United States District Court, D. New Mexico
MEMORANDUM OPINION AND ORDER
move the Court to exercise its equitable powers to dismiss
Plaintiff's complaint, saying that Plaintiff has
“unclean hands” because it brews beer illegally.
See Defs.' Mot., ECF No. 113. In its opposition
brief, Plaintiff moved to recover attorney's fees spent
responding to the motion, arguing that the filing is
baseless. See Pl.'s Resp. Br., ECF No. 117. The
Court, after carefully considering the parties' motions,
briefs, and relevant law, concludes that both motions should
Factual and Procedural Background
Lodestar Anstalt owns trademarks of the phrase Route 66 and
the iconic highway shield design to make and sell beer. Route
66 Junkyard Brewery LLC and its owner Henry Lackey
(“Defendants”) also use the phrase Route 66 and
design logo to produce beer at a microbrewery in Grants, New
Mexico. Plaintiff brought an action under the Lanham Act, 15
U.S.C. § 1114 against Defendants for infringement of
their federally registered trademarks and against the Brewery
for unfair competition under 15 U.S.C. § 1125.
their answer, Defendants pleaded seven affirmative defenses,
including a defense of unclean hands. See Defs.'
Answer, ECF No. 29 at 4-5. Plaintiff moved for summary
judgment on five of Defendants' affirmative defenses. On
January 16, 2019, the Court granted summary judgment in
Plaintiff's favor on each of the five affirmative
defenses for which Plaintiff sought summary judgment,
including Defendants' defense of unclean hands.
See Mem. Op. and Order, ECF No. 88, at 34-35
24, 2019, Defendants moved to dismiss Plaintiff's
complaint, asserting the equitable doctrine of unclean hands.
Defendants allege that Plaintiff's beer brewing operation
is illegal because Plaintiff lacks the appropriate beer
brewing permit from Wisconsin authorities. In support of
their argument, Defendants attached an e-mail between
Defendants' lawyer and Rick Uhlig, a Special Agent with
Wisconsin's Department of Revenue. See
Def.'s Ex. 2, ECF No. 113-1. In the e-mail, Mr. Uhlig
wrote that his search of Wisconsin's Fermented Malt
Beverage Permit Listing showed that neither Plaintiff nor its
representative appeared as permit-holders for the years 2016
and 2017. See Id. Defendants therefore believe that
Plaintiff brews beer without a permit and then sells the
illegal beer within New Mexico. Because unlicensed beer
brewing can result in a fine or imprisonment under Wisconsin
regulations, Defendants argue that Plaintiff's alleged
misconduct should prevent Plaintiff from bringing this
analyzing Defendants' unclean hands argument, the Court
will turn to Plaintiff's request for attorney's fees.
Defendants' Motion to Dismiss
who comes into equity must come with clean hands.”
Precision Instrument Mfg. Co. v. Auto. Maint. Mach.
Co., 324 U.S. 806, 814 (1945). “This maxim is far
more than a mere banality. It is a self-imposed ordinance
that closes the doors of a court of equity to one tainted
with inequitableness or bad faith relative to the matter in
which he seeks relief, however improper may have been the
behavior of the defendant.” Id. In the context
of trademark law, the Court of Appeals for the Tenth Circuit
has stated that “a plaintiff's unclean hands will
bar recovery for trademark infringement only if the
inequitable conduct is related to the plaintiff's cause
of action.” 1-800 Contacts, Inc. v.
Lens.com, Inc., 722 F.3d 1229, 1255 (10th Cir. 2013)
(internal quotations and citations omitted). The Tenth
Circuit recognizes two types of inequitable conduct covered
by the unclean hands doctrine: (1) “inequitable conduct
toward the public, such as deception in or misuse of the
trademark itself, resulting in harm to the public such that
it would be wrong for a court of equity to reward the
plaintiff's conduct by granting relief, ” and (2)
“when the plaintiff has acted inequitably toward the
defendant in relation to the trademark.”
Worthington v. Anderson, 386 F.3d 1314, 1321 (10th
Cir.2004). In trademark cases “[t]he burden of
proof [to establish a plaintiff's unclean hands] falls on
the party asserting the defense.” Dress for Success
Worldwide v. Dress 4 Success, 589 F.Supp.2d 351, 364
(S.D.N.Y. 2008) (citing Gidatex, S.r.L. v. Campaniello
Imports, Ltd., 82 F.Supp.2d 126, 130 (S.D.N.Y.
1999) (“The defendant who invokes the doctrine of
unclean hands has the burden of proof.”)).
Defendants' theory that Plaintiff has unclean hands
because it brews and sells “illegal” beer fails
for four reasons. First, the Court has already awarded
summary judgment to Plaintiff on this exact affirmative
defense. In its summary judgment motion, Plaintiff pointed
out a lack of evidence to support Defendants' unclean
hands defense. In response, Defendants failed completely to
identify any specific facts to create a genuine issue of
material fact as required by Fed.R.Civ.P. 56(c)(1)(A)-(B).
Accordingly, the Court entered summary judgment in
Plaintiff's favor, and cited as support the applicable
standard that “if the nonmovant bears the burden of
persuasion on a claim at trial, summary judgment may be
warranted if the movant points out a lack of evidence to
support an essential element of that claim and the nonmovant
cannot identify specific facts that would create a genuine
issue.” Order at 16 (citing Water Pik, Inc. v.
Med-Systems, Inc., 726 F.3d 1136, 1143-44 (10th Cir.
2013)). Defendants now belatedly raise the unclean hands
defense despite an adverse grant of summary judgment.
“A district court may revisit [interlocutory] decisions
but with the caveat that where litigants have once battled
for the court's decision, they should neither be
required, nor without good reason permitted, to battle for it
again. Thus generally, there is a strong presumption against
amendment of prior orders … unless there is an
intervening change of controlling law, the availability of
new evidence, or the need to correct a clear error or prevent
a manifest injustice.” Bergerson v. New York State
Office of Mental Health, Cent. New York Psychiatric
Ctr., 652 F.3d 277, 288-89 (2d Cir. 2011) (citation and
quotation marks omitted). Defendants have not argued that any
of these three conditions exist and therefore the Court does
amend its prior summary judgment order.
even if Defendants could raise this equitable defense at this
point in the litigation, the defense fails on the merits
because Defendants have not shown that Plaintiff's hands
are “unclean.” Defendants identify no
“inequitable conduct toward the public, ” on
Plaintiff's part, “such as deception in or misuse
of the trademark itself.” Worthington, 386
F.3d at 1321. In 1-800 Contacts, Inc., 722 F.3d at
1255, the Tenth Circuit illustrated what counts as a
“deceptive” or “misuse” of the mark
by citing Clinton E. Worden & Co. v. Cal. Fig Syrup
Co., 187 U.S. 516 (1903). There, the United States
Supreme Court refused to grant relief to the owner of
“Syrup of Figs” trademark when the trademark
itself misrepresented the product as containing fig juice.
Here, nothing whatsoever suggests that Plaintiff's
trademarks are deceptive or that Plaintiff's marks
misrepresents its goods to the public. Defendants have failed
to demonstrate the first type of inequitable conduct covered
by the unclean hands defense.
likewise failed to demonstrate the second type of inequitable
conduct that the defense covers - namely, that Plaintiff
“acted inequitably toward the defendant in relation to
the trademark.” Worthington, 386 F.3d at 1321.
In Worthington, for example, the Tenth Circuit
applied the unclean hands doctrine because the plaintiffs
interfered with the defendant's legal obligation to pay
off a debt under an arbitral award granting ownership of the
trademark to the plaintiffs. Id. at 1321-22. In
reaching this conclusion, the Tenth Circuit cited with
approval Federal Folding Wall Corp. v. National Folding
Wall Corp., 340 F.Supp. 141 (S.D.N.Y.1971), where the
district court applied the unclean hands doctrine because
“the plaintiff's own machinations had prevented the
defendant from meeting the conditions of its licensing
agreement and hence from preserving its own right to use the
trademark.” Worthington, 386 F.3d at 1321.
Here, Defendants do not allege that Plaintiff engaged in any
misleading conduct with respect to its ownership or use of
its marks. Defendants' unclean hands defense is that
Plaintiff brews beer “illegally” because it lacks
proper permits under Wisconsin law. But these allegations are
unrelated to Plaintiff's use of its marks. See 1-800
Contacts, Inc., 722 F.3d at 1255 (stressing that for the
unclean hands defense to apply the plaintiff's misconduct
towards the defendant must be “in relation to the
trademark.”) (emphases in original).
Defendants' theory is further undermined by the fact that
Defendants have long known that Plaintiff is a trademark
holder but that it contracts with a third-party to brew its
beer. During discovery, Plaintiff's witness testified at
a deposition that third-party Rhinelander Brewing Company in
Monroe, Wisconsin brews, bottles, and packages
Plaintiff's Route 66 branded beer. As Plaintiff correctly
points out, Plaintiff's name does not appear on
Wisconsin's permit holder list because it does not brew
beer, Rhinelander does.
even assuming arguendo that Plaintiff failed to
obtain a brewer's permit, that alone is insufficient to
justify the unclean hands defense. At least one state court
decision denied the defendant's unclean hands defense
based on the plaintiff taxi cab company's failure to
obtain a license to do business in certain Alabama cities.
See Powell v. Mobile Cab & Baggage Co., 263 Ala.
476 (1955). The failure to secure licenses was “a
matter between [the company] and [the cities]” the
court said, and “so unconnected with” the unfair
competition lawsuit to justify the unclean hands defense.
Id. at 479; 480-81. A prominent trademark law
treatise has cited Powell as an example that a
plaintiff's violation of a licensing ...