The makers of popular Peloton stationary indoor cycling equipment successfully defeated trademark infringement claims brought against them because the plaintiff waited too long to file suit, bringing them one step closer to complete domination of the in-home fitness world. A recent ruling in the Central District of California ensures that they can continue to use the Peloton mark to sell their exercise equipment and the dream of the perfect workout solution.
The dispute arose when Move Press, the publisher of cycling publication Peloton Magazine, sued Peloton Interactive, the producer of Peloton cycling equipment and on-demand spin classes, for trademark infringement, federal Lanham Act and California state unfair competition, false advertising, and cancellation of trademark registrations over the use of the term “Peloton.” (“Peloton” refers to the main group or pack of cyclists in a race.) Peloton Interactive countersued for cancellation of Move Press’s trademark registrations and declaratory judgment regarding validity of Move Press’s trademarks, non-dilution, and non-infringing use.
In the decision, Move Press, LLC v. Peloton Interactive, Inc., No. 2:18-cv-01686-JAK-RAO (C.D. Cal. Sept. 5, 2019), a federal district court granted Peloton Interactive’s motion for summary judgment, finding Move Press’s claims against Peloton Interactive were barred under the equitable doctrine of laches, which protects defendants from plaintiffs’ unreasonable delay in bringing their claims. The Court found that because Move Press did not file until after the most analogous state statute of limitations had expired, its delay was unreasonable, and Peloton Interactive was prejudiced by the delay.
The Lanham Act, which governs trademarks, does not contains a statute of limitations, and therefore, there is no statute of limitations defense to a trademark claim. However, the Lanham Act expressly provides for defensive use of equitable principles, including laches. Accordingly, when a trademark plaintiff fails to file within the most analogous state law statute of limitations, there is a presumption that its claims are barred by laches. Once the presumption is established, the defendant must demonstrate that equity favors applying laches by showing the plaintiff’s delay was unreasonable and the defendant was prejudiced as a result of the delay.
In this case, the most analogous state statute of limitations for Move Press’s claims was four years, meaning the presumption of laches would apply if Move Press filed more than four years after it knew or should have known of the alleged confused between the Peloton marks. The Court found that Move Press knew or should have known of the alleged confusion at least by the time it became actually aware of Peloton Interactive’s use of the Peloton mark (as evidenced by the testimony of Move Press’s editorial director demonstrating when he was informed of Peloton Interactive and visited Peloton Interactive’s website). Move Press did not file its complaint until more than four years later.
Move Press argued its delay in suing was justified and laches should not apply because Peloton Interactive’s use of its mark progressively encroached on Move Press’s mark. Under the doctrine of progressive encroachment, a trademark owner does not need to sue for de minimis infringement. The obligation to sue arises only if and when the junior user changes the nature of its use of the mark, for example by altering its mark or by redirecting or expanding its business into different products, regions, or markets, bringing it into direct competition with the senior user. The Court rejected Move Press’s progressive encroachment argument on the grounds that Peloton Interactive did not expand into different markets or consumers after 2013. At all relevant times, Peloton targeted the same consumers (“almost everyone who has any interest in fitness”) and only grew its existing business. The Court found that the growth and increase in popularity of Peloton after 2013 and concomitant increase in the use of the Peloton mark was not progressive encroachment.
The Court next considered whether Move Press’s delay in filing suit was unreasonable. In determining whether delay is unreasonable in a trademark case, courts consider six factors: (i) the strength and value of the trademark rights asserted; (ii) plaintiff’s diligence in enforcing the mark at issue; (iii) harm to the senior user if relief were denied; (iv) good faith ignorance by the junior user; (v) competition between the senior and junior users; and (vi) the extent of harm suffered by the junior user because of the senior user’s delay. See E-Systems, Inc. v. Monitek, Inc., 720 F.2d 604, 607 (9th Cir. 1982). Applying these factors, the Court found Move Press’s delay in filing suit was unreasonable as the factors weighed in Peloton Interactive’s favor:
- On the first factor, the strength and value of the rights, the Court found that both parties’ Peloton marks were weak because they are descriptive, but Peloton Interactive’s mark was much more valuable because of its significant growth compared to Move Press’s growth.
- On the second factor, Move Press’s diligence in enforcing its mark, the Court found Move Press was not diligent because it knew of the likelihood of confusion since 2013 but did not formally act to enforce its rights until filing the complaint in February 2018 other than sending a single cease and desist letter in July 2014 that it did not pursue.
- The third factor, harm to Move Press, turned on the likelihood of confusion of the marks, which could not be determined on the undisputed facts.
- On the fourth factor, good faith ignorance by Peloton Interactive, the Court found that Peloton Interactive acted in good faith as it did not know of Peloton Magazine when it selected the name Peloton and formed the company.
- The fifth factor, competition between Move Press and Peloton Interactive, was subject to disputes of fact and could not be weighed on summary judgment.
- The sixth and final factor, the harm suffered by Peloton Interactive because of Move Press’s delay, weighed in favor of Peloton Interactive because the prejudice to Peloton Interactive if it were to lose the rights to the Peloton name would be substantial due to its good will and recognition in the fitness market.
Even without weighing the third and fifth factors, the Court was able to conclude that Move Press’s delay was not reasonable because the four other factors weighed heavily in favor of Peloton Interactive.
The final inquiry in the laches analysis is whether the junior user was prejudiced by the senior user’s unreasonable delay. Even where the analogous state statute of limitations has expired triggering a presumption of laches and the plaintiff’s delay is unreasonable, laches will only apply to bar a claim if the delay prejudiced the defendant. The Court found that Peloton Interactive was prejudiced by Move Press’s delay because Peloton Interactive took significant action to grow its business using its Peloton mark that it would not have taken if Move Press had brought suit promptly and Peloton Interactive relied on the absence of a lawsuit in continuing to use its mark.
The Court also rejected Move Press’s argument that laches should not apply because Peloton Interactive’s infringement was willful. If the defendant’s infringement is willful in that it was done with knowledge that it constituted trademark infringement, the plaintiff has a defense to laches. Here, the Court held that the record was insufficient to establish willful infringement by Peloton Interactive so as to bar Peloton Interactive’s laches defense.
The Court denied Move Press’s cross-motion for summary judgment as moot, but also analyzed how it failed on the merits to establish the absence of triable issues as to Move Press’s claims.
This decision is an important reminder to plaintiffs—in the infringement context and generally—not to sit on their rights waiting to see if an alleged infringer becomes successful enough to make litigation worthwhile. It is also a lesson to would-be defendants that they may be able to rely on an accuser’s failure to file suit to protect them.
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