Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_19-cv-00173/USCOURTS-azd-2_19-cv-00173-0/pdf.json

Parties Involved:
Aguila Management LLC
Plaintiff
International Fruit Genetics LLC
Defendant

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Aguila Management LLC,

Plaintiff,

v. 

International Fruit Genetics LLC,

Defendant.

No. CV-19-00173-PHX-DJH

ORDER 

Pending before the Court is a Motion to Dismiss (“the Motion”) filed by Defendant 

International Fruit Genetics, LLC (“IFG”) (Doc. 20). The Motion seeks to dismiss the 

Complaint filed by Plaintiff Aguila Management LLC (“Aguila”). (Doc. 20 at 1). Plaintiff 

filed a Response (Doc. 28), and Defendant filed a Reply (Doc. 31).1

I. Background

Plaintiff initiated this action on January 10, 2019 (Doc. 1). The Complaint alleges 

Federal Trademark Infringement in violation of 15 U.S.C. § 1114(1), Federal Unfair 

Competition and False Designation of Origin in violation of 15 U.S.C. § 1125(a), and 

Dilution in violation of 15 U.S.C. § 1125(c), as well as Common Law Unfair Competition 

and Common Law Trademark Infringement. (Doc. 1 at 8-12). 

Plaintiff Aguila is the managing entity of a fruit and vegetables business which 

1 Both parties requested oral argument on this matter. The Court denies the request because

the issues have been fully briefed and oral argument will not aid the Court’s decision. See

Fed.R.Civ.P. 78(b) (court may decide motions without oral hearings); LRCiv 7.2(f) (same).

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conducts transactions in the retail and wholesale marketplaces. (Doc. 1 at 3). Defendant 

IFG is a fruit-breeding business focused on creating new fruit varietals. (Doc. 20 at 4). 

Plaintiff’s fruit and vegetables business utilizes trademarks “CANDY” for “Fresh FruitNamely, Apples, Peaches, Pears, Fresh Prunes and Plums;” “CANDY” for “Fresh Fruit;” 

and “KANDY” for “Fresh Fruit and Fresh Vegetables.” (Doc. 1 at 4-5). Subsequent to 

Plaintiff, Defendant registered “COTTON CANDY” for “Fruits, Namely, Fresh Grapes,”

among other phrases. (Doc. 20 at Ex. 6). In the Complaint, Plaintiff alleges that Defendant 

knowingly and willingly infringed upon its trademarks by adopting and using “Cotton 

Candy” as well as other “Candy” related terms. (Doc. 1 at 5-6). Pursuant to Fed. R. Civ. P. 

12(b)(6), Defendant moves to dismiss on all counts for failure to state a claim upon which 

relief can be granted, arguing that the affirmative defense of laches bars Plaintiff’s claims. 

(Doc. 20 at 1-2). 

II. Discussion

A. Legal Standard for Rule 12(b)(6) Motion

A motion to dismiss pursuant to Rule 12(b)(6) challenges the legal sufficiency of a

complaint. Cook v. Brewer, 637 F.3d 1002, 1004 (9th Cir. 2011). Complaints must contain 

a “short and plain statement showing that the pleader is entitled to relief.” Fed. R. Civ. P. 

8(a). This requires “more than an unadorned, the-defendant-unlawfully-harmed-me 

accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Bell Atlantic Corp. v.

Twombly, 550 U.S. 544, 555 (2007)). A complaint need not contain detailed factual 

allegations to avoid a Rule 12(b)(6) dismissal; it must simply plead “enough facts to state 

a claim to relief that is plausible on its face.” Twombly, 550 U.S. 544, 570 (2007). “The 

plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a 

sheer possibility that defendant has acted unlawfully.” Iqbal, 556 U.S. at 678 (citing 

Twombly, 550 U.S. at 556). “Where a complaint pleads facts that are ‘merely consistent 

with’ a defendant’s liability, it ‘stops short of the line between possibility and plausibility 

of entitlement to relief.’” Id. at 678 (citation omitted). 

The Court must interpret facts alleged in the complaint in the light most favorable

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to the plaintiff, while also accepting all well-pleaded factual allegations as true. Shwarz v.

United States, 234 F.3d 428, 435 (9th Cir. 2000). That rule does not apply, however, to

legal conclusions. Iqbal, 556 U.S. at 678. A complaint that provides “labels and

conclusions” or “a formulaic recitation of the elements of a cause of action will not do.”

Twombly, 550 U.S. at 555. Nor will a complaint suffice if it presents nothing more than

“naked assertions” without “further factual enhancement.” Id. at 557.

B. Laches

Laches is an affirmative defense distinct from a statute of limitations defense. 

Jarrow Formulas, Inc. v. Nutrition Now, Inc., 304 F.3d 829, 835 (9th Cir. 2002) (citation 

omitted). It is “an equitable time limitation on a party’s right to bring suit.” Id. (quoting

Boone v. Mech Specialties Co., 609 F.2d 956, 958 (9th Cir. 1979)). In a trademark 

infringement claim under the Lanham Act, it is well established that laches may be 

presented as an equitable defense. GoTo.com, Inc. v. Walt Disney Co., 202 F.3d 1199, 1209 

(9th Cir. 2000). If a suit is filed beyond the “analogous state limitations period” for a claim 

arising from the Lanham Act, the Court presumes laches applies. Jarrow, 304 F.3d at 836 

(citations omitted). Arizona’s analogous statute of limitations for trademark infringement 

and unfair competition bars claims after three years. See Ranch Realty v. DC Ranch Realty, 

LLC, 614 F. Supp. 2d 983, 989-90 (D. Ariz. 2007).

To evaluate the application of laches, the Court first applies a two-prong test. 

Danjaq LLC v. Sony corp., 263 F.3d 942, 951 (9th Cir. 2001). The first prong asks whether 

plaintiff unreasonably delayed filing suit, and the second prong asks whether defendant 

suffered prejudice as a result of the delay. Id. 

The first prong begins with the length of delay, which is measured from the time the 

plaintiff knew or should have known about its potential cause of action. Jarrow, 304 F.3d 

at 838 (citing Kling v. Hallmark Cards Inc., 225 F.3d 1030, 1036 (9th Cir. 2000); Portland 

Audubon Soc’y v. Lujan, 884 F.2d 1233, 1241 (9th Cir. 1989)). Next, the Court decides

whether the plaintiff’s delay was reasonable. Id. (citing Danjaq, 263 F.3d at 954-55; 

Couveau v. American Airlines, 218 F.3d 1078, 1083 (9th Cir. 2000)). The reasonableness 

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of the plaintiff’s delay is considered in light of the time allotted by the analogous limitations 

period. Id. (citing Sandvik v. Alaska Packers Ass’n, 609 F.2d 969, 971 (9th Cir. 1979)). 

The Court also considers whether the plaintiff has proffered a legitimate excuse for its 

delay. Id. (citing Danjaq, 263 F.3d at 954-55).

In the second prong, a defendant must prove either evidentiary prejudice or 

expectations-based prejudice. Danjaq, 263 F.3d at 955. Evidentiary prejudice includes 

such things as lost, stale, or degraded evidence, or witnesses whose memories have faded 

or who have died. Id. (citations omitted). A defendant may demonstrate expectations-based

prejudice by showing that it took actions or suffered consequences that it would not have, 

had the plaintiff brought suit promptly. Id. (citation omitted). However, when laches is 

presented as a defense to a trademark infringement claim, a finding of expectations-based 

prejudice requires more. Internet Specialties West, Inc. v. Milon-Digiorgio Enters., Inc.,

559 F.3d 985, 991 (9th Cir. 2009). The court must determine whether the claim of prejudice 

is based on mere expenditures in promoting the infringed name or whether it is based on 

an investment in the mark as the identity of the business in the minds of the public. Id. at 

991-93 (citations omitted) (quotation omitted). 

Finally, in addition to the Jarrow two-prong test, courts analyze six factors to 

determine whether laches precludes a trademark infringement claim: “1) the strength and 

value of trademark rights asserted; 2) plaintiff’s diligence in enforcing mark; 3) harm to 

senior user if relief denied; 4) good faith ignorance by junior users; 5) competition between 

senior and junior users; and 6) extent of harm suffered by junior user because of senior 

user’s delay.” E-Systems, Inc. v. Monitek, Inc., 720 F.2d 604, 607 (9th Cir. 1983).

C. Analysis 

In the Motion, Defendant argues Plaintiff’s claims are barred by the equitable 

doctrine of laches. (Doc. 20 at 7). Courts in this district have previously applied laches in 

a motion to dismiss, noting that “where the elements of laches are apparent on the face of 

a complaint, it may be asserted on a motion to dismiss.” Arizona Minority Coalition for 

Fair Redistricting v. Arizona Independent Redistricting Com’n, 366 F. Supp. 2d 887, 912 

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n.19 (D. Ariz. 2005) (citation omitted). Defendant first argues the facts require the 

presumption that laches applies. (Doc. 20 at 8). Second, Defendant argues Plaintiff 

unreasonably delayed suit. Id. at 9. Third, Defendant argues it is prejudiced by Plaintiff’s 

alleged unreasonable delay in bringing suit. Id. at 10. Finally, Defendant argues the sixfactor E-Systems test weighs in favor of dismissing Plaintiff’s claims. Id. at 11-14. For the 

following reasons, the Court will deny the Motion.

1. The Presumption of Laches

Plaintiff does not dispute that in 2011 it had knowledge of Defendant’s “COTTON 

CANDY” Intent-To-Use Trademark Application at the U.S. Patent Trademark Office 

(“USPTO”). (Doc. 28 at 9-10). Plaintiff argues an intent-to-use application does not trigger 

laches because the Lanham Act requires infringement by “use in commerce” for laches to 

be triggered. Id. at 9 (citing United Am. Indus., Inc. v. Cumberland Packing Corp., No. 

CV-06-1833PHX-FJM, 2007 WL 38279 at *3 (D. Ariz. Jan 5, 2007)). In this instance, 

however, the Court need not reach whether an intent-to-use application triggers laches 

under the Lanham Act because Defendant’s “COTTON CANDY” mark was later

registered with the USPTO on March 6, 2012. (Doc. 20 at Ex. 6). The registration also 

indicated use in commerce as early as August 26, 2011. Id.

As a matter of public record not subject to reasonable dispute, the Court takes 

judicial notice of Defendant’s 2012 “COTTON CANDY” mark registration. See Intri-Plex 

Technologies, Inc. v. Crest Group, Inc., 499 f.3d 1048, 1052 (9th Cir. 2007); Fed. R. Evid. 

201(b); Tallyho Enterprises, LLC. V. PremierGarage Sys., LLC, No. CV-07-01791-PHXSRB, 2008 WL 11338891, at *7 n.1 (D. Ariz. Apr. 29, 2008). Plaintiff thus had constructive 

notice of the March 6, 2012 registration of “COTTON CANDY” mark by Defendant. See 

Kling, 225 F.3d at 1036 (when laches is raised, the law charges Plaintiff with “such 

knowledge as he might have obtained upon inquiry, provided the facts already known by 

him were such as to put upon a man of ordinary intelligence the duty of inquiry”). Given 

that Plaintiff was aware of the relevant intent-to-use application prior to Defendant’s March 

6, 2012 “COTTON CANDY” mark registration, the Court finds Plaintiff reasonably had a 

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duty of inquiry and is assumed to have had knowledge of the registration as of March 6, 

2012. 

The current action was filed January 10, 2019, far later than the would-be March 6, 

2015 deadline for suit under Arizona’s analogous statute. The Court thus initially proceeds 

under the assumption laches applies. See Jarrow, 304 F.3d at 836. 

2. Plaintiff’s Unreasonable Delay

Plaintiff filed suit nearly seven years following Defendant’s March 6, 2012 

“COTTON CANDY” mark registration. Plaintiff’s delay is greater than double the 

maximum time to file suit under Arizona’s analogous statute of limitations. Plaintiff does 

not establish any justifiable reason for the delay. The Court finds the length of Plaintiff’s 

delay to be unreasonable.

3. Defendant Must Show it is Prejudiced by Plaintiff’s Unreasonable Delay

Plaintiff’s delay in bringing suit is unreasonable, but Defendant does not claim 

evidentiary prejudice and has not proven expectations-based prejudice. The Complaint 

does allege that “IFG has both licensed the Infringing Marks . . . and sold products bearing 

the Infringing Marks.” (Doc. 1 at 7). The claim that Defendant licensed and sold products 

bearing infringing marks, however, does not establish prejudice in the laches context. See 

Internet Specialties, 559 F.3d at 991-93. Laches is meant to protect an infringer whose 

efforts have been aimed at “build[ing] a valuable business around its trademark” and “an 

important reliance on the publicity of [its] mark.” Id. at 991-92 (quoting 6 McCarthy on 

Trademarks and Unfair Competition § 31:12) (citations omitted) (emphases added). Proof 

of efforts to build a valuable business around the marks in question is necessary because

“if this prejudice could consist merely of expenditures in promoting the infringed name, 

then relief would have to be denied in practically every case of delay.” Id. at 991 (quoting 

Tisch Hotels, Inc. v. Americana Inn, Inc., 350 F.2d 609, 615 (7th Cir. 1965)). 

Defendant has not shown at this stage that its alleged infringement rests on “an 

investment in the mark [ ] as the identity of the business in the minds of the public.” Id. at 

992; see also Jarrow, 304 F.3d at 839 (if plaintiff had filed the action sooner, defendant 

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“could have invested its resources in shaping an alternative identity . . . in the minds of the 

public”). Defendant’s statement that “the history of IFG’s uncontested growth as 

documented in the Complaint and in the USPTO register are precisely what evidence 

Courts rely upon” when analyzing prejudice understates the burden of proof required when

asserting laches against a Lanham Act trademark infringement claim. (Doc. 31 at 2). 

Defendant’s statement that its efforts regarding brand recognition are sufficiently 

demonstrated “by its development, registration, use, and licensing of its numerous 

CANDY-formative marks” also misapprehends the burden of proof required to show

expectations-based prejudice. Id. at 8. The Court is unable to conclude, at this early stage 

of the litigation, that Defendant has invested in the relevant marks as the identity of its 

business. Even finding a presumption in favor of laches, the application of laches at this 

stage is inappropriate because prejudice is not apparent on the face of the Complaint.

2

Therefore, the Court will deny the Motion to Dismiss. 

III. Conclusion

The Court finds the application of laches inappropriate because the Defendant failed 

to establish prejudice at this stage. 

Accordingly,

IT IS ORDERED that Defendant’s Motion to Dismiss (Doc. 20) is DENIED. 

Dated this 13th day of February, 2020.

Honorable Diane J. Humetewa

United States District Judge

2 The Court need not reach the E-Systems factors because the Motion fails to establish 

prejudice under the Jarrow test. See Internet Specialties, 559 F.3d at 991 (citing Jarrow, 

304 F.3d at 839) (holding that notwithstanding the result of the E-Systems analysis, 

defendant must still satisfy the second prong of the laches test). 

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