No. 10-0383-cv
RBC Nice Bearings, Incorporated v. Peer Bearing Company
1 UNITED STATES COURT OF APPEALS
2 FOR THE SECOND CIRCUIT
3
4 SUMMARY ORDER
5
6 RULINGS BY SUM M ARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A
7 SUM M ARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERM ITTED AND IS GOVERNED BY
8 FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1. WHEN
9 CITING A SUM M ARY ORDER IN A DO CUM ENT FILED W ITH THIS COURT, A PARTY M UST CITE
10 EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (W ITH THE NOTATIO N
11 “SUM M ARY ORDER”). A PARTY CITING A SUM M ARY ORDER M UST SERVE A COPY OF IT ON ANY
12 PARTY NOT REPRESENTED BY COUNSEL.
13
14 At a stated term of the United States Court of Appeals for the Second Circuit, held at
15 the Daniel Patrick Moynihan United States Courthouse, 500 Pearl Street, in the City of New
16 York, on the 15 th day of December, two thousand ten.
17
18 PRESENT: GERARD E. LYNCH,
19 DENNY CHIN,
20 Circuit Judges,
21 EDWARD R. KORMAN,
22 District Judge.*
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26 RBC NICE BEARINGS, INC., ROLLER BEARING COMPANY OF AMERICA,
27 Plaintiffs-Counter-Defendants-Appellants,
28
29 v. No. 10-0383-cv
30
31 PEER BEARING COMPANY,
32 Defendant-Counter-Claimant-Appellee.
33
34 --------------------------------------------------------------------
35
36 FOR APPELLANTS: JOSEPH W. MARTINI (Aaron S. Bayer, on the brief),
37 Wiggin and Dana LLP, New Haven, Connecticut.
38
39 FOR APPELLEE: THOMAS C. MCDONOUGH (James P. Muraff, Thomas E.
40 Williams, and Stephen Fedo, on the brief), Neal, Gerber &
41 Eisenberg, LLP, Chicago, Illinois.
*
Honorable Edward R. Korman of the United States District Court for the Eastern
District of New York, sitting by designation.
1 Appeal from the United States District Court for the District of Connecticut (Vanessa
2 L. Bryant, Judge).
3 UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND
4 DECREED that the judgment of the district court is AFFIRMED.
5 Plaintiffs-counter-defendants-appellants RBC Nice Ball Bearing and Roller Ball
6 Bearing Company of America (together, “Nice”) appeal from that portion of an October 29,
7 2009 judgment of the United States District Court for the District of Connecticut (Bryant, J.)
8 granting summary judgment on Nice’s federal trademark claims to defendant-counter-
9 claimant-appellee Peer Bearing Company (“Peer”) on the basis of laches and dismissing
10 Nice’s related Connecticut state law claims as barred by the applicable statutes of limitations.
11 We assume the parties’ familiarity with the underlying facts and the procedural history of the
12 case, which we reference only as necessary to explain our decision.
13 DISCUSSION
14 I. Trademark Claims
15 Summary judgment is appropriate when, drawing all reasonable inferences in favor
16 of the non-moving party, “there is no genuine dispute as to any material fact and the movant
17 is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a); see also Miller v. Wolpoff
18 & Abramson, L.L.P., 321 F.3d 292, 300 (2d Cir. 2003). Though this Circuit has not yet
19 settled on the appropriate standard to review a grant of summary judgment based on laches,
20 compare Hermes Int’l v. Lederer de Paris Fifth Ave., Inc., 219 F.3d 104, 107 (2d Cir. 2000)
21 (applying de novo review), with Eppendorf Netheler Hinz GMBH v. Nat’l Sci. Supply Co.,
2
1 14 F. App’x 102, 105 (2d Cir. 2001) (applying abuse of discretion review), in this case the
2 precise standard is immaterial: we reach the same conclusions as the district court and so we
3 would affirm its decision regardless of the applicable standard.
4 Laches bars a claim for relief under federal trademark law where (1) the “plaintiff had
5 knowledge of [the] defendant’s use of its marks” and “inexcusably delayed in taking action,”
6 and (2) the “defendant will be prejudiced by permitting [the] plaintiff . . . to assert its rights
7 at this time.” Saratoga Vichy Spring Co. v. Lehman, 625 F.2d 1037, 1040 (2d Cir. 1980)
8 (internal quotation marks omitted). The “burden of proving or rebutting the defense [of
9 laches]” is determined by reference to “analogous [state] statutes of limitation.” Conopco,
10 Inc. v. Campbell Soup Co., 95 F.3d 187, 191 (2d Cir. 1996) (internal quotation marks
11 omitted). “When a suit is brought within the time fixed by the analogous statute, the burden
12 is on the defendant” to demonstrate the applicability of the laches defense. Id. (internal
13 quotation marks omitted). “On the other hand, when the suit is brought after the statutory
14 time has elapsed, the burden is on the complainant to aver and prove the circumstances
15 making it inequitable to apply laches to his case.” Id. (internal quotation marks omitted).
16 As the district court found, Connecticut’s three-year statute of limitations for fraud
17 determines which party has the burden of proving the applicability or inapplicability of the
18 laches defense in this case. RBC Nice Bearings, Inc. v. Peer Bearing Co., 676 F. Supp. 2d
19 9, 25 (D. Conn. 2009); see also Argus Res. Group, Inc. v. Argus Media, Inc., 562 F. Supp.
20 2d 260, 273 (D. Conn. 2008), citing Conopco, 95 F.3d at 191. Nice filed its complaint on
21 September 5, 2006 and so the pertinent date for laches purposes is September 5, 2003.
3
1 A. Knowledge of Peer’s Use of 1600 Series Designation
2 Nice’s claims revolve around Peer’s adoption of the same 1600 Series designation
3 Nice had long used for its equivalent inch-based bearings. The only reasonable inference that
4 can be drawn from the record is that Nice should have known of Peer’s allegedly infringing
5 conduct – which began no later than 1961 – well before September 5, 2003. Nice’s argument
6 that it was “at most . . . aware of Peer’s sale of equivalent bearings . . . and not Peer’s
7 infringing sale of bearings actually using the 1600 SERIES trademark” misses the point.
8 Actual knowledge of Peer’s allegedly infringing conduct is not required: the applicable
9 limitations period is triggered once Nice “should have known” about it. ProFitness Physical
10 Therapy Ctr. v. Pro-Fit Orthopedic & Sports Physical Therapy P.C., 314 F.3d 62, 70 (2d Cir.
11 2002). “[T]he law is well settled that where the question of laches is in issue the plaintiff is
12 chargeable with such knowledge as he might have obtained upon inquiry, provided the facts
13 already known by him were such as to put upon a man of ordinary intelligence the duty of
14 inquiry.” Johnston v. Standard Min. Co., 148 U.S. 360, 370 (1893); see also Polaroid Corp.
15 v. Polarad Elecs. Corp., 182 F. Supp. 350, 356 (E.D.N.Y. 1960), aff’d, 287 F.2d 492 (1961).
16 By 2002, Nice was aware that some of its largest customers had begun sourcing their
17 1600 Series bearings from Peer instead. (Indeed, Nice was aware of at least one such sale
18 as early as 1997.) Nice was also aware that Peer was marketing its products as equivalent
19 to Nice’s 1600 Series bearings. Had Nice made even the most limited inquiry about its
20 competition, as a reasonable business would have, it would easily have discovered Peer’s
21 catalogs, which for many years had openly advertised its 1600 Series bearings. We conclude,
4
1 as did the district court, that any reasonable factfinder would be compelled to find that Nice
2 should have known about Peer’s allegedly infringing conduct well before September 5, 2003
3 and, as a result, the presumption of laches applies and the burden is on Nice to demonstrate
4 its inapplicability to this case.
5 B. Unreasonable Delay in Filing Suit
6 Nice offers no evidence to rebut the presumption of unreasonable delay and therefore
7 its more than five-year delay before filing suit was unreasonable as a matter of law.
8 C. Prejudice
9 Peer strengthens the presumption of prejudice in its favor by noting its continuous use
10 of the 1600 Series designation for nearly half a century and the difficulties posed by
11 defending this action after so many years have passed. Not only have memories faded and
12 documents been lost, but, as the district court found, many of the “individuals who would
13 have knowledge regarding the issues relevant to this case are now dead,” RBC Nice
14 Bearings, Inc., 676 F. Supp. 2d at 27, including Robert Balderston, a Nice employee from
15 1940 until 1972 who participated in the naming of the 1600 Series and had intimate
16 knowledge of Nice’s trademark practices, and died in 2008. Nice fails to adequately rebut
17 this evidence or to raise a material issue of fact that would undermine the presumption of
18 prejudice in this case.
19 D. Bad Faith as a Bar to Raising Laches Defense
20 Nice argues that the district court erred in permitting Peer to raise laches as a defense.
21 As Nice points out, Laches cannot be raised by “one tainted with inequitableness or bad faith
5
1 relative to the matter in which he seeks relief.” Precision Instrument Mfg. Co v. Auto.
2 Maint. Mach. Co., 324 U.S. 806, 814 (1945). In the trademark context, bad faith requires a
3 showing that the junior user “inten[ded] to promote confusion or exploit [the senior user’s]
4 good will or reputation.” Star Indus., Inc. v. Bacardi & Co., 412 F.3d 373, 388 (2d Cir.
5 2005). As this Court stated in Hermes, the laches defense is inapplicable where the junior
6 user “intentionally traded off the [senior user’s] name and protected products.” 219 F.3d at
7 107.
8 Nice cobbles together words and phrases from the deposition of Peer’s founder,
9 Laurence Spungen (“Spungen”) – who made the decision to adopt the 1600 Series
10 designation as Peer’s own – that it believes show bad faith. Spungen testified that, in
11 adopting the 1600 Series designation, he was aware that Nice was using the same designation
12 and that customers “in some respect” associated Nice with 1600 Series bearings. He also
13 admitted that Nice’s use of the 1600 Series designation “had some influence” on his decision
14 to adopt the same designation.
15 While Spungen’s deposition demonstrates his knowledge of Nice’s prior use of the
16 mark, more than mere knowledge is required; to forestall the laches defense, there must be
17 a finding of the infringer’s intent “to promote confusion or exploit [plaintiff’s] good will or
18 reputation.” Star Indus., 412 F.3d at 388. Nothing in the record contradicts Spungen’s
19 disavowal of such an intention, and much evidence corroborates it. For example, it is
20 undisputed that Peer’s catalogs and packaging always clearly and prominently labeled its
21 bearings with Peer’s corporate name and logos, which Nice does not claim are similar to its
6
1 own. Moreover, “Spungen later testified that, at the time he adopted the 1600 Series
2 designations, he did not believe that Nice bearings were good quality,” which the district
3 court concluded “belie[d] any inference that [he] wanted customers to confuse or otherwise
4 associate his bearings with Nice bearings.” RBC Nice Bearings, 676 F. Supp. 2d at 25-26.
5 (In fact, it is undisputed that Peer’s 1600 Series bearings met the applicable Annular Bearing
6 Engineering Committee standard, while Nice’s bearings did not.) Furthermore, Nice does
7 not contest Peer’s evidence that the sophisticated purchasers who are both companies’
8 customers independently test the quality of bearings they receive, so that the series number
9 matters much less than whether the specific bearing purchased meets the customer’s
10 requirements. On this record, no factfinder could conclude that Spungen adopted the 1600
11 Series designation in order to free-ride on Nice’s reputation or confuse customers about the
12 origin of his product. Peer was therefore free to raise laches as a defense to Nice’s claims
13 of infringement.
14 II. Connecticut State Law Claims
15 Nice alleges various state law causes of action predicated on the same factual
16 assertions as its federal trademark claims. While conceding that a three-year limitations
17 period applies to these claims and that the limitations period accrues on the date of
18 infringement, Nice insists that each allegedly infringing action creates a new three-year
19 limitations period and so its claims are not time-barred insofar as they reference allegedly
20 infringing actions taken by Peer within three years of Nice’s 2006 complaint.
7
1 Nice fails to identify a single case applying Connecticut law in the manner it suggests
2 to the causes of action at issue in this case. Nor could it. In a closely analogous case
3 addressing a counterclaim alleging ongoing violations of the Connecticut Trademark Statute,
4 fraud, unfair trade practices, tortious interference, and breach of contract, a Connecticut state
5 court held that “to allow the defendants to now come forward and pursue these allegations
6 . . . after knowing of the violations for almost a decade would violate the purpose of a statute
7 of limitations, which ‘is to prevent the unexpected enforcement of stale claims.’” S. Pope
8 Inc. v. Pope Exterminating, No. 66712, 1993 WL 489708, at *3 (Conn. Super. Ct. Nov. 17,
9 1993), quoting Vilcinskas v. Sears, Roebuck & Co., 144 Conn. 170, 174-75 (1956); see also
10 Argus Research Group, 562 F. Supp. 2d at 279-81; Roberto’s, Inc. v. Mirafrore, No. CV
11 940312295S, 1996 WL 150379, at *2 (Conn. Super. Ct. Mar. 12, 1996). The same is
12 certainly true here. Furthermore, under Connecticut law, “[t]he doctrine of laches applies
13 where a trademark owner has ignored a known infringer of his mark for a considerable length
14 of time.” Roberto’s, 1996 WL 150379, at *2, citing Polaroid, 287 F.2d at 492. But see P&S
15 Contractors v. Tig HitCo, Inc., No. HHBCV085010760S, 2009 WL 1424612, at *5 n.9
16 (Conn. Super. Ct. Mar. 31, 2009) (“As for whether laches may be a defense . . . the law is
17 unsettled.”). We therefore affirm the district court’s dismissal of Nice’s state law claims as
18 time-barred.
19
20
8
1 CONCLUSION
2 We have considered all of Nice’s remaining arguments and find them to be without
3 merit. Accordingly, the judgment of the district court is AFFIRMED.
4
5
6 FOR THE COURT:
7 Catherine O’Hagan Wolfe, Clerk of Court
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9