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Nature of Suit Code: 840
Nature of Suit: Trademark
Cause of Action: 

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In the

United States Court of Appeals

For the Seventh Circuit ____________________

No. 14-3261

HYSON USA, INC.,

LEONID TANKSY, and 

ENNA GAZARYAN,

Plaintiffs-Appellants,

v.

HYSON 2U, LTD.,

KAROLIS KAMINSKAS, INC.,

and KAROLIS KAMINSKAS,

Defendants-Appellees.

____________________

Appeal from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 14 C 4320 — Milton I. Shadur, Judge.

____________________

ARGUED SEPTEMBER 10, 2015 — DECIDED MAY 16, 2016

____________________

Before FLAUM, RIPPLE, and SYKES, Circuit Judges.

SYKES, Circuit Judge. This is a trademark dispute between 

two food-distribution companies named Hyson. Hyson 

USA, Inc., is owned by Leonid Tansky and formerly emCase: 14-3261 Document: 28 Filed: 05/16/2016 Pages: 9
2 No. 14-3261

ployed Karolis Kaminskas as a manager. In early 2012 Hyson 

USA experienced a serious financial setback and suspended 

its operations. In a role reversal, Tansky then went to work 

for Kaminskas at his newly formed company Hyson 2U, Ltd.

That company operated in much the same way as Hyson 

USA.

About 17 months later, Tansky was fired. This suit is his 

response. Tansky and his company, Hyson USA, accuse

Hyson 2U and Kaminskas of trademark infringement. See 

15 U.S.C. §§ 1114 et seq. Hyson 2U moved to dismiss for 

failure to state a claim, see FED. R. CIV. P. 12(b)(6), arguing 

that the complaint affirmatively established the defense of 

acquiescence. That defense estops recovery if the trademark 

owner, by his words or conduct, manifested his consent to 

the defendant’s use of the mark. The district court granted 

the motion and dismissed the case.

We reverse. The district judge jumped the gun in dismissing the case at the pleading stage. Acquiescence is a 

fact-intensive equitable defense that is rarely capable of

resolution on a motion to dismiss under Rule 12(b)(6).

I. Background

Hyson USA and Hyson 2U are food distributors with a 

common history. Hyson USA is wholly owned by its president, Leonid Tansky, and has operated since 2006. Karolis 

Kaminskas was one of its managers. In the spring of 2012,

Hyson USA encountered serious financial difficulty, culminating in the loss of its liability insurance. That move forced 

the company to suspend its operations.

In September 2012 Kaminskas established Hyson 2U, and

Hyson USA then transferred its branded inventory and 

Case: 14-3261 Document: 28 Filed: 05/16/2016 Pages: 9
No. 14-3261 3

equipment to the new company. Hyson 2U also leased the 

warehouse from which Hyson USA had operated. Tansky 

then switched roles with Kaminskas and went to work for

him at his new company. After the changeup Hyson 2U 

operated in the same manner and in the same markets as 

Hyson USA.

For reasons not disclosed, in February 2014 Tansky was 

fired. About five months later, he and Hyson USA—now up 

and running again—sued Hyson 2U and Kaminskas alleging

claims for trademark infringement under the Lanham Act;1

the suit also included several state-law claims.2 The defendants (we’ll refer to them collectively as “Hyson 2U”) moved 

to dismiss the federal claims under Rule 12(b)(6), arguing

that the allegations in the complaint established the affirmative defense of acquiescence. The judge agreed, dismissed 

the trademark claims, and relinquished supplemental jurisdiction over the state-law claims. This appeal followed.

II. Discussion

We review de novo the district court’s order dismissing 

the complaint under Rule 12(b)(6) for failure to state a claim.

Citadel Grp. Ltd. v. Wash. Reg’l Med. Ctr., 692 F.3d 580, 591 

(7th Cir. 2012). Dismissal is appropriate under that rule

when the factual allegations in the complaint, accepted as 

 

1 The Lanham Act claims are for trademark infringement, false designation of origin, trademark dilution, and cybersquatting. See 15 U.S.C. 

§ 1114(1); id. § 1125(a), (c), (d).

2 Tansky’s wife, Enna Gazaryan, is also a plaintiff, but her presence in the 

suit is not important here. We’ll refer to the plaintiffs collectively as

“Hyson USA.”

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true, do not state a facially plausible claim for relief. Ashcroft

v. Iqbal, 556 U.S. 662, 678 (2009); Bell Atl. Corp. v. Twombly, 

550 U.S. 544, 570 (2007); Silha v. ACT, Inc., 807 F.3d 169, 173–

74 (7th Cir. 2015). This case implicates the pleading principle 

that “[t]he mere presence of a potential affirmative defense 

does not render the claim for relief invalid.” Brownmark

Films, LLC v. Comedy Partners, 682 F.3d 687, 690 (7th Cir. 

2012). That is, a plaintiff ordinarily need not anticipate and 

attempt to plead around affirmative defenses. Chi. Bldg.

Design v. Mongolian House, Inc., 770 F.3d 610, 613 (7th Cir. 

2014).

An exception applies when “the allegations of the complaint ... set forth everything necessary to satisfy the affirmative defense.” United States v. Lewis, 411 F.3d 838, 842 (7th 

Cir. 2005). However, because affirmative defenses frequently

“turn on facts not before the court at [the pleading] stage,” 

Brownmark Films, 682 F.3d at 690, dismissal is appropriate 

only when the factual allegations in the complaint unambiguously establish all the elements of the defense, Brooks v. 

Ross, 578 F.3d 574, 579 (7th Cir. 2009). In other words, the

plaintiff “must affirmatively plead himself out of court.” Chi.

Bldg. Design, 770 F.3d at 614.

At issue here is the doctrine of acquiescence, a factsensitive equitable defense that may estop a trademark 

owner from obtaining injunctive and monetary remedies for 

trademark infringement. Before turning to the specifics of 

the defense, it’s helpful to step back and recall some basics of 

trademark law.

The purpose of trademark protection is to identify the 

source of a good or service to consumers. See RESTATEMENT 

(THIRD) OF UNFAIR COMPETITION § 9 (AM. LAW INST. 1995). 

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No. 14-3261 5

Trademark law does this by granting the owner of a mark

the right to prevent others from using the mark in a way that 

is likely to cause confusion. See Sorensen v. WD-40 Co., 

792 F.3d 712, 726 (7th Cir. 2015) (“The keystone of trademark 

infringement is likelihood of confusion as to source, affiliation, connection, or sponsorship of goods or services among 

the relevant class of customers and potential customers.”)

(internal quotation marks and citation omitted). Trademark 

protection is granted only for so long as the mark reliably 

identifies the source of a good or service. Accord Eva’s Bridal 

Ltd. v. Halanick Enters., 639 F.3d 788, 790 (7th Cir. 2011) (“A 

person who visits one Kentucky Fried Chicken outlet finds 

that it has much the same ambiance and menu as any other. ... The trademark's function is to tell shoppers what to 

expect—and whom to blame if a given outlet falls short.”).

If a trademark owner acquiesces to another’s use of his 

mark, however, then the mark’s original source-identifying 

power is weakened and the owner may be estopped from 

obtaining relief in an infringement action against the junior 

user. See TMT N. Am., Inc. v. Magic Touch GmbH, 124 F.3d 

876, 885 (7th Cir. 1997); accord Eva’s Bridal, 639 F.3d at 790. 

Thus, acquiescence is an affirmative defense in an action for 

trademark infringement under the Lanham Act. See 

15 U.S.C. § 1115(b)(9). 

Generally speaking, acquiescence is an equitable doctrine 

that permits the court to deny relief in an action for trademark infringement if the evidence shows that the owner of 

the mark has, through his words or conduct, conveyed his 

consent to the defendant’s use of the mark. See Magic Touch, 

124 F.3d at 885; Piper Aircraft Corp. v. Wag-Aero, Inc., 741 F.2d 

925, 932–33 (7th Cir. 1984); see also SunAmerica Corp. v. Sun 

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Life Assurance Co., 77 F.3d 1325, 1334 (11th Cir. 1996); see 

generally RESTATEMENT (THIRD) OF UNFAIR COMPETITION § 29.

The defense prevents the trademark owner from impliedly 

permitting another’s use of his mark and then attempting to 

enjoin that use after the junior user has invested substantial 

resources to develop the mark’s goodwill. See Magic Touch, 

124 F.3d at 885. We’ve noted (as have other courts) that 

“acquiescence is related to the doctrine of laches, by which 

equity comes to the aid of an innocent user and grants him 

refuge from a claimant who has calmly folded his hands and 

remained silent while the innocent user has exploited and 

strengthened the mark.” Id. (internal quotation marks omitted). Indeed, our acquiescence cases import aspects of laches 

analysis, looking to the reliance interests of the junior user, 

the senior user’s delay in enforcing his rights, and the prejudice to the junior user if the senior user’s rights are enforced.

See, e.g., Piper Aircraft, 741 F.3d at 932–33; Magic Touch, 

124 F.3d at 885–86; Seven-Up Co. v. O-So-Grape Co., 283 F.2d 

103, 106 (7th Cir. 1960) (formally decided under the doctrine 

of laches but also discussing acquiescence).

Importantly, however, “[w]hereas laches is a negligent, 

unintentional failure to protect trademark rights, 

[a]cquiescence is associated with intentional abandonment.” 

Piper Aircraft, 741 F.2d at 933 (emphasis added and quotation 

marks omitted). It requires an “affirmative word or deed” 

that conveys the trademark owner’s implied consent to the 

junior user’s use of his marks. Magic Touch, 124 F.3d at 885 

(emphasis added and quotation marks omitted).

Or, as the Fourth Circuit has aptly put it, “[a]cquiescence 

is the active counterpart to laches, a doctrine based on 

passive consent. Both doctrines connote consent by the 

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owner to an infringing use of his mark, but acquiescence 

implies active consent.” What-A-Burger of Va., Inc. v. 

Whataburger of Corpus Christi, Tex., 357 F.3d 441, 452 (4th Cir. 

2004) (internal quotation marks omitted); accord Creative 

Gifts, Inc. v. UFO, 235 F.3d 540, 548 (10th Cir. 2000) (“Acquiescence requires proof even more demanding than a showing[,] which would suffice for a laches defense[,] that the 

party seeking to enforce its trademark rights has unreasonably delayed pursuing litigation and, as a result, has materially prejudiced the alleged infringer.”).

In short, although our cases sometimes blend the doctrines of acquiescence and laches, they are formally distinct

and should be analyzed separately. See 6 J. THOMAS 

MCCARTHY, MCCARTHY ON TRADEMARKS AND UNFAIR 

COMPETITION § 31:41 (4th ed. 2014) (“To preserve some 

semantic sanity in the law, it is appropriate to reserve the 

word ‘acquiescence’ for use only in those cases where the 

trademark owner, by affirmative word or deed, conveys its 

implied consent to another. That is, laches denotes a merely 

passive consent, while acquiescence implies active consent. 

This results in two separate legal categories: ‘estoppel by 

laches’ as distinct from ‘estoppel by acquiescence.’”).

The Eleventh Circuit has distilled acquiescence doctrine

into three elements: “(1) the senior user actively represented 

that it would not assert a right or a claim; (2) the [senior 

user’s] delay between the active representation and assertion 

of the right or claim was not excusable; and (3) the delay 

caused the defendant undue prejudice.” SunAmerica, 77 F.3d 

at 1334; see also Coach House Rest., Inc. v. Coach & Six Rests., 

Inc., 934 F.2d 1551, 1558 (11th Cir. 1991). The Second and 

Ninth Circuits agree and have adopted this test for the 

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defense. See Seller Agency Council, Inc. v. Kennedy Ctr. for Real 

Estate Educ., Inc., 621 F.3d 981, 989 (9th Cir. 2010) (listing the 

same elements); Pro Fitness Physical Therapy Ctr. v. Pro-Fit 

Orthopedic & Sports Physical Therapy P.C., 314 F.3d 62, 67 (2d 

Cir. 2002) (same). Our acquiescence cases engage in essentially the same analysis (though without listing elements), so

we’ll use this formulation too.

Applying this understanding of the doctrine here, Hyson 

USA’s complaint does not unambiguously establish the 

affirmative defense of acquiescence. The complaint alleges

that Hyson USA transferred its branded inventory and 

equipment to Hyson 2U, that Hyson USA knew Hyson 2U 

was using its marks, and that Tansky worked for Hyson 2U 

for about 17 months before he was fired. There are no allegations that Hyson USA or Tansky made any active representations—by word or deed—that they would not assert a 

right or claim regarding the Hyson trademark. The other 

two elements of the defense—delay and undue prejudice—

cannot alone support a finding of acquiescence, so we need 

say no more about them here.

We note in closing that an equitable defense like acquiescence is not ordinarily susceptible to resolution at the pleading stage. The defense requires a qualitative examination of 

the parties’ words and conduct and an equitable evaluation 

of the length of the delay and the degree of prejudice to the 

defendant if the trademark owner’s rights are enforced. That 

kind of analysis generally requires a factual record. We note 

as well that even when an acquiescence defense can be 

proven, “[t]he law ... allows the senior user’s claim to be 

revived from estoppel if the senior user can show that 

‘inevitable confusion’ would result from dual use of the 

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No. 14-3261 9

marks.” Magic Touch, 124 F.3d at 886 (quoting SunAmerica, 

77 F.3d at 1334). That question, too, is generally inappropriate for resolution on the pleadings.

Because the allegations in the complaint do not unambiguously establish everything necessary for the affirmative 

defense of acquiescence, it was error to dismiss the case 

under Rule 12(b)(6). Accordingly, we reverse the judgment 

and remand for further proceedings consistent with this 

opinion.

REVERSED.

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