No Excuses! When It Comes to Trademark Infringement, Sue Fast or Stand Down

Almost two years ago, Fitbug and Fitbit went to court in California. Fitbug is a U.K. company, founded in 2004, that had quickly obtained two trademark registrations associated with its name. Fitbit is a U.S. company, founded a few years later, in 2007. Both companies produce wearable activity trackers and online interfaces for viewing the wearer's activity data, but Fitbit has been far more successful. On March 29, 2013, Fitbug sued Fitbit for trademark infringement and unfair competition. Fitbit counterclaimed for unfair competition and false advertising, and the fight was on.

Facing a trial beginning February 9, 2015, Judge Samuel Conti called the battle. He ruled largely in Fitbit's favor—finding that Fitbit's counterclaims had no support, but also finding that all of Fitbug's claims were barred by the doctrine of laches. Case dismissed!

What is laches? The laches doctrine is an equitable doctrine that limits the amount of time that a party has to bring suit once the party knows of the potential claim. When there is potential prejudice to the defendant in continuing the suit, a party's claims may be dismissed if that party (1) delayed in bringing suit (e.g. more than a statutory limit) and (2) the delay was unreasonable.

To determine whether there was delay, the Fitbug Court had to determine when the clock started ticking, and whether the elapsed time to filing was more than permitted under the statutes.

In general, the clock starts ticking when a party "knew or should have known about its potential cause of action." Here, that boiled down to when the trademark holder "knew or should have known about the likelihood of confusion between" the trademarks. Fitbit announced its products on September 9, 2008, and it received extensive media coverage before and after that. Not surprisingly, many individuals saw that coverage and contacted Fitbug about Fitbit. Because of the extensive media coverage about Fitbit, and specific communications, the Court found that Fitbug "knew or should have known of the likelihood of confusion by September 2008."

In reaching this conclusion, the Court rejected Fitbug's argument that it was waiting to see what would happen to Fitbit, and hoping they would go out of business. As the Court put it, the idea that Fitbug "should be permitted to wait and watch, with full knowledge of Fitbit's allegedly infringing use, as Fitbit invested substantial sums of money in advertising and building up goodwill in its allegedly infringing brand, only to intervene once those investments panned out," was both "inequitable" and "untenable."

The court thus found that Fitbug waited four and a half years to file suit (from September 2008 to March 2013), which was more than permitted under the applicable statutes of limitations, and that the delay was unreasonable for the following reasons:

1. Under the doctrine of progressive encroachment, a trademark owner need not sue if the infringement is initially de minimis; it need only sue once the infringer redirects or expands its business so that it is in direct competition with the trademark owner. The court rejected this view. It found that Fitbit's use of its mark was "substantial from the outset" and that it "was selling the same type of products, to the same type of Customers" beginning in 2008.
2. There are several factors that may provide an excuse for a party's delay in bringing suit, including "(1) the strength and value of the trademark rights asserted; (2) plaintiff's diligence in enforcing [the] mark; (3) harm to [the] senior user if relief is denied; (4) good faith ignorance by [the] junior user; (5) competition between [the] senior and junior users; and (6) [the] extent of harm suffered by the junior user because of [the] senior user's delay." The Court found that only factors (2) and (5) could possibly favor Fitbug. It noted specifically that Fitbit's mark was more valuable because of Fitbit's "rapid and continuing growth" relative to Fitbug, that Fitbug had not been diligent in protecting its mark, that Fitbit had selected its mark before it became aware of Fitbug, and that Fitbit was continuing to build its business and would be prejudiced by enforcement of Fitbug's mark.
3. A finding that infringement is willful can effectively negate a finding of delay. This stems from the equitable maxim that "he who comes into equity must come with clean hands." Here, however, the Court found no willful infringement because mere knowledge of a mark doesn't show bad faith, and Fitbit had a good faith belief that it was not infringing.

The final decision in the Fitbug vs. Fitbit case stands as a warning to all would-be trademark infringement plaintiffs: If your competitor is using a mark that could be confused with yours, don't sit on your rights. Don't wait-and-see what happens, and don't convince yourself that it doesn't matter for your business. Depending upon the applicable statute of limitations and absent a suite of really good excuses, you could have as little as two years to rightfully bring suit. This further highlights the importance of a strong enforcement strategy with a trademark watching service.

The case is Fitbug Ltd. vs. Fitbit, Inc., case no. 13cv01418-SC, United States District Court for the Northern District of California.