Newborn sued its competitor Albion for allegedly falsely
advertising its dispensing guns (used to apply sealants and adhesives) as made
in the US when Albion knew they were made in Taiwan. Late in the game, Newborn moved to strike
Albion’s late-pled unclean hands defense (apparently that Newborn’s products
were also falsely advertised as made in the US). First, the court found that affirmative
defenses aren’t required to be pled with the specificity required by Iqbal/Twombly. Newborn also argued that Rule 9(b) applied to
the extent that the counterclaim was fraud-like; the court was sympathetic, and
indicated that it likely would have granted a Rule 9(b) motion with leave to
amend if the issue had been raised before discovery. But given the timing, the
court wasn’t going to let Newborn use 9(b) as a sword, “when it was designed to
act as a shield against frivolous or unclear allegations of fraud.” At this point, Newborn had adequate notice of
the factual basis for the defense and opportunity to rebut it.
The court confirmed that unclean hands is a viable defense
to Lanham Act claims. If there was no factual
support for the defense, Newborn had other remedies at the appropriate stage of
litigation.
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