laches period won’t run before false advertising claimant suffers harm

Star-Brite Distributing, Inc. v. Gold Eagle Co., 2016 WL
4470093, No. 14-61841-CIV (S.D. Fla. Jan. 25, 2016)

The parties compete in the market for marine fuel additives.  Star-Brite argued that Gold Eagle’s false
advertising counterclaim was barred by laches; the court refused to grant
summary judgment because of material issues about the time at which Gold Eagle
could have satisfied all the elements of a false advertising claim, especially
showing harm from the falsity. 
The Lanham Act borrows a presumptive laches bar from
coordinate state law causes of action; Florida’s relevant limitations period is
four years.  Star-Brite argued that, as
early as 2007, Gold Eagle had reports that Star-Brite’s product didn’t perform
as advertised, and Gold Eagle was also aware of a false advertising
counterclaim filed against Star-Brite in 2009. 
Gold Eagle didn’t counterclaim until 2014.  Gold Eagle argued that, before 2010, Gold
Eagle’s product testing was focused on benchmarking against competitors, not on
whether Star-Brite’s claims were true, and that the other litigation created
doubt that the relevant tests could falsify Star-Brite’s claims.  In addition, though Star-Brite emerged as a
direct competitor in 2008, Gold Eagle didn’t start losing market share to
Star-Brite until late 2010.
The court couldn’t conclude as a matter of law that Gold
Eagle’s delay was unreasonable.  Gold
Eagle’s evidence indicated that it filed its claims within four years of
determining that it had provable claims; it was not until October 2010 that
Star-Brite began gaining market share from Gold Eagle and Gold Eagle thus had
evidence of harm, as required to prevail on a Lanham Act claim. Moreover, the
earlier litigation between Star-Brite and a third party “reasonably deterred
the filing of a false advertising claim until 2012, when the majority of marine
engine OEMs agreed that the [tests at issue] were appropriate to use when
testing all ethanol fuel additives, including [Star-Brite’s].” Finally, it was
not until after Star-Brite sued Gold Eagle that Gold Eagle determined in
discovery that Star-Brite’s product did not contain enzymes (relevant to

Likewise, Gold Eagle’s state law claims weren’t barred by
the statute of limitations. Floriday follows the continuing tort rule, and the
evidence showed that Star-Brite continued its allegedly false ads after the
counterclaims were filed.  Thus, Gold
Eagle could recover damages for tortious acts committed within the limitations
period prior to the filing of suit, allowing a four-year look-back period as
well as injunctive relief.

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