Takeaway: Do not delay in enforcing your intellectual property rights, as a delay in bringing legal action may lead to forfeiture of the right to seek equitable relief.
On January 29th, the Ninth Circuit Court of Appeals handed down its ruling on Eat Right Foods Ltd. v. Whole Foods Market, Inc. et al. The suit, filed in the Western District of Washington in late 2013, accused the defendant of infringing Eat Right Foods’ trademark as a part of its “Eat Right America” health and wellness campaign.
Eat Right Foods (ERF) allowed Whole Foods to use the “EATRIGHT” mark for four years before filing suit for trademark infringement. According to the district court, this constituted an unreasonable delay. The district court therefore granted Whole Foods’ motion for summary judgment on their affirmative defenses of laches and acquiescence.
Laches bars a claim if there was an unreasonable delay in bringing suit and the delay prejudiced the defendant. In this case, the district court determined that Whole Foods established expectations-based prejudice because Whole Foods “invested a significant amount of time and money in… [promoting] the ANDI® food-scoring system and Eat Right America diet and nutritional programs at its stores.” Additionally, the court rejected the plaintiff’s assertion that the delay arose from “actively seeking to resolve [the] matter out of court.” Instead, the court agreed with Whole Foods and found that the ERF’s delay was a result of an attempt to sell its brand to the larger company.
The circuit court vacated the summary judgment in favor of Whole Foods, holding that the district court improperly weighed the parties’ competing evidence by failing to resolve all factual disputes in favor of the non-moving party. Specifically, the panel of judges found that the district court did not credit ERF’s evidence that the delay was part of an attempt to resolve its claims against Whole Foods without litigation.
Concerning acquiescence, the circuit court ruled that the mistakes made by the district judge also affected its acquiescence analysis. Due to the district court’s flawed analyses, the circuit remanded the case for further proceedings.
For intellectual property owners, this case highlights the importance of monitoring usage of your intellectual property and enforcing your rights expeditiously. If immediate enforcement of your rights might jeopardize a business relationship or litigation is otherwise impractical, the intellectual property owner must take action to retain their rights of enforcement. If any delay or interruption arises in the enforcement of your IP rights, communicate to the infringer that the use of your intellectual property is unauthorized, and explain and document the reasoning behind the delay or interruption in enforcement. If done correctly, these actions will prevent the adverse party from claiming the affirmative defenses seen in this case.