9th Circuit finds laches in false advertising case

World Nutrition Inc. v. Advanced Supplementary Tech. Corp., 2025 WL 2427613, No. 24-4976 (9^th Cir. Aug. 22, 2025)

Over a partial dissent, the court of appeals reverses the district court’s refusal of a laches defense in this false advertising case, giving no weight to the public’s interest in avoiding deception. (Lower court ruling discussed here.)

The parties both advertised some of their respective enzyme products as having, to varying degrees, enteric coating. After a bench trial, the district court (1) rejected defendant AST’s laches defense; (2) ruled in favor of World Nutrition on its claim and in favor of AST on two of its three counterclaims; and (3) entered a monetary judgment in World Nutrition’s favor because it determined that AST made more than World Nutrition did from the deception.

The district court abused its discretion by rejecting AST’s laches defense. Laches requires unreasonable delay plus prejudice. Reasonability considers both the time allotted by the “analogous” state statute of limitations and any “legitimate excuse” for delay. But the district court considered only prejudice, which can’t be viewed in isolation from the delay. When a court determines that “the most analogous state statute of limitations expired before suit was filed,” a “strong presumption in favor of laches” attaches, and ourts must “bear[ ] in mind th[at] presumption” when evaluating prejudice.

World Nutrition knew—or at least should have known—about its false-advertising claim by 2011, and the analogous statute of limitations is Arizona’s three-year period for fraud. That expired in 2014, five years before World Nutrition sued. Thus, the district court abused its discretion in failing to evaluate prejudice without a presumption thereof.

Given that presumption, AST showed laches. World Nutrition offered no legitimate excuse for its delay. And the district court, addressing a different issue, relied on its determination that “AST centered its advertising—and spent substantial funds—on the claim that its products were more effective because of the enteric coating.” That finding, which was not clearly erroneous, showed prejudice, which exists when a defendant invests resources—whether through advertising or otherwise—to “build a valuable business around [the specific business asset or practice being challenged] during the time that the plaintiff delayed.”

The court of appeals affirmed the district court’s finding  that AST failed to meet its burden to prove the literal falsity of World Nutrition’s advertising of its liquid products as “100%” effective. Still, a good result for AST.

Judge Ryan Nelson dissented in part, because he would have sent it back to the district court to reassess laches in the first instance.