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In ‘Unique’ Case, Gibson Blocks Guitar Sales Despite Suit Delay

Aug. 5, 2022, 9:20 AM

Waiting 40 years to enforce its guitar-shape trademarks didn’t bar Gibson Brands Inc. from halting Dean Guitars’ sales of Flying V-shaped guitars going forward.

A July 28 permanent injunction against Armadillo Distribution Enterprises came two months after a verdict left both sides claiming victory in a case attorneys deemed extraordinary on multiple levels. The jury rejected the contention by Armadillo, which makes Dean Guitars, that body shapes like the Flying V and Z-shaped guitars had become generic, and instead found the company had engaged in counterfeiting—but awarded merely $4,000 because of Gibson’s delay in bringing suit.

The court cited century-old precedent to reject Armadillo’s argument that a finding of laches—unreasonable delay in suing—foreclosed an injunction. But trademark attorneys noted that successfully obtaining an injunction after such a long delay is incredibly uncommon.

Aside from being rare, the kind of decision the court made last week also happens to be, within broad frameworks, quite subjective. Laches is an equitable defense, hinging on a sense of fairness. Meanwhile an injunction is also an equitable remedy. That leaves courts with a fair amount of discretion, attorneys said.

“The general rule is even if laches is going to bar damages and monetary relief, if there’s ongoing consumer confusion you can still get injunctive relief because the whole purpose of the Lanham Act is to preclude consumer confusion,” intellectual property attorney Brian B. Darville of Oblon, McClelland, Maier & Neustadt LLP said of the “outlier” case. “But 40 years is a staggeringly long time to enter injunctive relief.”

The injunction ruling left open one final question before a potential appeal: whether Gibson can establish that the counterfeiting constitutes an “exceptional case” and recover attorneys’ fees. But the case already has proven to be fairly exceptional in several other ways.

‘All Over the Map’

Laches can apply to cases with much briefer delays than Gibson’s 2019 lawsuit over several guitar bodies, word trademarks, and a head-stock design. Laches constitutes an unreasonable delay that causes prejudice against the defendant, for example allowing damages from infringing sales to pile up. The doctrine often makes monetary awards unavailable.

But Judge Amos L. Mazzant’s opinion cited a pair of cases from the 1880s holding that laches alone doesn’t foreclose an injunction. The district court considered the standard permanent injunction factors, including the risk of irreparable harm absent one, balance of hardships of the parties, and adequacy of other remedies.

Continued counterfeiting and the potential need to sue again constituted irreparable harm, the court concluded. The main hardship for Armadillo would be adhering to trademark law, the court said.

It declined to extend the injunction to the infringed headstock, which Armadillo had incorporated into several non-infringing models. Enjoining it “would bring Armadillo’s business to a grinding halt,” the court said.

Attorneys generally saw the opinion as well-reasoned—while it may be unfair for Gibson to benefit monetarily from its delay, it still had trademark rights. But intellectual property attorney Marsha G. Gentner of Dykema Gossett PLLC also said results in such cases can vary.

“These laches cases, circuit to circuit, they’re all over the map. I’ve seen cases in the Ninth Circuit where they come close to saying ‘if you establish laches, you’re not going to get any relief,’” Gentner said. “It’s sort of a free-for-all.”

Gentner noted a case her firm worked on in which the Ninth Circuit nixed a permanent injunction after San Miguel Pure Foods Inc. prevailed on laches. There, the court found no irreparable harm beyond mere speculation.

In the Gibson case, Gentner said she had “a hard time seeing how” the delay didn’t qualify as acquiescence, where a mark owner implicitly concedes a use is non-infringing. But she also noted that a jury held that Armadillo had sold counterfeit guitars, and called the ruling a “proper exercise of the judge’s equitable powers.”

One thing that did surprise Gentner about the opinion was the absence of a 2020 trademark law encoding a presumption of irreparable harm in trademark injunction consideration—an omission in a surprising number of 2020 cases. The presumption would have shifted the burden to San Miguel in its 2015 win, and should have smoothed the judge’s path to granting Gibson’s injunction, she said.

‘Sleeping Dogs’

The Gibson ruling ultimately provides a nudge to brands that may feel like they’ve allowed infringement to persist too long to get relief, intellectual property attorney Michael G. Kelber of Neal Gerber Eisenberg LLP said.

“I do think this pushes the ability of folks that might not have been as proactive. It might give them some hope as long as their mark is still well-known, that their claim has not been lost. It’s a big victory for Gibson,” Kelber said. Echoing others, he also called it a “pretty unique case.”

As for Armadillo, the case remains at least a partial victory after the court declined to block the headstock or add lost profits to the slim award—though it did award $335,000 in costs—Darville said. That may inhibit Armadillo from appealing the injunction, he said. The infringing guitar shapes account for only a small percentage of its sales, and Gibson would likely counter-appeal for a greater award, said Darville.

“The defendant may look at this and say, ‘We got a lot of what we needed,’” Darville said. “If I’m the defense, I’d be talking to my client about ‘let’s let sleeping dogs lie. Let’s take our hits here and move on.’”

To contact the reporter on this story: Kyle Jahner in Washington at kjahner@bloomberglaw.com

To contact the editors responsible for this story: Adam M. Taylor at ataylor@bloombergindustry.com; Jay-Anne B. Casuga at jcasuga@bloomberglaw.com