Pinnacle Advertising and Marketing Group Inc. v. Pinnacle Advertising and Marketing Group, LLC ( 2021 )

USCA11 Case: 19-15167 Date Filed: 08/02/2021 Page: 1 of 39
[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 19-15167
________________________
D.C. Docket No. 9:18-cv-81606-DMM
PINNACLE ADVERTISING AND MARKETING GROUP, INC.,
Plaintiff-Appellant,
versus
PINNACLE ADVERTISING AND MARKETING GROUP, LLC,
Defendant-Appellee.
________________________
Appeal from the United States District Court
for the Southern District of Florida
________________________
(August 2, 2021)
Before MARTIN, NEWSOM, and BRANCH, Circuit Judges.
BRANCH, Circuit Judge:
USCA11 Case: 19-15167 Date Filed: 08/02/2021 Page: 2 of 39
This appeal arises out of a trademark dispute between two advertising and
marketing companies—both of which operate under the name Pinnacle Advertising
and Marketing Group. The Illinois-based Pinnacle owns two registered trademarks
for the name “Pinnacle” and a stylized version of the word “Pinnacle.” It sued the
Florida-based Pinnacle for trademark infringement and unfair competition under
the Lanham Act.1 When a company sues to enforce its registered marks, it faces
the risk of losing its marks’ protection in the process. After Pinnacle Illinois filed
suit, Pinnacle Florida filed a counterclaim seeking to cancel Pinnacle Illinois’s
trademark registrations under 15 U.S.C. § 1119. 2 Pinnacle Florida also alleged that
Pinnacle Illinois’s claims were barred by the doctrine of laches.
A jury eventually rendered a verdict in favor of Pinnacle Illinois on its
infringement and unfair competition claims. After Pinnacle Florida filed a post-
trial motion for judgment as a matter of law, the district court disregarded the
jury’s findings that Pinnacle Illinois’s marks were distinctive and thus trademark
1
This opinion will refer to the appellant, Pinnacle Advertising and Marketing Group,
Inc., as “Pinnacle Illinois,” and the appellee, Pinnacle Advertising and Marketing Group, LLC,
as “Pinnacle Florida.”
2
15 U.S.C. § 1119 provides:
In any action involving a registered mark the court may determine the right to
registration, order the cancelation of registrations, in whole or in part, restore
canceled registrations, and otherwise rectify the register with respect to the
registrations of any party to the action. Decrees and orders shall be certified by
the court to the Director, who shall make appropriate entry upon the records of the
Patent and Trademark Office, and shall be controlled thereby.
2
USCA11 Case: 19-15167 Date Filed: 08/02/2021 Page: 3 of 39
protectable and cancelled the registrations under § 1119. The district court also
found that Pinnacle Illinois’s claims were barred by laches.
After careful review and with the benefit of oral argument, we conclude that
the district court erred by disregarding the jury’s findings that Pinnacle Illinois’s
marks were distinctive and protectable and misapplying the presumption of
validity given to registered marks. Accordingly, we vacate and remand the district
court’s order cancelling Pinnacle Illinois’s registrations. Further, although we
affirm the district court’s finding that Pinnacle Illinois’s claims for monetary
damages were barred by laches, we remand for the district court to consider
whether to grant Pinnacle Illinois injunctive relief to protect the public’s interest in
avoiding confusion.
I. Background
Pinnacle Illinois has used the name “Pinnacle Advertising and Marketing
Group, Inc.” in connection with its advertising business since 1998. Pinnacle
Florida has operated its advertising business under the name “Pinnacle Advertising
and Marketing Group, LLC” since its formation in 2010. Although it is undisputed
that Pinnacle Illinois learned of Pinnacle Florida’s use of the “Pinnacle” name at
some point before it filed the current lawsuit, the parties dispute exactly when
Pinnacle Illinois obtained this knowledge.
3
USCA11 Case: 19-15167 Date Filed: 08/02/2021 Page: 4 of 39
A. Pinnacle Illinois’s Knowledge of Pinnacle Florida
Pinnacle Florida contends that Pinnacle Illinois learned of its company in
late 2013 or early 2014 when, during a client pitch meeting, the potential client—
the Central Florida Honda Dealers Association—asked Pinnacle Illinois if it was
affiliated with Pinnacle Florida. 3 Pinnacle Illinois’s initial response to an
interrogatory stated that Pinnacle Illinois CEO Michael Magnusson “first became
aware of Pinnacle (FL) in or around late 2013 . . . when pitching to . . . Central
Florida Honda.” But Magnusson later testified at trial that he did not specifically
learn of Pinnacle Florida at this meeting. Rather, he testified that he overheard a
conversation about a person at the meeting confusing Pinnacle Florida and
Pinnacle Illinois, and he only later (after learning of Pinnacle Florida) connected
the dots that the “Pinnacle” the potential client had referred to was Pinnacle
Florida.
Pinnacle Illinois contends that it first learned of Pinnacle Florida in January
2015 when an industry magazine, Advertising Age, mistakenly linked Pinnacle
Florida’s website to an article about Pinnacle Illinois. Magnusson testified at trial
3
Whether the Central Florida Honda pitch meeting occurred in late 2013 or January
2014 is unclear. Pinnacle Florida asserts that the meeting occurred in late 2013, which is
supported by Pinnacle Illinois’s interrogatories from an earlier trademark suit filed by Pinnacle
Illinois against Pinnacle Florida in Illinois. The record shows that Pinnacle Illinois added
Central Florida Honda as a client in January 2014 which implies that the pitch meeting occurred
sometime before then.
4
USCA11 Case: 19-15167 Date Filed: 08/02/2021 Page: 5 of 39
that he was “horrified” at the mistake because the article was about Pinnacle
Illinois’s Super Bowl commercial and “all the eyes” in the industry were reading to
see which advertisers created the all-important commercials that year. So
Magnusson contacted a magazine employee to correct the mistake. Following the
correction, Magnusson took no further action to rectify the confusion between the
two companies because, judging from Pinnacle Florida’s website, “[t]hey looked
like a small agency” that focused on hospitality work and Pinnacle Illinois was
“very busy” and “not . . . concerned about [Pinnacle Florida] at the time.”
In January 2016, Advertising Age made the same mistake again.
Magnusson once again contacted the magazine to seek a correction. Nevertheless,
Pinnacle Illinois did not reach out to Pinnacle Florida or take further action at that
time because its “priority was taking care of [its] clients” and it “didn’t have the
capacity to [take action] at that time.”
B. Further Confusion and Registration
Customer confusion continued in the lead-up to this lawsuit. In addition to
the Central Florida Honda pitch meeting and the two Advertising Age mix-ups,
there was evidence of misdirected communications from current and prospective
customers, misdirected invoices from vendors, and misdirected job applications.
Pinnacle Illinois filed for registration of the two marks at issue in this
litigation with the Patent and Trademark Office (“PTO”) on November 4, 2016,
5
USCA11 Case: 19-15167 Date Filed: 08/02/2021 Page: 6 of 39
and obtained registrations on September 12, 2017. Pinnacle Illinois obtained
registrations for “Pinnacle” as a word mark (U.S. Reg. No. 5,284,206) and the
following stylized form of the word “PINNACLE” (U.S. Reg. No. 5,284,223).
During the registration process, the PTO did not require Pinnacle Illinois to
provide proof that its marks had obtained secondary meaning. 4
C. The Current Lawsuit
On April 4, 2018, over four years after the Central Florida Honda pitch
meeting and over three years after the first Advertising Age mistake, Pinnacle
Illinois sued Pinnacle Florida for trademark infringement in the Northern District
of Illinois, but the case was dismissed for lack of personal jurisdiction.
On November 21, 2018, Pinnacle Illinois filed this action against Pinnacle
Florida in the Southern District of Florida. Pinnacle Illinois brought claims for
trademark infringement of its ’206 and ’223 marks under 15 U.S.C. § 1114; unfair
competition under 15 U.S.C. § 1125(a); and cybersquatting under 15 U.S.C.
§ 1125(d).
4
Secondary meaning “is the connection in the consumer’s mind between the mark and
the provider of the service.” Coach House Rest., Inc. v. Coach & Six Rests., Inc., 934 F.2d 1551,
1560 (11th Cir. 1991). A mark that is only “descriptive” of the goods or services it refers to
requires proof of secondary meaning to be trademark protectable. Id. at 1559. Other marks are
inherently distinctive and require no proof of secondary meaning to be protectable. Id.6
USCA11 Case: 19-15167 Date Filed: 08/02/2021 Page: 7 of 39
Pinnacle Florida filed its answer to Pinnacle Illinois’s complaint, which
asserted, among other things, an affirmative defense that Pinnacle Illinois’s claims
were barred by the doctrine of laches. Shortly thereafter, Pinnacle Florida filed an
amended counterclaim which asserted six claims, including a claim for
cancellation of Pinnacle Illinois’s registered mark No. 5,269,641 (a different
registered mark than the two at issue in this case) under 15 U.S.C. § 1119.
Pinnacle Illinois then moved to dismiss all of Pinnacle Florida’s
counterclaims and to strike its affirmative defenses. As to the cancellation
counterclaim, Pinnacle Illinois responded that the ’641 registration was not at issue
in this case. Thus, Pinnacle Illinois argued that the district court did not have
jurisdiction to cancel the ’641 registration under § 1119.
In response, Pinnacle Florida acknowledged that it could not seek
cancellation of the ’641 registration in this case and explained that “[it] intends to
file a motion seeking leave to amend (if it is unable to reach agreement on leave to
amend with [Pinnacle Illinois]).” Pinnacle Florida attached a draft cancellation
counterclaim (seeking cancellation of the ’206 and ’223 registrations) to its
response. Pinnacle Florida did not formally seek leave to amend its counterclaim
or attempt to reach an agreement with Pinnacle Illinois.
The district court granted in part and denied in part Pinnacle Illinois’s
motion to dismiss/strike Pinnacle Florida’s counterclaims and affirmative defenses.
7
USCA11 Case: 19-15167 Date Filed: 08/02/2021 Page: 8 of 39
As to the cancellation counterclaim, the district court acknowledged that it could
not consider the ’641 mark in this case. It then stated:
While [Pinnacle Florida] never sought leave to amend the
Counterclaim, it represented that it would confer with [Pinnacle
Illinois] as to whether an Amended Counterclaim would be permitted
and attached a proposed amended cancellation or restriction of
registration counterclaim to its response to the present Motion. . . .
Although the time to amend the Counterclaim has passed, I will allow
Defendant to proceed with the proposed amendment . . . in the interest
of fairness. I make this conclusion because [Pinnacle Florida]
conceded that it identified an incorrect mark when drafting the
Counterclaim, attempted to resolve the amendment issue with
opposing counsel amicably, and attached the proposed Amended
Counterclaim to the response to the present Motion. Accordingly, I
will not dismiss [the cancellation counterclaim], as amended.
Pinnacle Illinois filed a motion for reconsideration of the district court’s
order to the extent that it allowed Pinnacle Florida’s cancellation claim to
proceed.5 Pinnacle Illinois notified the court that Pinnacle Florida never conferred
with it about amending its cancellation counterclaim and never moved for leave to
amend (like it said it “intended” to do in response to Pinnacle Illinois’s motion to
dismiss). Pinnacle Illinois did not request additional discovery or a continuance of
the trial.
5
While Pinnacle Illinois’s motion to dismiss/strike Pinnacle Florida’s cancellation claim
was pending, the parties moved for summary judgment. Because the summary judgment
motions also remained pending, Pinnacle Illinois’s motion for reconsideration requested, in the
alternative, leave to amend its summary judgment motion.
8
USCA11 Case: 19-15167 Date Filed: 08/02/2021 Page: 9 of 39
The district court denied Pinnacle Illinois’s motion for reconsideration. 6
The district court began by observing that its “ruling would have been the same
even if [Pinnacle Florida] had not intended to confer with [Pinnacle Illinois] as to
the counterclaim.” The court further concluded that Pinnacle Illinois was not
prejudiced by its decision to allow the amendment because Pinnacle Illinois was
already prepared to prove its trademark infringement claim, which overlapped with
its obligation to defend against the amended cancellation counterclaim.
During a pre-trial conference, Pinnacle Illinois represented that the
cancellation counterclaim and the laches defense should be decided by the judge
rather than the jury at trial. Specifically, the district court and Pinnacle Illinois had
the following exchange:
THE COURT: And your position is [the Cancellation Counterclaim
is] a legal issue and not for the jury?
[PINNACLE ILLINOIS’S COUNSEL]: Right.
As a result of this discussion, neither the cancellation counterclaim nor the
laches defense were submitted to the jury.
Pinnacle Illinois’s infringement, unfair competition, and cybersquatting
claims were tried during a three-day jury trial. At the close of Pinnacle Illinois’s
case-in-chief, Pinnacle Florida moved for judgment as a matter of law on Pinnacle
6
The district court also denied Pinnacle Illinois’s alternative request for leave to amend
its summary judgment motion.
9
USCA11 Case: 19-15167 Date Filed: 08/02/2021 Page: 10 of 39
Illinois’s cybersquatting claim, and the district court granted the motion. After
trial, the jury returned a verdict in favor of Pinnacle Illinois on its claims for
trademark infringement and unfair competition and awarded Pinnacle Illinois
$550,000 in damages.
D. Post-Trial Rulings
After the verdict, Pinnacle Illinois filed its answer to Pinnacle Florida’s
amended cancellation counterclaim. Pinnacle Florida then moved for judgment as
a matter of law on its laches defense and the amended cancellation counterclaim.7
The district court granted Pinnacle Florida’s motion for judgment as a matter
of law. It concluded that Pinnacle Illinois’s trademark infringement and unfair
competition claims were barred by laches because Pinnacle Illinois waited over
four years to bring suit after it should have known of a potential infringement
claim against Pinnacle Florida. The district court also cancelled Pinnacle Illinois’s
registrations under § 1119 because it concluded that Pinnacle Illinois’s marks were
merely descriptive and lacked secondary meaning. Pinnacle Illinois appealed.
II. Discussion
On appeal, Pinnacle Illinois argues the district court erred in four ways:
(1) the district court allowed Pinnacle Florida to amend its cancellation
7
Pinnacle Florida also sought to overturn the jury’s verdict on trademark infringement
and unfair competition and alternatively sought a new trial, remitter, and other forms of relief.
10
USCA11 Case: 19-15167 Date Filed: 08/02/2021 Page: 11 of 39
counterclaim ten days before trial even though Pinnacle Florida never formally
moved to amend under Rule 15 of the Federal Rules of Civil Procedure; (2) the
district court cancelled Pinnacle Illinois’s registrations without regard to the jury’s
findings of distinctiveness and protectability or the presumption afforded to
registered marks; (3) the district court abused its discretion in finding that Pinnacle
Illinois’s claims were barred by laches; and (4) even if laches barred Pinnacle
Illinois’s claims for money damages, the district court erred in failing to consider
whether Pinnacle Illinois’s requested injunctive relief was proper to protect the
public’s interest in avoiding confusion. We will address each of these arguments
in turn.
A. Cancellation Counterclaim Amendment
Pinnacle Illinois argues that the district court should not have considered
Pinnacle Florida’s cancellation counterclaim for two reasons. First, Pinnacle
Illinois argues that Pinnacle Florida did not follow the requirements of Rule 15 to
amend its claim. Second, Pinnacle Illinois argues that the amendment prejudiced
Pinnacle Illinois’s ability to prepare its case. We do not find either argument
persuasive.
11
USCA11 Case: 19-15167 Date Filed: 08/02/2021 Page: 12 of 39
We review a district court’s decision on whether to grant a motion for leave
to amend the pleadings for abuse of discretion.8 Hargett v. Valley Fed. Sav. Bank,
60 F.3d 754, 760 (11th Cir. 1995). Outside of the time for an amendment as a
matter of course, “a party may amend its pleading only with the opposing party’s
written consent or the court’s leave.” Fed. R. Civ. P. 15. Rule 15 further provides
that a district “court should freely give leave when justice so requires.” Id. While
allowing an amendment is a discretionary decision, we have explained that district
courts should generally exercise their discretion in favor of allowing amendments
to reach the merits of a dispute. See Shipner v. E. Air Lines, Inc., 868 F.2d 401,
406–07 (11th Cir. 1989) (explaining that Rule 15’s policy of “liberally permitting
amendments to facilitate [the] determination of claims on the merits circumscribes
the exercise of the district court’s discretion”). Leave to amend should be “freely
given when justice so requires” unless there is an “apparent or declared reason” to
deny it such as “undue prejudice to the opposing party.” Foman v. Davis, 371 U.S.
178, 182 (1962); Garfield v. NDC Health Corp., 466 F.3d 1255, 1270 (11th Cir.
2006).
8
Pinnacle Illinois argues that because the district court amended the cancellation
counterclaim in its order denying Pinnacle Illinois’s motion to dismiss, we should review the
district court’s decision de novo. We disagree. Although Pinnacle Florida did not move to
amend under Rule 15, the district court construed its stated intent to do so—coupled with its
submission of a proposed amended counterclaim—as a motion for leave to amend. The district
court exercised its discretion when it allowed Pinnacle Florida to amend its counterclaim, so we
will apply the usual abuse-of-discretion standard.
12
USCA11 Case: 19-15167 Date Filed: 08/02/2021 Page: 13 of 39
Pinnacle Illinois appears to argue that the district court lacked authority to
allow Pinnacle Florida to amend its cancellation counterclaim sua sponte because
Pinnacle Florida never formally moved for leave under Rule 15. We have
previously held that district courts have broad discretion to allow pleading
amendments even when a party does not formally request leave. See Wagner v.
Daewoo Heavy Indus. Am. Corp., 314 F.3d 541, 542 (11th Cir. 2002) (en banc)
(holding that a “district court is not required to grant a plaintiff leave to amend his
complaint sua sponte when the plaintiff, who is represented by counsel, never filed
a motion to amend nor requested leave to amend before the district court”
(emphasis added)). Indeed, we neither require a district court to amend a pleading
sua sponte nor forbid it. Id. Rule 15 allows amendment with the “court’s leave”
and emphasizes that district courts “should freely give leave when justice so
requires.” Fed. R. Civ. P. 15(a)(2). To the extent Pinnacle Illinois asks us to graft
on to Rule 15 a formal requirement that a party seek leave from the district court to
amend its pleadings, we decline to do so.
Pinnacle Illinois’s next argument—that the district court’s decision to allow
the amendment ten days before trial unduly prejudiced it—is likewise unavailing.
Although a party in some situations may be unduly prejudiced by learning of a new
claim only ten days before trial, Pinnacle Illinois was not prejudiced here for
several reasons. First, Pinnacle Illinois spent much of its opening brief explaining
13
USCA11 Case: 19-15167 Date Filed: 08/02/2021 Page: 14 of 39
why its defense to the cancellation counterclaim largely overlapped with its
trademark infringement claim (which it was already prepared to take to trial).
Second, Pinnacle Illinois could not articulate in its briefing or at oral argument
what it would have done differently in preparing for trial if the amendment was
made earlier in the litigation process. Third, Pinnacle Illinois was on notice of the
contents of Pinnacle Florida’s proposed amendment almost three months before
trial. See Hargett, 60 F.3d at 763 (holding that the plaintiff was not prejudiced by
the district court’s decision to allow the defendant to amend its answer to assert a
statute of limitations defense late in the litigation process because the plaintiff
“was placed on notice” earlier in the litigation process that the defendant
“challenged the timeliness of the action”). Fourth, despite the late amendment,
Pinnacle Illinois did not move to delay trial or reopen discovery. Instead, it asked
for an opportunity to seek summary judgment on the counterclaim which revealed
that it was factually prepared to defend the cancellation counterclaim. In short, the
amendment did not unduly prejudice Pinnacle Illinois’s ability to prepare its
defense. Accordingly, the district court did not abuse its discretion by allowing the
amendment. See Foman, 371 U.S. at 182.
14
USCA11 Case: 19-15167 Date Filed: 08/02/2021 Page: 15 of 39
B. Pinnacle Florida’s Double Burden on Cancellation
Next, Pinnacle Illinois argues that the district court’s analysis of the
cancellation counterclaim was substantively wrong.9 Specifically, Pinnacle Illinois
argues that the district court did not view the cancellation counterclaim through the
lens of Pinnacle Florida’s “double burden” on post-trial review. First, Pinnacle
Illinois asserts that because the jury specifically made findings of distinctiveness
and protectability, the district court should have given those findings deference
under Rule 50 of the Federal Rules of Civil Procedure when considering Pinnacle
Florida’s post-trial motion for judgment as a matter of law. Second, Pinnacle
Illinois asserts that because its marks were registered, the district court should have
held Pinnacle Florida to its burden to rebut Pinnacle Illinois’s marks’ presumption
of distinctiveness.
1. First Burden: Deference to the Jury’s Findings
Under Rule 50, a district court can overturn a jury’s finding on an issue if
the court finds that “a reasonable jury would not have a legally sufficient
evidentiary basis to find for the party on that issue[.]” Fed. R. Civ. P. 50(a)(1). To
overturn a jury’s finding, a district court must “examine the entire record in the
light most favorable to [the party that prevailed at trial] . . . and ask whether the
9
We review the district court’s decision on Pinnacle Florida’s motion for judgment as a
matter of law de novo, applying the same standard that the district court applied. Royal Palm
Props., LLC v. Pink Palm Props., LLC, 950 F.3d 776, 782 (11th Cir. 2020).
15
USCA11 Case: 19-15167 Date Filed: 08/02/2021 Page: 16 of 39
evidence nonetheless points ‘so overwhelmingly in favor of’ [the movant] that the
jury’s verdict cannot stand.” Royal Palm Props., LLC v. Pink Palm Props., LLC,
950 F.3d 776, 782 (11th Cir. 2020) (quoting Richardson v. Leeds Police Dep’t, 71
F.3d 801, 805 (11th Cir. 1995)).
In this case, the district court made clear that it did not use the Rule 50
standard to evaluate the cancellation counterclaim; rather, it applied a
preponderance of the evidence standard, considered the evidence anew, and
determined that Pinnacle Illinois’s marks were not distinctive, and thus not
protectable, and cancelled the registrations under § 1119.10 The district court
appears to have reached this conclusion for two reasons. First, the district court
believed that it could not discern whether the jury made any specific finding that
the marks were distinctive. Second, it noted that the parties “agreed” that the
district court would determine the claim. Pinnacle Illinois contends that both
grounds are error. We agree.
The district court’s first reason for not applying the Rule 50 standard—that
it was unclear whether the jury made a finding that Pinnacle Illinois’s marks were
distinctive and thus trademark protectable—is belied by the record. Although the
cancellation counterclaim was not submitted to the jury directly, in considering
10
As explained more fully below, only distinctive marks—“marks that serve the purpose
of identifying the source of . . . goods or services”—are entitled to trademark protection under
the Lanham Act. Welding Servs., Inc. v. Forman, 509 F.3d 1351, 1357 (11th Cir. 2007).
16
USCA11 Case: 19-15167 Date Filed: 08/02/2021 Page: 17 of 39
Pinnacle Illinois’s claims for trademark infringement and unfair competition, the
jury made a specific finding that Pinnacle Illinois’s marks were distinctive and thus
trademark protectable.
As to Pinnacle Illinois’s claims for trademark infringement and unfair
competition, the jury was instructed:
To prove its claim, Pinnacle Illinois must prove the following facts by
a preponderance of the evidence:
1: Pinnacle Illinois owns a trademark that is entitled to
protection; and
2: That Pinnacle Florida is using a mark that infringes upon
Pinnacle Illinois’s trademark.
The jury instructions also twice explained: the concept of trademark protectability,
the requirement that a trademark be distinctive, and the spectrum of inherent and
acquired distinctiveness. After receiving these instructions, the jury returned a
verdict in favor of Pinnacle Illinois on both its trademark infringement and unfair
competition claims, necessarily meaning that the jury found that Pinnacle Illinois
owned “a trademark that is entitled to protection.” The verdict form demonstrates
the jury’s finding that Pinnacle Illinois’s marks were distinctive and thus
protectable:
Do you find by a preponderance of the evidence that:
...
1. Pinnacle Illinois owns a trademark that is entitled to protection?
Answer Yes or No YES
17
USCA11 Case: 19-15167 Date Filed: 08/02/2021 Page: 18 of 39
...
2. Pinnacle Illinois’s trademark was distinctive prior to the date of
first use of Pinnacle Florida’s trademark, either because Pinnacle
Illinois’s trademark was inherently distinctive or because it had
acquired distinctiveness?
Answer Yes or No YES
Because the record clearly demonstrates that the jury made findings on the
distinctiveness and protectability of Pinnacle Illinois’s marks, the district court
erred in disregarding these findings when it cancelled the marks.
The district court’s second reason for not applying the Rule 50 standard—
that the parties agreed that the court should decide the issue as a matter of law—is
likewise contradicted by the record. The “agreement” the district court referred to
took place at a pre-trial calendar call proceeding. There, the following exchange
occurred:
THE COURT: And your position is [the cancellation counterclaim is]
a legal issue and not for the jury?
PINNACLE ILLINOIS’S COUNSEL: Right.
According to Pinnacle Illinois, that colloquy did not suggest that the parties agreed
to vacate the jury’s findings; it only suggested that the parties agreed that the court
would decide the proper remedy under § 1119. As Pinnacle Illinois notes, § 1119
authorizes a court—not a jury—to cancel a registration. Royal Palm Props., 950
F.3d at 782 (“The Lanham Act gives federal courts the authority to cancel
trademarks that the PTO has registered.”). Pinnacle Florida, on the other hand,
18
USCA11 Case: 19-15167 Date Filed: 08/02/2021 Page: 19 of 39
argues that Pinnacle Illinois agreed that the entire cancellation counterclaim—facts
and law—would be decided by the district court.11
The district court erred in concluding that Pinnacle Illinois agreed that the
jury would have no part in determining the factual issues underlying the
cancellation counterclaim. To the contrary, the record supports Pinnacle Illinois’s
position that it agreed that the court should decide the remedy under § 1119 while
deferring to the jury’s factual findings. In the “agreement” recounted above,
Pinnacle Illinois agreed that the cancellation counterclaim involved a “legal issue”
(not a factual one) for the judge to decide. The factual issues underlying the
cancellation counterclaim—whether Pinnacle Illinois’s marks were distinctive and
thus protectable—were given to the jury to determine. After being instructed on
these issues, the jury answered “yes” that it found Pinnacle Illinois’s marks
distinctive and protectable. And in response to Pinnacle Florida’s motion for
judgment as a matter of law, Pinnacle Illinois included proposed findings of fact,
specifically relying on the fact that “[t]he jury returned a verdict specifically
stating that the PINNACLE mark is protectible.” Because the record clearly
11
Pinnacle Florida also suggests that Pinnacle Illinois waived this argument because
“[a]t no time, prior to the filing of its initial appellate brief did [Pinnacle Illinois] argue or object
to the District Court deciding the entirety of the Amended Cancellation Counterclaim.” We
disagree. Pinnacle Illinois is not arguing that the district court should not have decided the
cancellation counterclaim. Rather, it is arguing that the district court applied the wrong standard
in doing so given the jury’s factual findings on the protectability of Pinnacle Illinois’s marks.
Accordingly, Pinnacle Illinois did not waive this argument.
19
USCA11 Case: 19-15167 Date Filed: 08/02/2021 Page: 20 of 39
demonstrates that the parties (and the court) intended to give deference to the
jury’s findings on distinctiveness and protectability when the court determined the
cancellation counterclaim’s legal question (the remedy under § 1119), the district
court erred in disregarding the jury’s findings.
Further, Pinnacle Florida cites no case to support its position that even if
Pinnacle Illinois clearly agreed to have the district court redecide the factual issues
underlying the cancellation counterclaim, that the district court could do so without
giving the jury’s findings deference under Rule 50. See Lindsey v. Am. Cast Iron
Pipe Co., 810 F.2d 1094, 1098 (11th Cir. 1987) (“[I]t is well-settled that the ‘court
may not make findings’ contrary to or inconsistent with the jury’s resolution . . . of
that same issue as implicitly reflected in its general verdict . . . .” (quotations
omitted)). We are not persuaded that even if such an agreement existed it would
displace the rule that “[o]nce a jury has necessarily or actually decided an issue, the
district court may not reconsider it” without giving it proper deference. Lindsey,
810 F.2d at 1098; Fed. R. Civ. P. 50(a)(1); Royal Palm Props., 950 F.3d at 782.
Because the district court did not give the jury’s findings on protectability
deference, we vacate the district court’s order granting Pinnacle Florida’s motion
for a judgment as a matter of law and remand this case for the district court to
“examine the entire record in the light most favorable to [Pinnacle Illinois] . . . and
ask whether the evidence nonetheless points ‘so overwhelmingly in favor of’
20
USCA11 Case: 19-15167 Date Filed: 08/02/2021 Page: 21 of 39
[Pinnacle Florida] that the jury’s verdict cannot stand.” Royal Palm Props., 950
F.3d at 782 (quotation omitted). In other words, the district court should determine
“whether a reasonable jury could have decided that [Pinnacle Florida] was not
entitled to cancellation of the [Pinnacle registrations].” Id. “[I]f a reasonable jury
could have so concluded” then the district court must uphold the jury’s findings
and deny Pinnacle Florida’s motion for judgment as a matter of law as it relates to
its cancellation counterclaim. Id.
2. Second Burden: Presumption of Distinctiveness
Pinnacle Illinois also argues that the district court failed to hold Pinnacle
Florida to its burden to rebut the presumption that Pinnacle Illinois’s marks are
inherently distinctive. We begin this section by explaining the importance of a
determination of distinctiveness to the district court’s consideration of Pinnacle
Florida’s cancellation counterclaim. We then explain how the district court erred
in analyzing Pinnacle Florida’s cancellation counterclaim without considering
Pinnacle Florida’s second burden—the burden to rebut a presumption of inherent
distinctiveness.
Distinctiveness is the key to trademark protectability. Only distinctive
marks—“marks that serve the purpose of identifying the source of . . . goods or
services”—are entitled to trademark protection under the Lanham Act. Welding
Servs., Inc., 509 F.3d at 1357. Marks can be inherently distinctive (marks that
21
USCA11 Case: 19-15167 Date Filed: 08/02/2021 Page: 22 of 39
themselves identify the source of a particular product or service), or marks can
acquire distinctiveness (marks that initially might have described a broad class of
products, but that over time developed “secondary meaning . . . that links [the
mark] to a particular source”). Royal Palm Props., 950 F.3d at 782–83. When a
mark is inherently distinctive, no proof of secondary meaning is required to prove
protectability. Id. But for marks that are not inherently distinctive, proof of
secondary meaning is required to obtain protection. Id.
“To separate the ‘distinct’ from the non-‘distinct’ . . . we have classified
marks into four categories, in descending order of strength: (1) ‘fanciful’ or
‘arbitrary,’ (2) ‘suggestive,’ (3) ‘descriptive,’ and (4) ‘generic.’” Id. at 783
(quoting Coach House Rest., Inc. v. Coach & Six Rests., Inc., 934 F.2d 1551, 1559
(11th Cir. 1991)). We consider fanciful, arbitrary, and suggestive marks to be
inherently distinctive. Id. Descriptive and generic marks, however, are not
inherently distinctive. Id. “Descriptive marks can become protectible only if they
‘acquire’ distinctiveness by obtaining a ‘secondary meaning,’ and generic marks
can never become protectible.” Id. (quoting Knights Armament Co. v. Optical Sys.
Tech., Inc., 654 F.3d 1179, 1188 (11th Cir. 2011)).
Federal courts can cancel a registered mark under § 1119 if the challenger to
the registration demonstrates: “(1) that it has standing to petition for cancellation
because it is likely to be damaged, and (2) that there are valid grounds for
22
USCA11 Case: 19-15167 Date Filed: 08/02/2021 Page: 23 of 39
discontinuing registration.” Id. at 782 (quoting Coach House Rest., 934 F.2d at
1557). When, as here, the mark at issue has been registered for less than five
years, the “valid grounds for discontinuing registration include any reason for
which the registration should have been barred in the first instance.” Id. (citation
and quotation marks omitted). One such ground is that the mark lacks
distinctiveness. A determination of distinctiveness, therefore, is key to the district
court’s determination of whether Pinnacle Illinois’s registrations should be
cancelled under § 1119.
But in determining whether Pinnacle Illinois’s marks are distinctive, the
district court must consider the presumptions we give to marks registered with the
PTO. When a mark has been registered with the PTO, there is a “rebuttable
presumption that the marks are protectable or ‘distinctive.’” Welding Servs. Inc.,
509 F.3d at 1357 n.3 (quoting 15 U.S.C. § 1057(b)); see also 15 U.S.C. § 1115(a).
When a mark is registered, a challenger seeking cancellation of the registration
must “overcome the presumption of validity by showing—by a preponderance of
the evidence—that the mark is not distinctive.” Royal Palm Props., 950 F.3d at
783. It is also important to emphasize, however, that “trademark holders are never
entitled to presumptions of both ‘inherent’ and ‘acquired’ distinctiveness—they get
only one or the other.” Id. “The sort of presumption appropriate depends on
whether or not the [PTO] required proof of secondary meaning.” Welding Servs.
23
USCA11 Case: 19-15167 Date Filed: 08/02/2021 Page: 24 of 39
Inc., 509 F.3d at 1357 n.3. When the PTO does not require proof of secondary
meaning, the “presumption is that the mark is inherently distinctive,” but when the
PTO requires proof of secondary meaning, the “presumption is that the mark has
acquired distinctiveness by obtaining secondary meaning.” Royal Palm Props.,
950 F.3d at 784 (quotation omitted; alterations adopted).
In this case, it is undisputed that the PTO did not require Pinnacle Illinois to
provide proof of secondary meaning as part of the registration process for the
registrations at issue. Accordingly, Pinnacle Illinois is entitled to a presumption
that its marks are inherently distinctive. This means that Pinnacle Florida has the
“burden of [production and] persuasion,” which requires it to “prove invalidity [of
the registration] by a preponderance of the evidence.” Engineered Tax Servs., Inc.
v. Scarpello Consulting, Inc., 958 F.3d 1323, 1328 n.8 (11th Cir. 2020).
The district court misapplied these standards when it analyzed Pinnacle
Florida’s cancellation counterclaim. The district court noted that there is a
presumption of distinctiveness for registered marks, but it failed to explain or apply
this presumption properly. First, in its recitation of the presumption, the district
court did not distinguish between the presumption for registered marks that
required proof of secondary meaning (presumption of acquired distinctiveness) and
registered marks that did not require proof of secondary meaning (presumption of
inherent distinctiveness). Second, the district court failed to consider whether
24
USCA11 Case: 19-15167 Date Filed: 08/02/2021 Page: 25 of 39
Pinnacle Florida rebutted the presumption that Pinnacle Illinois’s marks were
inherently distinctive.
Accordingly, on remand, the district court should hold Pinnacle Florida to its
“double burden” to (1) demonstrate that “no reasonable jury” could have found
Pinnacle Illinois’s marks to be distinctive, and (2) rebut the presumption that
Pinnacle Illinois’s marks are inherently distinctive.
C. Laches Defense
Pinnacle Illinois argues the district court erred in finding that its claims for
money damages for trademark infringement and unfair competition under the
Lanham Act were barred by the doctrine of laches. “The equitable defense of
estoppel by laches may be applied to bar . . . Lanham Act [claims].” Kason Indus.,
Inc. v. Component Hardware Grp., Inc., 120 F.3d 1199, 1203 (11th Cir. 1997).
“Though the doctrine is an equitable doctrine that should be applied flexibly, a
defendant must demonstrate the presence of three elements in order to successfully
assert laches as a defense: (1) a delay in asserting a right or a claim; (2) that the
delay was not excusable; and (3) that there was undue prejudice to the party
against whom the claim is asserted.” Id.In trademark infringement cases, because the Lanham Act does not contain a
statute of limitations, we consider the “the [limitations] period for analogous state
law claims as the touchstone for laches.” Id. The analogous Florida limitations
25
USCA11 Case: 19-15167 Date Filed: 08/02/2021 Page: 26 of 39
period for this type of action is four years. See Fla. Stat. § 95.11(3); AmBrit, Inc. v.
Kraft, Inc., 812 F.2d 1531, 1546 (11th Cir. 1986).
“When the district court has weighed the proper factors in determining
whether a defendant has proven the elements of a laches defense, we review the
district court’s decision for abuse of discretion.” Angel Flight of Ga., Inc. v. Angel
Flight Am., Inc., 522 F.3d 1200, 1207 (11th Cir. 2008). And we review the district
court’s factual findings for clear error. Conagra, Inc. v. Singleton, 743 F.2d 1508,
1516 n.12 (11th Cir. 1984). A factual finding is clearly erroneous when “the
reviewing court on the entire evidence is left with the definite and firm conviction
that a mistake has been committed.” Johnson & Johnson Vision Care, Inc. v. 1-
800 Contacts, Inc., 299 F.3d 1242, 1246 (11th Cir. 2002) (quoting Univ. of Ga.
Athletic Ass’n v. Laite, 756 F.2d 1535 (11th Cir. 1985)).
The district court concluded that Pinnacle Florida established each element
of laches by a preponderance of the evidence and accordingly barred Pinnacle
Illinois’s claims for trademark infringement and unfair competition. We will
address each element in turn.
1. Delay
We calculate delay from the moment “the plaintiff knows or should know
[it] has a provable claim for infringement.” Kason, 120 F.3d at 1206. The parties
dispute when Pinnacle Illinois knew or should have known of its infringement and
26
USCA11 Case: 19-15167 Date Filed: 08/02/2021 Page: 27 of 39
unfair competition claims against Pinnacle Florida. 12 Lanham Act trademark
infringement claims and unfair competition claims both center on the likelihood of
confusion between the two marks. 15 U.S.C. §§ 1114, 1125(a); Savannah Coll. of
Art & Design, Inc. v. Sportswear, Inc., 983 F.3d 1273, 1279 (11th Cir. 2020)
(explaining that plaintiff had to prove likelihood of confusion to prove claims for
trademark infringement and unfair competition). Thus, the relevant question here
is when Pinnacle Illinois knew or should have known that there was a likelihood of
confusion between the two marks.
Pinnacle Illinois contends that we should calculate the delay from February
4, 2016—the date on which Advertising Age magazine mistakenly linked Pinnacle
Florida’s website to an article about Pinnacle Illinois for the second time. Pinnacle
Florida, however, contends that we should calculate delay from January 2014 13—
the date on which Pinnacle Illinois pitched a potential client, Central Florida
Honda, who asked if Pinnacle Illinois was affiliated with Pinnacle Florida. After
reviewing the evidence, the district court agreed with Pinnacle Florida and found
that Pinnacle Illinois knew or should have known there was a likelihood of
12
The parties agree that we stop the delay calculation on April 4, 2019—the day
Pinnacle Illinois filed its initial infringement lawsuit in Illinois.
13
As we previously explained, the record does not definitively establish whether the
Central Florida Honda pitch meeting occurred in late 2013 or early 2014. The exact date is
irrelevant to our analysis because even if the meeting occurred in January 2014, Pinnacle Illinois
waited over four years before bringing suit, which exceeds the four-year Florida statute of
limitations—the touchstone of our laches analysis.
27
USCA11 Case: 19-15167 Date Filed: 08/02/2021 Page: 28 of 39
confusion between the two marks as of January 2014, which was over four years
before Pinnacle Illinois initially filed suit. The district court concluded that
Pinnacle Florida had demonstrated the delay element of laches because Pinnacle
Illinois sued after the Florida four-year statute of limitations—the touchstone of
laches—had passed.
The district court’s finding that Pinnacle Illinois knew or should have known
of its claim as of January 2014 was not clearly erroneous. The district court relied
on three pieces of evidence in making its determination. First, the district court
relied on an interrogatory from the Illinois litigation in which Pinnacle Florida
asked Pinnacle Illinois when and how Pinnacle Illinois became aware of Pinnacle
Florida. Pinnacle Illinois responded that:
Michael Magnusson of Pinnacle (IL) first became aware of Pinnacle
(FL) in or around late 2013. He became aware of Pinnacle [(FL)]
when pitching to the Central Florida Honda Dealers Association,
when personnel related to that group asked whether the two were
affiliated because they did not wish to do business with Pinnacle (FL).
At that time, Mr. Magnusson assured the Central Florida Honda
Dealers Association that the two were not affiliated.
Second, the district court relied on an interrogatory from the current
litigation where Pinnacle Florida asked Pinnacle Illinois to “[d]escribe in detail
every occurrence [when the parties] pitched or marketed to the same potential
client and the outcome of same.” Pinnacle Illinois replied that “it [was] aware that
Pinnacle (IL) and Pinnacle (FL) both pitched their services to the Central Florida
28
USCA11 Case: 19-15167 Date Filed: 08/02/2021 Page: 29 of 39
Honda Dealers Association in or around late 2013.” The district court said this
evidence “implies that Pinnacle Illinois was aware of Pinnacle Florida in late 2013
and that Pinnacle Florida offered similar services as Pinnacle Illinois.”14
Third, the district court relied on a withdrawn request for admission from the
current litigation. Pinnacle Illinois admitted that it was aware of Pinnacle Florida’s
“use of the name ‘Pinnacle Advertising and Marketing Group, LLC’ at least as
early as 2013.” Pinnacle Illinois moved to withdraw this admission, and the
magistrate judge granted its request, which means it is not conclusive evidence of
the fact. Fed. R. Civ. P. 36(b) (“A matter admitted under this rule is conclusively
established unless the court, on motion, permits the admission to be withdrawn or
amended.”). The district court, however, considered it probative for the purposes
of analyzing Pinnacle Illinois’s delay in asserting its claims. In short, the district
court found that Pinnacle Illinois knew of Pinnacle Florida in January 2014 and, at
that time, it also knew that Pinnacle Florida was operating “a competing
advertising business, utilizing the same name, in the same geographic area that
Pinnacle Illinois had customers.”
14
Pinnacle Illinois replies that this evidence is contradicted by Pinnacle Florida’s CEO’s
testimony that Pinnacle Florida never pitched its services to Central Florida Honda. Although
Pinnacle Florida’s CEO did testify to that effect, the evidence that the district court relied on is
still probative of the fact that Pinnacle Illinois had some awareness that Pinnacle Florida was a
competing advertising company operating in the same geographic area as Pinnacle Illinois, that
Pinnacle Illinois’s potential customers required clarification about the relationship between the
two companies, and that Pinnacle Illinois’s understanding was that it and Pinnacle Florida were
competing for the same clients.
29
USCA11 Case: 19-15167 Date Filed: 08/02/2021 Page: 30 of 39
Pinnacle Illinois argues that the district court’s findings as to what occurred
at the pitch meeting were clearly erroneous because Magnusson’s trial testimony
about the Central Florida Honda pitch meeting diverges from his earlier
recollection of the meeting. The following exchange occurred at trial:
Q: So is this the first time that you heard of the defendant?
A: So the answer is “no.” I heard about them earlier, but I didn’t
associate it until we started, you know, discovering more.
And essentially what happened was we were presenting to the Central
Florida Honda Dealers Association. And we were pitching that
business, and when we were pitching that business, there was a
conversation in the room among the dealers, and somebody said, just
something that we overheard, or I overheard, you know, is that – is
that Pinnacle? . . . And I don’t know what he was relating to, I didn’t
understand really what they were talking about, but after discovering
more, then I associated the two.
So I legitimately heard about them in 2014.
Q: But in 2014, you didn’t know who that Pinnacle that was referred
to by the Central Florida Honda, right?
A: No, I didn’t know who it was.
Based on that testimony, Pinnacle Illinois argues that there is no proof that
the “other Pinnacle” referenced in the Central Florida Honda pitch meeting was
Pinnacle Florida. We disagree. The district court did not clearly err in crediting
Magnusson’s earlier testimony—demonstrating a clear understanding that Pinnacle
Florida was discussed at the pitch meeting—over his later testimony that only
some anonymous “other Pinnacle” was mentioned at the Central Florida Honda
pitch meeting.
30
USCA11 Case: 19-15167 Date Filed: 08/02/2021 Page: 31 of 39
Pinnacle Illinois also argues that the meeting, even as the district court
viewed it, did not give Pinnacle Illinois notice of a potential infringement claim. It
argues that delay should instead be calculated from the second Advertising Age
mistake because only then did Pinnacle Illinois discover that Pinnacle Florida had
“expanded its use of the PINNACLE mark to include the automotive market,
where it would directly compete with [Pinnacle Illinois].” In other words, Pinnacle
Illinois argues that Pinnacle Florida progressively encroached on Pinnacle
Illinois’s market over several years and we should not start the delay calculation
until the second Advertising Age mistake because only then was Pinnacle Florida
infringing on Pinnacle Illinois’s marks.
To be sure, the doctrine of progressive encroachment is relevant to
determining when delay begins.15 Under the doctrine, when “a defendant begins
use of a trademark . . . in the market” and only later “directs its marketing or
manufacturing efforts such that it is placed more squarely in competition with the
plaintiff,” we calculate delay from the later period because only then did the
plaintiff “know [it] ha[d] a provable claim for infringement.” Kason, 120 F.3d at
1205–06.
15
In Kason, we noted that courts “typically discuss encroachment as an excuse for
delay,” but we explained that “the doctrine significantly overlaps the court’s inquiry into when
delay begins.” 120 F.3d at 1206.
31
USCA11 Case: 19-15167 Date Filed: 08/02/2021 Page: 32 of 39
The district court rejected Pinnacle Illinois’s argument that the doctrine of
progressive encroachment affected its delay calculation in this case. As the district
court explained, after the Central Florida Honda pitch meeting, Pinnacle Illinois
was on notice that (1) another entity was using the name “Pinnacle” in the same
advertising and marketing industry, (2) Pinnacle Illinois’s potential client in the
automotive sector was aware of the entity, (3) the entity was operating in a
geographic location in which Pinnacle Illinois sought customers, and (4) at least
one instance of actual confusion had occurred. Accordingly, the district court
found that Pinnacle Illinois was on notice of a potential infringement claim in
January 2014. On our view of the entire record, the district court’s finding is
supported by the evidence for the reasons the district court explained.
Accordingly, the district court did not clearly err because we are not left with the
definite and firm conviction that the district court committed a mistake when it
calculated Pinnacle Illinois’s delay from January 2014. See Johnson & Johnson,
299 F.3d at 1246 (quotation omitted).
2. Excuse
In determining whether the second element of laches is met, courts consider
whether the plaintiff had an adequate excuse for waiting to bring suit. The excuse
requirement ensures that “[a] trademark owner cannot simply wait without
explanation to see how successful the defendant’s business will be and then [sue]
32
USCA11 Case: 19-15167 Date Filed: 08/02/2021 Page: 33 of 39
to take away [the] good will developed by defendant in the interim.” 6 McCarthy
on Trademarks and Unfair Competition § 31:14 (5th ed. 2021).
Courts excuse delay when, for example, a trademark owner delays in suing
because it is attempting to resolve the dispute through settlement negotiations.
See, e.g., Kehoe Component Sales Inc. v. Best Lighting Prods., Inc., 796 F.3d 576,
585 (6th Cir. 2015) (explaining that negotiations to resolve the dispute do not
count for the running of a laches defense); Piper Aircraft Corp. v. Wag-Aero, Inc.,
741 F.2d 925, 932 (7th Cir. 1984) (“It would disserve the strong policy in favor of
nonjudicial dispute resolution if defendant successfully could assert that the three-
and-one-half year period of settlement attempts contributes to the establishment of
laches.”); Siegerist v. Blaw-Knox Co., 414 F.2d 375, 381 (8th Cir. 1969) (excusing
delay because “the parties attempted to engage in conciliatory negotiations rather
than rush headlong toward litigation”). 16
The district court determined that Pinnacle Illinois had no excuse for
delaying four years to sue to enforce its marks. It found that Pinnacle Illinois
failed to communicate with Pinnacle Florida about the infringement until it filed
16
Although we did not specifically ground our analysis under the second laches element,
we similarly held in Citibank, N.A. v. Citibanc Group, Inc. that the laches defense failed because
the plaintiff wrote letters repeatedly warning the defendant that it “regarded the use of Citibanc
as an infringement of [its] rights,” but that the defendant expanded its use of the mark anyway.
724 F.2d 1540, 1546 (11th Cir. 1984). Because the “[d]efendants ha[d] not relied on the delay of
plaintiffs in expanding their use of the mark[,]” we found that that the defendants had not
established the defense of laches. Id. at 1547.
33
USCA11 Case: 19-15167 Date Filed: 08/02/2021 Page: 34 of 39
the Illinois lawsuit. The district court pointed out that Magnusson was “horrified”
both times Advertising Age mistakenly included Pinnacle Florida’s website in its
article about Pinnacle Illinois, but Magnusson “did not take even the minimal step
of contacting Pinnacle Florida to begin discussing the potential infringement.”
Pinnacle Illinois argues it should be excused for its delay because of the
“progressive encroachment” argument discussed above. While some courts do
consider progressive encroachment under the excuse prong of laches, we consider
it in calculating the initial delay. Kason, 120 F.3d at 1206 (analyzing progressive
encroachment under the delay element of laches). In any event, as explained
above, we reject Pinnacle Illinois’s argument that it did not know or should not
have known of a potential infringement claim during the Central Florida Honda
pitch meeting. Accordingly, Pinnacle Illinois has failed to show that the district
court clearly erred when it found that Pinnacle Illinois had no excuse for its delay
in enforcing its marks.
3. Undue Prejudice
Pinnacle Illinois’s final argument is that Pinnacle Florida was not prejudiced
by any delay. “[M]ere delay, without resulting injury to defendant, is not sufficient
to prevent relief for infringement.” 6 McCarthy on Trademarks and Unfair
Competition § 31:12 (5th ed. 2021). Courts have previously recognized two
categories of prejudice caused by a delay in bringing a trademark infringement
34
USCA11 Case: 19-15167 Date Filed: 08/02/2021 Page: 35 of 39
suit—evidentiary prejudice and economic prejudice. Id. (collecting cases)
(“Evidentiary prejudice encompasses such things as lost, stale or degraded
evidence or witnesses whose memories have faded or who have died. Economic or
expectation-based prejudice encompasses actions made by the defendant that it
would not have taken or consequences it would not have experienced had the
plaintiff brought suit promptly.”).
In this case, Pinnacle Florida asserts that it suffered economic prejudice.
The district court concluded that Pinnacle Florida established that it had been
unduly prejudiced by Pinnacle Illinois’s delay because Pinnacle Florida showed
that it “expended significant time and money developing its business (under the
Pinnacle name).” In addition to growing its business and expanding its clientele
during the time between the Central Florida Honda pitch meeting and when
Pinnacle Illinois sued to enforce its marks, Pinnacle Florida’s CEO Pete Gary
testified at trial that he has spent “close to $2 million” developing Pinnacle Florida
and its brand. Gary explained that the money was spent on sending representatives
to trade shows to pitch Pinnacle Florida to potential clients, creating publications
and booklets with the Pinnacle image and address, and supporting charity events
under the Pinnacle name.
Pinnacle Illinois argues that the district court clearly erred in finding that
these expenditures were sufficient to show prejudice because Pinnacle Florida only
35
USCA11 Case: 19-15167 Date Filed: 08/02/2021 Page: 36 of 39
presented evidence of time and money spent promoting its company, rather than
evidence of time and money promoting the Pinnacle mark. We note that our sister
circuits are split on the showing required to satisfy the prejudice element of laches
under the economic prejudice category.
The Ninth Circuit has adopted a stricter approach and requires a showing of
prejudice to be “based on an investment in the [trademark] as the identity of the
business in the minds of the public[,]” which is different than “mere[] . . .
expenditures in promoting the infring[ing] name[.]” Internet Specialties W., Inc. v.
Milon-DiGiorgio Enters., Inc., 559 F.3d 985, 991–92 (9th Cir. 2009). In Internet
Specialties, the Ninth Circuit held that no prejudice was shown merely by the
growth of the defendant’s business and customer base during the delay when the
defendant presented no evidence of its investment in the public’s awareness of the
trademarked brand. Id.Other circuits take a broader view of prejudice and have held that any
showing of economic prejudice related to the business because of the delay is
sufficient. Herman Miller, Inc. v. Palazzetti Imps. & Exps., Inc., 270 F.3d 298,
322 (6th Cir. 2001) (holding that increased potential liability for damages by itself
was sufficient to show prejudice); Hubbard Feeds, Inc. v. Animal Feed
Supplement, Inc., 182 F.3d 598, 602 (8th Cir. 1999) (holding that substantial
36
USCA11 Case: 19-15167 Date Filed: 08/02/2021 Page: 37 of 39
investments in equipment used to produce the infringing product were sufficient to
show prejudice).
In this case, we need not take a position on this circuit split, however,
because even under the Ninth Circuit’s strict approach, the “business” and the
“mark” in this case are one and the same—the investments described by Pinnacle
Florida’s CEO at trial are promoting the business generally and associating the
business with the “Pinnacle” name in the minds of relevant consumers.
Accordingly, it is impossible to distinguish between investments in promoting the
mark versus investments into promoting the business generally.
If Pinnacle Florida had known of Pinnacle Illinois’s infringement and unfair
competition claims sooner, it could have redirected its resources into promoting its
business and brand under a different name during the four years it continued to
promote the Pinnacle mark after Pinnacle Illinois should have known of its
infringement and unfair competition claims. Accordingly, Pinnacle Illinois failed
to show the district court clearly erred in finding that Pinnacle Florida was
prejudiced by Pinnacle Illinois’s over-four-year delay in bringing suit.
* * *
Pinnacle Illinois has failed to show that the district court committed clear
error when it found that each element of the defense of laches was met.
Accordingly, the district court did not abuse its discretion when it determined that
37
USCA11 Case: 19-15167 Date Filed: 08/02/2021 Page: 38 of 39
Pinnacle Illinois was barred from bringing its trademark infringement and unfair
competition claims for monetary damages.
D. Public Interest in Avoiding Confusion: Injunctive Relief
Even though we affirm the district court’s conclusion that the doctrine of
laches bars Pinnacle Illinois’s claims for monetary damages for trademark
infringement and unfair competition, we remand this case for the district court to
consider Pinnacle Illinois’s request for injunctive relief to protect the public’s
interest in avoiding confusion. As we explained in Kason, even if laches bars a
claim for money damages, “if the likelihood of confusion is inevitable, or so strong
as to outweigh the effect of the plaintiff’s delay in bringing a suit, a court may in
its discretion grant injunctive relief, even in cases where a suit for damages is
appropriately barred.” Kason, 120 F.3d at 1207; see id. (“Because of the public
interest in preventing the deception of consumers, delay by the trademark owner
will not ordinarily disable it from obtaining an injunction if there is strong
evidence of likely or actual confusion.” (alteration adopted) (quoting Restatement
(Third) of Unfair Competition § 31, cmt. e (1995))).
Although Pinnacle Illinois sought both monetary and injunctive relief for its
trademark infringement and unfair competition claims, the district court did not
address whether Pinnacle Illinois is entitled to injunctive relief to protect the
public’s interest in avoiding confusion. Accordingly, on remand, the district court
38
USCA11 Case: 19-15167 Date Filed: 08/02/2021 Page: 39 of 39
must “weigh the equities of the case and the strength of [Pinnacle Illinois’s] case”
to determine whether injunctive relief is appropriate. Kason, 120 F.3d at 1207
(explaining that because the issue of whether to grant an injunction after a
trademark claim for money damages is barred by laches will “require a careful,
fact-intensive consideration,” so it is best left “for the district court and its
informed discretion on remand” (quoting SunAmerica Corp. v. Sun Life Assurance
Co. of Can., 77 F.3d 1325 (8th Cir. 1996))).
III. Conclusion
For the reasons explained above, the judgment of the district court is
VACATED in part, AFFIRMED in part, and the case is REMANDED for further
consideration consistent with this opinion.
VACATED IN PART, AFFIRMED IN PART, and REMANDED.
39