HARMAN INTERNATIONAL INDUSTRIES INC v. JEM ACCESSORIES INC (2023)

United States District Court, C.D. California.

HARMAN INTERNATIONAL INDUSTRIES, INC., a Delaware corporation, Plaintiff and Counter-Defendant, v. JEM ACCESSORIES, INC. Dba Xtreme Cables, a New Jersey corporation, Defendant and Counter-Plaintiff.

Case No. 2:20-cv-08222-AB-SKx

Decided: April 10, 2023

John J. Dabney, Pro Hac Vice, Mary D. Hallerman, Pro Hac Vice, Snell and Wilmer LLP, Washington, DC, Patrick W. Kelly, Snell and Wilmer LLP, Los Angeles, CA, for Plaintiff and Counter-Defendant. Angie Daena Ayala, Law Offices of Lee E. Burrows APC, Irvine, CA, Alexander Janvelian, Lee E. Burrows, Law Offices of Lee E. Burrows, APC, Orange, CA, Jeffrey P. Resnick, Pro Hac Vice, Sherman Silverstein Kohl Rose and Podolsky PA, Moorestown, NJ, Morris E. Cohen, Pro Hac Vice, Goldberg Cohen LLP, Brooklyn, NY, for Defendant and Counter-Plaintiff.

ORDER DENYING JEM'S MOTION FOR SUMMARY JUDGMENT, and GRANTING HARMAN'S MOTION FOR SUMMARY JUDGMENT

Before the Court are Motions for Summary Judgment filed by both Defendant and Counter-Plaintiff Jem Accessories, Inc. (“Jem”) and Plaintiff and Counter-Defendant Harman International Industries (“Harman”). (Dkt. Nos. 69, 85.) Oppositions and replies were filed with both Motions. (See Dkt. Nos. 85, 95, 111.) The Court heard oral argument on March 28, 2023. For the following reasons the Court DENIES Jem's Motion, and GRANTS Harman's Motion based on laches.

I. BACKGROUND

A. Procedural History

This trademark action arises from two companies using “XTREME” and “INFINITY” as designations on audio speakers. On June 29, 2020, Jem sued Harman in the Southern District of New York (“the New York action”),¹ asserting infringement and unfair competition claims under the Lanham Act, 15 U.S.C. § 1051 et seq., and New York state law. (Dkt. No. 95, Ex. 16.) Jem's complaint in that action alleged that Harman's sale of Bluetooth speakers under an XTREME designation infringed Jem's asserted common law XTREME trademark, along with its various related federally registered marks. (Id. ¶¶ 13-18, 26.)

Harman responded by suing Jem in this Court on September 8, 2020, for (1) federal trademark infringement of its INFINITY mark, 15 U.S.C. § 1114(1); (2) federal false designation of origin and unfair competition pertaining to its INFINITY mark, 15 U.S.C. § 1125(a); (3) federal trademark dilution of its INFINITY mark, 15 U.S.C. § 1125(c); (4) unfair competition pertaining to its INFINITY mark, Cal. Bus. & Prof. Code § 17200 et seq.; (5) common law trademark infringement; (6) declaratory judgment that Harman's use of XTREME does not infringe Jem's federally registered marks; and (7) declaratory judgment that Harman's use of XTREME does not infringe Jem's common law marks. (Compl., Dkt. No. 1.) This Court eventually stayed Harman's action in order to allow the United States District Court for the Southern District of New York to adjudicate Harman's then-pending motion to dismiss or transfer. (Dkt. No. 31.) The United States District Court for the Southern District of New York subsequently issued a Memorandum Opinion and Order on February 22, 2021, dismissing Jem's complaint against Harman in that action without prejudice based on improper joinder. (Dkt. No. 36, Ex. A.)

On May 6, 2021, Jem filed its Answer in this action, asserting counterclaims for infringement and unfair competition under the Lanham Act and California law pertaining to Harman's use of XTREME. (Answer, Dkt. No. 39.) As in the New York action, Jem's counterclaims alleged that Harman's sale of Bluetooth speakers under an XTREME designation infringed Jem's asserted common law XTREME trademark, along with its related federally registered marks.² (Id. at 13-15.)

Jem now moves for summary judgment as to Harman's claims pertaining to INFINITY, arguing that Harman has abandoned its INFINITY mark. (Dkt. No. 69 at 3-5.) Jem also moves for summary judgment in favor of its counterclaims regarding XTREME. (Id. at 5-15.) Harman counters by moving for summary judgment against Jem's counterclaims regarding XTREME and further argues that the counterclaims are barred by laches, prior use, and fair use. (Dkt No. 85 at 6-42.)

B. Undisputed Facts

The Court has reviewed Jem's and Harman's Statements of Undisputed Facts (Dkt. Nos. 69-4, 85-1 at 1-40), Harman's Statement of Genuine Issues (Dkt. No. 85-1 at 40-92 (“Harman SGI”)), and Jem's Response to Harman's Statement of Undisputed Facts (Dkt. No. 96 (“Jem Resp.”)). Though the parties dispute myriad facts, the Court finds that the following facts are not in genuine dispute.

Harman is a corporation headquartered in Northridge, California that sells speakers and other audio accessories. (Jem Resp. ¶¶ 1-4.) Harman owns trademark registrations for INFINITY and JBL, which it uses to sell its audio-related goods. (Id. ¶ 4.) Harman specifically owns two U.S. Patent and Trademark Office (“USPTO”) registrations for INFINITY, issued in 1980 and 1986 respectively, which pertain to speakers, high fidelity speakers, and speaker elements, among other goods. (Harman SGI ¶¶ 29, 65; Dkt. Nos. 1-1, Ex. A; Dkt. No. 69, Ex. 29.)

Jem is a corporation headquartered in Edison, New Jersey. (Compl. ¶ 5; Answer ¶ 6.) Jem similarly sells and distributes electronic products and accessories, including cell phone chargers, speakers, cables, adapters, and television mounts. (Jem Resp. ¶ 15; Answer ¶ 8.) Jem began using XTREME as a designation in association with advertising and selling speakers, power banks, and other audio-related products as early as 2005. (Harman SGI ¶¶ 1, 3, 5, 91, 137, 196; Dkt. No. 69, Exs. 1, 3, 4.) In 2013, Jem first applied to register the mark X XTREME with the USPTO for batteries and battery chargers, among other products, but the application was denied because of a likelihood of confusion with other registered marks. (Jem Resp. ¶ 47; Hallerman Decl. Ex. 10.) In July 2014, Jem secured a trademark registration for XTREME DIGITAL LIFESTYLE ACCESSORIES, pertaining to brackets for flat screen T.V. sets, mobile computer carrying cases, cell phone covers, computer mice, computer styluses, smartphone cases, and cell phone USB cables. (Harman SGI ¶¶ 8, 49; Dkt. No. 69, Ex. 8.) In September 2020, Jem obtained both word and style registrations for XTREME CONNECTED HOME pertaining to, among other goods, wireless speakers and wireless outdoor speakers. (Dkt. No. 95, Exs. 47-48.)

Jem has accumulated similar registrations via litigation. As a result of a settlement with Sentry Industries, Inc. (“Sentry”; “the Sentry litigation”), Jem was assigned a USPTO registration for XTRAEM in July 2017, pertaining to earphones, headphones, and earbuds. (Harman SGI ¶¶ 9-10, 104; Dkt. No. 69, Exs. 9-10.) During that litigation on August 1, 2016, Harman's use of OnBeat Xtreme on speaker docks was brought to the attention of Jem's President Albert Alboucai during a deposition. (Harman SGI ¶ 143; Jem Resp. ¶ 129; Dkt. No. 69, Ex. 21.) Mr. Alboucai later testified that he wanted Jem to sue Harman “the second he left his deposition,” and subsequently notified Jem's co-owner Elie Chemtob of Harman's use of XTREME on speakers. (Jem Resp. ¶¶ 130-31.) Mr. Chemtob confirmed knowledge of Harman's use from the Sentry litigation, considering it a “problem” for Jem. (Id. ¶ 132.) In 2021, Jem was also assigned all of JVCKenwood USA Corp.’s (“JVC”) rights to XTREME from 2011 to 2021 as a result of the New York action that Harman was dismissed from. (Harman SGI ¶¶ 18, 108; Dkt. No. 69, Exs. 18-19.)

From at least 2006 to 2010, Harman sold JBL brand speakers using the designation “Control 1Xtreme,” garnering reviews from industry publications and websites. (Jem Resp. ¶¶ 6, 134, 136.) From 2011 to 2015, Harman sold a JBL OnBeat Xtreme speaker featuring Bluetooth connectivity and wireless streaming, for which it also received coverage in magazines and online publications. (Id. ¶¶ 7-8, 138-39.) In September 2015, Harman first sold a portable XTREME speaker under its JBL brand, featuring Bluetooth connectivity, wireless streaming, and power bank capabilities. (Harman SGI ¶¶ 90, 182; Jem Resp. ¶ 10.) It later introduced a second and third generation of the speaker, the XTREME 2 and XTREME 3, under its JBL brand in January 2018 and in 2020, respectively. (Jem Resp. ¶¶ 10-11.) Harman has earned “extensive revenue[s]” in the United States from sales of its JBL XTREME speakers. (Id. ¶¶ 14, 151, 153.)

Jem and Harman now both use the designation XTREME on portable Bluetooth speakers. (Harman SGI ¶ 114; Dkt. No. 69, Ex. 2, Ex. 8 at 46.) Harman sells its speakers to retailers like Best Buy, Target, and Walmart, while Jem's goods are sold at retailers like Menards and Five Below. (Harman SGI ¶¶ 116-17.) Both parties sell their products online, including via Amazon.com. (Id. ¶¶ 128-29.) Most of Jem's speakers retail between $5 and $100, and Jem has never sold a speaker above this price range. (Jem Resp. ¶¶ 56-57.) New models of Harman's JBL XTREME speakers retail for over $200. (Harman SGI ¶¶ 185-86; Jem Resp. ¶ 58.)

II. LEGAL STANDARD

A motion for summary judgment must be granted when “the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 24748 (1986). The moving party bears the initial burden of identifying the elements of the claim or defense and evidence that it believes demonstrates the absence of an issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Where the nonmoving party will have the burden of proof at trial, the movant can prevail merely by pointing out that there is an absence of evidence to support the nonmoving party's case. Id. The nonmoving party then “must set forth specific facts showing that there is a genuine issue for trial.” Anderson, 477 U.S. at 248.

“Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no ‘genuine issue for trial.’ ” Matsushita, 475 U.S. at 587. The Court must draw all reasonable inferences in the nonmoving party's favor. In re Oracle Corp. Sec. Litig., 627 F.3d 376, 387 (9th Cir. 2010) (citing Anderson, 477 U.S. at 255). Nevertheless, inferences are not drawn out of thin air, and it is the nonmoving party's obligation to produce a factual predicate from which the inference may be drawn. Richards v. Nielsen Freight Lines, 602 F.Supp. 1224, 1244–45 (E.D. Cal. 1985), aff'd, 810 F.2d 898 (9th Cir. 1987). “[M]ere disagreement or the bald assertion that a genuine issue of material fact exists” does not preclude summary judgment. Harper v. Wallingford, 877 F.2d 728, 731 (9th Cir. 1989).

III. JEM'S MOTION FOR SUMMARY JUDGMENT AS TO HARMAN'S INFRINGEMENT CLAIMS IS DENIED.

In adjudicating the parties’ motions, the Court has considered Jem's and Harman's Statements of Undisputed Facts, Harman's Statement of Genuine Issues, and Jem's Response to Harman's Statement of Undisputed Facts, along with evidence cited and submitted. The Court discusses below those undisputed and disputed facts that are material to its decision. The Court has also considered objections to the evidence submitted. Objections material to its decision are discussed below; all other objections are overruled.

A. Abandonment

Jem first moves for summary judgment as to Harman's infringement claims regarding Harman's INFINITY mark. Jem specifically argues that Harman's claims cannot survive because Harman's INFINITY mark was abandoned based on its nonuse. (See Dkt. No. 69 at 3-4.)

“To show abandonment by nonuse, the party claiming abandonment must prove both the trademark owner's (1) ‘discontinuance of trademark use’ and (2) ‘intent not to resume such use.’ ” Electro Source, LLC v. Brandess-Kalt-Aetna Group, Inc., 458 F.3d 931, 935 (9th Cir. 2006) (citing 15 U.S.C. § 1127). “Intent not to resume may be inferred from circumstances.” 15 U.S.C. § 1127. “Nonuse for 3 consecutive years shall be prima facie evidence of abandonment.” Id.

“Section 1127 ․ provides that ‘use’ of a trademark defeats an allegation of abandonment when: the use includes placement on goods sold or transported in commerce; is bonafide; is made in the ordinary course of trade; and is not made merely to reserve a right in a mark.” Electro Source, 458 F.3d at 936. The prima facie case of abandonment (proof of non-use for three consecutive years) “ ‘eliminates the challenger's burden to establish the intent element of abandonment as an initial part of [its] case,’ ” and creates a rebuttable presumption that the registrant has abandoned the mark without intent to resume ․” Levi Strauss & Co. v. GTFM, Inc., 196 F. Supp. 2d 971, 976 (N.D. Cal. 2002) (quoting Imperial Tobacco, Ltd. v. Philip Morris, Inc., 899 F.2d 1575, 1579 (Fed. Cir. 1990)). “Once created, a prima facie case of abandonment may be rebutted by showing valid reasons for nonuse or lack of intent to abandon the mark.” Id. (citing Abdul–Jabbar v. Gen'l Motors Corp., 85 F.3d 407, 411 (9th Cir. 1996)).

First, it should be noted that Jem failed to assert an abandonment defense in its Answer. (See Dkt. No. 39.) Abandonment is an affirmative defense, and affirmative defenses generally are deemed waived if not asserted in the pleadings. See Herb Reed Enterprises, LLC v. Fla. Ent. Mgmt., Inc., 736 F.3d 1239, 1247 (9th Cir. 2013); In re Cellular 101, Inc., 539 F.3d 1150, 1155 (9th Cir. 2008) (citing Fed. R. Civ. P. 8(c)) (“[A]n affirmative defense ․ is generally waived if not asserted in the answer to a complaint.”). For this reason alone, Jem's motion for summary judgment as to Harman's infringement claims may be denied.

Jem's argument also fails on the merits. Jem relies on the deposition testimonies of Harman's Manager of Product Marketing Soraya Kukucka and its Senior Vice President Daniel Lee to argue that a prima facie case of three years of nonuse has been established. Ms. Kukucka testified that she had no familiarity with Harman's marketing and sale of INFINITY speakers in the United States (Dkt. No. 95, Ex. 30 at 14), while Mr. Lee stated he had no specific knowledge of INFINITY being used for speakers from 2015 to the present, though he thought such use was a “possibility” (id., Ex. 31 at 73-74). It is unclear how this lack of knowledge regarding use of the INFINITY mark on speakers constitutes proof that Harman discontinued use of its mark, let alone prima facie evidence of three years of consecutive nonuse. Parties asserting abandonment are required to “strictly prove” their claim, which in part requires proof of “complete cessation or discontinuance” of the mark in question. Electro Source, 458 F.3d 931 at 935, n.2, 938. But Ms. Kukucka's and Mr. Lee's testimonies only demonstrate that they lacked knowledge regarding use of the mark on speakers, not that the company had ceased use of the mark in that context. Indeed, Mr. Lee still maintained that such a use was possible, despite his lack of knowledge.

Harman, moreover, has attested to significant sales of INFINITY speakers in the U.S. since 2017 and has proffered evidence of it selling speakers under the INFINITY word mark on its websites (see, e.g., Dkt. No. 83, Ex. 5). While this evidence may not be conclusive, a reasonable jury could rely on it to find that Harman has used the mark in commerce sufficiently to defeat Jem's claim of abandonment. See 15 U.S.C. § 1127 (defining “use of commerce” as including a use of mark “on the goods ․ or the displays associated therewith” in the ordinary course of trade) (emphasis added); see also Banc of California Inc. v. Farmers & Merchants Bank of Long Beach, No. SA-cv-16:01601-CJC-AFMx, 2017 WL 3575471, at *1 (C.D. Cal. July 6, 2017) (denying summary judgment on abandonment where defendant provided a single instance of use in commerce despite various evidence that defendant had ceased use of its mark).

Having made all reasonable inferences in favor of Harman as the nonmoving party, Jem has not met its heavy burden of proving abandonment to secure summary judgment on Harman's infringement claims. The Court accordingly denies summary judgment on this ground.

IV. HARMAN'S MOTION FOR SUMMARY JUDGMENT AS TO JEM'S INFRINGEMENT COUNTERCLAIMS IS GRANTED.

A. Laches

Harman moves for summary judgment in its favor on Jem's counterclaims based on a laches. Jem also moves for summary judgment in its favor as to that defense.

To apply laches in the trademark infringement context, “[w]e analyze the laches defense with a two-step process.” Pinkette Clothing, Inc. v. Cosm. Warriors Ltd., 894 F.3d 1015, 1025 (9th Cir. 2018) (quoting La Quinta Worldwide LLC v. Q.R.T.M., S.A. de C.V., 762 F.3d 867, 878 (9th Cir. 2014)). First, we assess the plaintiff's delay by looking to whether the most analogous state statute of limitations has expired. Id. If the most analogous state statute of limitations expired before suit was filed, there is a strong presumption in favor of laches. Id. That presumption is reversed, however, if the most analogous state statute of limitations expired after suit was filed. Id. “Second, we assess the equity of applying laches using the E-Systems factors: (1) ‘strength and value of trademark rights asserted;’ (2) ‘plaintiff's diligence in enforcing [the] mark;’ (3) ‘harm to senior user if relief denied;’ (4) ‘good faith ignorance by junior user;’ (5) ‘competition between senior and junior users;’ and (6) ‘extent of harm suffered by junior user because of senior user's delay.’ ” Id. (quoting E-Sys., Inc. v. Monitek, Inc., 720 F.2d 604, 607 (9th Cir. 1983)).

1. Presumption of Laches

The most analogous state statute of limitations for this case is California's four-year statute of limitations for trademark infringement actions.³ Id.; Internet Specialties W., Inc. v. Milon-DiGiorgio Enters., Inc., 559 F.3d 985, 990 n.2 (9th Cir. 2009). In order to assess whether any presumption of laches exists, the Court must thus address whether Jem took longer than four years to file its counterclaims in this action once it knew or should have known about its potential claim. See Pinkette, 894 F.3d at 1025 (“Laches runs ‘from the time the plaintiff knew or should have known about its potential cause of action.’ ”); Tillamook, 465 F.3d at 1107-08 (basing the end of a counterclaimant's laches period on when its counterclaims were filed rather than when the opposing party filed its action).⁴

The parties debate when Jem's laches clock began. Jem argues that laches either began running on August 1, 2016, (Dkt. No. 69 at 29), when Sentry's attorney showed Jem's President Albert Alboucai a listing of Harman's OnBeat Xtreme speaker during a deposition (Jem Resp. ¶ 129), or not until 2018 or 2019 when Jem had the ability to bring a meritorious claim (Dkt. No. 69 at 21-24). Harman claims Jem had actual knowledge of Harman's use of XTREME either on December 21, 2015, when Sentry produced evidence of Harman advertising JBL Xtreme speakers to Jem's counsel (Dkt. No. 85 at 28), or on August 1, 2016 as a result of the Alboucai deposition (id.). Harman further claims that Jem had constructive knowledge even earlier than 2015 based on Harman's long-term use of XTREME in connection with speakers and its longstanding presence as a market leader in consumer audio (Dkt. No. 85 at 29-31).

To its second point, Jem reads far too much into the cases it cites. None of the controlling cases Jem relies on specify that an infringement claim must demonstrate sufficient direct competition or confusion in order for laches to run; indeed, some of them contradict this proposition. See Tillamook, 465 F.3d at 1109 (“[T]he two companies were using similar marks on complementary products in the same geographical area, creating the prospect of confusion.”) (emphasis added); Jarrow, 304 F.3d at 838 (“[I]f the plaintiff legitimately was unaware of the defendant's conduct, laches is no bar to suit.”) (emphasis added); see also Halstead v. Grinnan, 152 U.S. 412, 417-18 (1894) (“When ․ he took title, he took it with notice that a survey had been made, and would not now be heard to say that he had no knowledge of that fact.”) (emphasis added). Instead, “[l]aches runs “from the time the plaintiff knew or should have known about its potential cause of action.” Pinkette, 894 F.3d at 1025 (emphasis added). This knowledge, whether actual or constructive, can arise from conduct such as registration of a potentially infringing mark, id. at 1025, receipt of materials displaying infringing content, Evergreen, 697 F.3d at 1227, or observation of the infringing mark on competing goods, Eat Right, 880 F.3d at 1116-17.

Here, the parties do not dispute that Jem's president Albert Alboucai was shown an Amazon listing of Harman's OnBeat Xtreme speaker on August 1, 2016, during a deposition in Jem's case against Sentry. (Jem Resp. ¶ 129.) Mr. Alboucai further testified that he wanted Jem to sue Harman “the second he left his deposition,” and later notified Jem's co-owner Elie Chemtob of Harman's use of Xtreme on speakers.” (Id. ¶¶ 130-31.) Mr. Chemtob confirmed knowledge of Harman's use from the Sentry litigation and considered it a “problem” for Jem. (Id. ¶ 132.) On these undisputed facts, no reasonable jury could conclude that Jem did not have knowledge of its potential claim against Harman by August 1, 2016 at the latest.⁵ Given Jem's knowledge of its potential claim by this date, Jem's May 6, 2021, counterclaims (Dkt. No. 39) were filed beyond California's four-year limitations period for trademark infringement claims, establishing a presumption in favor of laches.⁶

2. E-Systems Factors

Again, “we assess the equity of applying laches using the E-Systems factors: (1) ‘strength and value of trademark rights asserted;’ (2) ‘plaintiff's diligence in enforcing [the] mark;’ (3) ‘harm to senior user if relief denied;’ (4) ‘good faith ignorance by junior user;’ (5) ‘competition between senior and junior users;’ and (6) ‘extent of harm suffered by junior user because of senior user's delay.’ ” Pinkette Clothing, Inc. v. Cosm. Warriors Ltd., 894 F.3d 1015, 1025 (9th Cir. 2018) (quoting E-Sys., Inc. v. Monitek, Inc., 720 F.2d 604, 607 (9th Cir. 1983)).

a. Strength and Value of Trademark Rights Asserted

“The more likely a mark is to be remembered and associated in the public mind with the mark's owner, the greater protection the mark is accorded by trademark laws.” GoTo.com, Inc. v. Walt Disney Co., 202 F.3d 1199, 1207 (9th Cir. 2000) (citing Kenner Parker Toys Inc. v. Rose Art Indus., Inc., 963 F.2d 350, 353 (Fed. Cir. 1992), overruled on other grounds by Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 22 (2008)). A mark's strength is evaluated based on two components: “the mark's inherent distinctiveness (i.e., its conceptual strength)” and its “recognition in the market (i.e., its commercial strength).” Stone Creek, Inc. v. Omnia Italian Design, Inc., 875 F.3d 426, 432 (9th Cir. 2017) (citing Lahoti v. Vericheck, Inc., 636 F.3d 501, 508 (9th Cir. 2011)).

“To determine a mark's conceptual strength, we classify a mark along a spectrum of five categories ranging from strongest to weakest: arbitrary, fanciful, suggestive, descriptive, and generic.” JL Beverage Co., LLC v. Jim Beam Brands Co., 828 F.3d 1098, 1107 (9th Cir. 2016). “Arbitrary and fanciful marks ․ employ words and phrases with no commonly understood connection to the product,” “suggestive marks ․ suggest a product's features and require consumers to exercise some imagination to associate the suggestive mark with the product[,]” and “[d]escriptive marks define a particular characteristic of the product in a way that does not require any imagination.” Id. Arbitrary or fanciful marks (i.e., Kodak) are generally “strong” marks, whereas descriptive or suggestive marks are generally “weak.” Nutri/Sys., Inc. v. Con-Stan Indus., Inc., 809 F.2d 601, 605 (9th Cir. 1987) (quoting AMF Inc. v. Sleekcraft Boats, 599 F.2d 341, 349 (9th Cir. 1979)); see Brookfield Commc'ns, Inc. v. W. Coast Ent. Corp., 174 F.3d 1036, 1058 (9th Cir. 1999) (“[S]uggestive marks are presumptively weak.”).

“After identifying whether a mark is generic, descriptive, suggestive, arbitrary, or fanciful, the court determines the mark's commercial strength.” JL Beverage, 828 F.3d at 1107 (citation omitted). “Commercial strength may be demonstrated by commercial success, extensive advertising, length of exclusive use, and public recognition.” Adidas Am., Inc. v. Calmese, 662 F. Supp. 2d 1294, 1303 (D. Or. 2009) (citation omitted). Further, “a suggestive or descriptive mark, which is conceptually weak, can have its overall strength as a mark bolstered by its commercial success” or by advertising expenditures that increase its market recognition. M2 Software, Inc. v. Madacy Ent., 421 F.3d 1073, 1081 (9th Cir. 2005) (citing cases). Likewise, if a conceptually weak suggestive or descriptive mark demonstrates a lack of commercial strength, the overall strength of the mark may be diminished. See, e.g., Brookfield, 174 F.3d at 1058 (finding that court did not clearly err in classifying a suggestive mark as weak given lack of commercial strength evidence).

Both parties appear to concede that Jem's use of XTREME on speakers is suggestive. (See Dkt. No. 95 at 9; Dkt. No. 111 at 6.) The Court agrees with this classification. “If the mental leap between the word and the product's attribute is not almost instantaneous, this strongly indicates suggestiveness, not direct descriptiveness.” Japan Telecom, Inc. v. Japan Telecom Am. Inc., 287 F.3d 866, 873 (9th Cir. 2002). That is certainly the case here. The term XTREME does not convey attributes of a speaker instantaneously. Instead, potential consumers would be required to make a mental leap from the term to particular attributes of a speaker, like its extremely high quality, its extreme volume, or its extreme durability. This need to “exercise ․ imagination and perception to reach a conclusion as to the product's nature,” fits Jem's use of XTREME within the suggestive category. Brookfield, 174 F.3d at 1058 n.19.

For the same reason, the mark cannot be fanciful or arbitrary. “Fanciful [and arbitrary] marks have no commonly known connotation to the product at hand,” Surfvivor Media, Inc. v. Survivor Prods., 406 F.3d 625, 632 (9th Cir. 2005), whereas the term XTREME commonly may connote features of a speaker like the examples mentioned above. Moreover, the fact that XTREME appears to be a coined term does not change this analysis. XTREME is a misspelling of the common word “extreme,” and such mere misspellings do not qualify as fanciful or arbitrary automatically despite their appearance as coined terms. See id. (“[T]he mere fact that [“Surfvivor”] consists of a coined term does not automatically render that mark fanciful.”); see also Interstellar Starship Servs., Ltd. v. Epix Inc., 184 F.3d 1107, 1111 (9th Cir. 1999) (determining that the coined phrase “EPIX” for electronic pictures should not be considered an arbitrary [or fanciful] mark automatically). The term XTREME is thus best categorized as suggestive as it relates to speakers.

The mark's classification as suggestive does not make it strong, however. While the Ninth Circuit has recognized suggestive marks as “inherently distinctive,” Lodestar Anstalt v. Bacardi & Co. Ltd., 31 F.4th 1228, 1260 (9th Cir. 2022), it has also regarded them as “presumptively weak” and explained that suggestive marks may be categorized as weak despite being entitled to some restricted form of trademark protection, Brookfield, 174 F.3d at 1058. See Alpha Indus., Inc. v. Alpha Steel Tube & Shapes, Inc., 616 F.2d 440, 445–46 (9th Cir. 1980) (“Of course, even ‘weak’ marks are protected. The difference is that if the mark is weak, then a stronger showing as to other factors ․ must be made.”); Sleekcraft, 599 F.2d at 350 (“Although appellant's mark is protectible and may have been strengthened by advertising, ․ it is a weak mark entitled to a restricted range of protection.”) (citations omitted), abrogated on other grounds by Mattel, Inc. v. Walking Mountain Prods., 353 F.3d 792 (9th Cir. 2003). Whether a suggestive mark may overcome its presumption of weakness depends on the mark's commercial strength, which is assessed by analyzing factors such as “extensive advertising, length of exclusive use, [and] public recognition ․” Entrepreneur Media, Inc. v. Smith, 279 F.3d 1135, 1144 (9th Cir. 2002) (citations omitted).

Jem points to a variety of evidence to argue that its XTREME mark is commercially strong. First, Jem argues that its repeated and successful enforcement of its various XTREME-related marks via litigation demonstrates the mark's commercial strength (see Dkt. No. 69 at 11). Jem fails to point to any authority, however, that relies on prior enforcement efforts as evidence of a mark's commercial strength. This lack of authority makes sense, as the inquiry into commercial strength seeks to determine whether a “mark has achieved actual marketplace recognition” rather than whether the mark has led to successful litigation outcomes. See, e.g., Brookfield, 174 F.3d at 1058. This evidence thus does not impact the Court's analysis of commercial strength. Even if it did, much of the evidence Jem points to involves rights being assigned to Jem pursuant to settlement agreements, weakening Jem's claim that its mark has been enforced successfully in court. (See Dkt. No. 69, Exs. 10, 13 (stipulation of dismissal and assignment of rights from Sentry), 18 (assignment from JVC), 22 at 135: 8-19 (settlement agreement between Jem and Monster).)

Jem next proffers declaration statements and deposition testimony from its CFO and CEO, respectively, attesting to Jem's longtime attendance at the Consumer Electronics Show (“CES”), its advertisement of XTREME products since 2005, and its expansion into new retailers as evidence of XTREME's commercial strength. (See Dkt. No. 100; see also Dkt. No. 69, Ex. 22 at 41:18-23, Ex. 23 at 70:21-72:12.) Even accepting that these statements support the inference that these efforts promoted Jem's XTREME mark in particular, attestations of this nature have low probative value towards a mark's strength for two reasons. First, Jem has not tied these expenditures to any evidence that such efforts have been effective in making consumers associate XTREME with Jem. See Delta Forensic Eng'g, Inc. v. Delta V Biomechanics, Inc., 402 F. Supp. 3d 902, 908 (C.D. Cal. 2019) (“As to its advertising and public recognition, Plaintiff has not connected its expenditures with evidence of effectiveness, in other words, evidence that consumers associate [the mark] with Plaintiff.”). Second, Jem's evidence is based on the statements of its own executives, and thus does not provide insight into actual consumer views. See Self-Realization Fellowship Church v. Ananda Church of Self-Realization, 59 F.3d 902, 910 (9th Cir. 1995) (“Attestations from person[s] in close association and intimate contact with (the trademark claimant's) business do not reflect the views of the purchasing public.”); Walter v. Mattel, Inc., 210 F.3d 1108, 1111 (9th Cir. 2000), holding modified on another ground by Surfvivor, 406 F.3d 625. Jem has thus provided some, albeit insubstantial, evidence regarding the strength of its XTREME mark.

Harman responds to Jem's evidence by pointing to voluminous third-party registrations and uses of XTREME and similar variants on other products (see Dkt. No. 83, Exs. 13-18), many of which are related to the consumer electronic industry (see, e.g., id., Ex. 13 (over 200 pages of Amazon.com listings for various third-party electronic products using “Xtreme” as a designation), Ex. 17 (registration for “Xtreme Sound” for sound cards), Ex. 18 (“Klip Xtreme” registration for headsets and USB hubs)). Jem's co-founders have also attested to third parties using XTREME as a product designation in the electronics industry. (See Dkt. No. 83, Ex. 11 at 99:17-25, Ex. 12 at 30:5-10.) Such evidence tempers Jem's ability to overcome the presumptive weakness of its XTREME mark. See Arcona, Inc. v. Farmacy Beauty, LLC, 976 F.3d 1074, 1081 (9th Cir. 2020) (“[Defendant] presented evidence that other companies use the phrase ‘EYE DEW’ in the ․ industry. This underscores that the ‘EYE DEW’ mark is not so unique or strong.”); Glow Indus., Inc. v. Lopez, 252 F. Supp. 2d 962, 990 (C.D. Cal. 2002) (finding commercial strength and advertising expenditures “offset, ․ by the relative weakness of [plaintiff]’s mark, which is suggestive only, and which competes in an exceedingly crowded field of beauty products using the word ‘glow’ in some manner as a trade name or trademark”); Matrix Motor Co. v. Toyota Jidosha Kabushiki Kaisha, 290 F. Supp. 2d 1083, 1091 (C.D. Cal. 2003) (“Even an arbitrary mark may be classified as weak where there has been extensive third party use of similar marks on similar goods.”) (citation omitted). Additionally, it is undisputed that Harman, itself, has sold speakers using some variety of an XTREME designation since 2006 (Jem Resp. ¶¶ 6-7, 10-11) and has garnered “extensive revenue” from its JBL speakers using that designation (id. ¶ 14). This concurrent use of XTREME by both parties for over a decade further underscores the weakness of Jem's asserted mark. See Accuride Int'l, Inc. v. Accuride Corp., 871 F.2d 1531, 1536 (9th Cir. 1989) (holding that a mark was not strong because of the parties’ concurrent use, despite plaintiff's evidence of advertising, sales, and long-standing use of the trade name); Delta Forensic Eng'g, Inc. v. Delta V Biomechanics, Inc., 402 F. Supp. 3d 902, 908 (C.D. Cal. 2019). Given Harman's significant evidence of weakness in response to Jem's proffered evidence, no reasonable jury could find that Jem could overcome the presumptive weakness associated with its suggestive mark. This factor thus weighs toward applying laches.

b. Diligence in Enforcing the Mark

This factor weighs in favor of laches. The Court has established that Jem had notice of its potential cause of action against Harman by August 1, 2016, at the latest, and the parties do not dispute that Jem failed to contact Harman about the alleged infringement prior to filing its New York action (Jem Resp. ¶ 156). This inactivity falls short of the “effective policing effort” the Ninth Circuit requires, which “[a]t the very least, ․ must involve actually contacting the alleged infringer about its use of a trademark.” Grupo Gigante SA De CV v. Dallo & Co., 391 F.3d 1088, 1102 (9th Cir. 2004). Indeed, laches has applied in cases where plaintiffs have put forth more effort over a similar time period to enforce their trademark rights against potential infringers. See id. (finding lack of diligence where plaintiff contacted defendant three times over four years); Fitbug Ltd. v. Fitbit, Inc., 78 F. Supp. 3d 1180, 1193 (N.D. Cal. 2015) (one letter over five years). Jem contends that its diligence is evidenced instead by prior successful suits against other alleged infringers. (Dkt. No. 69 at 25.) But, as addressed further below, Jem's diligence in enforcing the asserted mark against other defendants is inconsequential to laches analysis. Indeed, Jem's diligence elsewhere only highlights Jem's lack of diligence as to Harman here.

c. Harm to Senior User if Relief is Denied

The third factor either weighs in Jem's favor or can be assumed to do so. This factor “turns largely on the court's analysis of the likelihood of confusion,” which involves assessing the Sleekcraft factors. Fitbug, 78 F. Supp. 3d at 1193; see Grupo Gigante, 391 F.3d at 1103. Here, the parties present disputed factual issues regarding at least the proximity of their goods, similarity of their marks, and the overlap of their marketing channels. (Compare Dkt. No. at 13-15 with Dkt. No. 85 at 13-23.) As the Sleekcraft factors “present[ ] a highly factual inquiry,” Ironhawk Techs., Inc. v. Dropbox, Inc., 2 F.4th 1150, 1161 (9th Cir. 2021), the Court cannot make any finding as a matter of law as to likelihood of confusion. Accordingly, this factor weighs towards not applying laches.

d. Good Faith Ignorance by Junior User

This factor focuses on whether Harman acted in bad faith or had prior knowledge of Jem when it adopted use of XTREME on speakers. See Grupo Gigante, 391 F.3d at 1104; Fitbug, 78 F. Supp. 3d at 1194.

As evidence of Harman adopting XTREME in bad faith, Jem points to its ownership of two XTREME-related trademark registrations dating before 2015 and its significant presence at two CES trade shows in 2014 and 2015. (Dkt. No. 95 at 35.) The parties concede, however, that Harman began selling speakers with some form of an XTREME designation by at least 2011 (Jem Resp. ¶ 138), suggesting that Harman had chosen to use such a designation on speakers before Jem's proffered evidence could have impacted its decision. See Fitbug, 78 F. Supp. 3d at 1194 (N.D. Cal. 2015) (favoring laches where defendant had selected its mark before being aware of plaintiff). Jem has failed to demonstrate, moreover, how its evidence establishes Harman's actual awareness of Jem before using XTREME on its speakers. Even if Jem's proffered evidence does establish Harman's constructive knowledge of Jem prior to selling XTREME speakers, “[p]rior knowledge of a senior user's trademark does not necessarily give rise to an inference of bad faith and may be consistent with good faith.” Fitbug, 78 F. Supp. 3d at 1195–96 (quoting Arrow Fastener Co. v. Stanley Works, 59 F.3d 384, 397 (2d Cir. 1995)).

Jem otherwise presents no evidence that Harman ever “sought to free-ride on [Jem]’s good will or otherwise take unfair advantage of the similarity between the two companies’ marks,” a point the Ninth Circuit has regarded as “most important[ ]” in assessing this factor for laches. Pinkette, 894 F.3d at 1028. Harman's repeated release of new generations of XTREME speakers resulting in voluminous sales after 2015 (Jem Resp. ¶¶ 11, 151; see Dkt. No. 85 at 38) moreover demonstrates that “[t]here was no indication that [Harman] was ever trying to hide its use of the mark; it was open and notorious,” Pinkette, 894 F.3d at 1028. This further supports Harman operating in good faith. This factor accordingly weighs in favor of laches.

e. Competition Between Senior and Junior Users

Jem and Harman both sell Bluetooth speakers bearing the designation XTREME. Although both parties agree that they do not sell their products at the same retailers (compare Dkt. No. 69 at 13 with Dkt. No. 85 at 22), they dispute whether the retailers that sell their goods fall within the same channel of mass market retailers (Harman SGI ¶¶ 117, 120). Further, though the parties do not dispute that Jem and Harman's XTREME speakers were retailing at different price ranges in 2016 (Harman SGI ¶¶ 184-86), they contest whether those prices converged in subsequent years (id. ¶¶ 188, 191). Making all reasonable inferences in favor of Jem, these facts could demonstrate that the parties compete in their sales of XTREME speakers. See Grupo Gigante, 391 F.3d at 1104 (holding that parties who sold groceries to a very broad customer base in close proximity competed for purposes of laches). This factor thus weighs against laches.

f. Extent of Harm Suffered by Junior User Because of Senior User's Delay

“Courts have recognized two chief forms of prejudice in the laches context—evidentiary and expectations-based.” Danjaq LLC v. Sony Corp., 263 F.3d 942, 955 (9th Cir. 2001). “Evidentiary prejudice includes such things as lost, stale, or degraded evidence, or witnesses whose memories have faded or who have died.” Id. “A defendant may also demonstrate prejudice by showing that it took actions or suffered consequences that it would not have, had the plaintiff brought suit promptly.” Id. Additionally, “a defendant can make the required showing of prejudice by proving that it has continued to build a valuable business around its trademark during the time that the plaintiff delayed the exercise of its legal rights.” Pinkette, 894 F.3d at 1028 (9th Cir. 2018) (quoting Grupo Gigante, 391 F.3d at 1105); see Whittaker Corp. v. Execuair Corp., 736 F.2d 1341, 1347 (9th Cir. 1984).

As discussed above, Jem had notice of its potential claim against Harman by August 1, 2016, at the very latest, but it did not file its counterclaims in this case until May 6, 2021. Harman presents evidence of evidentiary and expectations-based prejudice both within and beyond this time period. (See, e.g., Dkt. No. 85 at 36-38.) Even if the Court limits its analysis to this time period and assumes the validity of Jem's arguments as to evidentiary-based prejudice, it remains undisputed that between August 1, 2016 and May 6, 2021, Harman introduced two new generations of XTREME speakers, reaping extensive revenues from those products. (Jem Resp. ¶¶ 11, 151; see Dkt. No. 85 at 38.) This sort of continued investment in a line of products generating substantial sales is sufficient to demonstrate economic prejudice for purposes of laches. Pinkette, 894 F.3d at 1028 (affirming finding of economic prejudice because “[defendant] continued to invest in its ․ label”); Danjaq, 263 F.3d at 956 (same); Grupo Gigante, 391 F.3d at 1105 (holding that defendant was prejudiced by opening a second store during plaintiff's delay); Fitbug, 78 F. Supp. 3d at 1194 (“[Defendant] has provided substantial evidence detailing its efforts through the period of ․ delay to build its business, generat[e] substantial sales, ․ and develop[ ] products”). Indeed, Harman's continued accrual of liability during this period is exactly the type of detrimental reliance laches seeks to prevent in the trademark context. See Whittaker, 736 F.2d at 1347 (“[Defendant] was prejudiced because it continued engaging in its existing practices, incurring additional potential liability by reason of [Plaintiff]’s failure to take prompt action.”); see also Dkt. No. 39 at 22-23 (listing Jem's prayer for relief for “any and all revenues and profits derived by [Harman] by reason of the acts complained of”). This factor thus weighs in favor of laches.

Given the existing presumption of laches and that four of the six E-Systems factors favor applying laches in this case, laches will bar Jem's counterclaims, unless some other exception applies.

3. Other Laches Issues

a. Progressive Encroachment

Jem proffers various other reasons why laches should not apply.

First, Jem argues that the E-Systems factors should not apply because Harman progressively encroached on Jem's XTREME mark. (Dkt. No. 95 at 23-25.) Laches will not apply where a party's encroachment on another's mark has “been minimal, or its growth slow and steady.” E-Sys., Inc. v. Monitek, Inc., 720 F.2d 604, 607 (9th Cir. 1983). “To establish progressive encroachment, [a defendant] would have ․ to show that [plaintiff] ‘expand[ed] its business into different regions or into different markets.’ ” Tillamook Country Smoker, Inc. v. Tillamook Cnty. Creamery Ass'n, 465 F.3d 1102, 1110 (9th Cir. 2006) (emphasis omitted) (quoting Grupo Gigante, 391 F.3d at 1103). “A junior user's growth of its existing business and the concomitant increase in its use of the mark do not constitute progressive encroachment.” Id.

Jem presents no evidence of Harman expanding into different regions, and the parties do not dispute that Harman has sold speakers for decades (Jem Resp. ¶ 3), belying any argument that Harman's sale of XTREME speakers constituted an expansion into a different market. See Internet Specialties W., Inc. v. Milon-DiGiorgio Enterprises, Inc., 559 F.3d 985, 991 (9th Cir. 2009) (holding that an internet provider's shift from offering dial-up access to DSL was not an expansion into a new market). Harman's sale of XTREME speakers was also anything but minimal or gradual in relation to Jem. It is undisputed that Harman began selling XTREME speakers under its JBL brand in September 2015 (Jem Resp. ¶ 10), almost a year before the earliest date that Jem contends it had knowledge of Harman's alleged infringement (see Dkt. No. 95 at 32). The parties moreover agree that Harman garnered extensive revenues from these sales both prior to 2018 and between 2015 and 2021. (Jem Resp. ¶¶ 151, 161.) Jem offers no evidence that these sales occurred at a slow and steady pace after Jem's knowledge of potential infringement developed; indeed, at least some portion of Harman's sales must have occurred before such a date. On these facts, no reasonable jury could conclude that Harman's sales of XTREME speakers progressively encroached on Jem's market such that laches could not apply.

b. Other Litigation

Jem also argues that its delay in bringing its counterclaims was reasonable because it was handling other litigation involving its XTREME mark and did not have the financial resources to maintain a simultaneous suit against Harman. (Dkt. No. 69 at 18-19; Dkt. No. 95 at 27). Danjaq LLC v. Sony Corp. appears to address these arguments directly. 263 F.3d 942 (9th Cir. 2001). There, defendants argued that their delay in bringing copyright infringement counterclaims was excusable because they had been preoccupied with other related actions and could not afford to bring suit at certain times. Id. at 948-49, 953-55. The Ninth Circuit rejected these alleged justifications for defendants’ delay, noting that defendants’ prior cases were either dismissed or did not involve plaintiffs, and that lack of finances was generally an invalid reason to prevent the application of laches. Id. at 953-55 (citing cases on the invalidity of arguing lack of finances). The same logic applies to Jem's counterclaims here. Aside from the New York action, all of Jem's referenced lawsuits did not involve Harman, and Jem filed many of these actions itself. (See Dkt. No. 69 at 18-19; Harman SGI ¶¶ 11, 15.) Harman was also dismissed from Jem's New York action due to improper joinder. (Dkt. No. 36, Ex. A.) That Jem's chosen litigation strategy led it to file its counterclaims in this action beyond the most analogous state statute of limitations cannot excuse its delay. See Jarrow Formulas, Inc. v. Nutrition Now, Inc., 304 F.3d 829, 839 (9th Cir. 2002) (“[L]itigation policy did not excuse [plaintiff]’s delay in filing suit.”) Jem's other litigation will thus not bar applying laches to its counterclaims in this suit.

c. Overriding Public Interest

Jem next argues that the likelihood of confusion in this case demonstrates an overriding public interest in having the suit proceed, despite the potential application of laches. (Dkt. No. 95 at 36.) Harman is correct to note, however, that the Ninth Circuit has held that “in order to ensure that laches remains a viable defense to Lanham Act claims, the public's interest will trump laches only when the suit concerns allegations that the product is harmful or otherwise a threat to public safety and well being.” Jarrow Formulas, Inc. v. Nutrition Now, Inc., 304 F.3d 829, 841 (9th Cir. 2002). Neither party has alleged or produced evidence suggesting that the products at issue in the case—audio speakers—implicate concerns of harm or threats to public safety. Heeding the Ninth Circuit's warning to “not ․ define the public's interest in such a manner as to ‘effectively swallow the rule of laches, and render it a spineless defense,’ ” id. at 840, the Court finds that no reasonable jury could conclude that the public's interest in this case could preclude laches.

d. Injunctive Relief

Jem additionally argues that laches cannot bar its request for prospective injunctive relief. (Dkt. No. 95 at 36.) This argument is meritless, as it ignores Supreme Court and Ninth Circuit case law holding that laches may bar prospective injunctive relief in trademark cases. See Danjaq LLC, 263 F.3d at 959 (“[Defendant] is correct that laches typically does not bar prospective injunctive relief. However, the rule is not ․ an absolute one. Indeed, we have already disposed of this argument in the trademark context ․”) (emphasis added); Prudential Ins. Co. of Am. v. Gibraltar Fin. Corp. of California, 694 F.2d 1150, 1152 (9th Cir. 1982) (“The Supreme Court explicitly made laches available as an equitable defense barring injunctive relief.”) (citing United Drug Co. v. Rectanus Co., 248 U.S. 90, 102–03 (1918) and French Republic v. Saratoga Vichy Spring Co., 191 U.S. 427, 436–37 (1903)).

e. Preclusion and Continuing Tort Theories

Jem attempts to avoid laches by presenting two final theories. First, citing Lucky Brand Dungarees, Inc. v. Marcel Fashions Grp., Inc., 206 L. Ed. 2d 893 (2020), Jem contends that the laches period should be assessed separately for each generation of JBL XTREME speakers that Harman launched between 2015 and 2020 because each release gave rise to new material operative facts and thus constituted a separate claim. (Dkt. No. 95 at 25-26.) Lucky Brand, however, dealt with claim preclusion—not laches, 206 L. Ed. 2d at 1596, and Jem cites no controlling authority requiring this Court to extend Lucky Brand’s rationale to the laches context. Lucky Brand further relied on the “different marks” and “different legal theories” across the actions it was analyzing to reach its decision, making the case's analysis a poor fit for the dispute between Jem and Harman here. The Court declines to apply this theory to Harman's laches defense.

Second, Jem argues that Harman's separate generations of JBL XTREME speakers present separate claims for laches because trademark infringement is a continuing tort. (Dkt. No. 95 at 26-27.) Jem concedes that “this Circuit ․ ha[s] not addressed this doctrine as to trademark laches” (id.), and this Court declines to do so as well.

As none of Jem's ancillary arguments apply, the presumption in favor of laches and the E-Systems factors compel the Court to bar Jem's counterclaims under the laches doctrine.⁷

V. CONCLUSION

For the foregoing reasons, the Court DENIES Jem's Motion for Summary Judgment, and GRANTS Harman's Motion for Summary Judgment as to Jem's counterclaims.

FOOTNOTES

1.   Jem Accessories, Inc. v. JVCKenwood USA Corp., No. 1:20-cv-04984 (S.D.N.Y. filed June 29, 2020).

2.   Jem's Reply and Opposition also appears to take issue with Harman using an XTREME designation on power banks. (See, e.g., Dkt. No. 95 at 14 (“[Jem] is specifically asserting rights to the accused portable Bluetooth speakers and power banks.”).) As Jem does not raise any allegations regarding power banks in its counterclaims (see Dkt. No. 39), the Court will not address this alleged infringement in ruling on the parties’ Motions for Summary Judgment. See Chavez v. Wynar, 536 F. Supp. 3d 517, 535 (N.D. Cal. 2021) (“Plaintiffs may not raise a new claim or theory of liability for the first time in response to a motion for summary judgment.”); InfoVista S.A. v. VistanetIT, Inc., No. C07-00822 MJJ, 2007 WL 1176628, at *4 (N.D. Cal. Apr. 20, 2007) (declining to adjudicate a question because the complaint contained no related allegations).

3.   Jem argues that New York's six-year limitations period should apply instead because Jem actually began litigating its counterclaims on June 29, 2020, when it filed its New York action against Harman. (Dkt. No. 69 at 16-17.) Jem cites no case holding that where a party has previously filed a similar action in another district articulating claims under a different state's laws, a court should, for the purpose of laches, analogize to the state statute of limitations related to the previous action. Cf. Seven Arts Filmed Ent. Ltd. v. Content Media Corp. PLC, 733 F.3d 1251, 1258 (9th Cir. 2013) (holding that plaintiff may not “rely on the filing of a separate action against a separate defendant to toll a subsequent copyright action against a new defendant”). At any rate, Harman was dismissed from the New York action based on improper joinder (see Dkt. No. 36), and Jem's counterclaims in this action only arise under either California or federal law (see Dkt. No. 39 at 17-21), making the California statute of limitations more applicable to the adjudication of this action.

4.   Jem argues that the laches clock stopped on June 29, 2020, when it filed its New York action. (Dkt. No. 69 at 17; Dkt. No. 95 at 33-34.) Jem first cites Jarrow Formulas, Inc. v. Nutrition Now, Inc., 304 F.3d 829, 835-36 (9th Cir. 2002) and Shouse v. Pierce County, 559 F.2d 1142, 1147 (9th Cir. 1977) for support, but these cases only restate the inquiry at issue, namely whether Jem's action was filed within the analogous limitations period or not. The sole remaining controlling authority Jem cites does not support that the New York action controls and instead emphasizes that a defendant's knowledge of a claim (perhaps, including knowledge of a prior dismissal—as is the case here) is immaterial to assessing laches. See Jackson v. Axton, 25 F.3d 884, 889 (9th Cir. 1994) (“Laches is based on the plaintiff's delay in beginning litigation, not on the information a defendant has regarding a claim.”) (emphasis added); see also Danjaq LLC v. Sony Corp., 263 F.3d 942, 953 (9th Cir. 2001) (“[T]he delay, which the defense (of laches) contemplates, is not delay in bringing claims to the attention of the defendant. It is ․ delay on the part of the plaintiff in instituting litigation on his claims ․”) (alterations in original) (internal quotation marks and citations omitted). Further, the laches clock stops “when ‘the lawsuit in which the defendant seeks to invoke the laches defense’ is initiated.” Eat Right Foods Ltd. v. Whole Foods Mkt., Inc., 880 F.3d 1109, 1116 (9th Cir. 2018) (quoting Evergreen Safety Council v. RSA Network Inc., 697 F.3d 1221, 1226 (9th Cir. 2012)). Harman did not need to raise its laches defense in this case until Jem filed its counterclaims. (See Dkt. Nos. 39, 41.) Given this fact along with the Ninth Circuit's previous reliance on counterclaim filing dates in Tillamook, the Court finds that the date Jem filed its counterclaims in this action controls.

5.   As Harman suggests in its Motion and Reply, there is a colorable argument that Jem had actual or constructive knowledge of its potential claims well before August 1, 2016, either from Sentry's production of Harman's Amazon listing for its OnBeat Xtreme speaker or Harman's use of Xtreme on speakers in conjunction with its reputation as a market leader in consumer audio. See, e.g., Pinkette, 894 F.3d at 1027 (finding that party had constructive knowledge based on its outside counsel receiving a notice of trademark registration); Miller v. Glenn Miller Prods., Inc., 454 F.3d 975, 981 (9th Cir. 2006) (affirming finding of constructive knowledge based on attorney's receipt of financial statements). While there is notable authority supporting these arguments, the Court need not reach them, as it has concluded after drawing all reasonable inferences in favor of Jem that Jem's counterclaims were filed after the applicable laches period.

6.   Jem argues that the laches period should not have accrued during the time when this case was stayed pending resolution of the New York action. (Dkt. No. 95 at 34.) Assuming that Jem is correct, this argument is of no import to the Court's analysis. Jem's counterclaims were filed a little over four years and nine months after it had knowledge of its potential claims against Harman. The stay in this action lasted just over three months, beginning on November 25, 2020 (Dkt. No. 31), and ending on March 5, 2021 (Dkt. No. 37.) Thus, Jem's delay in filing its counterclaims extended beyond the applicable four-year limitations period regardless whether the delay is calculated with or without the stay.

7.   As the Court grants Harman's motion for summary judgment based on its laches defense, the Court reaches neither the parties’ motions as to the merits of Jem's infringement counterclaims nor Harman's defenses of prior and fair use.

ANDRÉ BIROTTE JR., UNITED STATES DISTRICT COURT JUDGE