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PRO-FOOTBALL, INC. v. HARJO

February 27, 2002

PRO-FOOTBALL, INC., PLAINTIFF,
V.
SUZAN SHOWN HARJO, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Facciola, United States Magistrate Judge.

  MEMORANDUM OPINION

This matter has been referred for discovery by Judge Kollar-Kotelly. Before me are defendants' motion to compel and plaintiffs two motions for protective orders.

In 1933, George Preston Marshall purchased a National Football League ("NFL") franchise located in Boston and moved it to Washington, D.C., whereupon he renamed the team the "Redskins." The franchise registered the first of a series of "Redskins" marks with the United States Trademark Office in 1967. In 1992, a group of seven Native Americans ("Native Americans") from an array of different tribes and nations petitioned the United States Patent and Trademark Office's Trademark Trial and Appeal Board ("TTAB") for cancellation of Pro-Football's federal trademark registrations involving the term "Redskin(s)." Seven years later, in April 1999, the TTAB ruled in favor of the Native Americans under Section 2(a) of the Lanham Act, 15 U.S.C.A. § 1052(a) (1997), finding that the term "Redskins" "may be disparaging of Native Americans to a substantial composite of this group of people" and "may bring Native Americans into contempt or disrepute." Harjo v. Pro-Football, Inc., 1999 WL 375907, 50 U.S.P.Q.2d 1705, 1748 (1999) ("Harjo II "). Pro-Football subsequently filed the present action for de novo review under § 1071(b) of the Lanham Act, seeking to overturn the TTAB's ruling.

At the same time the TTAB handed down its decision, the Estate of Jack Kent Cooke (a long-time owner) Was in the process of selling the franchise. One purchase bid in January 1999 for a reported $800 million was rejected by the NFL, which held a veto over any proposed sale. In May 1999, one month after the TTAB ruling, a bid by the Daniel M. Snyder Ownership Group, also estimated at $800 million, was approved by the NFL, and the purchase closed in July 1999.

DISCUSSION

The Native Americans' Motion to Compel

In order to counter Pro-Football's laches defense, the Native Americans seek information relating to the worth of the Redskins marks. The laches defense originally was rejected on equitability grounds by the TTAB in a pretrial ruling. Harjo v. Pro-Football, Inc., 1994 WL 262249, 30 U.S.P.Q.2d 1828 (1994) ("Harjo I "). When Pro-Football once again pleaded laches in its 1999 complaint, the Native Americans sought to strike the defense in a motion for judgment on the pleadings. Judge Kollar-Kotelly ruled that the defense survived the motion for judgment on the pleadings. Reading Pro-Football's allegations as true, the judge concluded that plaintiff had satisfied the three common law requirements of such a plea: "(1) the Native Americans delayed substantially before commencing their challenge to the `Redskins' trademarks; (2) the Native Americans were aware of the trademarks during the period of delay; and (3) Pro-Football's ongoing development of goodwill during this period of delay engendered a reliance interest in the preservation of the trademarks." Pro-Football, Inc. v. Harjo, 2000 WL 1923326, *5-6 (D.D.C. Dec. 11, 2000) ("Mem.Op."). However, Judge Kollar-Kotelly deferred ultimate resolution of the laches issue to a later time, once the record was expanded beyond those facts alleged in the pleadings. Id. at *6-7.

The Scope of Discovery

Pro-Football takes a strange approach to discovery. First, it dismisses out of hand any obligation to produce evidence that the Redskins marks have a distinct or specific monetary value. In the same breath, however, it advises the Native Americans that:

To the extent the Redskins intend to introduce general evidence to buttress its laches claim such as expert testimony on the value of the brand or witness testimony confirming the continuous use and promotion of the Redskins Marks throughout the period of delay-Defendants can seek appropriate depositions, without the wholesale financial discovery sought here.

Plaintiff's Memorandum of Points and Authorities in Opposition to Defendant's Motion to Compel Discovery ("P.Mem.") at 7. See id. at 10 ("The Redskins will present general evidence of the development and promotion of the Redskins Marks, will produce any such documents to Defendants, and will provide Defendants with ample opportunity to depose any such witnesses.").

While Pro-Football may try to dictate the pace of a football game, it cannot control the scope of discovery by limiting its opponents to rebutting only what Pro-Football chooses to prove concerning what it calls the "value of the brand." The very purpose of discovery is to force a litigant to disclose relevant material in its files so that its opponent can press a case, using whatever legal or factual theory the opponent sees fit to use. It borders on the fatuous to suggest, for example, that documents bearing on how the holder of a mark values that mark are not discoverable in litigation devoted to ascertaining how the holder will be prejudiced by the cancellation of the mark. Pro-Football would be delighted to present evidence that they have persistently carried the value of the mark on their books as a million dollars. This information is no less discoverable if they have instead carried that value as $1 but have no intention of presenting that evidence.

Discovery and Laches

The Native Americans assert that, because a laches argument requires a showing of economic prejudice, they are entitled to broad discovery of Pro-Football's financial records. Pro-Football responds that specific evidence of such prejudice is not required to prevail on the laches claim, and therefore its financial records are irrelevant and confidential.*fn1

A laches defense requires the party asserting the claim to show that its interests have been prejudiced by plaintiffs delay in asserting its rights. Bridgestone/Firestone Research, Inc. v. Automobile Club De L'Ouest De La France, 245 F.3d 1359, 1361 (Fed.Cir. 2001); N.A.A.C.P. v. N.A.A.C.P. Legal Defense and Educational Fund, Inc., 753 F.2d 131, 137 (D.C.Cir. 1985); Gull Airborne Instruments, Inc. v. Weinberger, 694 F.2d 838, 843 (D.C.Cir. 1982). Prejudice may be against a party's economic interests or trial interests. Bridgestone, 245 F.3d at 1362.*fn2 The crux of the present dispute is whether the showing of economic prejudice must consist of specific, quantitative evidence. Plaintiff submits that general evidence showing the franchise's continuous use of the mark, along with portions of its complaint avowing the "millions of dollars" in and "tremendous value" of the marks, satisfies the economic prejudice requirement.*fn3 Defendants contend that plaintiffs use of the mark is but the departure point for a detailed inquiry into the precise value of the marks.

In Bridgestone, the Federal Circuit followed its earlier opinion in A. C. Aukerman Co. v. R.L. Chaides Const. Co., 960 F.2d 1020 (Fed.Cir. 1992). Aukerman distinguished laches from equitable estoppel on the grounds, inter alia, of the necessity of establishing reliance. Equitable estoppel cannot be invoked unless there has been a shift of position in reliance upon the conduct of the party to be estopped. Id. at 1041. On the other hand, laches can exist even though the party asserting it did not change its position in reliance on the other party's delay. It suffices to show prejudice in the form of loss of money that would not have been invested had the other party not delayed in asserting its rights. This is economic prejudice, which the party invoking the laches defense must show. Id. at 1032.

In Bridgestone, what the Federal Circuit called "the Automobile Club" sought to cancel the use of the Le Mans mark for tires that Bridgestone sold because the mark suggested an association between the tires and the famous road race the Automobile Club sponsored. The TTAB granted the application and, in a footnote of its opinion, stated:

n. 5 The only affirmative defenses maintained by Bridgestone in its brief were "laches" and "estoppel by laches." The record does not reflect evidence on these defenses; and in Bridgestone's brief, it stated only very general information about its alleged reliance on the Automobile Club's delay in seeking cancellation of Bridgestone's registration. For example, Bridgestone stated that ". . . in reliance on the lack of any objection for so many decades, Firestone has designed, marketed, and sold many tires under the name LEMANS"; and "Firestone would obviously not have invested so much time and money in its LEMANS tires had [the Automobile Club's] objections been timely raised. . . ."
Bridgestone provided absolutely no specific information regarding its alleged reliance on the Automobile Club's alleged silence. While it is clear that there has been a delay in seeking cancellation of Bridgestone's registration, Bridgestone has not proven the elements of the affirmative defenses of laches and estoppel by laches.

Bridgestone, 245 F.3d at 1361.

Noting that it was "undisputed that Bridgestone invested in and promoted the LEMANS brand tires over this lengthy period, during which the Automobile Club was silent," the Federal Circuit chastised the TTAB for confusing the reliance element of laches with the reliance element of equitable estoppel:

The Board's requirement of "specific" evidence of "reliance" on the Automobile Club's silence could relate to proof of estoppel, but it does not apply to laches. When there has been an unreasonable period of delay by a plaintiff, economic prejudice to the defendant may ensue whether or not the plaintiff overtly lulled the defendant into believing that the plaintiff would not act, or whether or not the defendant believed that the plaintiff would have grounds for action. See A.C. Aukerman Co., 960 F.2d at 1042, 22 USPQ2d at 1336 ("reliance is not a requirement of laches but is essential to equitable estoppel"). Economic prejudice arises from investment in and development of the trademark, and the continued commercial use and economic promotion of a mark over a prolonged period adds weight to the evidence of prejudice. See Hot Wax, Inc. v. Turtle Wax, Inc., 191 F.3d 813, 821, 52 USPQ2d 1065, 1072 (7th Cir. 1999) (the longer the use and the lengthier the period of delay, the lighter the burden of showing economic prejudice in support of the defense of laches). Bridgestone's evidence of undue delay and prejudice was uncontroverted by the Automobile Club. The Board's ruling rested on an erroneous interpretation of the law of laches, leading to an unreasonable exercise of judgment. Thus the Board's rejection of the defense of laches was an abuse of discretion. That ruling is reversed.

Id. at 1362 (emphasis added).

As is obvious when one views the entire quotation, the Federal Circuit was criticizing the TTAB for using the reliance factor as it is defined for the purposes of estoppel — a change of position in reliance on the other party's conduct — and concluding that that showing was also necessary to the defense of laches. It is this narrow sense of the term "reliance" that Bridgestone and Aukerman employed in holding that reliance was not a requirement of laches. It hardly follows that a specific showing of how the loss of the mark will harm its holder is irrelevant when the holder claims laches.

Indeed, rather than disavowing the need for specific evidence of prejudice, Aukerman affirms its importance in overcoming a presumption of laches. Id. at 1034-1039. Other cases also affirm the operation of this presumption, but do not treat it as irrebuttable. See, e.g., N.A.A.C.P.; Hot Wax; University of Pittsburgh v. Champion Prods., Inc., 686 F.2d 1040 (3rd Cir. 1982). In addition, cases that discuss economic prejudice sometimes detail the magnitude of plaintiffs interest with specific dollar figures. See, e.g., Chubb Integrated Systems, Inc. v. National Bank of Washington, 658 F. Supp. 1043, 1049 (D.D.C. 1987).

Furthermore, if a showing of economic harm is appropriate to advance a laches defense, then it must follow that a showing of a lack of economic harm may defeat that defense. It then follows that the Native Americans in this case have to the right to see what value is given the mark in Pro-Football's books and records to defeat the claim of economic prejudice. Pro-Football cannot simply "presume" away the Native Americans' right to assert that there will be no real economic prejudice if the use of the mark is barred. That there is a self-evident association in the public mind between the popular football team and the mark does not in itself preclude the Native Americans from ...


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