Injunctive Relief Available Even Where Laches Bars Trademark Infringement, Unfair Competition Damage Claims
The US Court of Appeals for the 11th Circuit affirmed a district court’s conclusion that laches barred an advertising and marketing company’s claims for monetary damages for trademark infringement and unfair competition, but remanded the case for assessment of injunctive relief to protect the public’s interest in avoiding confusion between two similarly named companies operating in the advertising sector. Pinnacle Advertising and Marketing Group, Inc. v. Pinnacle Advertising and Marketing Group, LLC, Case No. 19-15167 (11th Cir. Aug. 2, 2021) (Branch, J.)
Pinnacle Advertising and Marketing Group (Pinnacle Illinois) is an Illinois-based company and owner of two registered trademarks including the name “Pinnacle.” Pinnacle Illinois learned of a Florida-based company operating under almost the same name that was also in the advertising and marketing space—Pinnacle Advertising and Marketing Group (Pinnacle Florida) —through potential clients and a magazine’s accidental conflation of the two unrelated companies. Several years later, Pinnacle Illinois sued Pinnacle Florida for trademark infringement, unfair competition and cybersquatting. Pinnacle Florida filed a counterclaim seeking to cancel Pinnacle Illinois’s trademark registrations and also alleged that Pinnacle Illinois’s claims were barred by the doctrine of laches.
Following a jury trial, the district court granted Pinnacle Florida’s motion for judgment as a matter of law on Pinnacle Illinois’s cybersquatting claim. The jury returned a verdict in favor of Pinnacle Illinois on its claims for trademark infringement and unfair competition, awarding Pinnacle Illinois $550,000 in damages. The district court then granted Pinnacle Florida’s motion for judgment as a matter of law on its laches defense, concluding that Pinnacle Illinois’s trademark infringement and unfair competition claims were barred by laches because it waited more than four years to bring suit after it should have known that it had a potential infringement claim against Pinnacle Florida. The district court also cancelled Pinnacle Illinois’s registrations because it concluded that Pinnacle Illinois’s marks were merely descriptive and lacked secondary meaning. Pinnacle Illinois appealed.
Pinnacle Illinois argued that the district court abused its discretion in finding that Pinnacle Illinois’s claims were barred by laches, and that even if laches did bar Pinnacle Illinois’s claims for money damages, the district court should have considered whether injunctive relief was proper to protect the public’s interest in avoiding confusion between the two companies. Pinnacle Illinois also argued that the district court erred when it cancelled its registrations without regard to the jury’s findings of distinctiveness and protectability or the presumption of distinctiveness afforded to its registered marks.
The 11th Circuit found that the district court did not abuse its discretion in determining that laches barred Pinnacle Illinois from bringing its trademark infringement and unfair competition claims for monetary damages. Pinnacle Illinois sued after the Florida four-year statute of limitations had passed, and the Court found that the company was not excused for its delay because it did not communicate with Pinnacle Florida about the infringement until it filed suit. Pinnacle Florida also suffered economic prejudice because it invested significant time and money, including around $2 million, in developing its business under the Pinnacle name. The Court rejected Pinnacle Illinois’s contention that Pinnacle Florida’s evidence of prejudice showed only general investment in the company instead of the specific Pinnacle mark because promoting the business meant associating it with the “Pinnacle” name in the minds of consumers. Although the 11th Circuit affirmed the district court’s conclusion that Pinnacle Illinois’s claims for monetary damages were barred, it remanded for the district court to consider exercising its discretionary authority to grant Pinnacle Illinois’s request for injunctive relief to protect the public’s interest in avoiding confusion between the two companies.
Additionally, the 11th Circuit found that the district court erred in disregarding the jury’s findings and the presumption afforded to registered marks. Although the cancellation counterclaim was not submitted directly to the jury, the Court found that the jury made specific findings that Pinnacle Illinois’s marks were distinctive and thus trademark protectable, and the district court erred in disregarding those findings.
The 11th Circuit explained that the district court also erred in concluding that Pinnacle Illinois agreed that the jury would have no part in determining the factual issues underlying the cancellation counterclaim, and noted that even if such an agreement existed, it could not nullify a district court’s obligation to give proper deference to jury findings.
Finally, the 11th Circuit explained that in cancelling Pinnacle Illinois’s marks, the district court failed to hold Pinnacle Florida to its burden to rebut the presumption that Pinnacle Illinois’s marks were inherently distinctive. When a mark has been registered with the US Patent & Trademark Office (PTO), there is a rebuttable presumption that the marks are distinctive. Because the PTO did not require Pinnacle Illinois to provide proof that its marks had obtained secondary meaning during the registration process, its marks were entitled to a presumption of inherent distinctiveness, and Pinnacle Florida was required to overcome that presumption by showing that the marks were not distinctive.