Aristocrat Technologies, Inc. (“ATI”) produces and sells gaming machines under the word and design trademarks ARISTOCRAT (here and here), which ATI has registered both in the U.S. and internationally. High Impact Design & Entertainment (“HIDE Nevada”) had an agreement with ATI to purchase ATI’s gaming machines – an agreement that clearly indicated that ATI retained all rights, title and interest in its trademarks, and HIDE Nevada had no such rights. In June 2003, HIDE Nevada (without ATI's knowledge) applied to register the ARISTOCRAT design mark in Venezuela. ATI discovered HIDE Nevada’s Venezuelan application in December 2003 and demanded that HIDE Nevada withdraw the application; however, HIDE Nevada convinced ATI to wait until the mark had registered and then assign it to ATI later in order to avoid spending more time and money in registering the mark. ATI took no action at the time, and waited until it registered to HIDE Nevada’s Venezuelan affiliate company. But when the mark registered, HIDE Nevada refused to assign the mark over to ATI.
ATI initially sued HIDE Venezuela in August 2007. In August 2008, ATI filed an amended complaint adding HIDE Nevada and some individual defendants to the action. The defendants’ initial motion to dismiss for lack of subject matter jurisdiction was dismissed. Shortly thereafter, three of the Defendants (the “Moving Defendants”) filed Motions to Dismiss Case not Commenced within Three Years
The Moving Defendants argued that ATI's Lanham Act trademark infringement claims were not timely commenced and therefore the doctrine of laches should apply to bar the complaint based on the nearly four year delay from the time ATI learned of HIDE Nevada’s application for trademark registration in Venezuela and the date that ATI filed suit.
The court described the significance of the statute of limitations with respect to the defense of laches as follows:
While laches and the statute of limitations are distinct defenses, if the plaintiff filed a Lanham Act claim within the analogous limitations period under state law, courts strongly presume that laches is inapplicable. Reno Air Racing Ass'n, Inc. v. McCord, 452 F.3d 1126, 1138-39 (9th Cir. 2006). If the plaintiff filed suit outside the analogous period, courts have often presumed that laches is applicable. Id. at 1139. Because the Lanham Act contains no explicit statute of limitation, courts "borrow" the analogous state time period. Id. In determining the presumption for laches, the limitations period runs from the time the plaintiff knew or should have known about his cause of action. Id.
However, the court noted that the issue of the applicable statute of limitations was not really at issue in the Reno Air case:
The [Reno Air] Defendant asserted that the doctrine of laches should apply to bar the Plaintiff's claim, and the court specifically noted that the parties in that case had agreed that the three-year limitation period in NRS §11.190(3) should apply to determine the presumption for laches. Id. at 1139. Notably, as Plaintiffs in this case point out, the court in Reno Air did not specifically hold that the applicable statute of limitations for a Lanham Act claim is three years under NRS §11.190(3). Id. Rather, the Reno Air court accepted the parties' understanding without discussion, and undertook its analysis of the laches issue based on the fact that the parties agreed that the three-year period should apply. Id.
The court then went on to address which of Nevada’s statute of limitations should apply – agreeing with ATI’s arguments that it should be four years based on Nevada’s four year statute of limitations period for actions under Nevada’s deceptive trade practices laws:
By contrast, Plaintiffs in this case argue that the Court should look to the four-year statute of limitations in NRS §11.190(2) for actions involving deceptive trade practices in violation of NRS §598.0903 to 598.0999. (Pl.'s Opp'n (# 48) 4). They argue that both the Lanham Act and Nevada's deceptive trade practices statute are "designed to prevent consumer confusion and deception in the marketplace with respect to the source, sponsorship, approval, affiliation, connection, or association of goods and services" and therefore Nevada's four-year statute of limitations for deceptive trade practices is the most closely analogous. Id. at 5. This Court agrees. A review of the Lanham Act provisions regarding trademark infringement and Nevada's deceptive trade practices statute reveals that the two are indeed analogous and appear to address similar wrongs including the false or deceptive use of another's mark or product.
The court added that, even though ATI’s suit was presumed to have been timely filed, laches could still apply if the Moving Defendants could show that they suffered prejudiced as a result of the ATI’s unreasonable delay in filing suit. The court noted that, given HIDE Nevada’s assurances that it would assign the Venezuelan trademark upon registration, it was not unreasonable for ATI to delay in filing its action upon initially discovering the application in December 2003. Moreover, the Moving Defendants apparently had not shown any evidence of prejudice as a result of the alleged delay. Thus, the court denied the Moving Defendants’ Motion to Dismiss.