Certiorari Denied December 13, 1982. See 103 S.Ct. 571.
OPINION OF THE COURT
VAN DUSEN, Senior Circuit Judge.
This is an appeal from a final order of the district court, sitting without a jury, entering judgment for the defendant based upon a finding that the plaintiff's trademark infringement and unfair competition claims are barred by laches. University of Pittsburgh v. Champion Products, Inc., 529 F.Supp. 464, 469 (W.D.Pa.1982). This court has jurisdiction under 28 U.S.C. § 1291 (1976).
Because we believe that the district court erred in applying the doctrine of laches to bar plaintiff's claims for prospective injunctive relief, we will reverse that portion of the judgment and remand for further consideration of the facts and law underlying plaintiff's claim for future injunctive relief. See, e.g., In re Arthur Treacher's Franchisee Litigation, Arthur Treacher's Fish & Chips, Inc. v. A & B Management Corp., etc., 689 F.2d 1137 (3d Cir. 1982). In all other respects, the judgment of the district court will be affirmed.
I.
The historical facts of this case are set forth in detail in the district court's opinion. See 529 F.Supp. at 466-67. The University of Pittsburgh ("Pitt") is a non-profit Pennsylvania corporation, originally established in 1787, which has been operating under its
Champion Products, Inc. ("Champion") is a New York corporation engaged in the business of manufacturing and marketing "soft goods,"
Although the testimony was not without confusion,
The mid-1970s marked a period of dramatic success and increased national exposure for the Pitt football team.
On December 2, 1981, Pitt brought this action in state court, alleging (1) common law trademark infringement; (2) trademark infringement in violation of Pa.Stat.Ann. tit. 73, § 23 (Purdon 1971); (3) common law unfair competition; and (4) false designation of origin of goods under the Lanham Act, 15 U.S.C. § 1125(a) (1976). Champion removed the case the next day to the United States District Court for the Western District of Pennsylvania.
This appeal followed.
II.
The issue before this court — and the only issue discussed in the district court's opinion — is very narrow: has Champion carried its burden of establishing on these facts the affirmative defense of laches to a degree which must bar Pitt's claims in their entirety? Because laches is an equitable doctrine, its application is inextricably bound up with the nature and quality of the plaintiff's claim on the merits relevant to a prospective injunction. Consequently, while we must of necessity discuss the merits of the plaintiff's claim, we express no opinion on the ultimate question of precisely what has been proven on this record, nor on the availability or scope of the prospective injunctive remedy available, preferring not to venture into this expanding area of the law without the benefit of the district court's findings and conclusions on the issues raised by the application for such a prospective injunction.
A. The Doctrine of Laches
It is hornbook law that laches consists of two essential elements: (1) inexcusable delay in instituting suit, and (2) prejudice resulting to the defendant from such delay. Gruca v. United States Steel Corp., 495 F.2d 1252, 1258 (3d Cir. 1974); Sobosle v. United States Steel Corp., 359 F.2d 7, 12-13 (3d Cir. 1976).
Although there is some degree of confusion on this point in the older cases, it is also clear that actual "laches" in effect works an equitable estoppel barring all relief and requires a showing of both delay and prejudice. Jenn-Air Corp. v. Penn Ventilator Co., 464 F.2d 48, 49-50 (3d Cir. 1972), quoting Holmberg v. Armbrecht, 327 U.S. 392, 396, 66 S.Ct. 582, 584, 90 L.Ed. 743 (1946); Sobosle v. United States Steel Corp., 359 F.2d at 12. In the trademark context, the concepts of "mere delay" or "laches without more," although confusing as a matter of semantics, see Alfred Dunhill of London v. Kasser Dist. Prod. Corp., 350 F.Supp. 1341, 1364-65 (E.D.Pa.1972), aff'd mem., 480 F.2d 917 (3d Cir. 1973), are nonetheless relevant in two ways.
First, there is that narrow class of cases where the plaintiff's delay has been so outrageous, unreasonable and inexcusable as to constitute a virtual abandonment of its right. In Anheuser-Busch v. Du Bois Brewing Co., for example, we postulated that, "for example, had there been a lapse of a hundred years or more, we think it highly dubious that any court of equity would grant injunctive relief against even a fraudulent infringer." 175 F.2d at 374. Second, there is the much more common situation in which the plaintiff's less egregious delay will bar its claim for an accounting for past infringement but not for prospective injunctive relief. Id. at 373-74 (citing cases); Alfred Dunhill of London v. Kasser Dist. Prod. Corp., 350 F.Supp. at 1364; 4 R. Callman, Unfair Competition
The length of the plaintiff's delay is also relevant for one other reason. Our recent cases have held that where the "plaintiff sleeps on his rights for a period of time greater than the applicable statute of limitations," the burden of proof shifts to the plaintiff to prove the absence of such prejudice to the defendant as would bar all relief. Gruca v. United States Steel Corp., 495 F.2d at 1258-59; Burke v. Gateway Clipper, Inc., 441 F.2d 946, 949 (3d Cir. 1971).
Finally, we note again that laches is an equitable doctrine addressed to the sound discretion of the district judge, whose determination we will not disturb absent an abuse of that discretion. Gruca v. United States Steel Corp., 495 F.2d at 1258.
B. Pitt's Delay in Asserting Its Claim
At the outset, it cannot be said on these facts that the district court abused its discretion in barring Pitt's claim for an accounting for past infringement. At least as to the period after 1960, when Pitt stopped carrying imprinted goods in its bookstore, we agree with the district court that "[i]t is inconceivable that persons in authority at Pitt did not know that Champion soft goods, marked with various Pitt insignia, were being sold at retail outlets other than the Pitt book store." 529 F.Supp. at 468. The evidence that Pitt-imprinted garments were widely worn by students and faculty and readily available in the community is more than sufficient to support such a conclusion. Insofar as earlier periods are concerned, the evidence is less certain but it cannot be said that the district court's findings that Champion was selling to persons other than Pitt are clearly erroneous. Inwood Laboratories, Inc. v. Ives Laboratories, Inc., 456 U.S. 844, ___, 102 S.Ct. 2182, 2188, 72 L.Ed.2d 606 (1982). At best, this evidences inattention on Pitt's part; at worst it represents precisely the sort of silent acquiescence which the courts since McLean and Menendez have held sufficient to bar an accounting.
However, we do not believe that Pitt's action rises to the level of outrageous and inexcusable delay which will bar all relief even absent a showing of detriment to Champion. Neither do we understand the district court to have believed this to be the case.
Read in the light most favorable to Champion, the district court's findings show that Champion, with Pitt's actual or chargeable knowledge, sold Pitt-marked goods in the Pittsburgh area during the same period that it was selling to the Pitt bookstore and thereafter. Pitt's witnesses testified that, to the extent that the university was aware of outside sales, they believed that most of them were made to students or others as to which Pitt had no objection. There is no indication that Pitt "abandoned" its name or marks in the sense of non-use or "a general surrender of the use to the public." Menendez v. Holt, 128 U.S. at 524, 9 S.Ct. at 145. In fact, during this same period, Pitt
Similarly, the district court did not find that Pitt officials had any knowledge of the existence or volume of sales outside of the Pittsburgh area before the 1977 Sugar Bowl game.
Consequently, we reject Champion's contention that Pitt's delay alone has barred its right to prospective relief and hold that such a bar must depend upon the degree to which Pitt's delay may have prejudiced Champion.
C. Detrimental Reliance By Champion
Although the district court made four separate findings of fact concerning Champion's reliance on Pitt's inaction,
In the classic trademark or unfair competition case, both parties manufacture and/or sell the same or related products. When both attempt to use the same name or trademark, the law protects the senior user from what is, in laymen's terms, an attempt by the junior user to take advantage of the market demand and goodwill generated by the senior user. The essential issue is consumer confusion: if the public could reasonably believe the junior's product to be the product of the senior, the junior may be enjoined. Laches becomes relevant where the senior delays in asserting its rights for so long that the junior has developed sufficient demand and goodwill through its own efforts that it would be inequitable to enforce the senior's rights. These principles, which we have stated here in summary fashion, are discussed in detail in our earlier cases, as well as in a helpful opinion by our colleague, Judge Becker, then of the district court, in Alfred Dunhill of London v. Kasser Dist. Prod. Corp., 350 F.Supp. at 1357-58.
In this case, there is no consumer confusion in the traditional sense. No one would seriously assert that a significant segment of the public believes that Pitt actually manufactured the goods involved. This is the heart of Champion's argument on the merits and the theoretical basis for their laches position. Further, Champion argues, "it cannot be equitable for a well-informed merchant with knowledge of a claimed invasion of right, to wait and see how successful his competitor will be and then destroy with the aid of a court decree much of what the competitor has striven for and accomplished...." Anheuser-Busch v. Du Bois Brewing Co., 175 F.2d at 375 (citing cases).
It is, however, equally beyond question that, while the market for imprinted soft goods, in the sense of their physical availability to the public and the public's corresponding knowledge of that availability, exists as a result of Champion's efforts, the ultimate demand for the product is a direct result of the efforts of Pitt to make its name widely known through athletic and educational accomplishments. With negligible exception,
The landmark case in this area is the Fifth Circuit's decision in Boston Pro. Hockey Ass'n v. Dallas Cap & Emblem Mfg., Inc., 510 F.2d 1004, 1012 (5th Cir.), cert. denied, 423 U.S. 868, 96 S.Ct. 132, 46 L.Ed.2d 98 (1975), where the court explained:
In National Football League Properties, Inc. v. Wichita Falls Sportswear, Inc., 532 F.Supp. 651, 658-59 (W.D.Wash.1982), the district court elaborated on this point and described the problem as a "confusion of sponsorship"
We decline to delve into this fray without the benefit of its consideration by the district court and full briefing of these most recent cases by the parties. Nonetheless, even postulating a less expansive variation of this theory than that expressed in Boston Hockey, we believe that the fundamental concepts upon which these cases rest require a reevaluation of the district court's findings concerning Champion's reliance on Pitt's delay.
First, it is simply not true that Champion has built up its entire business in reliance on Pitt's inaction. By Champion's own testimony, Pitt is only one of approximately 10,000 schools and colleges whose names or designs they imprint on soft goods. Champion built its physical plant, art department and sales force in order to design, produce and market soft goods with marks and designs of every kind. Some of these designs — notably those of professional football teams — it pays for; others — apparently schools and colleges — it does not. The only tangible investments in Pitt's designs, per se, are the screen stencils used for imprinting the designs — which are produced in quantity, used for no more than a few dozen shirts, and then destroyed
Similarly, Champion has indeed developed a market in the sense of recruiting sales outlets, but again Champion was seeking outlets and developing goodwill for whatever Champion products were in demand in that area. The fact that greater Pittsburgh sales outlets were interested in Pitt-marked goods is not so much a result of Champion's efforts as understandable local loyalty. As to buyers outside the area, the evidence appears to show that consumer demand increased in direct proportion to Pitt's football fortunes. If a potential Pitt goods customer indicated that it would prefer to stock Penn State or Princeton or Duke imprinted goods, for example, there is no evidence that Champion would feel compelled to push Pitt-marked products. While Champion has indeed developed the mechanism for producing and marketing these goods, the demand for goods with any given imprint is due not to the efforts of Champion but rather to the efforts of the school, team, movie producer, musical group, or whatever person or entity whose imprint is used and whose current popularity makes that imprint desirable.
The teaching of Boston Hockey, NFL Properties, and related cases is that, whatever the ultimate scope of protection afforded, the crucial element is consumer desire to associate with the entity whose imprint is reproduced. This desire is based on success or notoriety which, in turn, is a result of the efforts of that entity. Champion merely packages and exploits it. Champion's investment is in the industry in general, not in Pitt's marks in particular. We doubt that if Pitt closed its doors tomorrow — or, perhaps more to the point, discontinued football — Champion's losses would extend beyond existing inventory. This we hold to be insufficient to bar all relief.
III.
For the foregoing reasons, the judgment of the district court will be reversed insofar as it holds Pitt's claims for prospective injunctive relief to be barred by laches, and the case will be remanded for further proceedings concerning the scope of prospective injunctive relief, if any, and for such findings and conclusions as the district court may make on that subject, consistent with this opinion and such further evidence as may be produced on remand. We decline to determine on the present record the precise scope of prospective injunctive relief available in light of the developing case law in this area and its application to the relevant facts underlying this case as they may be supplemented on remand.
In all other respects, the judgment of the district court will be affirmed.
The parties will bear their own costs.
FootNotes
529 F.Supp. at 467.
Pitt has also filed several federal trademark registrations. All of those which are relevant here are still pending.
529 F.Supp. at 468. At the outset, we note that we do not believe Champion's quality control efforts to be evidence of detriment. Thus, our discussion will focus on the remaining points. As noted at the end of part II-A above, our decision in Gruca may shift the burden of justifying the delay and/or disproving prejudice to Pitt as a result of the length of the delay. 495 F.2d at 1258-59. Regardless of the allocation of this burden, we conclude as a matter of law that the evidence in this record does not support a finding of prejudice sufficient to support the laches determination.
529 F.Supp. at 467.
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