Court Opinion

ID: 4290127
Source: CourtListenerOpinion
Date Created: 2018-06-29 17:01:27.942804+00
Date Added: 2024-06-11T14:38:04.235713
License: Public Domain

FOR PUBLICATION

    UNITED STATES COURT OF APPEALS
         FOR THE NINTH CIRCUIT

 PINKETTE CLOTHING, INC., a                        No. 17-55325
 California corporation,
         Plaintiff-Counter-Defendant-                D.C. No.
                            Appellee,             2:15-cv-04950-
                                                     SJO-AJW
                      v.

 COSMETIC WARRIORS LIMITED,                           OPINION
 believed to be a United Kingdom
 limited company doing business as
 Lush Handmade Cosmetics,
        Defendant-Counter-Claimant-
                            Appellant.

         Appeal from the United States District Court
             for the Central District of California
          S. James Otero, District Judge, Presiding

             Argued and Submitted April 12, 2018
                    Pasadena, California

                       Filed June 29, 2018

           Before: John M. Rogers,* Jay S. Bybee,
            and Paul J. Watford, Circuit Judges.

                    Opinion by Judge Bybee

    *
      The Honorable John M. Rogers, United States Circuit Judge for the
U.S. Court of Appeals for the Sixth Circuit, sitting by designation.
2       PINKETTE CLOTHING V. COSMETIC WARRIORS

                            SUMMARY**

                    Trademark Infringement

    The panel affirmed the district court’s judgment in favor
of Pinkette Clothing, Inc., which sells LUSH-branded
women’s fashions, in a case in which Cosmetic Warriors
Limited (CWL), which sells LUSH-branded cosmetics and
related goods, sought (a) an injunction restraining Pinkette
from infringing on CWL’s LUSH trademark and (b) the
cancellation of Pinkette’s registration of its own LUSH
trademark.

    Distinguishing Perella v. Metro-Goldwin-Mayer, Inc.,
134 S. Ct. 1962 (2014) (Copyright Act), and SCA Hygiene
Products v. First Quality Baby Products, LLC, 137 S. Ct. 954
(2017) (Patent Act), the panel held that laches is available as
a defense to CWL’s cancellation claim because the Lanham
Act has no statute of limitations and expressly makes laches
a defense to cancellation.

    The panel held that the district court applied the correct
standard when it applied the factors set forth in E-Sys., Inc. v.
Monitek, Inc., 720 F.2d 604 (9th Cir. 1983), to CWL’s claim
for injunctive relief. The panel wrote that analysis of the E-
Systems factors validates the strong presumption in favor of
laches created by CWL’s delaying past the expiration of the
most analogous state statute of limitations. The panel
concluded that the district court did not abuse its discretion in

    **
       This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
       PINKETTE CLOTHING V. COSMETIC WARRIORS                3

applying laches to bar CWL’s cancellation and infringement
claims.

    The panel held that the district court did not abuse its
discretion in declining to apply the doctrine of unclean hands
to preclude Pinkette from asserting laches, and that the
inevitable confusion doctrine is inapplicable. The panel also
held that evidence of Pinkette’s LUSH mark in Canada was
not relevant to the infringement-related questions for which
the jury was the sole trier of fact, and that any error in
excluding the disputed evidence from the jury’s hearing was
harmless because CWL was allowed to present all of its
evidence to the district court after the jury was dismissed.

    Rejecting CWL’s argument that the words “other than
clothing” in the district court’s judgment is inconsistent with
the jury’s verdict and in error, the panel concluded that the
judgment, read as a whole, accurately reflects the court’s
disposition of the case.

                         COUNSEL

Rachel Zimmerman Scobie (argued), Ian G. McFarland,
Heather J. Kliebenstein, and John A. Clifford, Merchant &
Gould P.C., Minneapolis, Minnesota, for Defendant-Counter-
Claimant-Appellant.

Kevin M. Bringuel (argued), Sarah Silverton, David Crane,
Tiffany Hansen, Enoch Liang, and James Lee, LTL Attorneys
LLP, South San Francisco, California, for Plaintiff-Counter-
Defendant-Appellee.
4      PINKETTE CLOTHING V. COSMETIC WARRIORS

                         OPINION

BYBEE, Circuit Judge:

    Cosmetic Warriors Limited (“CWL”) sells LUSH-
branded cosmetics and related goods, while Pinkette Clothing
sells LUSH-branded women’s fashions. CWL seeks both a
permanent injunction restraining Pinkette from infringing on
CWL’s LUSH mark and cancellation of Pinkette’s
registration of its own LUSH mark. The district court held
that laches barred CWL’s infringement and cancellation
claims and accordingly entered judgment for Pinkette.

    The Lanham Act recognizes laches as a defense to a
petition for cancellation of a trademark registration.
15 U.S.C. § 1069. Although such a petition may be filed “[a]t
any time,” § 1064 limits the grounds for cancellation after
five years have passed from the date of registration—i.e.,
after the mark becomes incontestable. Id. § 1064. Relying on
Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S. Ct. 1962
(2014), and SCA Hygiene Products v. First Quality Baby
Products, LLC, 137 S. Ct. 954 (2017), CWL argues that
laches cannot bar a cancellation claim if it is brought within
the five-year period specified in § 1064.

    We write principally to address what effect, if any,
Petrella and SCA Hygiene had on applying laches to a
trademark cancellation claim. In Petrella, the Supreme Court
held that laches could not bar a copyright infringement claim
brought within the Copyright Act’s three-year statute of
limitations. 134 S. Ct. at 1967. And in SCA Hygiene, the
Court held that laches could not bar a patent infringement
claim brought within the Patent Act’s six-year statute of
limitations. 137 S. Ct. at 959. We conclude that the principle
       PINKETTE CLOTHING V. COSMETIC WARRIORS              5

at work in these cases—a concern over laches overriding a
statute of limitations—does not apply here, where the
Lanham Act has no statute of limitations and expressly makes
laches a defense to cancellation. As CWL’s other arguments
on appeal are also without merit, we affirm the judgment of
the district court.

                    I. BACKGROUND

A. CWL’s Use of the LUSH Mark on Cosmetics and Related
   Goods

    In the mid-1990s, CWL began selling cosmetics through
a mail-order catalogue and brick-and-mortar retail store
located in the United Kingdom. The first edition of its
catalogue was titled “Cosmetic House” but asked customers
to submit suggestions for a new name. One customer
recommended “Lush.” CWL adopted the name and began
selling a variety of products under the LUSH mark, including
makeup, bath and body products, spa treatments, and
fragrances. The first LUSH retail store in Canada opened in
1996, and the first such store in the United States opened in
2002. Today, CWL has about 940 LUSH retail stores in
49 different countries.

    From the beginning, LUSH retail staff wore LUSH-
branded aprons. There is no evidence, however, of CWL’s
making any clothing sales to end consumers in the United
States until at least 2004. Between 2004 and 2013, CWL sold
fewer than 1,000 LUSH-branded t-shirts, tank tops, or
sweatshirts in the United States. It appears these sales were
part of the company’s promotional “swag program,” and it is
not clear how many of the sales were to end consumers rather
than employees.
6      PINKETTE CLOTHING V. COSMETIC WARRIORS

    CWL has multiple trademark registrations in the United
States, including registrations for use of LUSH on perfumes
and hair services and for use of LUSH TIMES on
publications. Though CWL has never had a registration in
the United States for use of LUSH on clothing, it did have
such a registration in Canada (specifically, for use on t-shirts)
until recently. The Canadian registration was filed in 2002,
but was later cancelled on the grounds that CWL’s sales of t-
shirts at cost for promotional purposes did not qualify for
trademark protection.

    CWL actively polices the LUSH mark, and its log of
trademark-enforcement matters reflects over 130 such
disputes. CWL has investigated, for example, Lush Day Spa
Salon in Minnesota in 2012; Lush Salon & Day Spa in
Tennessee in 2013; and Lush Aveda Salon and Spa in Illinois
in 2014. CWL has also successfully opposed the registration
of numerous marks, such as LUSH BERRY, LUSHPOP, and
HYDRA LUSH. And CWL has filed a number of
infringement actions. See, e.g., Cosmetic Warriors Ltd. v.
Nailush LLC, No. 17-1475, 2017 WL 5157390, at *1 (D.N.J.
Nov. 6, 2017); Cosmetic Warriors Ltd. v. Lush Boutique,
L.L.C., No. 09-6381, 2010 WL 481229, at *1 (E.D. La. Feb.
1, 2010).

B. Pinkette’s Use of the LUSH Mark on Clothing

    In 2003—after CWL had already entered the United
States—Edward Kim, his sister Erica Kim, and their cousin
Daniel Kim started Pinkette Clothing, a company that sells
young women’s clothing under different labels. One of those
labels is LUSH. The Kims testified that they brainstormed
the name together by picking words out of a dictionary,
ultimately deciding on the adjective “lush” because it
       PINKETTE CLOTHING V. COSMETIC WARRIORS                 7

described what their brand “aspire[d] to be,” namely,
“appealing, attractive, prosperous, and abundant.”

    After landing on the LUSH name, the Kims began
researching internet domain names, and in the process,
discovered that CWL sold LUSH-branded cosmetics at
lush.com. They checked whether CWL sold clothing on its
website, determined that it did not, and ultimately selected
lushclothing.com as Pinkette’s domain name.            From
September 2003 onward, Pinkette has sold women’s clothing
under the LUSH mark to retailers in the United States and
Canada—principally to Nordstrom but also to retailers such
as TJ Maxx and Bloomingdale’s.

    In May 2009, Pinkette filed a trademark registration
application for use of LUSH on clothing in the United States.
The application was published for opposition in the
Trademark Official Gazette. A trademark watch service
notified CWL’s outside counsel of the application, but CWL
claims that it did not become aware of Pinkette’s use of the
LUSH mark, much less its trademark application, until years
later. There was no opposition to Pinkette’s application, and
Pinkette’s LUSH mark was registered in July 2010, thereby
putting CWL on constructive notice of Pinkette’s claim to
ownership. See 15 U.S.C. § 1072 (“Registration of a mark on
the principal register . . . shall be constructive notice of the
registrant’s claim of ownership thereof.”).

   In August 2010, Pinkette filed a trademark registration
application for use of LUSH on clothing in Canada. That
application was rejected in December 2010 for being
confusingly similar to CWL’s LUSH mark. Four years later,
Pinkette began an anonymous cancellation proceeding against
CWL’s Canadian registration for use of LUSH on t-shirts. As
8      PINKETTE CLOTHING V. COSMETIC WARRIORS

noted above, that action was successful in 2017—though it
remains on appeal in Canada.

C. Procedural History

    CWL claims it had no actual knowledge of Pinkette’s use
of the LUSH mark until late 2014. In December 2014, CWL
filed a trademark registration application for use of LUSH on
clothing in the United States, which was rejected on account
of Pinkette’s preexisting registration. It was not until June
2015—approximately four years and eleven months after
Pinkette’s registration issued—that CWL finally filed a
petition with the Trademark Trial and Appeal Board
(“TTAB”) to cancel Pinkette’s registration.

    After CWL filed its cancellation petition, Pinkette filed
this action in federal court, seeking a declaratory judgment
that it did not infringe on CWL’s trademark rights, or
alternatively that laches bars CWL from asserting its rights
against Pinkette. CWL counterclaimed for trademark
infringement and cancellation of Pinkette’s registration,
among other claims. On the parties’ joint motion,
proceedings before the TTAB were stayed pending resolution
of this case.

    The district court determined that a jury would decide
CWL’s infringement and cancellation claims and serve in an
advisory capacity as to Pinkette’s laches defense, which
would be decided by the court. Pinkette moved in limine to
exclude from the jury any reference to its Canadian trademark
registration application and cancellation petition. CWL
opposed, arguing that Pinkette’s actions in Canada
demonstrated its knowledge of the likelihood of confusion
between the two companies’ marks and, hence, its bad faith
       PINKETTE CLOTHING V. COSMETIC WARRIORS                 9

in continuing to use the LUSH mark in the United States.
The district court granted Pinkette’s motion but allowed CWL
to present the disputed evidence to the court after the jury was
dismissed.

    Following a five-day trial, the jury returned a special
verdict finding for CWL on its infringement and cancellation
claims but finding (in an advisory capacity) for Pinkette on its
laches defense. The parties then presented additional
evidence regarding laches, at the conclusion of which the
court rendered an oral decision holding that laches barred
CWL’s claims. Nevertheless, CWL moved for judgment in
its favor, requesting a permanent injunction prohibiting
Pinkette from using the LUSH mark and an order directing
the TTAB to cancel Pinkette’s registration. The district court
denied CWL’s motion in a written decision and entered
judgment for Pinkette on all claims. CWL timely appealed.

                       II. ANALYSIS

    CWL raises four issues before us. First, was laches a
proper defense where CWL brought its cancellation claim
within the five-year period specified in 15 U.S.C. § 1064(1)?
Second, assuming laches could be asserted, did the district
court properly apply laches to CWL’s cancellation and
infringement claims? Third, did the district court abuse its
discretion when it excluded reference to Pinkette’s Canadian
trademark application from the jury? Fourth, did the district
court properly limit CWL’s trademark to cosmetics and goods
other than clothing? We address each question in turn.
10       PINKETTE CLOTHING V. COSMETIC WARRIORS

A. Availability of Laches as a Defense to CWL’s
   Cancellation Claim

    The Lanham Act, 15 U.S.C. § 1051 et seq., provides for
the registration of trademarks. Id. § 1052. The owner of a
registered mark is entitled to a presumption that the mark is
valid, id. § 1057(b), and after five years, the registered mark
ordinarily becomes incontestable, id. § 1065. The right to the
mark, however, is subject to “equitable principles, including
laches, estoppel, and acquiescence.” Id. § 1115(b)(9); see
also id. § 1069 (“In all inter partes proceedings equitable
principles of laches, estoppel, and acquiescence, where
applicable may be considered and applied.”).

    The Lanham Act also authorizes “any person who
believes that he is or will be damaged . . . by the registration
of a mark” to petition to cancel the registration.1 Id. § 1064.
If a petition for cancellation is brought before the mark
becomes incontestable, “any ground that would have
prevented registration in the first place qualifies as a valid
ground for cancellation,” including that there exists a
“likelihood of confusion between the mark sought to be
canceled and a mark for which the party seeking cancellation
can establish either prior use or prior registration.”
Cunningham v. Laser Golf Corp., 222 F.3d 943, 946 (Fed.
Cir. 2000); see also 15 U.S.C. §§ 1052(d), 1064; J. THOMAS
MCCARTHY, MCCARTHY ON TRADEMARKS AND UNFAIR
COMPETITION § 20:53 (5th ed.) (“MCCARTHY”). Here, the
jury found a likelihood of confusion between the parties’

     1
     Petitions for cancellation are typically heard by the TTAB. But
where, as here, an action brought in federal court involves a registered
mark, the district court may order cancellation of the registration.
15 U.S.C. § 1119.
        PINKETTE CLOTHING V. COSMETIC WARRIORS                          11

marks, and absent Pinkette’s laches defense, CWL would
have been entitled to judgment in its favor on its cancellation
claim.

    The Supreme Court has held that laches is not available
as a defense to claims for copyright or patent infringement
brought within the limitations periods prescribed under the
Copyright and Patent Acts. SCA Hygiene Prods. v. First
Quality Baby Prod., LLC, 137 S. Ct. 954, 959 (2017) (Patent
Act); Petrella v. Metro-Goldwyn-Mayer, Inc., 134 S. Ct.
1962, 1967 (2014) (Copyright Act). CWL argues that,
because it filed its cancellation petition with the TTAB before
Pinkette’s trademark registration became incontestable under
15 U.S.C. § 1064, laches is not available as a defense to its
cancellation claim and that the district court therefore erred
in applying laches here.2

    We begin with a brief overview of the relevant decisions.
In Petrella, Frank Petrella owned the copyright to a
screenplay used in MGM’s Academy Award-winning film
Raging Bull. 134 S. Ct. at 1971. Frank registered the
copyright to the screenplay in 1963, and his daughter and
heir, Paula Petrella, renewed the registration in 1991. Id. at
1970–72. Seven years later, Paula informed MGM of her
belief that its exploitation of Raging Bull infringed on her
copyright. Id. at 1972. Another eleven years after that, she
filed her copyright infringement suit. Id. She acknowledged
the applicable three-year statute of limitations and sought
relief only for acts of infringement that occurred during the

    2
      We review whether laches is available as a potential defense in a
particular action de novo, and we review the district court’s application of
laches for abuse of discretion. In re Beaty, 306 F.3d 914, 920–21 (9th Cir.
2002).
12     PINKETTE CLOTHING V. COSMETIC WARRIORS

three years prior to her suit. Id. The district court, however,
granted summary judgment for MGM based on laches. Id.

    The Supreme Court explained that, because federal
copyright law did not originally include a statute of
limitations for civil suits, federal courts used to rely on
analogous state statutes of limitations to determine the
timeliness of federal infringement claims and sometimes
invoked laches to abridge the state law prescription. Id. at
1968. This practice accorded with the general rule that
“[w]hen Congress fails to enact a statute of limitations, a
[federal] court that borrows a state statute of limitations but
permits it to be abridged by the doctrine of laches is . . .
merely filling a legislative hole.” Id.

    Eventually, however, Congress filled the gap it had
previously left open by enacting a three-year statute of
limitations for copyright infringement. The Copyright Act
now states: “No civil action shall be maintained under the
provisions of this title unless it is commenced within three
years after the claim accrued.” 17 U.S.C. § 507(b). When
combined with the “separate-accrual rule”—under which the
statute of limitations runs separately for each successive act
of infringement—the effect of § 507(b) is that a copyright
infringement “is actionable within three years, and only three
years, of its occurrence” and “the infringer is insulated from
liability for earlier infringements of the same work.”
Petrella, 134 S. Ct. at 1969–70.

    The Court held that laches could not bar Petrella’s
copyright infringement claim for acts of infringement within
the last three years, noting that it had “never applied laches to
bar in their entirety claims for discrete wrongs occurring
within a federally prescribed limitations period.” Id. at 1975.
       PINKETTE CLOTHING V. COSMETIC WARRIORS                13

The Court reasoned that this result was necessary to protect
the regime put in place through the combination of § 507(b)
and the separate-accrual rule. Id. at 1978. Notably, the Court
differentiated between the Copyright Act and the Lanham
Act: “In contrast to the Copyright Act, the Lanham Act,
which governs trademarks, contains no statute of limitations,
and expressly provides for defensive use of ‘equitable
principles, including laches.’” Id. at 1974 n.15 (quoting
15 U.S.C. § 1115(b)(9)).

    In SCA Hygiene, SCA Hygiene Products and First Quality
Baby Products disputed the validity of SCA’s patent on an
adult diaper. 137 S. Ct. at 959. The two parties corresponded
on the subject in 2004. Id. Later the same year, without
notifying First Quality, SCA asked the Patent and Trademark
Office (“PTO”) to reexamine the validity of its patent in light
of First Quality’s patent. Id. The PTO did so and confirmed
the validity of SCA’s patent in 2007. Id. SCA nevertheless
waited until 2010 to file its patent infringement suit against
First Quality. Id. The district court granted summary
judgment for First Quality based on laches. Id.

    On appeal, the Supreme Court elaborated on its reasoning
in Petrella, which rested on “separation-of-powers
principles” and “the traditional role of laches in equity.” Id.
at 960. With respect to the former: “When Congress enacts
a statute of limitations, it speaks directly to the issue of
timeliness and provides a rule for determining whether a
claim is timely enough to permit relief. . . . [A]pplying laches
within a limitations period specified by Congress would give
judges a ‘legislation-overriding’ role that is beyond the
Judiciary’s power.” Id. With respect to the latter: “Laches is
a gap-filling doctrine, and where there is a statute of
limitations, there is no gap to fill.” Id. at 961.
14     PINKETTE CLOTHING V. COSMETIC WARRIORS

    Applying Petrella, the Supreme Court held that laches did
not bar SCA’s patent infringement claim brought within the
Patent Act’s six-year statute of limitations. Id. at 959, 963.
The Patent Act states: “Except as otherwise provided by law,
no recovery shall be had for any infringement committed
more than six years prior to the filing of the complaint or
counterclaim for infringement in the action.” 35 U.S.C.
§ 286. Similar to the Copyright Act’s three-year statute of
limitations, the Patent Act’s six-year statute of limitations
“represents a judgment by Congress that a patentee may
recover damages for any infringement committed within six
years of the filing of the claim.” SCA Hygiene, 137 S. Ct. at
961. In short, the Patent Act’s statute of limitations leaves no
gap for laches to fill.

    CWL does not argue that Petrella and SCA Hygiene
preclude application of laches to its trademark infringement
claim—presumably because the Lanham Act prescribes no
statute of limitations for such a claim. See Petrella, 134
S. Ct. at 1974 n.15. Instead, CWL only argues that those
cases preclude application of laches to its cancellation claim
because it filed that claim before Pinkette’s mark became
incontestable. Thus, from the outset, CWL’s argument
presents an asymmetry found in neither Petrella nor SCA
Hygiene: CWL would have us hold that, even where
prejudicial delay otherwise precludes one party from
enforcing its trademark rights against another party, the first
party may still have the second party’s registration stricken
from the register. This is not the result required by either the
Lanham Act or the Supreme Court’s decisions.

   “Unlike both Copyright law and Patent law, each of
which has its own federal statute of limitations, the federal
Lanham Act has no statute of limitations.” MCCARTHY
       PINKETTE CLOTHING V. COSMETIC WARRIORS                  15

§ 31:33. Rather, the Lanham Act vests courts with the power
to grant relief according “to the principles of equity.”
15 U.S.C. §§ 1116, 1117. Moreover, § 1069 expressly makes
laches a potential defense “[i]n all inter partes proceedings”
before the PTO, including cancellation proceedings.
15 U.S.C. § 1069 (emphasis added); see also McCarthy
§ 20:74. Importantly, § 1069 makes no distinction between
proceedings against contestable versus incontestable marks.

    Nothing in § 1064 alters the straightforward application
of § 1069 to permit laches as a defense to cancellation. There
is no question that § 1064 is not a statute of limitations in the
usual sense of barring an action entirely once a defined period
expires. Incontestability merely limits the grounds on which
cancellation may be sought. A petition brought within five
years of registration (against a contestable mark) may assert
any ground that would have prevented registration in the first
place—most commonly that the registered mark creates a
likelihood of confusion with the petitioner’s preexisting
mark. 15 U.S.C. § 1064. By contrast, a petition brought five
years after registration (against an incontestable mark) may
only assert one of several enumerated grounds for
cancellation, including genericism, functionality,
abandonment, or fraudulent procurement. Id.

    Moreover, § 1064 does not implicate the same concerns
identified in Petrella and SCA Hygiene. The statutes of
limitations at issue in those cases state categorically that “[n]o
civil action shall be maintained,” 17 U.S.C. § 507(b), or “no
recovery shall be had,” 35 U.S.C. § 286. Such language
represents a clear directive from Congress and leaves no gap
for laches to fill. The Lanham Act, on the other hand,
provides that a petition for cancellation may be brought “[a]t
any time” but affords different grounds for cancellation
16       PINKETTE CLOTHING V. COSMETIC WARRIORS

depending on whether the petition is brought within five
years of registration.3 15 U.S.C. § 1064. Applying laches to
a cancellation claim against a contestable mark neither
overrides a clear directive from Congress nor fills a gap
where there is none to fill. See SCA Hygiene, 137 S. Ct. at
960–61.

    Finally, although Petrella and SCA Hygiene are recent
decisions, the idea that laches will not bar a claim for legal
relief brought within the applicable statute of limitations is
not. See, e.g., United States v. Mack, 295 U.S. 480, 489
(1935) (“Laches within the term of the statute of limitations
is no defense at law.”); Wehrman v. Conklin, 155 U.S. 314,
326 (1894) (“Though a good defense in equity, laches is no
defense at law. If the plaintiff at law has brought his action
within the period fixed by the statute of limitations, no court
can deprive him of his right to proceed.”); Cross v. Allen,

     3
      The Third Circuit has interpreted § 1064’s “[a]t any time” language
to mean that laches cannot bar a cancellation claim based on any of the
enumerated grounds for cancelling an incontestable mark. Marshak v.
Treadwell, 240 F.3d 184, 193 (3d Cir. 2001) (holding that laches could not
bar cancellation claim brought more than five years after registration).
Other courts have reached the opposite conclusion, reasoning that “[t]he
words ‘[a]t any time’ demonstrate only that the act imposes no statute of
limitations” and “have nothing to do with what equitable defenses may be
available.” Pro-Football, Inc. v. Harjo, 415 F.3d 44, 48 (D.C. Cir. 2005)
(permitting laches as a defense to cancellation claim brought more than
five years after registration); accord Bridgestone/Firestone Research, Inc.
v. Auto. Club de L’Ouest de la France, 245 F.3d 1359, 1360 (Fed. Cir.
2001) (same). Interestingly, combining the Third Circuit’s rule with
CWL’s argument here would result in laches never being a defense in
cancellation proceedings—a party could neither assert laches before a
mark becomes incontestable nor after. Such a result would run contrary
to the Lanham Act’s prescription of laches as a defense in “[i]n all inter
partes proceedings.” 15 U.S.C. § 1069.
        PINKETTE CLOTHING V. COSMETIC WARRIORS                          17

141 U.S. 528, 537 (1891) (“So long as the demands secured
were not barred by the statute of limitations, there could be no
laches in prosecuting a suit.”). Indeed, the Supreme Court
itself suggested that Petrella and SCA Hygiene merely
“confirmed and restated” a “long-standing rule.”4 SCA
Hygiene, 137 S. Ct. at 963.

    Notwithstanding the long pedigree of the rule in Petrella
and SCA Hygiene, the TTAB has repeatedly reached the same
conclusion we do today and applied laches to bar trademark
cancellation claims brought within five years of the relevant
registration. See, e.g., Ava Ruha Corp. v. Mother’s
Nutritional Ctr., Inc., 113 U.S.P.Q.2d 1575 (T.T.A.B. 2015)
(applying laches where respondent’s registration issued in
June 2009 and petitioner filed petition for cancellation in
August 2012).5 Similarly, a leading trademark treatise

    4
      To say this is a “long-standing rule” is not to say it has been
universally applied. See, e.g., In re Beaty, 306 F.3d at 925 (noting that “a
claim may be barred by laches even if the statute of limitations for the
claim has not expired,” and collecting cases).
    5
       See also The Christian Broad. Network, Inc. v. ABS-CBN Int’l,
84 U.S.P.Q.2d 1560 (T.T.A.B. 2007) (applying laches where respondent’s
registration issued on March 28, 2000 and petitioner filed petition for
cancellation on March 24, 2005); Teledyne Techs., Inc. v. W. Skyways,
Inc., 78 U.S.P.Q.2d 1203 (T.T.A.B. 2006), aff’d, 208 Fed. App’x 886
(Fed. Cir. 2006) (applying laches where respondent’s registration issued
in March 1999 and petitioner filed petition for cancellation in October
2002); Turner v. Hops Grill & Bar, Inc., 52 U.S.P.Q.2d 1310 (T.T.A.B.
1999) (applying laches where respondent’s registrations issued in
September 1992 and December 1995 and petitioner filed petition for
cancellation in August 1997). There are also instances where the TTAB
or courts have declined to apply laches to cancellation claims brought
within five years of registration. See, e.g., Charrette Corp. v. Bowater
Comm’n Papers Inc., 13 U.S.P.Q.2d 2040 (T.T.A.B. 1989). But these
cases declined to apply laches because of insufficient delay or prejudice.
18      PINKETTE CLOTHING V. COSMETIC WARRIORS

suggests that laches is available as a defense in cancellation
cases initiated “within the first five years of registration.”
MCCARTHY § 20:76. For all of these reasons, laches is
available as a defense to CWL’s cancellation claim, and the
district court did not err in considering laches as a defense in
this case.

B. Application of Laches to CWL’s Cancellation and
   Infringement Claims

    “We analyze the laches defense with a two-step process.”
La Quinta Worldwide LLC v. Q.R.T.M., S.A. de C.V.,
762 F.3d 867, 878 (9th Cir. 2014). First, we assess the
plaintiff’s delay by looking to whether the most analogous
state statute of limitations has expired. Id. If the most
analogous state statute of limitations expired before suit was
filed, there is a strong presumption in favor of laches. Id.
That presumption is reversed, however, if the most analogous
state statute of limitations expired after suit was filed. Id.

    Second, we assess the equity of applying laches using the
E-Systems factors: (1) “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 user;” (5) “competition between senior
and junior users;” and (6) “extent of harm suffered by junior
user because of senior user’s delay.” E-Sys., Inc. v. Monitek,
Inc., 720 F.2d 604, 607 (9th Cir. 1983). We review a district
court’s application of laches for abuse of discretion. In re
Beaty, 306 F.3d 914, 921 (9th Cir. 2002). “An abuse of
discretion occurs if the district court bases its decision on an

See, e.g., id. We are unaware of any case declining to apply laches to a
cancellation claim merely because the mark remained contestable.
       PINKETTE CLOTHING V. COSMETIC WARRIORS                 19

erroneous legal standard or on clearly erroneous findings of
facts.” Grupo Gigante SA de CV v. Dallo & Co., 391 F.3d
1088, 1101 (9th Cir. 2004).

    The most analogous state statute of limitations in this case
is California’s four-year statute of limitations for trademark
infringement actions. See Internet Specialties W., Inc. v.
Milon-DiGiorgio Enters., Inc., 559 F.3d 985, 990 n.2 (9th
Cir. 2009). Laches runs “from the time the plaintiff knew or
should have known about its potential cause of action.”
Tillamook Country Smoker, Inc. v. Tillamook Cty. Creamery
Ass’n, 465 F.3d 1102, 1108 (9th Cir. 2006). CWL should
have known about its claims no later than when Pinkette’s
registration issued in July 2010. See E-Sys., 720 F.2d at 607
(applying laches where “Monitek registered its trademark in
1972,” “[b]ut plaintiff did not file suit for infringement . . .
until 1978”). Yet CWL did not file its cancellation petition
until nearly five years later in June 2015. Because CWL
delayed beyond the expiration of the most analogous state
statute of limitations, a strong presumption in favor of laches
arises. See La Quinta Worldwide, 762 F.3d at 878.

    On appeal, CWL does not dispute this conclusion, but
rather focuses on the second step of our inquiry—whether in
light of the E-Systems factors equity favors applying laches.
In this respect, CWL argues that: (1) the district court applied
the wrong legal standard in applying laches to a claim for
injunctive relief; and (2) even if the district court applied the
correct standard, it misweighed the E-Systems factors. In
addition, CWL argues that: (3) unclean hands bars Pinkette’s
laches defense; and (4) the inevitable confusion doctrine bars
Pinkette’s laches defense as well. We address each argument
in turn.
20      PINKETTE CLOTHING V. COSMETIC WARRIORS

     1. The district court applied the correct standard.

    CWL first argues that, by applying E-Systems and its
progeny to a claim for injunctive relief, the district court
applied the wrong legal standard and therefore abused its
discretion. See Grupo, 391 F.3d at 1101 (“An abuse of
discretion occurs if the district court bases its decision on an
erroneous legal standard . . . .”). According to CWL, the
Supreme Court articulated a heightened standard for applying
laches to claims for injunctive (as opposed to monetary) relief
in McLean v. Fleming, 96 U.S. 245 (1877), and Menendez v.
Holt, 128 U.S. 514 (1888); we recognized that heightened
standard in Stork Restaurant v. Sahati, 166 F.2d 348, 363 (9th
Cir. 1948); and all our cases since Stork Restaurant—
including E-Systems and its progeny—erred insofar as they
failed to apply the heightened standard.

    We disagree with CWL’s premise and thus cannot agree
with its conclusion. In 1877, the Supreme Court held that
laches barred a plaintiff’s claim for monetary relief for
trademark infringement but nevertheless affirmed entry of a
permanent injunction restraining the defendant’s future use of
the mark. McLean, 96 U.S. at 258. Eleven years later, the
Supreme Court cited McLean for the proposition that “even
though a complainant were guilty of such delay in seeking
relief upon infringement as to preclude him from obtaining an
account of gains and profits, yet, if he were otherwise so
entitled, an injunction against future infringement might
properly be awarded.” Menendez, 128 U.S. at 523–25
(emphasis added) (holding that, although the plaintiff had
delayed in bringing suit, “there was neither conduct nor
negligence which could be held to destroy the right to
prevention of further injury”). Next, in 1948, we cited
McLean and Menendez in refusing to apply laches to a
       PINKETTE CLOTHING V. COSMETIC WARRIORS                 21

particular claim for injunctive relief. Stork Restaurant,
166 F.2d at 362–63 & n.18 (“[I]n a case of this type laches is
no defense. . . . Laches or delay must be accompanied by
circumstances amounting to an abandonment or an estoppel
before it constitutes any defense.”).

    We previously addressed Menendez, McLean, and Stork
Restaurant and concluded that they do not create a
heightened standard for applying laches to a claim for
injunctive relief. In Prudential Insurance Company of
America v. Gibraltar Financial Corporation of California,
694 F.2d 1150, 1152 (9th Cir. 1982), we addressed whether
“laches may preclude damages, but cannot bar injunctive
relief.”     Examining Menendez, McLean, and Stork
Restaurant, we held that “[t]hese cases do not support the
proposition” and cited other cases in which the Supreme
Court “made laches available as an equitable defense barring
injunctive relief.” Id. (citing United Drug Co. v. Theodore
Rectanus Co., 248 U.S. 90, 102–03 (1918); La Republique
Francaise v. Saratoga Vichy Spring Co., 191 U.S. 427,
436–37 (1903)). We specifically stated that our opinion in
Stork Restaurant had “found no laches based on the facts”
and had only “stated in dicta that laches could not bar
injunctive relief,” such that “Stork Restaurant should be read
for the limited proposition that the defense of laches was not
made out in that case.” Id.

    We have since observed that “laches typically does not
bar prospective injunctive relief. However, the rule is not . . .
an absolute one.” Danjaq LLC v. Sony Corp., 263 F.3d 942,
959 (9th Cir. 2001). We have thus followed Prudential
Insurance and considered laches in a number of cases in
which an injunction was sought. See, e.g., Tillamook Country
Smoker, 465 F.3d at 1108 (applying laches to a claim for an
22      PINKETTE CLOTHING V. COSMETIC WARRIORS

injunction); Miller v. Glenn Miller Prods., Inc., 454 F.3d 975,
997 (9th Cir. 2006) (“It is well established that laches is a
valid defense to Lanham Act claims for both monetary
damages and injunctive relief.”); Jarrow Formulas, Inc. v.
Nutrition Now, Inc., 304 F.3d 829, 840 (9th Cir. 2002)
(applying laches to a claim for an injunction); Danjaq,
263 F.3d at 960 (“In a situation like this one, laches may bar
prospective injunctive relief.”); E-Sys., 720 F.2d at 607
(“Laches can bar recovery in trademark or tradename actions
where injunctive relief is sought.”).

    We repeat what we have said in these cases: in each case,
the district court must weigh the plaintiff’s delay and the
resulting prejudice to the defendant to determine whether and
to what extent laches bars the requested relief, including a
request for an injunction. It is precisely these elements of
delay and prejudice that the E-Systems factors are meant to
identify. 720 F.2d at 607 (“For laches to constitute a defense,
the passage of time must be accompanied by circumstances
which estop plaintiff from obtaining injunctive relief.”). We
therefore turn to the district court’s application of those
factors in this case.

     2. The district court did not abuse its discretion in
        weighing the E-Systems factors.

    The district court found that at least the second, third,
fourth, and sixth factors favored laches—i.e., that CWL was
not diligent in enforcing its mark; that CWL would not suffer
harm if the injunction was denied; that Pinkette acted in good
faith; and that Pinkette was harmed by CWL’s delay. Based
on these findings, it concluded that, “the E-Systems factors
weigh in favor of a finding of laches.” This was not an abuse
of discretion.
       PINKETTE CLOTHING V. COSMETIC WARRIORS              23

    The first factor is the “strength and value of [the]
trademark rights asserted.” E-Sys., 720 F.2d at 607. Pinkette
does not dispute that CWL’s LUSH mark is strong and
valuable, and this factor therefore weighs against applying
laches. The second factor—the “plaintiff’s diligence in
enforcing [the] mark”—cuts in the opposite direction. Id.
Pinkette’s trademark registration put CWL on constructive
notice of Pinkette’s claim to ownership of the LUSH mark in
July 2010. Even though CWL’s outside counsel received
notice of Pinkette’s registration application, and even though
CWL otherwise strictly polices its mark, CWL waited until
June 2015 to file its petition for cancellation. See, e.g.,
Grupo, 391 F.3d at 1102 (four-year delay sufficient for laches
defense); Fitbug Ltd. v. Fitbit, Inc., 78 F. Supp. 3d 1180,
1193 (N.D. Cal. 2015) (same).

     The third factor—the “harm to [the] senior user if relief
[is] denied”—does not weigh strongly in either one direction
or the other. E-Sys., 720 F.3d at 607. On the one hand, we
recognize that the lack of a permanent injunction restraining
Pinkette’s use of the mark harms CWL by diminishing its
control over its brand. CWL markets itself as a socially-
conscious and environmentally-friendly company, and
Pinkette’s infringing use undermines CWL’s control over that
message. On the other hand, the two companies successfully
coexisted from Pinkette’s founding in 2003 until late 2014.
Cf. Grupo, 391 F.3d at 1104 (“[D]elay weakens a claim of
likelihood of confusion, because the public may learn to
distinguish between similar marks over time, so that any real
likelihood of confusion gradually dissipates.”). Moreover,
CWL abandoned its claim for actual damages before trial and
instead sought disgorgement of Pinkette’s profits. Although
the jury found for CWL on infringement, it also found that
none of Pinkette’s profits were attributable to infringement
24     PINKETTE CLOTHING V. COSMETIC WARRIORS

and awarded zero damages. On the whole, the third factor is
either neutral or only weakly favors applying laches.

    The fourth factor is “good faith ignorance by [the] junior
user.” E-Sys., 720 F.2d at 607. The district court found that
“[t]here was no indication that Pinkette was ever trying to
hide its use of the mark; it was open and notorious.” The
Kims testified that they brainstormed the LUSH name
independently from CWL, and the district court found their
testimony “very credible.” In response, CWL points to the
Kims’ discovery of the internet domain name lush.com in
2003 and Pinkette’s unsuccessful Canadian trademark
registration application in August 2010. But the Kims
testified that they believed their use of the mark on clothing
would not infringe on CWL’s trademark rights, and the
rejection of their Canadian application would not have given
them reason to doubt the validity of their registration in the
United States. See Grupo, 391 F.3d at 1092 (“[U]nder the
‘territoriality principle,’ use of a mark in another country
generally does not serve to give the user trademark rights in
the United States.”). Perhaps most importantly, there is no
evidence that Pinkette ever sought to free-ride on CWL’s
good will or otherwise take unfair advantage of the similarity
between the two companies’ marks. Pinkette’s good faith
thus weighs in favor of laches.

    The fifth factor—“competition between senior and junior
users”—also weighs in favor of laches. E-Sys., 720 F.2d at
607. There is no evidence that CWL and Pinkette have ever
competed with each other; indeed, CWL claims it did not
even know that Pinkette’s LUSH label existed between 2003
and late 2014, even though LUSH clothing was sold in major
American retail stores. CWL has sold a relatively small
number of LUSH-branded t-shirts, tank tops, and sweatshirts,
       PINKETTE CLOTHING V. COSMETIC WARRIORS                25

but it appears these clothing items were sold only for
promotional purposes, and they bear little relation to
Pinkette’s high-end, women’s fashions.

    The sixth and final factor is the “extent of harm suffered
by [the] junior user because of [the] senior user’s delay.” E-
Sys., 720 F.2d at 607. Between July 2010 when CWL was
put on constructive notice and June 2015 when CWL
petitioned to cancel Pinkette’s registration, Pinkette continued
to invest in its LUSH label. The district court found that,
during this time, “Pinkette built its business by pursuing trade
shows and advertising;” “[i]t committed to significant
expansion of its warehouse;” and “[i]t committed to a
significant expansion of its employment base.” We have held
that “a defendant can make the required showing of prejudice
by proving that it has continued to build a valuable business
around its trademark during the time that the plaintiff delayed
the exercise of its legal rights.” Grupo, 391 F.3d at 1105; see
also Whittaker Corp. v. Execuair Corp., 736 F.2d 1341, 1347
(9th Cir. 1984) (defendant’s investments in parts and
inventory to expand its existing business was evidence of
prejudice for purposes of laches). The final factor therefore
weighs in favor of laches.

    In sum, analysis of the E-Systems factors validates the
strong presumption in favor of laches created by CWL’s
delaying past the expiration of the most analogous state
statute of limitations. At least four, and possibly five, of the
factors support a finding of laches. The district court did not
abuse its discretion in applying laches to bar CWL’s
cancellation and infringement claims.
26      PINKETTE CLOTHING V. COSMETIC WARRIORS

     3. The district court did not abuse its discretion in
        declining to apply the doctrine of unclean hands.

    CWL contends that the doctrine of unclean hands
precludes Pinkette from asserting laches. “A party with
unclean hands may not assert laches.” Jarrow Formulas,
304 F.3d at 841. “[O]nly a showing of wrongfulness,
willfulness, bad faith, or gross negligence, proved by clear
and convincing evidence, will establish sufficient culpability
for invocation of the doctrine of unclean hands.” Pfizer, Inc.
v. Int’l Rectifier Corp., 685 F.2d 357, 359 (9th Cir. 1982).
The district court declined to apply unclean hands here. We
review this holding for abuse of discretion. See TransWorld
Airlines, Inc. v. Am. Coupon Exch., Inc., 913 F.2d 676, 694
(9th Cir. 1990).

    CWL’s argument in this regard parallels its argument on
the “good faith” E-Systems factor: it argues that Pinkette
acted in bad faith because its founders knew of CWL’s LUSH
mark in 2003 and learned there was a likelihood of confusion
between the two companies’ marks when their Canadian
trademark registration application was rejected in 2010. For
the same reasons explained above, there was no clear and
convincing evidence of wrongfulness, willfulness, bad faith,
or gross negligence on Pinkette’s part. See Pfizer, 685 F.2d
at 359; see also GoTo.com, Inc. v. Walt Disney Co., 202 F.3d
1199, 1210 (9th Cir. 2000) (a party’s hands need not be
“clean as snow” to avoid the unclean hands doctrine). The
district court did not abuse its discretion by declining to apply
the doctrine of unclean hands.
       PINKETTE CLOTHING V. COSMETIC WARRIORS               27

   4. The inevitable confusion doctrine is inapplicable.

    “If it is inevitable that a significant amount of confusion
will probably be created by the junior user’s actions, then the
right of the public not to be confused and deceived may
outweigh the inequity to the junior user of the trademark
owner’s delay in suing [and defeat a defense of laches].”
MCCARTHY § 31:10. That said, “the danger of ‘inevitable
confusion’ between products will defeat a successful laches
defense only in a narrow set of circumstances.” Tillamook
Country Smoker, 465 F.3d at 1111. “[I]n order to ensure that
laches remains a viable defense to Lanham Act claims, the
public’s interest will trump laches only when the suit
concerns allegations that the product is harmful or otherwise
a threat to public safety and well being.” Id. There is no
evidence that Pinkette’s clothing is harmful or otherwise a
threat to public safety and well being, and the doctrine of
inevitable confusion is therefore inapplicable.

C. Evidence of the LUSH Mark in Canada

    Pinkette moved in limine to exclude reference to its
Canadian trademark registration application and anonymous
cancellation petition from the jury’s hearing. The district
court granted Pinkette’s motion but allowed CWL to present
the disputed evidence after the jury was dismissed. CWL
challenges this evidentiary ruling on appeal. “We review the
district court’s evidentiary rulings for abuse of discretion.”
Draper v. Rosario, 836 F.3d 1072, 1080 (9th Cir. 2016).

    Evidence of the LUSH mark in Canada was not relevant
to the infringement-related questions for which the jury was
the sole trier of fact. See, e.g., Grupo, 391 F.3d at 1093
(“[U]nder the ‘territoriality principle,’ use of a mark in
28     PINKETTE CLOTHING V. COSMETIC WARRIORS

another country generally does not serve to give the user
trademark rights in the United States.”). Although evidence
of the LUSH mark in Canada was relevant to questions the
jury considered in its advisory capacity, the district court did
not abuse its discretion in excluding the evidence from the
jury’s hearing, as its probative value was substantially
outweighed by dangers of confusing the issues, misleading
the jury, and causing undue delay. Fed. R. Evid. 403.
Regardless, any error was harmless, because CWL was
permitted to present all of its evidence to the district court
after the jury was dismissed and the court took that evidence
into account in concluding that laches barred CWL’s claims.
See, e.g., In re First All. Mortg. Co., 471 F.3d 977, 999 (9th
Cir. 2006).

D. The District Court’s Judgment

    The jury found that CWL “prove[d] by a preponderance
of the evidence that it owns LUSH as a trademark,” and the
district court’s judgment stated that “CWL owns LUSH as a
trademark in cosmetics and various other goods and services
other than clothing.” CWL argues that including the words
“other than clothing” in the judgment is inconsistent with the
jury’s verdict and in error. Read as a whole, however, the
judgment accurately reflects the court’s disposition of this
case. As a result of laches, CWL can neither enforce its
trademark rights against Pinkette’s use of the LUSH mark on
clothing nor cancel Pinkette’s registration for use of the mark
on clothing. There was no error in the district court’s
judgment.
      PINKETTE CLOTHING V. COSMETIC WARRIORS         29

                  III. CONCLUSION

    For the foregoing reasons, we AFFIRM the judgment of
the district court.