Pinkette Clothing, Inc. v. Cosmetic Warriors Ltd.

• Decision Date: 29 June 2018
• Docket Number: No. 17-55325,17-55325
• Citation: 894 F.3d 1015
• Parties: PINKETTE CLOTHING, INC., a California corporation, Plaintiff-Counter-Defendant-Appellee, v. COSMETIC WARRIORS LIMITED, believed to be a United Kingdom limited company doing business as Lush Handmade Cosmetics, Defendant-Counter-Claimant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

894 F.3d 1015

PINKETTE CLOTHING, INC., a California corporation, Plaintiff-Counter-Defendant-Appellee,

v.COSMETIC WARRIORS LIMITED, believed to be a United Kingdom limited company doing business as Lush Handmade Cosmetics, Defendant-Counter-Claimant-Appellant.

No. 17-55325

United States Court of Appeals, Ninth Circuit.

Argued and Submitted April 12, 2018—Pasadena, California

Filed June 29, 2018

Rachel Zimmerman Scobie (argued), Ian G. McFarland, Heather J. Kliebenstein, and John A. Clifford, Merchant & Gould P.C., Minneapolis, Minnesota, for Defendant-Counter-Claimant-Appellant.

Kevin M. Bringuel (argued), Sarah Silverton, David Crane, Tiffany Hansen, Enoch Liang, and James Lee, LTL Attorneys LLP, South San Francisco, California, for Plaintiff-Counter-Defendant-Appellee.

Before: John M. Rogers,^* Jay S. Bybee, and Paul J. Watford, Circuit Judges.

BYBEE, Circuit Judge:

Cosmetic Warriors Limited ("CWL") sells LUSH-branded cosmetics and related goods, while Pinkette Clothing sells LUSH-branded women's fashions. CWL seeks both a permanent injunction restraining Pinkette from infringing on CWL's LUSH mark and cancellation of Pinkette's registration of its own LUSH mark. The district court held that laches barred CWL's infringement and cancellation claims and accordingly entered judgment for Pinkette.

The Lanham Act recognizes laches as a defense to a petition for cancellation of a trademark registration. 15 U.S.C. § 1069. Although such a petition may be filed "[a]t any time," § 1064 limits the grounds for cancellation after five years have passed from the date of registration—i.e., after the mark becomes incontestable. Id. § 1064. Relying on Petrella v. Metro-Goldwyn-Mayer, Inc. , ––– U.S. ––––, 134 S.Ct. 1962, 188 L.Ed.2d 979 (2014), and SCA Hygiene Products v. First Quality Baby Products, LLC , ––– U.S. ––––, 137 S.Ct. 954, 197 L.Ed.2d 292 (2017), CWL argues that laches cannot bar a cancellation claim if it is brought within the five-year period specified in § 1064.

We write principally to address what effect, if any, Petrella and SCA Hygiene had on applying laches to a trademark cancellation claim. In Petrella , the Supreme Court held that laches could not bar a copyright infringement claim brought within the Copyright Act's three-year statute of limitations. 134 S.Ct. at 1967. And in SCA Hygiene , the Court held that laches could not bar a patent infringement claim brought within the Patent Act's six-year statute of limitations. 137 S.Ct. at 959. We conclude that the principle at work in these cases—a concern over laches overriding a statute of limitations—does not apply here, where the Lanham Act has no statute of limitations and expressly makes laches a defense to cancellation. As CWL's other arguments on appeal are also without merit, we affirm the judgment of the district court.

I. BACKGROUND

A. CWL's Use of the LUSH Mark on Cosmetics and Related Goods

In the mid-1990s, CWL began selling cosmetics through a mail-order catalogue and brick-and-mortar retail store located in the United Kingdom. The first edition of its catalogue was titled "Cosmetic House" but asked customers to submit suggestions for a new name. One customer recommended "Lush." CWL adopted the name and began selling a variety of products under the LUSH mark, including makeup, bath and body products, spa treatments, and fragrances. The first LUSH retail store in Canada opened in 1996, and the first such store in the United States opened in 2002. Today, CWL has about 940 LUSH retail stores in 49 different countries.

From the beginning, LUSH retail staff wore LUSH-branded aprons. There is no evidence, however, of CWL's making any clothing sales to end consumers in the United States until at least 2004. Between 2004 and 2013, CWL sold fewer than 1,000 LUSH-branded t-shirts, tank tops, or sweatshirts in the United States. It appears these sales were part of the company's promotional "swag program," and it is not clear how many of the sales were to end consumers rather than employees.

CWL has multiple trademark registrations in the United States, including registrations for use of LUSH on perfumes and hair services and for use of LUSH TIMES on publications. Though CWL has never had a registration in the United States for use of LUSH on clothing, it did have such a registration in Canada (specifically, for use on t-shirts) until recently. The Canadian registration was filed in 2002, but was later cancelled on the grounds that CWL's sales of t-shirts at cost for promotional purposes did not qualify for trademark protection.

CWL actively polices the LUSH mark, and its log of trademark-enforcement matters reflects over 130 such disputes. CWL has investigated, for example, Lush Day Spa Salon in Minnesota in 2012; Lush Salon & Day Spa in Tennessee in 2013; and Lush Aveda Salon and Spa in Illinois in 2014. CWL has also successfully opposed the registration of numerous marks, such as LUSH BERRY, LUSHPOP, and HYDRA LUSH. And CWL has filed a number of infringement actions. See, e.g. , Cosmetic Warriors Ltd. v. Nailush LLC , No. 17-1475, 2017 WL 5157390, at *1 (D.N.J. Nov. 6, 2017) ; Cosmetic Warriors Ltd. v. Lush Boutique, L.L.C. , No. 09-6381, 2010 WL 481229, at *1 (E.D. La. Feb. 1, 2010).

B. Pinkette's Use of the LUSH Mark on Clothing

In 2003—after CWL had already entered the United States—Edward Kim, his sister Erica Kim, and their cousin Daniel Kim started Pinkette Clothing, a company that sells young women's clothing under different labels. One of those labels is LUSH. The Kims testified that they brainstormed the name together by picking words out of a dictionary, ultimately deciding on the adjective "lush" because it described what their brand "aspire[d] to be," namely, "appealing, attractive, prosperous, and abundant."

After landing on the LUSH name, the Kims began researching internet domain names, and in the process, discovered that CWL sold LUSH-branded cosmetics at lush.com. They checked whether CWL sold clothing on its website, determined that it did not, and ultimately selected lushclothing.com as Pinkette's domain name. From September 2003 onward, Pinkette has sold women's clothing under the LUSH mark to retailers in the United States and Canada—principally to Nordstrom but also to retailers such as TJ Maxx and Bloomingdale's.

In May 2009, Pinkette filed a trademark registration application for use of LUSH on clothing in the United States. The application was published for opposition in the Trademark Official Gazette. A trademark watch service notified CWL's outside counsel of the application, but CWL claims that it did not become aware of Pinkette's use of the LUSH mark, much less its trademark application, until years later. There was no opposition to Pinkette's application, and Pinkette's LUSH mark was registered in July 2010, thereby putting CWL on constructive notice of Pinkette's claim to ownership. See 15 U.S.C. § 1072 ("Registration of a mark on the principal register ... shall be constructive notice of the registrant's claim of ownership thereof.").

In August 2010, Pinkette filed a trademark registration application for use of LUSH on clothing in Canada. That application was rejected in December 2010 for being confusingly similar to CWL's LUSH mark. Four years later, Pinkette began an anonymous cancellation proceeding against CWL's Canadian registration for use of LUSH on t-shirts. As noted above, that action was successful in 2017—though it remains on appeal in Canada.

C. Procedural History

CWL claims it had no actual knowledge of Pinkette's use of the LUSH mark until late 2014. In December 2014, CWL filed a trademark registration application for use of LUSH on clothing in the United States, which was rejected on account of Pinkette's preexisting registration. It was not until June 2015—approximately four years and eleven months after Pinkette's registration issued—that CWL finally filed a petition with the Trademark Trial and Appeal Board ("TTAB") to cancel Pinkette's registration.

After CWL filed its cancellation petition, Pinkette filed this action in federal court, seeking a declaratory judgment that it did not infringe on CWL's trademark rights, or alternatively that laches bars CWL from asserting its rights against Pinkette. CWL counterclaimed for trademark infringement and cancellation of Pinkette's registration, among other claims. On the parties' joint motion, proceedings before the TTAB were stayed pending resolution of this case.

The district court determined that a jury would decide CWL's infringement and cancellation claims and serve in an advisory capacity as to Pinkette's laches defense, which would be decided by the court. Pinkette moved in limine to exclude from the jury any reference to its Canadian trademark registration application and cancellation petition. CWL opposed, arguing that Pinkette's actions in Canada demonstrated its knowledge of the likelihood of confusion between the two companies' marks and, hence, its bad faith in continuing to use the LUSH mark in the United States. The district court granted Pinkette's motion but allowed CWL to present the disputed evidence to the court after the jury was dismissed.

Following a five-day trial, the jury returned a special verdict finding for CWL on its infringement and cancellation claims but finding (in an advisory capacity) for Pinkette on its laches defense. The parties then presented additional evidence regarding laches, at the conclusion of which the court rendered an oral decision holding that laches barred CWL's claims. Nevertheless, CWL moved for judgment in its favor, requesting a permanent injunction prohibiting Pinkette from using the LUSH mark and an order directing the TTAB to cancel Pinkette's registration. The district court denied CWL's motion in a written decision and entered judgment for Pinkette on all claims. CWL timely appealed.

II. ANALYSIS

CWL raises four issues before us. First, was laches a proper defense where CWL brought its cancellation claim within the...