Lontex Corp. v. Nike, Inc.

LONTEX CORPORATION, v. NIKE, INC.

CIVIL ACTION NO. 18-5623

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA

February 24, 2021

MEMORANDUM RE CROSS-MOTIONS FOR SUMMARY JUDGMENT

Baylson, J.

I. Introduction

This litigation is a trademark dispute concerning a small but significant segment of the clothing market—athletic clothing—which both Plaintiff Lontex Corporation ("Lontex") and Defendant Nike, Inc. ("Nike") manufacture and sell. Lontex owns a trademark, "cool compression," and asserts Nike is liable for infringement.

Lontex's First Amended Complaint alleges five counts against Nike:

1. Count I: Trademark Infringement under the Lanham Act in violation of 15 U.S.C. § 1114;

2. Count II: Trademark Infringement under the Lanham Act in violation of 15 U.S.C. § 1125(a);

3. Count III: Contributory Trademark Infringement under the Lanham Act in violation of 15 U.S.C. §§ 1114, 1125(a);

4. Count IV: State Common Law Trademark Infringement in violation of the laws of California, Florida, Texas, New York, New Jersey, North Carolina, Maryland, Massachusetts, Illinois, Georgia, Colorado, Minnesota, Washington, and the District of Columbia; and

5. Count V: State Statutory Trademark Infringement and Unfair Competition in violation of the following Deceptive and Unfair Business Practices Acts:

(1) the Florida Deceptive and Unfair Trade Practices Act, Florida Stat. §501.201 et seq., (2) California Business and Professions Code § 17200 et seq., (3) New York General Business Law § 349, (4) New Jersey Stat. § 56:4-1, (5) North Carolina General Statute Sec. 75-1.1 et seq., (6) Mass. Gen. Laws c. 93A, § 11, (7) Illinois Uniform Deceptive Trade Practices Act, 815 ILCS 510/1 et seq., (8) Georgia Uniform Deceptive Trade Practices Act, O.C.G.A. §§ 10-1-370 through 10-1-375, (9) Colorado Unfair Practices Act, Colo. Rev. Stat. §§6-2-101 through 6-2- 117, (10) Minn. Stat. § 8.31, subds. 1 & 3a, & §§ 325D.43-325D.48, and (11) Washington Unfair Business Practices - Consumer Protection, Rev. Code Wash. 19.86.010, et seq.

ECF 20, "Am. Compl." ¶¶ 36-88.

Presently before the Court are the parties' Cross-Motions for Summary Judgment. Lontex seeks partial summary judgment on two of Nike's affirmative defenses, and Nike seeks summary judgment with respect to all of Lontex's claims. For the reasons that follow, Lontex's Motion will be granted in part and denied in part, and Nike's Motion will be denied.

II. Factual Background and Procedural History

Lontex manufactures and sells athletic apparel, and is the owner of three "cool compression" trademarks. ECF 20-1. Two of those trademarks cover the words "cool compression" with respect to certain lines of clothing. ECF 188-5, 188-6. These trademarks consist of "standard characters without claim to any particular font, style, size, or color." Id. The third trademark, no longer at issue in this case, contains the words "cool compression" accompanied by a logo. See Lontex Corp. v. Nike, Inc., No. 18-5623, 2020 WL 5947852 (E.D. Pa. Oct. 7, 2020). The crux of Lontex's complaint is that Nike's use of the words "cool compression" in relation to some of Nike's products infringes on Lontex's "cool compression" trademark. Further relevant factual background is discussed below with respect to each Motion.

This case has been exceptionally contentious in discovery proceedings and at one point, the Court felt that the best solution was to appoint a Master specializing in commercial litigation, intellectual property, and digital discovery issues. Sandra A. Jeskie, Esquire performed this role admirably and after her final report was approved, very few discovery problems arose. The parties proposed a post-discovery schedule which included the filing of dispositive motions under Rule56, and Daubert motions on the same day. Lontex moved for partial summary judgment on November 4, 2020 (ECF 188, "Lontex MSJ"), Nike responded on December 4, 2020 (ECF 201, "Nike Opp'n"), and Lontex replied on December 16, 2020 (ECF 218, "Lontex Reply"). Nike moved for summary judgment on November 5, 2020 (ECF 191, "Nike MSJ"), Lontex responded on December 4, 2020 (ECF 203, "Lontex Opp'n"), and Nike replied on December 16, 2020 (ECF 220, "Nike Reply"). Both parties filed Daubert Motions and responses. ECF 187, 200, 189, 199, 190, 202.

These filings have been voluminous. As a result of the undersigned's practice requirement that a paper copy of extensive exhibits be submitted to Chambers, along with the briefs and motions, the totality of briefs and exhibits consume approximately five large document boxes, including many tens of thousands of pages. After initial review of these briefs and exhibits, the Court determined that the Daubert issues would be delayed and entered an order dated December 9, 2020 staying any reply briefs. ECF 207. As to the summary judgment motions, each party was required to summarize the holdings of the five cases and five most important exhibits already produced in discovery which supported its position. Id. This seemingly unusual order was appropriate because, from the initial briefing, the Court had doubts about granting summary judgment on any issue other than the statute of limitations. The parties filed these summary statements on December 21, 2020. ECF 225, 226.

The Court issued a list of questions to the parties, for discussion at oral argument which was held via video conference on February 2, 2021. ECF 228. The parties were then permitted to submit final statements summarizing their most important points. ECF 232, 233. Recognizing that there has been extensive discovery and that there are many factual disputes, this Memorandum will be confined to identifying the most material issues of fact.

III. Legal Standard

Summary judgment is proper if the movant can establish "that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A dispute is genuine—and will preclude a grant of summary judgment—if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). If a fact "might affect the outcome of the suit under the governing law," the factual dispute is material and will allow the nonmovant to survive summary judgment. Id. Only if "the record taken as a whole could not lead a rational trier of fact to find for the non-moving party" is a grant of summary judgment appropriate. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). At the summary judgment stage, the district court is obligated to "review the record as a whole and in the light most favorable to the nonmovant, drawing reasonable inferences in its favor." In re Chocolate Confectionary Antitrust Litig., 801 F.3d 383, 396 (3d Cir. 2015).

It is the responsibility of the litigant seeking summary judgment to inform the district court of the basis for its motion and identify the portions of the record that demonstrate the absence of a genuine dispute of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Where the burden of proof on a particular issue rests with the nonmoving party at trial, the moving party's initial burden can be met by simply pointing out to the district court "that there is an absence of evidence to support the nonmoving party's case." Id. at 325. Once the moving party has met its initial burden, the nonmoving party must set forth specific facts—through citation to affidavits, depositions, discovery documents, or other evidence—demonstrating the existence of a genuine triable dispute. Fed. R. Civ. P. 56(c).

IV. Lontex's Motion

Lontex has moved for partial summary judgment regarding two of Nike's asserted affirmative defenses. Nike's fourteenth affirmative defense asserts that Lontex's state law claims are time-barred. Nike's fifteenth affirmative defense asserts that Lontex's claims are barred by the equitable doctrines of laches, waiver, acquiescence, and estoppel.

a. Factual Background

The facts relevant to the resolution of Lontex's Motion, considered in the light most favorable to Nike, are as follows. Lontex discovered Nike's alleged infringement in December 2015. ECF 214-1, Nike's Response to Lontex's Statement of Facts, "Nike SOF" ¶ 12. On April 8, 2016, counsel for Lontex contacted Nike stating "[i]t has recently come to our attention that Nike has begun advertising its directly competing goods using Lontex's 'Cool Compression' trademark." Nike SOF ¶ 14. Lontex stated that it would be willing to discuss Nike's licensing of the trademark, and asked Nike to "take immediate action to discontinue its trademark infringement" and provide Lontex with sales data relating to the allegedly infringing products. Id.

This letter prompted Nike to internally investigate its use and Lontex's use of "cool compression." Nike SOF ¶ 23. Throughout their continued communications, Nike emphasized that even prior to Lontex's letter, and for reasons unrelated to Lontex's trademark, Nike had started to change its use of "cool compression" and began updating its website accordingly. Nike SOF ¶ 16. Lontex continued to offer Nike a licensing agreement and request sales data to determine "appropriate compensation for past unauthorized use." Nike SOF ¶ 18. On July 19, 2016, Nike wrote:

Nonetheless, as we previously shared, Nike is in the process of changing the format of all descriptors on its website and that should be completed in the coming months. As you can surely appreciate, the process takes time. In the interim, as previously explained, as a gesture of good faith we have attempted to offset "Cool" and "Compression" even further with the use of a hyphen.

Nike SOF ¶ 20.

Lontex responded:

We are pleased to learn that Nike has agreed albeit without prejudice to its legal arguments, to discontinue its use of the registered incontestable "Cool Compression" trademark, and we acknowledge that a brief transition period is appropriate and

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