United States: Laches Defense Supported By Three-Year, Two-Month Delay In U.S. Cancellation Action

Ava Ruha Corp. dba Mother's Market & Kitchen v. Mother's Nutritional Center, Cancellations Nos. 92056067 and 92056080, 113 U.S.P.Q.2d 1575 (T.T.A.B. 2015)

Mother's Nutritional Center ("Mother's Nutritional") applied to register the marks MOTHER'S (Stylized) and MOTHER'S NUTRITIONAL CENTER (together, the "MOTHER'S Marks"), both in connection with "retail grocery stores that exclusively feature foods authorized for purchase by pregnant women, new mothers and young children participating in the federal Supplemental Food Program for Women, Infants and Children (WIC)" in International Class 35. Both marks were published for opposition on June 16, 2009, and registrations issued on September 1, 2009.

On August 21, 2012, Ava Ruha Corp. d/b/a Mother's Market & Kitchen ("Ava Ruha") filed petitions to cancel both of Mother's Nutritional's registrations on the grounds of likelihood of confusion, dilution, and fraud. In its answer, Mother's Nutritional asserted the affirmative defense of laches. At issue here were Mother's Nutritional's motion for summary judgment and Ava Ruha's cross motion for summary judgment, both on Mother's Nutritional's laches defense1. At the outset, the Trademark Trial and Appeal Board (the "Board" or "T.T.A.B.") determined that a laches defense is not available for fraud claims, and thus limited consideration of the laches defense to Ava Ruha's likelihood of confusion and dilution claims.

To prevail on its laches defense, the Board held that Mother's Nutritional has the burden of establishing (i) undue or unreasonable delay by Ava Ruha in asserting its rights and (ii) prejudice to Mother's Nutritional resulting from the delay. Both of these inquiries are questions of fact, and so Mother's Nutritional was required to show that there was no genuine dispute of material fact as to either element.

As to the delay element, the Board first determined the operative date for calculating Ava Ruha's delay. The operative date was either the June 16, 2009 date of publication of Mother's Nutritional's applications, which would govern if Ava Ruha was aware of Mother's Nutritional's use of the MOTHER'S Marks prior to close of the opposition period for the applications, or alternatively, the September 1, 2009 date of registration of the marks, which would govern if Ava Ruha had no actual knowledge of Mother's Nutritional's marks before the close of the opposition period2. Because there was no genuine dispute that Ava Ruha knew of Mother's Nutritional's use of the MOTHER'S marks as early as 1998 (when Ava Ruha demanded that Mother's Nutritional cease use of the marks), the operative date for calculating Ava Ruha's delay was the June 16, 2009 date of publication. As such, the relevant delay period was a little over three years and two months.

Citing two other T.T.A.B. cases that found similar delay periods to be supportive of a laches defense, the Board held that Ava Ruha's delay "could support a defense of laches" and turned to consider whether Ava Ruha's delay was excusable. Ava Ruha asserted a progressive encroachment argument, claiming that its delay was reasonable and excusable because Mother's Nutritional had only recently redirected its business so that it more squarely competed with Ava Ruha, including by selling nutritional foods that were more in line with Ava Ruha's food products. However, the Board concluded that "the types of foods Ava Ruha points to as evidence of progressive encroachment are subsumed within the description of retail store services in the Registrations. For purposes of an attack on a registration, there can be no 'progressive encroachment' where the alleged encroachment is within the scope of the registration at issue." Because Ava Ruha could not show any change in Mother's Nutritional's business beyond the retail food services identified in the registrations, the Board rejected Ava Ruha's progressive encroachment argument, held that there was no justification for Ava Ruha's over three-year delay, and concluded that Mother's Nutritional had satisfied the first prong of the laches defense.

The Board next considered whether Mother's Nutritional was prejudiced by Ava Ruha's delay in bringing its cancellation claims. Mother's Nutritional showed that since June 16, 2009, it had added at least fifteen stores and spent over $7 million on promoting the MOTHER'S Marks and its services thereunder. Ava Ruha argued that Mother's Nutritional had not shown a nexus between Ava Ruha's delay and Mother's Nutritional's store opening and marketing expenditures. But the Board held that Mother Nutritional's "reliance" on Ava Ruha's delay was not required for a successful laches defense. Rather, Mother's Nutritional need only show that there had been a change in its economic position during the period of delay. Because there was no dispute that Mother's Nutritional had changed its economic position during the three-plus years between the registration date and the filing of the cancellation action, Mother's Nutritional satisfied the second prong of the laches defense.

Finally, although the Board found that Mother's Nutritional had proven the elements of a laches defense, and further that the defense barred Ava Ruha's dilution claim, it sua sponte raised the issue of "inevitable confusion," i.e., that a laches defense will not serve as a bar against a petition for cancellation on a likelihood of confusion ground when it is determined that consumer confusion is not only likely, but inevitable. Although Ava Ruha had not raised an "inevitable confusion" argument, and the Board acknowledged that it could be deemed to have waived this issue, the Board in its discretion declined to find a waiver in "the public interest of avoiding consumer confusion." Because the parties had not yet briefed the issue of the likelihood of confusion, the Board concluded that it could not definitively rule on the laches issue, and instead held that at trial, Ava Ruha's burden is to prove that confusion is not only likely, but rather inevitable.

The key takeaway from this decision is that although the Lanham Act allows a cancellation action to be filed as late as five years after the date of registration, this provision refers only to the latest conceivable date that a claim may be brought, and laches can still bar a cancellation claim as little as 38 months after the date of registration. Thus, barring a legitimate excuse (e.g., the registrant significantly changes its business after obtaining its registration; the parties were engaged in active settlement discussions), a mark owner should strive to assert a cancellation claim as soon after registration as possible.

Footnotes

1. Also at issue was (i) Ava Ruha's motion to amend, which was granted as conceded (the summary judgment motions were treated as pertaining to the Amended Petition to Cancel), (ii) Ava Ruha's motion for Fed. R. Civ. P. 56(d) discovery, which was denied as moot in view of its substantive response to Mother's Nutritional's summary judgment motion and its own cross-motion for summary judgment, and (iii) evidentiary objections, which were overruled.

2. The operative date could not be before the date of publication because that is the earliest an opponent may challenge an application, and it could not be after the date of registration because, even if Petitioner remained unaware of the marks at that time, Petitioner would at least have constructive knowledge of the marks as of the registration date.

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