ 20). Designs that incorporated the double horseman mark were prominently displayed on a full line of casual sportswear including shirts, sweatshirts, jeans, jean jackets, sweaters, casual pants and wind-wear, and several signs identified the line as originating from USPA. (Id.).
At this time, USPA Properties' trademark counsel failed to file a request for an extension of time to file a Statement of Use with the PTO, thereby allowing the notice of allowance for the double horseman mark on clothing and leather goods to lapse. (Ferguson Ex. 31; Jenkins Aff. ¶ 18). Upon learning of this, USPA filed a new application on February 23, 1999. (Ferguson Ex. 32; Jenkins Aff. ¶ 18). At this time, plaintiff did not raise objection to the double horseman mark being used in Jordache's line. (D.M.S.J., 16).
In August 1999, defendants again presented the USPA line at the Magic Show. (Mintz Aff. ¶ 23). After this show, Jordache sought to enlarge the USPA line to attract a wider customer base, and by the end of 1999, the line was being sold in 392 stores. (Mintz Aff. ¶ 24). In 1999, Jordache spent approximately $1,500,000.00 to design, merchandise, produce and sell the USPA line. Of that total, approximately 30% (or $450,000.00) was attributable to products bearing the double horseman mark. In 1999, Jordache sold 233,000 garments. (Id., at 25).
In December 1999, Jordache originated a women's line of clothing that utilized the USPA marks in logos and graphics including the double horseman mark. (Smindak Dep. 15-16, 20-21). For this new line, Jordache hired a president, a new sales manager, salespeople, merchandisers, designers, technical personnel, production personnel and sourcing personnel. (Mintz Aff. ¶ 28). The women's line, like the men's line, contained the same restrictions to ensure that consumers could differentiate between plaintiff's goods and USPA goods. (Smindak Dep. 35-36).
In February 2000, Jordache displayed both the men's and women's USPA lines at trade shows like the Magic Show. (Smindak Dep. 29; Mintz Aff. ¶ 29). There was no objection by plaintiff to the USPA lines at this time. (Ds MSJ, 19). Throughout the Fall and Winter of 1999 and into 2000, plaintiff and USPA Properties were in "constant communication." (Id.; Jenkins Aff. ¶ 21). During this same period, USPA products were being distributed to retail stores throughout the United States, however, plaintiff did not object to the double horseman mark. (Jenkins Aff. ¶ 21).
On March 7, 2000, USPA Properties for the first time received notice that plaintiff had instituted an opposition to the double horseman mark. (Jenkins Aff. ¶ 23). This was the first time that USPA Properties was notified that plaintiff had an objection to defendants' use of the double horseman mark. (Id.). On March 24, 2000, plaintiff served USPA, USPA Properties and Jordache with the complaint in this action.
DISCUSSION
Plaintiff moves for summary judgment on defendants' affirmative defenses of laches and acquiescence as these defenses relate to the double horseman mark, arguing that plaintiff's claims against defendants regarding such mark are not barred by such defenses. Defendants move for summary judgment based on the affirmative defenses of laches and acquiescence, arguing that plaintiff's claims against defendants as they relate to the double horseman mark are barred by such defenses.
Summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); Nebraska v. Wyoming, 507 U.S. 584, 590, 113 S.Ct. 1689, 1694 (1993). A dispute regarding a material fact is genuine if a verdict at trial could reasonably be returned for the non-moving party.See Weinstock v. Columbia University, 224 F.3d 33, 41 (2d Cir. 2000). The burden of demonstrating that no factual dispute exists is on the moving party. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the moving party has met this burden, the nonmoving party "must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). "The non-moving party may not rely on conclusory allegations or unsubstantiated speculation." Scotto v. Alemas, 143 F.3d 105, 114 (2d Cir. 1998). In deciding a motion for summary judgment, a court must resolve all ambiguities and draw all reasonable inferences in favor of the party opposing the motion. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.3d.2d 202 (1986). Summary judgment should be granted only when no reasonable trier of fact could find in favor of the nonmoving party. Gallo v. Prudential Residential Services, Ltd., 22 F.3d 1219, 1224 (2d Cir. 1994). The burden of demonstrating that summary judgment should be granted is significant in that summary judgment is a "drastic devise, since its prophylactic function, when exercised, cuts off a party's right to present his case to the jury." Nationwide Life Ins. Co. v. Bankers Leasing Ass'n, Inc., 182 F.3d 157, 160 (2d Cir. 1999), quoting Eastway Construction Corp. v. City of New York, 762 F.2d 243, 249 (2d Cir. 1985).
Defendants' Claim of Acquiescence
Defendants argue that plaintiff is barred from contesting defendants' use of the double horseman mark by the doctrine of acquiescence and defendants seek summary judgment on that ground. Plaintiff argues that its claim is not barred by this affirmative defense and seeks summary judgment on this basis. For the following reasons, both defendants' and plaintiff's motions for summary judgment on defendants' affirmative defense of acquiescence are denied.
Acquiescence is an affirmative and equitable defense. Times Mirror Magazines, Inc. v. Field Stream Licenses Company, et al., 294 F.3d 383, 395 (2d Cir. 2002). A claim of acquiescence "`requires proof of three elements: (1) the senior user actively represented that it would not assert a right or 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.'" Id. (quoting Sun America Corp. v. Sun Life Assurance Co., 77 F.3d 1325, 1334 (11th Cir. 1996)). Acquiescence is implied by active consent, which is defined as "`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.'"Information Superhighway, Inc. v. Talk America, Inc, et al., 274 F. Supp.2d 466, 472 (S.D.N.Y. 2003) (quoting Carl Zeiss Stiftung v. VEB Carl Zeiss Jena, 433 F.2d 686, 704 (2d Cir. 1970)). The doctrine of acquiescence necessitates consideration of the circumstances of each particular case, as well as a balancing of the equities and interests of the parties.Information Superhighway, at 471.
A. Consent
Defendants argue that plaintiff actively consented to defendants' use of the double horseman mark and did not voice any objection to the mark. (D.M.S.J., 29; Jenkins Aff. ¶ 23). Defendants claim that Jenkins of USPA Properties approached plaintiff's Associate General Counsel in 1996 and showed him the double horseman mark. (D.M.S.J., 28; Jenkins Aff. ¶ 12). Jenkins informed him of defendants' intention to build a sports merchandising program around the mark, including its plans to embroider it on clothing. (D.M.S.J., 28; Jenkins Aff. ¶ 12; Sporn Dep. 562; Ferguson Exs. 14, 16). Plaintiff's Associate General Counsel told USPA Properties that "it would not object to the Two Horsemen Symbol because PRL found it to be sufficiently dissimilar to the PRL horsemen." (D.M.S.J., 28; Jenkins Aff. ¶ 12, 13; Sporn Dep. 109-110, 562; Ferguson Exs. 14, 16). Therefore, defendants contend that plaintiff had actual knowledge of defendants' intention to use the double horseman mark as early as March 1996. (Sporn Dep. 561-62; Jenkins Aff. ¶ 12-13; Ferguson Exs. 14, 16). Further, defendants argue that after USPA Properties filed its trademark application for the double horseman mark in May 1996, in December 1996 when the mark was published for opposition in the PTO's Official Gazette, that PRL "made a conscious decision" to not oppose the trademark application. (Jenkins Aff. ¶ 13, 14; Ferguson Ex. 41). Defendants state that from March 1996 to March 2000, USPA Properties and plaintiff communicated on a regular basis regarding USPA's merchandising program and plaintiff did not object to defendants' use of the double horseman mark. (Jenkins Aff. ¶ 13; Ferguson Exs. 14, 16, 33).
Defendants further argue that plaintiff, having constructive knowledge of defendants' use the double horseman mark as early as February 1999, passively consented to defendants' use of the mark. (D.M.S.J., 29). Defendants allege that at least as early as January 1998, plaintiff was monitoring USPA's licensing program by reviewing published reports of the program and by employing private investigators to investigate the program. (Id.). Defendants allege that when they displayed the Jordache line, which included products featuring the double horseman mark, at the February 1999 Magic Show, plaintiff was also in attendance at the show, having its own booth located on the same floor of the same building as the USPA booth. (Mintz Aff. ¶ 20). Two employees of plaintiff both testified at depositions that part of their time at the Magic Show is spent looking at the other vendors' booths in order to see what the competition is showing. (Carman Dep. 34-35; Grossman Dep. 173-74).
Lastly, defendants assert that plaintiff was repeatedly given the opportunity to raise objections to defendants' use of the double horseman mark, and yet remained silent. (D.M.S.J., 30). They argue that plaintiff's silence and inaction communicated plaintiff's consent to defendants' use. (Id.).
Plaintiff, on the other hand, argues that it is clear that it "never consented — either explicitly or through its silence — to the USPA's or Jordache's use of the "Two Horsemen Symbol." (Plaintiff's Supplemental Memorandum In Opposition to the USPA and Jordache Defendants' Joint Motion for Summary Judgement, "P.S.M.O.", 4). Plaintiff disputes the claim that plaintiff consented to defendants' use of the double horseman mark in the March 1996 meeting between Jenkins and plaintiff's Assistant General Counsel. Plaintiff argues that Jenkins "admits" that this discussion was in the context of a potential settlement and that the "reaction" that he received from plaintiff in regards to the double horseman mark was only a "preliminary reaction." (P.M.O., 26; Ferguson Ex. 14 at 4). Further, plaintiff argues that Jenkins "admits" that settlement discussions in March 1996 between the parties had broken off within months thereafter and that as of June 1996, he believed that he could not rely on a position taken by plaintiff unless it was in writing. (P.M.O., 26; Ferguson Ex. 16 at 2). Plaintiff argues that there is no evidence that defendants ever received consent to the double horseman mark in writing. (P.M.O., 26-27). Plaintiff further contends that Jenkins "admits" in a February 4, 1997 letter, which provided USPA Properties' formal report on the status of its licensing program to the USPA Executive Committee and Board of Governors, that plaintiff had objected to the double horseman mark. (P.M.O., 27; Bernstein Ex. 4 at 5). He stated that "we are proceeding with the registration of our active horseman marks both single and double horseman in the face of the opposition of Lauren." (Id.). In his deposition testimony, plaintiff points out that Jenkins stated that as of February 1997, USPA "considered it likely that Ralph Lauren would sue if we used any designs at all of an active horseman." (Bernstein Ex. 1 at 67-68).
Defendants argue that the significance of this letter must be determined according to the context in which it was written. (D.M.S.J., 11). Defendants state that "just prior" to the writing of this letter, Jenkins became aware that PRL had requested an extension of time to oppose the double horseman mark and that previously, "when PRL had sought an extension of time to oppose one of USPA's applications for a trademark, a notice of opposition soon followed," which then "led Mr. Jenkins to believe that PRL had reversed [Assistant General Counsel's] previous approval of the Two Horsemen Symbol." (Id.; Jenkins Supp. Aff. ¶ 2; Stipulated Facts ¶ 13-14). Defendants argue that "PRL's ultimate `conscious decision' not to oppose the Two Horsemen Symbol . . . confirmed [Jenkins'] belief that, based on [Assistant General Counsel's] prior acquiescence to the use of the Two Horsemen Symbol, PRL did not object to its use." (Id.; Ferguson Ex. 41).
While Jenkins states that he showed plaintiff an embroidery of the double horseman mark (Jenkins Aff. ¶ 13), plaintiff's Assistant General Counsel recalls only having seen a drawing of the mark at some point in time. (Bernstein Ex. 5 at 562). Plaintiff argues that there is no evidence that the representation of this mark that defendants showed to plaintiff in March 1996 is the same representation that Jordache is using in its present USPA line, nor that plaintiff could have anticipated the manner in which the mark is presently being used. (P.M.O., 27).
Plaintiff argues that its failure to file a Notice of Opposition in December 1996 to USPA's intent to use trademark application of the double horseman mark does not constitute a failure to object to the use of that mark. (P.M.O., 28). Plaintiff points out that after USPA failed to file the Statement of Use of the double horseman mark with the PTO, and then subsequently filed a new application for the mark with the PTO, that plaintiff did then file a Notice of Opposition. (Bernstein Ex. 5 at 109-13; Ferguson Exs. 32, 34).
Plaintiff argues that there is no evidence that plaintiff obtained information concerning defendants' use of the double horseman mark as a result of plaintiff's use of private investigators or Jordache's attendance at the February 1999 Magic Show. (P.M.O., 28-29). Plaintiff states that most of the investigative companies that it employs to monitor the market with respect to plaintiff's trademarks are retained to conduct seizures of counterfeit goods, though some do bring potential infringements to plaintiff's attention on an "ad hoc basis." (P.M.O., 8; Bernstein Ex. 5 at 61-63, 77-78). Plaintiff alleges that none of these investigators ever brought to plaintiff's attention any of defendants' marks or products that it deemed to be infringing. (Id. at 75-76). Further, while plaintiff's employees and those of its licensees are asked to report infringements, prior to Fall 1999, plaintiff states that it received no such reports of violations by defendants in the United States. (Id., at 48-50).
As for the Magic Show, plaintiff states that its licensee, Polo Jeans Company, sets up a booth at each show and that occasionally, one or more of plaintiff's employees may attend. (Ps Opp., 9). At the Spring 2000 show, two Polo Jeans executive did see a USPA booth "displaying a knit shirt which appeared to have an exact replica of the PRL Polo Player Symbol on it." (Id.) However, neither of these executives ever saw a USPA booth at any prior show, and plaintiff states that there is no "evidence that any other representative of Polo Jeans Company or PRL has ever seen a USPA booth or USPA product at any other Magic show." (Id., at 9-10; Bernstein Exs. 10 at 42-44, 11 at 174).
Plaintiff states that the first time that it became aware of any infringing UPSA products being sold by Jordache was in September 1999, and yet even then, the products discovered were not those which bore the double horseman mark. (P.M.O., 29). Plaintiff argues that the first time that plaintiff learned of products bearing the double horseman mark was in discovery conducted during the present litigation. (Id.; Bernstein Ex. 5 at 564-66; Sporn Dec. ¶¶ 6,7). Plaintiff further alleges that during settlement negotiations between the parties beginning in June 1999, USPA did not inform plaintiff that it had entered into a licensing agreement with Jordache, that it was marketing a new line of products, or that it was using the double horseman mark. (P.M.O., 31).
B. Inexcusable Delay
Defendants also argue that plaintiff delayed four years in revoking its consent to defendants' use of the double horseman mark and that such delay was inexcusable. (D.M.S.J., 30). Defendants state that in delaying four years, plaintiff "slept on its rights and has lulled the USPA and Jordache into a false sense of security." (Id.). Defendants further state that USPA purposefully presented plaintiff with the double horseman mark so as to avoid litigation and that had plaintiff then initially objected to defendants' use of the mark, defendants "could have pursued further discussions to avoid disputes." (Id.). Plaintiff instead held its objections until after defendants invested substantial time and resources in the mark. (Id.). Defendants allege that they were affirmatively misled into investing substantial time and resources in the development of the double horseman mark. (Id.).
Plaintiff argues that it brought its claims "promptly upon learning of the infringing USPA products and [did] not unreasonably delay in taking action against Defendants." (P.M.O., 32). Plaintiff claims that it gained actual knowledge of defendants' allegedly infringing products "on or about September 24, 1999 . . . and commenced this lawsuit in response on October 1, 1999." (Id.). These products, however, did not bear the double horseman mark. (Id., 29). Plaintiff argues that the first time that plaintiff learned of products bearing the double horseman mark was during discovery conducted in the present litigation. (Id.; Bernstein Ex. 5 at 564-66; Sporn Dec. ¶¶ 6, 7). Plaintiff states that it did not originally name USPA as a defendant, but instead waited until March 1, 2000, due to the fact that plaintiff was "reasonably attempting to reach a settlement" with USPA. (Id., 34; Sporn Dec. ¶ 3). Further, plaintiff alleges that it did not originally name Jordache as a defendant because at the time of it initially filing this lawsuit, plaintiff was "unaware" of Jordache's connection to the allegedly infringing products. (Ps Opp., 34; Sporn Dec. ¶ 4).
C. Undue Prejudice
Defendants argue that as a result of plaintiff's consent to defendants' use of the double horseman mark, USPA allowed Jordache to utilize the mark starting in December 1998, and that Jordache then proceeded to invest substantial time and resources into developing a marketing program around the mark, a program in which defendants "are now deeply entrenched and which to abandon would cause them grave injury." (D.M.S.J., 32-33; Jenkins Aff. ¶ 17). In 1999, defendants invested approximately $450,000.00 in developing and manufacturing products using the double horseman mark which appears on approximately 30% of all products in USPA's line; in 2000, they spent approximately $690,000.00. (Mintz Aff. ¶ 25, 38). In 1999, Jordache sold approximately 69,000 products bearing the mark; in 2000, Jordache sold approximately 216,000 products, grossing approximately $2.4 million. (Id., ¶ 26, 43). Further, the double horseman mark has been extensively utilized on the packaging and displays used to merchandise USPA's line, for example on the hangtags of clothing and advertising signs that Jordache created. (Id., ¶ 10).
"In reliance on PRL's representation that the use of the Two Horsemen Symbol would not infringe their rights, the PTO approval, and Jenkins' assurances, [Jordache] began full-scale production of the USPA Line. This Line included the Two Horsemen Symbol." (Mintz Aff. ¶ 19).
Plaintiff argues that due to the fact that defendants cannot show that they relied on plaintiff's knowledge or consent with regard to their use of the double horseman mark, "there can be no showing of prejudice on the part of the Defendants." (P.M.O., 34-35). Again, plaintiff argues that Jenkins "admits" that settlement discussions between the parties from March 1996 had broken off within months thereafter and that as of June 1996, he believed that he could not rely on a position taken by plaintiff unless it was in writing. (Id., 35; Ferguson Ex. 16 at 2). Plaintiff states that there is no evidence that defendants ever received consent to the double horseman mark in writing. (P.M.O., 35). Plaintiff points to the testimony of a former Jordache employee who stated that as late as June 1999, Jordache was aware that USPA had yet secured approval from plaintiff to use the double horseman mark. (P.S.M.O., 4). Further, plaintiff argues that a finding of reliance on the part of defendants is "incredible in the face of the undisputed evidence that PRL has been involved in numerous adversarial proceedings with the USPA over the years and both the USPA and Jordache Defendants feared litigation by PRL throughout the time period during which they now claim reliance." (P.M.O., 35).
Defendants point out that this testimony is from "a disgruntled former employee who is determined to retaliate against Jordache both for firing her and for refusing to succumb to her extortionate demands for money." (Memorandum of Law in Further Support of United States Polo Association, Inc., USPA Properties, Inc., Jordache, Ltd., L.V. Enterprises, Inc., and U.S. Polo Association, Ltd.'s Motion for Summary Judgment, "D.S.M.", 1).
This Court finds that genuine issues of material fact exist as to whether plaintiff consented to defendants' use of the double horseman mark, as well as whether plaintiff had knowledge of defendants' alleged infringing use. Therefore, this Court also finds that genuine issues of material fact exist as to whether plaintiff inexcusably delayed in bringing its claim against defendants and whether defendants were unduly prejudiced by this alleged delay. Therefore, both plaintiff's and defendants' motions for summary judgment on defendants' defense of acquiescence are denied. Defendants' Claim of Laches
Plaintiff argues that defendants' bad faith in adopting the double horseman mark as well an alleged likelihood of confusion due to defendants' use of the mark bars defendants' acquiescence defense. (P.M.O., 19-25). Due to the fact that the Court finds that there are genuine issues of material fact as to whether plaintiff consented to defendants' use of the double horseman mark, whether plaintiff inexcusably delayed in bringing this action and whether defendants were prejudiced by any such alleged delay which preclude granting both plaintiff's and defendants' motions for summary judgment on defendants' affirmative defense of acquiescence, it is not necessary for the Court to reach these arguments at this time.
Defendants also argue that plaintiff is barred from contesting defendants' use of the double horseman symbol by the doctrine of laches and defendants seek summary judgment on that ground. Plaintiff argues that its claim is not barred by the doctrine of laches and seeks summary judgment in their favor. For the following reasons, both motions for summary judgment on the doctrine of laches are denied.
Laches "is an equitable defense that bars a plaintiff's . . . claim where he is guilty of unreasonable and inexcusable delay that has resulted in prejudice to the defendant."Eppendorf-Netheler-Hinz GMBH v. National Scientific Supply Co., Inc., et al., 2001 WL 798844, 2 (2d Cir. 2001), citingIkelionwu v. United States, 150 F.3d 233, 237 (2d Cir. 1998). To prevail on this defense, a defendant must make a showing that is similar to that of acquiescence. Information Superhighway, Inc. v. Talk America, Inc, et al., 274 F. Supp.2d 466, 471 (S.D.N.Y. 2003); See also ProFitness Physical Therapy Center v. Pro-Fit Orthopedic and Sports Physical Therapy P.C., 314 F.3d 62, 67 (2d Cir. 2002) (defining acquiescence and laches as "closely related doctrines."). Defendant must show that "(1) the plaintiff knew of the defendant's misconduct; (2) the plaintiff inexcusably delayed in taking action; and (3) the defendant was prejudiced by the delay." Ikelionwu, 150 F.3d at 237. Further, a party that is asserting a laches defense must show that it is coming before the court with clean hands. See Frankel v. Central Moving Storage Co., 1997 WL 672003 (S.D.N.Y. 1997) ("To prove the equitable defense of laches, defendant must show . . . good faith conduct on the part of the defendant.").
Defendants allege that plaintiff had knowledge of the double horseman mark and of defendants' intent to use that mark in a sports merchandising program since 1996, when Jenkins met with plaintiff's Assistant General Counsel. (D.M.S.J., 28; Jenkins Aff. ¶ 12, 13; Sporn Dep. 109-110, 562; Ferguson Exs. 14, 16). Defendants further allege that plaintiff possessed constructive knowledge of defendants' use of the double horseman mark as early as February 1999. (D.M.S.J., 29). Plaintiff, on the other hand, alleges that the first time that it learned of defendants' products bearing the double horseman mark was during discovery conducted in the present litigation. (P.M.O., 29; Bernstein Ex. 5 at 564-66; Sporn Dec. ¶¶ 6, 7).
Defendants allege that plaintiff delayed four years in bringing the present action and that such delay was inexcusable. (D.M.S.J, 30). Defendants further argue that with this delay, plaintiff "slept on its rights and . . . lulled the USPA and Jordache into a false sense of security." (Id.). Defendants allege that they were affirmatively misled into investing substantial time and resources into the development of the double horseman mark and that if they now have to abandon their merchandising program surrounding the mark, such "would cause them grave injury." (Id., 30, 32-33; Jenkins Aff. ¶ 17). Plaintiff alleges that it brought this action "promptly upon learning of the infringing USPA products and [did] not unreasonably delay in taking action against Defendants." (P.M.O., 32). Further, plaintiff argues that because defendants cannot show that they reasonably relied on plaintiff's knowledge or consent as to their use of the double horseman mark, "there can be no showing of prejudice on the part of the Defendants." (Id., 34-35).
Here, as with the issue of acquiescence, the Court finds that genuine issues of material fact exist as to whether plaintiff knew of defendants' conduct, and therefore, whether plaintiff inexcusably delayed in taking action against defendants' alleged infringement, and whether defendants were prejudiced by any such alleged delay. Therefore, both plaintiff's and defendants' motions for summary judgment on defendants' defense of laches are denied.
Plaintiff argues that defendants' bad faith in adopting the double horseman mark as well an alleged likelihood of confusion due to defendants' use of the mark bars defendants' laches defense. (P.M.O., 19-25). Due to the fact that the Court finds that there are genuine issues of material fact as to whether plaintiff had knowledge of defendants' use of the double horseman mark, whether plaintiff inexcusably delayed in bringing this action and whether defendants were prejudiced by any such alleged delay which preclude granting both plaintiff's and defendants' motions for summary judgment on defendants' affirmative defense of laches, it is not necessary for the Court to reach these arguments at this time.
CONCLUSION
For the foregoing reasons, both plaintiff's and defendants' motions for summary judgment on defendants' affirmative defenses of acquiescence and laches are DENIED.SO ORDERED.