Mckeon Prods. v. Howard S. Leight & Assocs., 100821 FED6, 20-2279

CourtUnited States Court of Appeals (6th Circuit)
JudgeBefore: NORRIS, KETHLEDGE, and NALBANDIAN, Circuit Judges.
Writing for the CourtNALBANDIAN, CIRCUIT JUDGE.
PartiesMcKeon Products, Inc., Plaintiff-Appellee, v. Howard S. Leight and Associates, Inc., Defendant, Honeywell Safety Products USA, Inc., as successor-in-interest, Interested Party-Appellant.
Docket Number20-2279

McKeon Products, Inc., Plaintiff-Appellee,

v.

Howard S. Leight and Associates, Inc., Defendant,

Honeywell Safety Products USA, Inc., as successor-in-interest, Interested Party-Appellant.

No. 20-2279

United States Court of Appeals, Sixth Circuit

October 8, 2021

Argued: June 9, 2021

Appeal from the United States District Court for the Eastern District of Michigan at Detroit. No. 2:95-cv-76322-Paul D. Borman, District Judge.

ARGUED:

Mark L. Johnson, GREENE ESPEL PLLP, Minneapolis, Minnesota, for Appellant.

J. Michael Huget, HONIGMAN, Ann Arbor, Michigan, for Appellee.

ON BRIEF:

Mark L. Johnson, Holley C. M. Horrell, GREENE ESPEL PLLP, Minneapolis, Minnesota, Jill M. Wheaton, DYKEMA GOSSETT PLLC, Ann Arbor, Michigan, for Appellant.

J. Michael Huget, Sarah E. Waidelich, Patrick Rawsthorne, HONIGMAN, Ann Arbor, Michigan, for Appellee.

Before: NORRIS, KETHLEDGE, and NALBANDIAN, Circuit Judges.

OPINION

NALBANDIAN, CIRCUIT JUDGE.

In 1995, McKeon Products ("McKeon") sued Howard S. Leight and Associates ("Leight") over its use of a phonetically identical trademark. Both companies made earplugs. McKeon used the brand name "MACK'S," and Leight used the brand names "MAX" and "MAX-LITE."1 The potential for confusion is obvious.

Rather than litigate McKeon's trademark infringement claims, the parties entered a settlement agreement that the district court approved by consent decree. Their goal was to prevent consumer confusion over the brand names. To achieve that end, Leight agreed not to sell its MAX-brand earplugs into the "Retail Market." And McKeon agreed that Leight could continue to sell its earplugs in "the Industrial Safety Market and elsewhere, except as expressly agreed."

But the agreement and the consent decree never contemplated the internet. In 2017, McKeon complained to Honeywell (which now owns Leight) about sales of MAX-brand earplugs on Amazon and other retail websites. McKeon argued that the consent decree prevents Honeywell from selling these earplugs on those sites. Honeywell responded that the consent decree's definition of the retail market didn't cover websites. And, in any event, distributors had been selling MAX-brand earplugs on Amazon and similar websites for more than a decade without complaint from McKeon. So laches barred any effort by McKeon to belatedly enforce the consent decree.

Unpersuaded, McKeon moved the district court to enforce the consent decree and end Honeywell's online retail sales. McKeon won below, where the district court held that laches wasn't an available defense and that McKeon had the correct interpretation of the consent decree.

Honeywell challenges both determinations. So this appeal poses three questions. Is laches available to Honeywell? If so, does laches bar McKeon's motion to enforce the consent decree against the allegedly prohibited online sales? And if McKeon's motion was timely, is its argument that some websites fall into the consent decree's definition of the retail market correct?

I.

McKeon has sold "MACK'S" earplugs to retail consumers since the 1960s. In the 1980s, Leight began marketing and selling MAX-brand earplugs to distributors. The brand names are phonetically identical.

In 1995, McKeon sued Leight for trademark infringement. The company was concerned that MAX-brand earplugs were encroaching into the retail market. McKeon had historically focused its sales on retail consumers and had understood that MAX products were generally sold to industrial customers. McKeon moved for a preliminary injunction the next year.

The parties settled before the district court decided McKeon's motion. Neither party admitted liability, and the district court did not make any finding of consumer confusion. The settlement produced a consent decree-styled as a "permanent injunction"-intended "to minimize the likelihood of confusion concerning the parties' respective trademarks by Leight's sale and marketing of [MAX-brand] earplugs in the Retail Market." (R. 32-2, PageID 31-32.) None of its terms prohibits McKeon's sales or marketing in any way. Instead, the parties regulated the business practices of Leight and its various distributors. For example, Leight had to stop any packaging of MAX-brand earplugs that made their "sale and distribution appropriate for the Retail Market" and ban its distributors from repackaging its earplugs and using the MAX-brand trademarks. (Id. at PageID 31.) The consent decree explicitly binds Leight's successors and any party with actual notice.

The consent decree divided the markets into which McKeon and Leight could sell their products. McKeon got the "Retail Market," and Leight got the "Industrial Safety Market and elsewhere." (Id. at PageID 31-32.) The parties defined the "Retail Market" as "the market consisting of all retail establishments including the D[r]ug and Grocery Market, sporting goods stores and mass merchandisers." (Id. at PageID 30.) Mass. merchandisers include Walmart, Target, and Meijer. (Id. at PageID 32.)

The "Drug and Grocery Market" includes "retail establishments where medicines and miscellaneous articles such as cosmetics, food and film and/or where food stuffs, meats, produce, dairy products and other household supplies are the principal products sold as well as any distributor or supplier who sells to these markets." (Id. at PageID 29-30.) Walgreens is one example. (Id. at PageID 30.)

Leight retained its right to sell MAX-brand earplugs "in the Industrial Safety Market and elsewhere, except as expressly agreed in the Consent Order." (Id. at PageID 32.) The "Industrial Safety Market" is "the market in which manufacturing entities purchase earplugs and other hearing protection for their employees' use as well as any distributor or supplier who sells within that market." (Id. at PageID 30.)

Correspondence from 1999 documents show McKeon handled an alleged violation of the consent decree by Bacou USA ("Bacou"), which owned Leight at the time. McKeon complained about its discovery of MAX-brand earplugs in drug stores and suggested that this issue had arisen before. After reminding Bacou of its "affirmative duty" to ensure MAX-brand earplugs are not sold to retailers, McKeon disclaimed any responsibility to "play policeman" and asked for copies of the requirements that Bacou was giving its distributors. (R.32-6, Bacou Correspondence, PageID 62-64.) Bacou updated its distribution requirements to include an explicit ban on the resale of MAX-brand earplugs into "retail/consumer" markets. (Id. at PageID 78.) And it chastised a vendor that both McKeon and Bacou suspected to be a problem.

After this dispute fizzled out, the record includes no further correspondence about the consent decree until 2017. McKeon has represented both in a declaration and at the hearing on the motion to enforce that it has regularly worked with Leight's parent company at any given time to resolve alleged sales of MAX-brand earplugs in the retail market.

By 2009, Sperian Protection ("Sperian"), which then owned Leight, was selling MAX-brand earplugs directly on Amazon. Honeywell bought Sperian, and thus Leight, in 2010. Honeywell has never suspended these online sales, which grew by almost 70% from 2016 to 2017 after growing by 52% from 2015 to 2016.

In September 2017, McKeon emailed Honeywell after its discovery of MAX-brand earplugs available for sale on Amazon. The email asserted that the sales violated the consent decree and directed Honeywell to cease and desist. Honeywell responded that its online sales of MAX-brand earplugs were "in the industrial safety market [] to manufacturing entities, distributors, and resellers." (R.32-4, Oct. 25, 2017 Email, PageID 38.) McKeon accused Honeywell of improperly narrowing the consent decree's vision of the retail market. It described Amazon as "the leading internet retail marketplace," and further complained about sales McKeon had discovered on other websites, like Walmart's. (R.32-5, Nov. 13, 2017 Letter, PageID 42.) McKeon offered to give Honeywell time to remove its MAX-brand products from these websites. The record doesn't contain any further correspondence between the parties.

In March 2018, McKeon moved the district court to enforce the consent decree. Magistrate Judge Stafford held a hearing on laches and the interpretation of the consent decree. She concluded that laches was not an available defense to the motion to enforce and that Honeywell's online sales violated the consent decree. District Judge Borman adopted her Amended Report and Recommendation and granted McKeon's motion.

Honeywell moved to stay the order and filed a notice of appeal while that motion was pending. The district court stayed its ruling and required Honeywell to pay a $500, 000 bond.

II.

We review both whether laches is available as an affirmative defense and the interpretation of a consent decree de novo. Chirco v. Crosswinds Cmtys., Inc., 474 F.3d 227, 231 (6th Cir. 2007) (laches); Evoqua Water Techs., LLC v. M.W. Watermark, LLC, 940 F.3d 222, 228-29 (6th Cir. 2019) (consent decrees).

III.

The first issue is whether Honeywell can raise laches as an affirmative defense to McKeon's motion to enforce the consent decree. We have already resolved that question affirmatively. See Bergmann v. Mich. State Transp. Comm'n, 665 F.3d 681, 684 (6th Cir. 2011). A motion to enforce a consent decree seeks an equitable remedy and is thus susceptible to equitable defenses. Id. at 683 (citing Cook v. City of Chicago, 192 F.3d 693, 695 (7th Cir. 1999) (Posner, C.J.)). Every other circuit to address whether laches can bar a motion to enforce a consent decree has reached the same conclusion. Coffey v. Braddy, 834 F.3d 1184, 1189 (11th Cir. 2016); Brennan v. Nassau County, 352 F.3d 60, 63-64...

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