Intellectual Property Law

Five-Year Delay May Cut Off Trademark Infringement Damages, But Not Claim

By Michael Atkins

In Sonoma Foods, Inc. v. Sonoma Cheese Factory, LLC, plaintiff cheese maker sued defendant cheese maker in the Northern District of California. At issue was Sonoma Cheese Factory’s use of Sonoma Foods’ registered trademarks, SONOMA CHEESE FACTORY and DESIGN and SONOMA JACK (the “Bull Trademarks”), allegedly constituting infringement and a false description or passing off.

According to Sonoma Cheese Factory, before December 31, 2001, Sonoma Foods owned and operated the Sonoma Cheese Factory retail store. On that date, the corporation was restructured; Sonoma Cheese Factory, LLC, was formed; and Sonoma Foods transferred the retail store to the new entity. When Sonoma Cheese Factory acquired the store, it continued to use the same signs and packaging that Sonoma Foods had used. It is that use about which Sonoma Foods complains.

    
Two Photos Sonoma Cheese Factory submitted in support of its
motion for partial summary judgment based on laches.

Sonoma Cheese Factory responded by moving for partial summary judgment on the ground of laches. It argued:

“Sonoma Cheese Factory used the Bull Trademarks on two signs in its retail store. These signs hung above the store’s front door and above its main cheese counter, just inside the front door. Both signs were displayed continuously from December 31, 2001 until after this suit was filed. During the same period, Sonoma Cheese Factory sold cheeses and other products packaged in paper bags imprinted with U.S. Trademark No. 1,099,709. Sonoma Cheese Factory also used U.S. Trademark No. 1,111,024 on mailing envelopes at least as early as February 2002.

“These signs, bags, and envelopes were used in commerce, in connection with the sales of cheese products — including products that compete with Plaintiff’s cheeses. Sonoma Foods’ officers knew the defendants were using the Bull Trademarks but took no action for over five years. The statute of limitations therefore provides a complete defense to Sonoma Foods’ second and sixth claims.”

Judge Jeffrey White denied the motion. (Order not available online.) The court found:

“Regardless of whether a statute of limitations defense is applicable to Plaintiff’s trademark infringement claim, the alleged violations are ongoing, and thus, ‘the statute of limitations is conceivably only a bar to monetary relief for the period outside of the statute of limitations.’ Defendants’ alleged infringement activity is ongoing. Therefore, even assuming a statute of limitations defense may bar some portion of Plaintiff’s trademark infringement claim, Plaintiff would still be entitled to pursue damages based on the infringement activity that occurred within the statute of limitations period.”

This strikes me as wrong. Laches exists to cut off a plaintiff’s claim when the plaintiff has unreasonably delayed in bringing suit and caused the defendant prejudice as a result. Here, Sonoma Cheese Factory alleged that Sonoma Foods knew of its alleged infringement since December 31, 2001, and delayed bringing suit more than five years — long after the analogous statute of limitations had run. For the court to find this delay merely cuts off damages Sonoma Foods can recover undermines the equitable principles on which laches is based. By this reasoning, Sonoma Foods could wait 30 years to sue and still be entitled to recover damages from Sonoma Cheese Factory’s “continuing violation.” To my mind, laches stands for the proposition that when it comes to sitting on one’s rights, at some point enough is enough. Laches bars a claim; it does not merely limit the damages a plaintiff can recover.

The case cite is Sonoma Foods, Inc. v. Sonoma Cheese Factory, LLC, No. 07-554, 2008 WL 913279 (N.D. Calif. April 3, 2008) (White, J.).

Full post as published by Seattle Trademark Lawyer on April 14, 2008 (boomark / email).