Court Opinion

ID: 4710271
Source: CourtListenerOpinion
Date Created: 2021-08-10 17:01:38.557749+00
Date Added: 2024-06-11T08:07:02.316686
License: Public Domain

PRECEDENTIAL

UNITED STATES COURT OF APPEALS
     FOR THE THIRD CIRCUIT
         ______________

       Nos. 20-2813, 20-2900
         ______________

       KARS 4 KIDS INC.

                V.

        AMERICA CAN!

 AMERICA CAN! CARS FOR KIDS

                V.

       KARS 4 KIDS INC.

           KARS 4 KIDS INC.,
                    Appellant 20-2813

       KARS 4 KIDS INC.
                V.
        AMERICA CAN!

  AMERICA CAN! CARS FOR KIDS
               V.
       KARS 4 KIDS INC.
      AMERICA CAN!; AMERICAN CAN! CARS
               FOR KIDS,
                   Appellants 20-2900
                 ______________

    Appeal from the United States District Court
            for the District of New Jersey
    (D.C. Nos. 3-14-cv-07770, 3-16-cv-04232)
    District Judge: Honorable Peter G. Sheridan
                   ______________

               Argued July 7, 2021
                ______________

Before: SHWARTZ, KRAUSE, and FUENTES, Circuit
                  Judges.

             (Filed: August 10, 2021)
                 ______________

                    OPINION
                 ______________

                         2
Christopher Cariello [ARGUED]
Peter D. Vogl
Orrick Herrington & Sutcliffe
51 West 52nd Street
New York, NY 10019

Upnit K. Bhati
Orrick Herrington & Sutcliffe
1152 15th Street, N.W.
Columbia Center
Washington, DC 20005

Eleonore Ofosu-Antwi
Liza M. Walsh
Mark D. Haefner
Walsh Pizzi O’Reilly & Falanga
Three Gateway Center
100 Mulberry Street, 15th Floor
Newark, NJ 07102

Jonathan Z. King,
Cowan, Liebowitz & Latman
114 West 47th Street
New York, NY 10036

      Counsel for Appellant

Aubrey N. Pittman [ARGUED]
Suite 700
100 Crescent Court
Dallas, TX 75201

Karen A. Confoy

                                3
Fox Rothschild
997 Lenox Drive
Princeton Pike Corporate Center, Building 3
Lawrenceville, NJ 08648

Allison L. Hollows
Fox Rothschild
101 Park Avenue
17th Floor
New York, NY 10178

Robert S. Tintner
Fox Rothschild
2000 Market Street
20th Floor
Philadelphia, PA 19103

Christopher R. Kinkade
FisherBroyles
100 Overlook Center
2nd Floor
Princeton, NJ 08540

       Counsel for Appellee

SHWARTZ, Circuit Judge.

       Kars 4 Kids, Inc. (“Kars 4 Kids”) and America Can!
Cars for Kids (“America Can”) used similar trademarks. Each
sued the other, alleging violations of state and federal law
related to the use of those marks. Because (1) America Can
did not preserve its challenge to the District Court’s denial of
summary judgment on its trademark cancelation claims, (2)

                               4
America Can was first to use its mark in Texas and Kars 4 Kids
has waived any challenge to the validity of America Can’s
marks, and (3) the District Court did not abuse its discretion by
declining to award enhanced monetary relief or prejudgment
interest, we will affirm in part. We will, however, vacate in
part and remand for the District Court to reexamine its laches
and disgorgement conclusions under the governing law.

                                I

                               A

       America Can and Kars 4 Kids are charities that sell
donated vehicles to fund children’s programs. America Can
began receiving donations in the late 1980s and, in the early
1990s, began using the mark “Cars for Kids” in advertising
campaigns. Its campaigns included between two and five radio
advertisements per week by Bonnie Curry, a radio personality
whose programs reached up to one million people in the Dallas
area. Curry’s advertisements began in 1993 and have
continued “pretty consistent[ly]” since then. App. 2135.
Between 1995 and 2001, America Can also advertised in the
Dallas Morning News, which published several articles
discussing the “Cars for Kids” program.

        Kars 4 Kids was founded in 1995, and it has used its
marks in its advertising since at least 1997. Kars 4 Kids first
used “flyers and bumper stickers,” App. 1975, then distributed
nationwide mailers. In the early 2000s, Kars 4 Kids began
advertising in regional newspapers and national Jewish
publications. In 1999, Kars 4 Kids started using a musical
jingle in its radio and television advertisements. In 2003, Kars

                               5
4 Kids began advertising in online magazines and purchased
keyword advertisements on Yahoo and Google.
        In 2003, America Can noticed Kars 4 Kids’
advertisements in Texas and sent a cease and desist letter,
asserting America Can’s rights to the “Cars for Kids” mark in
Texas. After sending that letter, America Can did not notice
Kars 4 Kids’ advertisements in Texas for several years. Kars
4 Kids, however, kept advertising.1 For example, in 2005, Kars
4 Kids advertised nationally in Reader’s Digest. It also used
Google advertising, which allowed Kars 4 Kids’
advertisements to appear nationwide—including in Texas—
when potential donors used certain search terms. In 2011, Kars
4 Kids procured the URL www.carsforkids.com, which it
initially used to solicit donations.2 By 2011, America Can
began seeing Kars 4 Kids advertisements and, in 2013, sent

      1
           During this period, America Can received
communications from at least one confused donor but the
record does not reveal whether the donor was based in Texas.
       2
         Kars 4 Kids stopped using the URL and “parked” the
domain, meaning it is no longer “redirected to a live webpage.”
App. 3122. According to America Can, the parked domain
both benefited and harmed it. On the one hand, America Can
could “continue to get some of the donations [when its] donors
[were] looking for [its] name, and Kars 4 Kids . . . [would not
have been] getting them.” App. 3125. In fact, after Kars 4
Kids parked the domain, America Can’s “donations in
specifically Dallas and Houston, picked up significantly.”
App. 3122. On the other hand, “if somebody [went] to find
[America Can] and [found the] name at a website that [was]
down . . . they’re going to look at [America Can] as
incompetent” and choose not to donate their vehicle. App.
3125.

                              6
Kars 4 Kids another cease and desist letter, alleging that Kars
4 Kids was unlawfully using “KARS 4 KIDS” in Texas.
                             B

       Kars 4 Kids sued America Can in 2014, bringing federal
and state trademark infringement, unfair competition, and
trademark dilution claims, and seeking equitable relief.
America Can filed its suit in 2015, asserting the same claims
and seeking cancelation of Kars 4 Kids’ trademark for 1-877-
KARS-4-KIDS under 15 U.S.C. § 1119, financial
compensation, and a nationwide injunction prohibiting Kars 4
Kids from using the mark.

      The District Court denied the parties’ cross-motions for
summary judgment, including America Can’s request for mark
cancelation, “[d]ue to the disputed facts with regard to the
trademark in this matter.”3 Kars 4 Kids Inc. v. America Can!,

       3
         America Can has not preserved its challenge to this
order. “[W]hen a legal issue initially raised at summary
judgment . . . depends on the resolution of factual questions,
motions for judgment as a matter of law under Rules 50(a) and
(b) are . . . required to preserve the legal issue for appellate
review.” Frank C. Pollara Grp., LLC v. Ocean View Inv.
Holding, LLC, 784 F.3d 177, 186-87 (3d Cir. 2015).
       Under 15 U.S.C. § 1119, district courts may “order the
cancelation of registrations, in whole or in part.” One basis for
cancelation is fraud on the Patent and Trademark Office
(“PTO”). 15 U.S.C. §§ 1064(3), 1119. A trademark applicant
commits fraud under the Lanham Act when he knowingly
makes false, material representations of fact in connection with
an application for a registered mark. See Sovereign Mil.
Hospitaller Ord. of Saint John of Jerusalem of Rhodes & of

                               7
No. 14-cv-7770, 2018 WL 5298406, at *8 (D.N.J. Oct. 25,
2018).

        Before the liability trial, the District Court determined
that America Can’s request for damages equal to Kars 4 Kids’
profits was “plainly a claim for disgorgement of profits, and
not a claim for America Can[]’s own damages.” Kars 4 Kids
Inc. v. America Can!, No. 3:14-cv-7770, 2019 WL 2078670,
at *2 (D.N.J. May 10, 2019). Because disgorgement is an
equitable remedy, the Court granted Kars 4 Kids’ motion to
present disgorgement evidence at a bench trial, if necessary,
following the jury’s verdict on liability. Id. at *2-3.

       Following the close of evidence to the jury, both parties
moved for judgment as a matter of law under Federal Rule of
Civil Procedure 50(a). Kars 4 Kids argued, among other
things, that “America Can[] failed to demonstrate that it has

Malta v. Fla. Priory of Knights Hospitallers of Sovereign Ord.
of Saint John of Jerusalem, Knights of Malta, Ecumenical Ord.,
702 F.3d 1279, 1289 (11th Cir. 2012). Succeeding on a fraud
claim requires showing by clear and convincing evidence that
the applicant intended to deceive the PTO when applying for
the mark. In re Bose Corp., 580 F.3d 1240, 1243, 1245 (Fed.
Cir. 2009).
        The District Court correctly determined that the
cancelation claim required resolving a factual question:
whether Kars 4 Kids was truthful when applying to register its
mark. Because this requires resolution of disputed facts and
America Can failed to renew its challenge in its motion for
judgment as a matter of law under Rule 50(a), it has waived its
ability to seek review of the summary judgment order denying
its cancelation claim.

                               8
ownership and priority” of the mark, App. 2293, but did not
argue that America Can’s mark is invalid. The District Court
reserved judgment on those motions. The jury then found that
America Can had trademark rights and that Kars 4 Kids
willfully infringed those rights in Texas. The jury also found
neither party proved their trademark dilution claims and that
America Can failed to prove that Kars 4 Kids had obtained
registration of its 1-877-KARS-4-KIDS mark by false
representations. Furthermore, as the District Court observed,
the jury returned no verdict on any state law claim.4

       The District Court then held a bench trial on the
equitable claims and remedies. The Court held that the defense
of laches did not apply, finding America Can’s executive
credibly testified that he did not see Kars 4 Kids’
advertisements in Texas from 2004 to 2011 and that Kars 4
Kids seemed to have “pulled back their advertising” following
America Can’s 2003 cease and desist letter. Kars 4 Kids Inc.
v. America Can!, No. 3:14-cv-7770, 2020 WL 1550804, at *4
(D.N.J. Apr. 1 2020). The Court found that this lack of
advertising “lulled America Can[] into a passive position until
2011” and “preclude[d] a finding of inexcusable delay.” Id.
The Court also found that Kars 4 Kids tried to “unscrupulously
apply” laches “[b]y waiting to tee-up its laches defense until
the remedy stage after litigating for four years.” Id. The Court
also stated, without explanation, that Kars 4 Kids did not
“show any prejudice” from America Can’s alleged delay. Id.

       After concluding that laches did not apply, the District
Court ordered Kars 4 Kids to disgorge its profits in Texas. To
arrive at the disgorgement amount, the Court first examined

       4
           No party appealed this finding.

                                 9
Kars 4 Kids’ “gross and net revenues from the donations
generated by the sale of vehicles originating from Texas.” Id.
at *5. For the years 2008-2019, the parties agreed that the gross
revenue was $18,454,452 and net revenue was $16,067,943.
The Court deducted $3,447,191 in Texas-specific advertising
expenses, $362,210 in national advertising expenses, and
$1,011,000 in expenses related to compensation and office
expenses, and ultimately ordered Kars 4 Kids to disgorge
$10,637,135.5

        The District Court declined to award enhanced
monetary relief because (1) “Kars 4 Kids willfully infringed
upon America Can[]’s mark in Texas only; but not in any other
state,” and (2) “the jury found no fraud in procuring Kars 4
Kids[’] trademark.” Id. at *9. The Court also explained that,
because the case was not “exceptional” under the Lanham Act,
America Can was not entitled to attorneys’ fees or prejudgment
interest. App. 83.

       The District Court enjoined Kars 4 Kids from using its
mark in Texas and from using www.carsforkids.com. The
Court explained that “[d]ue to consumers’ confusion . . . and
the parked domain issues . . . compensatory damages are
insufficient, and thus some injunctive relief is necessary to
distinguish these charitable corporations.” Id. at *12. The
Court declined to cancel Kars 4 Kids’ registered mark,
however, because “the jury determined that Kars 4 Kids did not
knowingly procure its registration of the 1-877-Kars-4-Kids
trademark by false or fraudulent means, which suggests that

       5
        The parties did not appeal the District Court’s
disgorgement calculation.

                               10
the jury found that the mark should not be cancelled.” Id. at
*13.
       Kars 4 Kids renewed its motion for judgment as a matter
of law under Rule 50(b), arguing, among other things, that
America Can’s mark is invalid. The District Court held that
Kars 4 Kids preserved its invalidity argument, finding “some
interconnectedness” between the validity argument in its Rule
50(b) motion and the ownership argument it presented in its
Rule 50(a) motion. App. 127. Still, the Court found that there
was sufficient evidence from which the jury could have found
the mark was either distinctive, or that it established secondary
meaning.

       Both parties appeal.

                               II6

                               A

       “[T]o win a trademark claim, a plaintiff must establish
that (1) the marks are valid and legally protectable; (2) the
marks are owned by the plaintiff; and (3) the defendant’s use
of the marks to identify goods or services is likely to create
confusion concerning the origin of the goods or services.”7
Opticians Ass’n of Am. v. Indep. Opticians of Am., 920 F.2d

       6
          The District Court had jurisdiction under 28 U.S.C.
§§ 1331, 1338(a). We have jurisdiction under 28 U.S.C.
§ 1291.
        7
          Kars 4 Kids wisely does not argue that America Can
failed to establish likelihood of confusion given the evidence
of customer confusion and diverted donations. Notably,
America Can benefited from the same confusion.

                               11
187, 192 (3d Cir. 1990). Ruling on Kars 4 Kids’ motion for
judgment as a matter of law under Rule 50(b), the District
Court held that the jury reasonably found that America Can
owns a valid trademark in Texas.8

        We agree that America Can owns the mark, but, unlike
the District Court, conclude that Kars 4 Kids failed to preserve
its challenge to the validity of that mark.9 As a result, Kars 4
Kids’ effort to overturn the jury’s liability verdict fails.

       8
         “We exercise plenary review of an order granting or
denying a motion for judgment as a matter of law and apply the
same standard as the district court.” Lightning Lube, Inc. v.
Witco Corp., 4 F.3d 1153, 1166 (3d Cir. 1993). “Such a motion
should be granted only if, viewing the evidence in the light
most favorable to the nonmovant and giving it the advantage
of every fair and reasonable inference, there is insufficient
evidence from which a jury reasonably could find liability.”
Id. When evaluating “whether the evidence is sufficient to
sustain liability, the court may not weigh the evidence,
determine the credibility of witnesses, or substitute its version
of the facts for the jury’s version.” Id. “The question is not
whether there is literally no evidence supporting the party
against whom the motion is directed but whether there is
evidence upon which the jury could properly find a verdict for
that party.” Jaasma v. Shell Oil Co., 412 F.3d 501, 503 (3d
Cir. 2005) (citation omitted).
       9
         We review a district court’s determination whether a
party waived an argument by failing to raise it earlier in the
proceedings for abuse of discretion. See Seed Co. v.
Westerman, Hattori, Daniels & Adrian, LLP, 961 F.3d 1190,
1195 (D.C. Cir. 2020) (“We conclude that the appropriate
standard of review [of the district court’s determination that a

                               12
                                1

        First, America Can owns its unregistered mark. To
determine rightful ownership of an unregistered mark, we
generally apply “[t]he first use test . . . , taking account of the
well-established common law principle of ‘first-in-time, first-
in-right’ that rewards actual and continuous use in commerce
as between market competitors.” Covertech Fabricating, Inc.
v. TVM Bldg. Prods., Inc., 855 F.3d 163, 170 (3d Cir. 2017).
Thus, “[w]ith respect to ownership of an unregistered mark, the
first party to adopt a mark can assert ownership so long as it
continuously uses the mark in commerce.” Com. Nat’l Ins.
Servs., Inc. v. Com. Ins. Agency, Inc., 214 F.3d 432, 438 (3d
Cir. 2000) (citation omitted).

       Kars 4 Kids does not dispute that it started using its
mark in Texas in 2003 and the evidence shows America Can
continuously used its mark before 2003. For instance, Bonnie
Curry testified that she has performed between two and five
advertisements per week for America Can beginning in 1993
and has done so “pretty consistent[ly]” since then. App. 2135.
She testified that America Can used “Cars for Kids . . . in the
early days,” App. 2144, and that when she talks about “what
they do, it’s always been part and parcel of that process. The

party waived a substantive claim] is for abuse of discretion.”);
Am. Trucking Ass’ns, Inc. v. N.Y. State Thruway Auth., 886
F.3d 238, 244-45 (2d Cir. 2018) (“We review for abuse of
discretion a district court’s decision that a party did not waive
an argument by failing to raise it earlier in the proceedings.”);
Consumer Fin. Prot. Bureau v. Gordon, 819 F.3d 1179, 1187
(9th Cir. 2016) (“A district court’s determination that a party
waived an issue is reviewed for an abuse of discretion.”).

                                13
Can Academies change lives. And to make that happen, you
give to Cars for Kids.” App. 2141. Cheryl Podrugach,
America Can’s former public relations manager, further
testified that Grant East, founder of America Can’s
predecessor, “came up with” Cars for Kids “in the early []90s,”
App. 2148, recalled America Can advertisements using the
mark during that period, and explained that America Can’s use
of the mark was in “full force” when she was hired in 2002 and
that America Can was still using the mark in its advertisements
when she began working with the car donation program in
2007. App. 2153. Finally, Malcolm Wentworth, America
Can’s Chief Operating Officer, testified about various America
Can advertisements using the phrase “Cars for Kids.” For
instance, between 1995 and 2001, the Dallas Morning News
published several articles discussing the “Cars for Kids”
program. Based on that evidence, the jury reasonably found
that America Can had established continuous use prior to 2003
and hence owned the mark in Texas.

                                2

      Kars 4 Kids argues that America Can’s mark is invalid
because it is descriptive and had not established secondary
meaning before Kars 4 Kids’ first use in Texas. Kars 4 Kids,
however, waived this argument by failing to present it in its
Rule 50(a) motion.

       “[A] post-trial Rule 50 motion can only be made on
grounds specifically advanced in a motion for a directed
verdict at the end of plaintiff’s case. . . . .” Kutner Buick, Inc.
v. Am. Motors Corp., 868 F.2d 614, 617 (3d Cir. 1989); see
also Williams v. Runyon, 130 F.3d 568, 571-72 (3d Cir. 1997)
(“[A] defendant’s failure to raise an issue in a Rule 50(a)(2)

                                14
motion with sufficient specificity to put the plaintiffs on notice
waives the defendant’s right to raise the issue in [its] Rule
50(b) motion.”). In its Rule 50(a) motion, Kars 4 Kids argued
that “America Can[] failed to demonstrate that it has ownership
and priority” of the mark. App. 2293. Based on that argument,
and viewing “some interconnectedness” between validity and
ownership of a mark, the District Court determined that Kars 4
Kids had not waived the validity arguments made in its Rule
50(b) motion. App. 127. Validity and ownership, however,
are distinct. See Opticians Ass’n of Am., 920 F.2d at 192
(noting validity and ownership are separate elements of a
trademark infringement claim).          Each element requires
different showings. Validity turns on whether a mark is
inherently distinctive or has acquired secondary meaning, see
Parks LLC v. Tyson Foods, Inc., 863 F.3d 220, 230 (3d Cir.
2017) (“A valid and legally protectable mark must be
‘distinctive,’” meaning it is “inherently distinctive” or acquired
“secondary meaning”), while ownership turns on which party
established “first use,” see Covertech, 855 F.3d at 170 (“The
first use test is generally proper [to determine ownership of]
unregistered trademarks. . . . .”). Because Kars 4 Kids
presented no arguments on the validity of the mark in its Rule
50(a) motion, the District Court abused its discretion when it
concluded that Kars 4 Kids had not waived its validity
arguments. Because Kars 4 Kids waived its validity challenge
to America Can’s mark, we will not review Kars 4 Kids’
validity arguments or its related concurrent use or source-
identifier arguments.

                                B

       Following a bench trial on remedies, the District Court
declined to apply laches and ordered Kars 4 Kids to disgorge

                               15
profits tied to its Texas activities. The Court also held that
neither enhanced monetary relief nor prejudgment interest
were warranted. With respect to laches and disgorgement, we
will remand for the District Court to reexamine these issues
under the governing law. With respect to enhanced damages
and prejudgment interest, however, we conclude the Court
acted within its discretion in denying both forms of relief.

                              110

        The Lanham Act does not contain a statute of
limitations and instead subjects all claims to “the principles of
equity,” such as laches. Santana Prods., Inc. v. Bobrick
Washroom Equip., Inc., 401 F.3d 123, 135 (3d Cir. 2005)
(quoting 15 U.S.C. § 1117(a)). To determine whether laches
bars a claim, we consider two elements: (1) the plaintiff’s
“inexcusable delay in bringing suit,” and (2) “prejudice to the
defendant as a result of the delay.” Id. at 138. To determine
which party bears the burden of proof for a laches claim, courts
first identify “the most analogous statute of limitation as a
guideline,” id. at 135, and then consider whether that period
has expired. If the period has expired, then the defendant
“enjoys the benefit of a presumption of inexcusable delay and
prejudice,” and the plaintiff “carrie[s] the burden of proving
that its delay was excusable and that [the delay] did not
prejudice [the defendant].” Id. at 138-39 (emphasis omitted)
(citation omitted).

       10
          “Because laches is an equitable doctrine, we review
the District Court’s decision for abuse of discretion.” Tracinda
Corp. v. DaimlerChrysler AG, 502 F.3d 212, 226 (3d Cir.
2007).

                               16
       The parties agree that “[c]laims under the Lanham Act
are properly analogized to New Jersey’s six year fraud statute.”
Kaufhold v. Caiafa, 872 F. Supp. 2d 374, 379 (D.N.J. 2012).
Because America Can first discovered Kars 4 Kids’ allegedly
wrongful conduct in 2003 and did not bring its counterclaims
until 2015, the statute of limitations had run on America Can’s
claims.11 Accordingly, America Can bears the burden of
disproving delay and prejudice. See Santana, 401 F.3d at 138-
39.12
       11
           The District Court appears to have found that the 2011
website registration constituted a new act of infringement that
was not barred under the six-year limitations period, and so the
presumption did not apply. While many alleged Lanham Act
violations “are ongoing,” at least one of our sister circuits has
recognized that “the presumption of laches is triggered if any
part of the claimed wrongful conduct occurred beyond the
limitations period.” Jarrow Formulas, Inc. v. Nutrition Now,
Inc., 304 F.3d 829, 837 (9th Cir. 2002).
        12
           Contrary to America Can’s assertions, Kars 4 Kids
did not waive the laches defense because Kars 4 Kids raised it
in its answer, in the final pretrial order, in its trial brief, and at
trial. Cf. Bradford-White Corp. v. Ernst & Whinney, 872 F.2d
1153, 1160 (3d Cir. 1989) (concluding that, although the
defendant raised a statute of limitations defense in its answer,
it waived the defense because “it did not file a motion or
present argument before the district court on [that] issue at any
time before or at the trial”).
        Aside from reiterating this waiver argument, America
Can also urges us to affirm the District Court’s laches analysis
on two alternative grounds. It first paints Kars 4 Kids as an
“intentional” infringer who cannot take advantage of laches.

                                 17
Appellee Br. at 52; cf. Anheuser-Busch v. Du Bois Brewing,
175 F.2d 370, 374 (3d Cir. 1949) (noting that “a fraudulent
infringer cannot expect tender mercy of a court of equity”). In
making this argument, America Can relies on the jury’s finding
that Kars 4 Kids willfully infringed. Kars 4 Kids retorts that
the jury instructions here allowed the jury to identify
willfulness based on recklessness alone, not intent. The
District Court stated that the conduct was “willful,” but did not
say whether it reached this conclusion because it found that
Kars 4 Kids was a knowing infringer or reckless infringer.
Because the District Court will be revisiting its laches analysis,
we leave it to the Court to decide whether Kars 4 Kids counts
as a knowing infringer and whether its finding impacts its
laches analysis. America Can also insists that Kars 4 Kids has
unclean hands because it waited almost as long as America Can
before filing suit. We also leave it to the District Court to
determine whether the equities of the case outweigh any
finding of delay or prejudice. See, e.g., Waddell v. Small Tube
Prods., 799 F.2d 69, 79 (3d Cir. 1986); see also A.C.
Aukerman Co. v. R.L. Chaides Const. Co., 960 F.2d 1020,
1033 (Fed. Cir. 1992) (“Where there is evidence of other
factors which would make it inequitable to recognize the
defense despite undue delay and prejudice, the defense may be
denied.”); Polaroid Corp. v. Polarad Elecs. Corp., 287 F.2d
492, 497 (2d Cir. 1961) (Friendly, J.) (“[W]here both sides
failed to press their claims after knowledge of the facts, this
Court has reached the conclusion, seemingly far more sensible,
that both were barred.”).

                               18
        A plaintiff is not obligated to sue until it knows or
should know that the defendant’s conduct constitutes
trademark infringement. See, e.g., Excelled Sheepskin &
Leather Coat Corp. v. Or. Brewing Co., 897 F.3d 413, 419 (2d
Cir. 2018) (“The laches clock begins to run when the trademark
owner knew or should have known, not simply that [the
infringer] was using the potentially offending mark, but that
[it] had a provable infringement claim against [the infringer].”
(quotation marks and citation omitted)); Oriental Fin. Grp.,
Inc. v. Cooperativa de Ahorro y Credito Oriental, 698 F.3d 9,
21 (1st Cir. 2012) (“[L]aches applies only where the plaintiff
knew or should have known of the infringing conduct.”); cf.
Covertech, 855 F.3d at 175-76 (noting that “the relevant date
for quantifying the ‘delay’ [for purposes of applying the
acquiescence defense] is when the trademark owner either
knew or should have known of the existence of a provable
claim of infringement”). Thus, we examine delay based upon
whether a reasonable person in the defendant’s shoes would
have waited to file suit. See Claussen v. Mene Grande Oil Co.,
275 F.2d 108, 111 (3d Cir. 1960).

       In examining the delay element, the District Court
focused exclusively on the evidence of activity America Can
observed or did not observe in Texas. Based on that evidence,
the Court concluded that Kars 4 Kids’ apparent inactivity in
Texas, as demonstrated by the lack of observed advertisements
in Texas and the minimal amount of advertising directed into
Texas, lulled America Can into believing the 2003 cease and
desist letter was effective and Kars 4 Kids “pulled back [its
Texas] advertising.” Kars 4 Kids Inc., 2020 WL 1550804, at
*4. These observations, however, did not account for Kars 4
Kids’ national advertising and whether those advertisements
reached Texas. Those considerations are relevant because the

                              19
delay inquiry hinges on whether a reasonable entity in America
Can’s shoes would have filed suit sooner. We will therefore
remand to allow the District Court to consider the evidence of
this national activity and whether it nevertheless excused
America Can’s delay in filing suit. See Univ. of Pittsburgh v.
Champion Prods. Inc., 686 F.2d 1040, 1044 n.14 (3d Cir. 1982)
(“Open and notorious use by the defendant is relevant to the
plaintiff’s knowledge and, thus, whether its delay is
excusable.”). The District Court should also explain whether
that activity impacts its view concerning prejudice from the

                             20
delay.13, 14

        13
           In addressing the prejudice element, the District Court
stated that Kars 4 Kids “cannot show prejudice” but did not
explain the basis for its conclusion. App. 74. As a general rule,
a plaintiff must disprove both delay and prejudice to avoid the
laches defense when the analogous statute of limitations has
run. See Santana, 401 F.3d at 138-39. America Can argues
that Kars 4 Kids was not prejudiced because, as a recipient of
a cease and desist letter, it assumed the risk that, if it continued
using the mark, subsequent investments in the mark would be
lost. Some of our sister circuits agree with this view. See
Roederer v. J. Garcia Carrion, S.A., 569 F.3d 855, 859 (8th Cir.
2009); Elvis Presley Enters., Inc, v. Capece, 141 F.3d 188, 205
(5th Cir. 1998); Conan Properties, Inc. v. Conan Pizza, Inc.,
752 F.2d 145, 151-52 (5th Cir. 1985); see also Citibank, N.A.
v. Citibanc Grp., Inc., 724 F.2d 1540, 1546 (11th Cir. 1984)
(concluding that a plaintiff’s claim was not barred by laches
because “defendants knew of plaintiff’s objections but
nevertheless proceeded to enlarge their use” of the plaintiff’s
mark). The District Court is free to consider these cases as
well as any other facts in the record when it examines whether
America Can has carried its burden to prove both that it did not
inexcusably delay bringing suit and that Kars 4 Kids was not
prejudiced from such a delay. We express no opinion as to the
proper outcome of the laches analysis on remand.
        14
           Kars 4 Kids is wrong to say that the District Court’s
evaluation of laches “infected its evaluation of the injunctive
relief factors.” Appellant’s Br. at 57. First, Kars 4 Kids argues
that America Can’s delay cuts against finding irreparable harm,
but “trademark infringement amounts to irreparable injury as a
matter of law.” S & R Corp. v. Jiffy Lube Int’l, Inc., 968 F.2d
371, 378 (3d Cir. 1992). Second, Kars 4 Kids incorrectly

                                21
                                215

        Section 35(a) of the Lanham Act provides for the
disgorgement of an infringer’s profits, “subject to the
principles of equity.” 15 U.S.C. § 1117(a).16 Disgorgement
“does not follow as a matter of course upon the mere showing
of an infringement,” and, for example, “will be denied where
an injunction satisfies the equities of a case.” A & H
Sportswear, Inc. v. Victoria’s Secret Stores, Inc., 166 F.3d 197,
209 (3d Cir. 1999) (en banc) (quotation marks omitted). To
“evaluat[e] whether equity supports disgorging the infringer’s
profits,” we consider “(1) whether the [infringer] had the intent
to confuse or deceive, (2) whether sales have been diverted,
(3) the adequacy of other remedies, (4) any unreasonable delay
by the plaintiff in asserting his rights, (5) the public interest in
making the misconduct unprofitable, and (6) whether it is a
case of palming off.” Banjo Buddies, Inc. v. Renosky, 399

argues that the District Court “never balanced America Can’s
demand for an injunction against the prejudicial consequence
of prohibiting [Kars 4 Kids] from using marks it had cultivated
nationally for years,” Appellant’s Br. at 58, because the Court
explicitly said that it “must balance the rights of America
Can[], as found by the jury, against the right of Kars 4 Kids to
advertise in all other geographic regions and states outside of
Texas.” App. 88.
       15
           “We . . . review the District Court’s award of
equitable remedies under section 35(a) of the Lanham Act
under an abuse of discretion standard.” Banjo Buddies, Inc. v.
Renosky, 399 F.3d 168, 173 (3d Cir. 2005).
       16
          “In assessing profits the plaintiff shall be required to
prove defendant’s sales only; defendant must prove all
elements of cost or deduction claimed.” 15 U.S.C. § 1117(a).

                                22
F.3d 168, 175 (3d Cir. 2005) (quoting Quick Techs. v. Sage
Grp. PLC, 313 F.3d 338, 349 (5th Cir. 2002)).

        The District Court did not consider all of these factors.17
In fact, it focused solely on “the appropriate accounting
methodology to determine the disgorgement of net profits,”
Kars 4 Kids Inc., 2020 WL 1550804, at *5, which covers only
the second Banjo Buddies factor: “whether sales have been
diverted,” 399 F.3d at 175.18 Because the Court did not address
the other Banjo Buddies factors and thus did not show that it
balanced the equities, we will vacate the disgorgement order
and remand for the Court to apply the remaining factors. See
4 Pillar Dynasty LLC v. N.Y. & Co., 933 F.3d 202, 214-15 (2d
Cir. 2019) (explaining that a district court “must still balance
equitable factors in assessing the propriety of a profits award”
and concluding that the court adequately did so); Malack v.
BDO Seidman, LLP, 617 F.3d 743, 745 (3d Cir. 2010) (“An
abuse of discretion occurs if the district court’s decision rests
upon . . . an improper application of law to fact.” (quotation
marks omitted)); Synergistic Int’l, LLC v. Korman, 470 F.3d
162, 174-75 (4th Cir. 2006) (holding that a district court abused
its discretion in awarding disgorgement under the Lanham Act
where “[t]he court summarily stated . . . that the equities had

       17
           Kars 4 Kids did not waive its objection to the District
Court’s failure to apply the Banjo Buddies factors. It presented
the Banjo Buddies factors in its brief in opposition to America
Can’s request for disgorgement and addressed them in its post-
trial proposed findings of fact and conclusions of law.
        18
           The donations at issue here are equivalent to diverted
sales for a for-profit entity.

                                23
been balanced” without “specify[ing] the equitable factors it
had utilized in making such an award”).19

                               320

        The District Court acted within its discretion when it
declined to award enhanced monetary relief under the Lanham
Act. Section 1117(a) authorizes awards of “(1) defendant’s
profits, (2) any damages sustained by the plaintiff, and (3) the
costs of the action.” 15 U.S.C. § 1117(a). When an award is
based on profits, which “is either inadequate or excessive[,] the
court may in its discretion enter judgment for such sum as the
court shall find to be just, according to the circumstances of the
case.”21 Id. If the court increases the monetary award, such an

       19
           We express no opinion as to whether application of
the Banjo Buddies factors should lead the Court to reach a
different result.
        20
           We review a district court’s decision on whether to
enhance damages under the Lanham Act for abuse of
discretion. See Merck Eprova AG v. Gnosis S.p.A., 760 F.3d
247, 263 (2d Cir. 2014); Skydive Ariz., Inc. v. Quattrocchi, 673
F.3d 1105, 1110 (9th Cir. 2012).
        21
           Section 1117(a) permits an award of up to treble
damages when a party shows its own damages and an
enhancement when an award based on the defendant’s profits
is inadequate. See 15 U.S.C. § 1117(a) (“In assessing damages
the court may enter judgment . . . for any sum above the amount
found as actual damages, not exceeding three times such
amount. If the court shall find that the amount of the recovery
based on profits is either inadequate or excessive the court may
in its discretion enter judgment for such sum as the court shall
find to be just, according to the circumstances of the case.”).

                               24
enhancement “shall constitute compensation and not a
penalty.” Id.; see also Fifty-Six Hope Rd. Music, Ltd. v.
A.V.E.L.A., Inc., 778 F.3d 1059, 1077 (9th Cir. 2015) (“The
district court ought to tread lightly when deciding whether to
award increased profits, because granting an increase could
easily transfigure an otherwise-acceptable compensatory
award into an impermissible punitive measure.”). “Generally,
actual, proven profits will adequately compensate the
plaintiff.” Fifty-Six Hope Rd. Music, 778 F.3d at 1077. Thus,
in most cases, when disgorging profits, “the district court
should award actual, proven profits unless the . . . infringer
gained more from the infringement than the [infringer’s]
profits reflect.” Id.; see also Badger Meter, Inc. v. Grinnell
Corp., 13 F.3d 1145, 1157 (7th Cir. 1994) (noting that “the
benchmark for making [an enhancement] determination” when
a court disgorges a defendant’s profits “is the likely benefit
accruing to the defendant on account of its infringement”).

        America Can presents no arguments why an enhanced
award, let alone an award equal to three times Kars 4 Kids’
profits, is needed to fully compensate it or that such an award
more accurately reflects Kars 4 Kids’ true profits. Put another
way, America Can offers no non-punitive rationale for
enhancing the award.22 Cf. Bos. Pro. Hockey Ass’n v. Dallas

       22
          In its brief, America Can suggests that Kars 4 Kids’
willful infringement alone justifies an enhanced award. While
“willful infringement is central,” to the decision whether to
enhance damages, SecuraComm Consulting Inc. v. Securacom
Inc., 166 F.3d 182, 187 (3d Cir. 1999), we have not held that
willful infringement is alone sufficient to support an enhanced
award. On the facts of this case, it was not an abuse of
discretion to conclude that the evidence of Kars 4 Kids’ willful

                              25
Cap & Emblem Mfg., Inc., 597 F.2d 71, 77 (5th Cir. 1979)
(“We would be reluctant to approve increased damages
intended solely as punishment for conduct unrelated to . . . the
actual damages caused by [the infringement].”). Because
America Can has not made such a showing, and the statute
precludes punitive enhancements, the District Court
appropriately declined to award enhanced compensation.

                              423

infringement was not itself enough to justify an enhanced
award, particularly where both parties benefited from the
confusion. Cf. 4 Pillar Dynasty LLC, 933 F.3d at 214 (“Even
when a plaintiff sustains its burden of proving willfulness,
courts should consider not only whether an enhanced profits
award is appropriate, but also whether the disgorgement of all
profits attributable to the infringing product is necessary to
achieve the desired deterrent effect.” (emphasis omitted)).
       To the extent America Can relies on deterrence as a
basis for its request for an enhancement, it conceded at oral
argument that deterrence is not a compensatory reason. Oral
Argument at 45:17-45:21. Thus, it cannot serve as a basis for
an enhanced award. Cf. ALPO Petfoods, Inc. v. Ralston Purina
Co., 913 F.2d 958, 969 (D.C. Cir. 1990) (“[D]eterrence is too
weak and too easily invoked a justification for the severe and
often cumbersome remedy of a profits award . . . [and] alone
cannot justify such an award.”); Getty Petroleum Corp. v.
Bartco Petroleum Corp., 858 F.2d 103, 113 (2d Cir. 1988) (“So
long as its purpose is to compensate a plaintiff for its actual
injuries—even though the award is designed to deter wrongful
conduct—the Lanham Act remains remedial.”).
       23
           “[I]n the absence of an explicit congressional
directive, the awarding of prejudgment interest under federal

                              26
     The District Court also properly declined to award
America Can prejudgment interest.

        Section 1117 authorizes monetary awards for trademark
infringement. 15 U.S.C. § 1117. It “particularizes in
considerable detail the types of monetary relief available for
trademark infringement and defines the criteria for awarding
each type.” Georgia-Pacific Consumer Prods. LP v. von
Drehle Corp., 781 F.3d 710, 721 (4th Cir. 2015). As discussed
above, § 1117(a), which applies generally to trademark
infringement cases, and which applies here, authorizes awards
of “(1) defendant’s profits, (2) any damages sustained by the
plaintiff, and (3) the costs of the action.” 15 U.S.C. § 1117(a).
Section 1117(b), which applies to knowing and intentional use
of a counterfeit mark, allows courts to also award, among other
forms of relief, prejudgment interest. 15 U.S.C. § 1117(b).

        “[W]here Congress includes particular language in one
section of a statute but omits it in another section of the same
Act, it is generally presumed that Congress acts intentionally
and purposely in the disparate inclusion or exclusion.”
Russello v. United States, 464 U.S. 16, 23 (1983) (alteration in
original) (citation omitted). Applying this principle, because
§ 1117(b) allows courts to award prejudgment interest and
§ 1117(a) does not provide for prejudgment interest,

law is committed to the trial court’s discretion.” Pignataro v.
Port Auth. of N.Y. & N.J., 593 F.3d 265, 273 (3d Cir. 2010)
(alteration in original). Thus, when Congress does not provide
for prejudgment interest to a prevailing party, we review the
District Court’s decision for abuse of discretion. Id.

                               27
prejudgment interest is unavailable under § 1117(a).24 See
Georgia-Pacific, 781 F.3d at 721-22. Thus, the District Court
correctly denied prejudgment interest on America Can’s
federal trademark infringement claims.

       America Can is also not entitled to prejudgment interest
under state law. To obtain prejudgment interest on a state law
claim, the party must prevail on that claim. As the District
Court observed, the “trademark infringement claims under the
Lanham Act were the main claims in this case.” App. 121. The

      24
          Two sister circuits have determined that prejudgment
interest is presumptively available to successful plaintiffs
under § 1117(a). See United Phosphorus, Ltd. v. Midland
Fumigant, Inc., 205 F.3d 1219, 1236-37 (10th Cir. 2000)
(remanding to consider whether prejudgment interest was
warranted and noting that “this Court has adopted a preference,
if not a presumption, for prejudgment interest” for federal
claims); Gorenstein Enters., Inc. v. Quality Case-USA, Inc.,
874 F.2d 431, 436 (7th Cir. 1989) (affirming award of
prejudgment interest under § 1117(a) because the “federal
common law authorizes the award of such interest in
appropriate cases to victims of violations of federal law”).
Neither court, however, considered the text of § 1117 in its
entirety, which shows Congress’s intent to make prejudgment
interest unavailable under § 1117(a). The Gorenstein court, for
instance, noted that “the statute makes no reference to
prejudgment interest,” 874 F.2d at 436, but failed to recognize
that the next section refers to prejudgment interest. Thus,
because these courts overlooked this clear evidence of
Congress’s intent, we decline to adopt their conclusion that
prejudgment interest is presumptively available under
§ 1117(a).

                              28
Court therefore found that “the jury did not consider the unfair
competition as a separate cause of action but instead as an
element of the trademark infringement cause of action.” Id.
Because America Can did not object to these observations, it
has forfeited any right to assert that the jury found in its favor
on a state law claim.25 Cf. In re Wettach, 811 F.3d 99, 115 (3d
Cir. 2016) (deeming as forfeited arguments not developed in
appellant’s opening brief). Because there was no verdict in its
favor on any state law claim, America Can has no basis to seek
prejudgment interest under state law.

                               IV

        For the foregoing reasons, we will affirm in part, vacate
in part, and remand.

       25
           Although the jury was instructed that it need not
“consider unfair competition separately” from the trademark
infringement claims, D. Ct. ECF No. 29 at 118, it was not asked
to return a verdict on the claim. America Can neither objected
to the instruction, id. at 106-07, nor sought a verdict on any
state law claim.

                               29