Seattle Trademark Lawyer

In Internet Specialties West, Inc. v. Milon-Digiorgio Enterprises, Inc., the plaintiff owner of ISWest.com alleged that defendant’s use of ISPWest.com infringed its trademark rights. Both parties use their domain names in connection with their competing Internet service provider services. Relevant here is the Central District of California’s finding that laches did not bar plaintiff’s claim because the four-year analogous limitations period started in 2004 when the defendant began offering DSL, rather than in 1998 when the plaintiff gained actual knowledge of the defendant’s existence. This finding, coupled with the jury’s finding that defendant’s use of the domain name infringed plaintiff’s rights, led the district court to enter a permanent injunction against the defendant.

Defendant appealed.

On March 17, the Ninth Circuit affirmed the court’s laches ruling, finding that plaintiff’s delay in bringing suit did not prejudice the defendant within the context of a trademark infringement claim.

Of particular interest is Circuit Judge Andrew Kleinfeld’s dissent, wherein he found the majority “defies circuit precedent” on laches’ prejudice element:

“The key, and new, holding is ’[i]f this prejudice could consist merely of expenditures in promoting the infringed name, then relief would have to be denied in practically every case of delay’ applied in this case to a time period well in excess of the analogous statute of limitations period (6 years compared with 4) and exponential increases in business and business-building expenses around a trademark (438% increase in general business expense and a 14,931% increase in advertising expenditures). Notably, the language the majority uses in its holding comes from a case where the delay was less than a year, the infringement was deliberate, and in which longer periods of delay were distinguished. The practical effect of this new rule is to eviscerate the defense of laches in trademark law.”

Judge Kleinfeld explained his reasoning in terms of the Ninth Circuit case of Jarrow Formulas, Inc. v. Nutrition Now, Inc., 304 F.3d 829 (9th Cir. 2002):

“Where the presumption of prejudice applies, as it does in this case and did in Jarrow [because the plaintiff did not file suit within the analogous statute of limitations period], prejudice exists where an infringer is ‘forced to abandon its long-term investment in its presentation of [its product] to the public.’ In Jarrow Formulas, we said that had the plaintiff ‘filed suit sooner, [the infringer] could have invested its resources in an alternative identity … in the minds of the public.’ Likewise, had Internet Specialties sent a letter to ISPWest when it knew of the infringement, ISPWest would have had to deal with a name change for only 2,000 customers, not 13,000, and could have invested its resources in familiarizing the market and its customers with a new name. Jarrow quotes with approval Seventh Circuit language, that ‘investments to exploit [a market position with respect to the product at issue] are sufficient prejudice to warrant the application of laches.’”

In Judge Kleinfeld’s view, “[o]ur authorities compel the conclusion that laches applies” to these facts.

Further reading: Las Vegas Trademark Attorney’s discussion of the case; Coderights’ discussion.

The case cite is Internet Specialities West, Inc. v. Milon-Digiorgio Enterprises, Inc., Nos. 07-55087 and 07-55199, __ F.3d __, 2009 WL 690302 (9th Cir.).

Note: Most brackets in original; one parenthetical added by STL.