Could a couch potato mistake his cushy and comfortable shoes for the high-tech shoe wear of the athletes he watches on television?
That's at issue in Gravity Defyer Corp. v. Under Armour Inc. et al. Gravity Defyer sued several sports and apparel chains — including Nordstrom's and Foot Locker — claiming that their sales of athletic shoes infringe Gravity Defyer’s G-Defy trademark.
While attempting to defend their actions, the retailers have raised an interesting and little used defense in trademark infringement litigation: the unclean hands defense.
Does the shoe fit? Could this defense help these retailers avoid or at least minimize their potential liability? The unclean hands defense is typically only invoked by a court when a plaintiff otherwise entitled to relief has acted so improperly with respect to the controversy at hand that the public interest in punishing the plaintiff outweighs the need to prevent the defendant's illegal conduct. In other words, courts don't want to help a litigant in a specific case when the party has done something insufferably wrong in conducting that specific case.
In the rare cases where the unclean hands defense is applied, several rationales are given. Chief them are:
- That courts exercising equity powers should not force a defendant to comply with the dictates of conscience as to matters outside the strict rules of law if the plaintiff is not going to comply with them
- That a court should be protected in not being compelled to grant relief to a plaintiff manifestly no better than the defendant the plaintiff is suing
- That it is the public which is protected by invocation of the defense
The concern with applying the unclean hands defense, however, is that an overzealous judge interested in protecting the court’s conscience may rely on the unclean hands defense to punish the plaintiff at the cost of public confusion. As such, it seems to make sense that there be limits to the court’s ability to rely on the unclean hands defense in limiting a plaintiff’s cause of action.
For example, the 3rd Circuit has held that misconduct sufficient to rise to the level of unclean hands must be “egregious,” because a central concern in trademark infringement cases is protection of the public from confusion and therefore courts should require clear, convincing evidence of egregious misconduct by the plaintiff before invoking the doctrine and thus allowing potentially confusing activities by the defendants to continue.
The 9th Circuit agreed. It has held that evidence of bad intentions by the plaintiff alone should not form the basis for an unclean hands defense because the doctrine is unclean hands, not impure thoughts. The court was dubious that bad intentions never put into effect could support a finding of unclean hands.
All this being said, intentional misrepresentations as to the origin, nature or ingredients of a product which are material and which deceive the public have been found by numerous courts as grounds for denying relief for trademark infringement or unfair competition in circumstances where such misrepresentations are directly connected to the subject matter of the suit. But this leads to another problem in applying this defense: The decisions are inconsistent when it comes to deciding whether the false advertising of plaintiff “directly relates to the subject matter” of the unfair competition suit against a given defendant. False advertising may injure the public, but may not cause any harm to the defendant being sued. In many cases, it will be impossible for a defendant to show that a plaintiff's false advertising has caused any harm to a defendant.
Further, some courts have stated that the unclean hands defense is not limited to a showing of any harm to the defendant. That is, injury to the public is sufficient. For example, if the plaintiff's trademark is not deceptive per se, but has allegedly been used as a part of false advertising, the issue is whether this act of an unclean hand is directly related to the subject matter of the plaintiff's suit. In such cases, almost all courts have drawn the limits of the scope of the “subject matter” of the case narrowly, so as to rule out unclean hands.
For example, in Fuddruckers, Inc. v. Doc’s B.R. Others, Inc., an alleged infringer of a plaintiff's protectable restaurant trade dress argued that the plaintiff was guilty of unclean hands in falsely advertising its hamburger meat as “ground steak.” The court properly held that even assuming that the plaintiff’s advertisement was false, the misstatement was not material to the subject matter of the litigation and did not constitute an unclean hands defense.
Because a preliminary injunction is an extraordinary equitable remedy, a court may be more willing to invoke the unclean hands defense. For example, in the 1996 case Estate of Lennon by Lennon v. Screen Creations, Ltd., a court denied a preliminary injunction for trademark and copyright infringement by the use of John Lennon's identity and artwork outside the scope of a license, because during license negotiations the licensor's agent also acted as an agent for the defendant-licensee.
While a plaintiff's unclean hands may not form a complete bar to relief, it may limit in some way the scope of such relief. A court could hold that the fact that a plaintiff made some illegal sales of its product did not excuse the defendant's trademark infringement. That is, plaintiff could be entitled to an injunction, damages and defendant's profits even if the plaintiff knowingly sold its goods as part of a plan to cater to illegal users. A court could hold that the illegality was relevant in that plaintiff would be entitled only to damages and profits related to diverted sales that were legally made.
So there remains ambiguity about how the unclean hands defense can be invoked, and where it should be applied. Our courts could address the ambiguity by holding that where the law invoked by a plaintiff is really for the protection of the public, unclean hands is not a defense. That is, if the evidence shows that plaintiff is engaging in inequitable practices, but defendant is also guilty of the unfair competition charged, an injunction should be granted notwithstanding the unclean hands defense. In essence, the court could find that it is better to remedy one wrong than to leave two wrongs at large. If defendant thinks that plaintiff is guilty of inequitable conduct, he could always raise it in a counterclaim or in a separate suit against plaintiff.
In the case of Gravity Defyer, the retailers submitted an exhibit that purports to show that Gravity Defyer falsely claimed in its print advertising that the “smart spring” technology found in its G-Defy shoes provides immediate relief to joint pain, eliminates ankle and foot pain, and provides users who regularly wear its G-Defy shoe improved athletic performance.
In its recently filed motion in limine to exclude the retailers’ unclean hands defense, Gravity Defyer argued that allowing the retailers to argue that Gravity Defyer’s advertising was misleading would be highly prejudicial and was unrelated to Gravity Defyer’s trademark infringement claims. In addition, Gravity Defyer argued, the retailers had failed to show that the advertisements in question were deceptive and that even if the retailers could show that they were deceptive, the retailers themselves were not harmed by the claims made in the advertising. Finally, Gravity Defyer argued that the type of advertising used in G-Defy marketing was used by Under Armour and the other companies in marketing for their own athletic shoes.
It will be interesting to see how the court handles this defense. If unclean hands is used to deny relief to Gravity Defyer, then the public is still potentially exposed to two wrongs. If at least the retailers’ actions are enjoined (assuming they are improper), only one wrong (Gravity Defyer’s allegedly false advertising) remains to be dealt with. If Gravity Defyer’s actions are wrong, they can be remedied in several ways: a counterclaim filed by the retailers; a decree against the retailers conditioned on Gravity Defyer purging itself of unclean hands; or a decree running against both parties. The Supreme Court has recognized that relief may be accorded even an “unclean” plaintiff if it can come back another day and show that it has “purged” itself of its misconduct. We will see where the court lands on this issue —and how hard.