laches, once established, bars Lanham Act claims even during more recent periods

Design Gaps, Inc. v. Distinctive Design & Construction LLC, --- F.4th ----, 2025 WL 3492373, No. 24-1860 (Dec. 5, 2025)

Super complicated facts; I’ll try to focus on the Lanham Act laches part because of that. “[A]fter a squabble developed over a cabinet and closet job for a luxury home in Charleston, South Carolina, the parties went to arbitration. The arbitration turned out well for the homeowners and the general contractor overseeing the home renovations but badly for the cabinet maker.” The cabinet maker nonetheless sued in federal court, including suing people that the arbitrator had held could not be brought into the arbitration because they weren’t bound by the agreement. The court of appeals nonetheless found that, because the disallowed parties were in privity with entities validly in the arbitration, res judicata and collateral estoppel precluded any claims against them based on the job.

Design Gaps “designs and installs cabinetry in luxury homes,” and frequently worked with defendant Shelter, “a general contractor engaged in homebuilding and renovation.” They had disputes during their years of working together. “For example, Design Gaps claimed from time to time that Shelter advertised Design Gaps’ cabinets without attributing the work to Design Gaps.” These claims were not covered by the arbitration, but they were still barred by laches.

The parties accepted that South Carolina’s three-year statutes of limitations for fraud and unfair trade practices supplied the analogous limitations period. Design Gaps filed its lawsuit on January 13, 2023, meaning that any alleged Lanham Act violations occurring before January 2020 presumptively were barred by laches.

Design Gaps argued that it did not have sufficient information concerning Shelter’s violations until arbitration commenced. But it sent a C&D in April 2018 about Shelter’s unattributed uses of Design Gaps’ work specifically referencing the Lanham Act in connection with its failure-to-attribute objections. While “mere knowledge that [a trademark owner] might have an infringement claim at some future date is not sufficient to trigger the period of unreasonable delay required for estoppel by laches,” the inquiry is objective. And the objective evidence was that “Design Gaps knew Shelter was using Design Gaps’ cabinet work in its promotional materials and that Shelter was not attributing that work to Design Gaps. Design Gaps had also stated in writing that it believed such conduct was false and misleading as to the origin of the cabinet work and that Design Gaps was being harmed. These facts are virtually identical to those alleged to support Design Gaps’ Lanham Act claims in this lawsuit.”

Would laches also cover continuing the same conduct during the presumptively not-lached period? Yes. Here, the core “claim” remained the same, so the continuing violation doctrine extended laches to the more recent period.

Design Gaps argued that its delay was excusable based on Citibank, N.A. v. Citibanc Group, Inc., 724 F.2d 1540 (11th Cir. 1984); there, Citibank should have known of the defendants’ use of its name “prior to 1960, but did not file suit until 1979.” “When [Citibank] first learned of defendants’ adoption of Citibanc as the name of its holding company in 1972, [Citibank] wrote letters warning that it regarded the use of” the name “as an infringement of [Citibank]’s rights.” But, unlike Citibank, Design Gaps did not “sen[d] several other letters over the next few years” before bringing suit. Moreover, in Citibank, the defendants did “not rel[y] on the delay of plaintiffs in expanding their use of the mark; indeed, they [ ] expanded their use while asserting their right to do so, in the face of plaintiff’s constant complaints.” By contrast, the record here didn’t indicate that Shelter asserted its belief that it had the right to promote its work in the way it did to Design Gaps.

Design Gaps also argued that settlement discussions excused its delay, but the record didn’t support the existence of discussions, only that Shelter didn't respond to the letter.

Design Gaps also argued that there was no prejudice. Prejudice can be economic or evidentiary. For trademark, a defendant’s “assertion that it would suffer economic injury if enjoined from using” a plaintiff’s mark, “without reference to any evidence beyond the length of time it has used the mark, is simply insufficient to establish economic prejudice.” In another false advertising case, the Fourth Circuit found that “unreasonable delay prejudiced” the defendant “because of [the defendant]’s continued use of the advertisement on all of its [products] in over a dozen retail stores for years,” to the point that the plaintiff alleged that the defendant “ha[d] been unjustly enriched by over $27 million.” The record didn’t show that much here, but Shelter “demonstrated its continued economic investment in promotional materials between 2015 and 2022.”

For evidentiary prejudice, a defendant must “articulate how” intervening time “would prejudice [its] defense specifically.” Indeed, a defendant “ha[s] an obligation to adduce specific evidence of prejudice” to use this type of laches. Shelter relied on the death of a Mr. Butler, one of its principals, who communicated with Design Gaps about the challenged conduct. Design Gaps argued that it served interrogatories and requests for production on Mr. Butler ten weeks before his unexpected death and that Shelter’s refusal to answer discovery and deficient responses created the prejudice Shelter claims to have suffered. “Design Gaps has not supported this argument with citation to the record. Besides, written discovery responses are no substitute for live testimony. Any responsibility for discovery issues does not change the fact that Shelter has demonstrated some evidentiary prejudice. When considered in the context of over four years of unreasonable delay, we conclude that Shelter has carried its burden.” (Not entirely sure why it’s Shelter’s burden given the presumption of laches, but ok.)