The doctrine of laches may be applied to equitable claims brought under the Lanham Act, which contains no express limitations provision. When federal courts, in the exercise of their equitable power, consider laches, they are guided by the limitations period that they would borrow for actions at law and presume that if an equitable claim is brought within the limitations period, it will not be barred by laches. But if the claim is one for injunctive relief, laches would not apply. A prospective injunction is entered only on the basis of current, ongoing conduct that threatens future harm. Inherently, such conduct cannot be so remote in time as to justify the application of the doctrine of laches.
Lyons Partnership, L.P. (Lyons), the owner of "Barney," the famous purple dinosaur who speaks in a distinctive baritone, sought an action for copyright trademark infringement,injunctive relief and damages, against a costume rental company to end the marketing of three look-alike costumes that children allegedly believe were in fact Barney. The district court recognized the Lyon’s intellectual property rights in the Barney character but denied their enforcement against the costume rental company because (1) the first act of infringement occurred outside of the statute of limitations period; (2) the claims were in any event barred by laches; and (3) confusion as to one of the costumes existed only among young children and not among the adults who rented the costume.
Was it proper for the court to apply laches to the case?
The court reversed the ruling that the trademark and copyright claims were time-barred. It also reversed the ruling that any claims were barred by laches. The court found that the district court erred to the extent it dismissed claims premised upon acts that occurred within the applicable limitations periods, and applied laches. The district court's finding that infringement was not willful was not clearly erroneous, but it was still left with the determination of whether lesser statutory damages should be awarded. Next, the court reversed the ruling denying plaintiff an injunction in view of the infringement. As for the dragon copyright and trademark claims, the court vacated on the copyright issue because the district court should have considered the perspectives of the children. For similar reasons, it vacated on the trademark issue. It vacated on the state law claim because good faith was not a defense.