IP Law Daily ‘Unclean hands’ ruling reversed in METAL infringement dispute
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Wednesday, February 17, 2021

‘Unclean hands’ ruling reversed in METAL infringement dispute

By John W. Scanlan, J.D.

Most of the instances of alleged misconduct cited by the district court did not necessarily relate directly to the plaintiff’s infringement claim, did not definitely show bad intent, and did not appear to have harmed the defendant.

A district court erred in granting summary judgment to a trademark infringement defendant based on the unclean hands doctrine because the court improperly had resolved disputed issues of material fact in favor of the moving party, the U.S. Court of Appeals for the Ninth Circuit ruled in an unpublished decision affirming in part, reversing in part, and remanding the matter to the lower court. The Ninth Circuit also issued a published decision determining that "abuse of discretion" was the proper standard of review to apply to the district court’s grant of summary judgment based upon the unclean hands doctrine (Metal Jeans, Inc. v. Metal Sport, Inc., February 16, 2021, Pregerson, D.).

Gary Topolewski formerly owned Topolewski America, Inc. (TA). In 1990, he began selling clothing under the METAL mark, and in 1999 obtained the METAL mark in standard characters for use on jeans, shirts, and boots. He told the U.S. Patent and Trademark Office in 2005 that TA had continuously used the METAL mark for these products since 1999, but because this was not true with respect to boots the PTO canceled TA’s registration of the mark in 2008. He applied for the same mark through Metal Jeans, Inc., which received registration of the mark in 2013. In 1997, retired powerlifter Ano Turtiainen created a METAL mark in a stylized font and licensed it to Metal Sport for use with specialized powerlifting gear, accessories, and apparel. He received a registration for this mark in 2016.

In 2015, Metal Jeans brought claims for trademark infringement against Metal Sport. Metal Sport raised the affirmative defense that Metal Jeans had acted with unclean hands; Metal Jeans alleged a counter-defense of unclean hands against Metal Sport. Both parties moved for summary judgment. Denying both parties’ motions with respect to the underlying trademark infringement claims, the district court determined at summary judgment that Metal Jeans had come before the court with unclean hands and rejected Metal Jeans’ counter-defense. According to the district court, there were six instances of alleged misconduct by Metal Jeans supporting its ruling: Metal Jeans had provided multiple accounts about how it acquired the mark, it represented on its website that it owned the mark when TA actually owned the mark, Gary Topolewski told the PTO that METAL was a "premium denim lifestyle brand" but had testified before the court that this was untrue, Metal Jeans sourced some products from China despite its slogan that its products were made in American, Topolewski’s testimony about his assignments of the trademarks and goodwill from TA to Metal Jeans was inconsistent, and he made the false statement in 2005 to the PTO that he had continuously used the METAL mark. Metal Jeans appealed only the portion of the judgment with respect to the finding of unclean hands.

Standard of review. Abuse of discretion was the proper standard of review for reviewing a grant of summary judgment for unclean hands in a trademark infringement case, the Ninth Circuit said in the published decision. The court observed that it had not previously addressed this question because the proper standard of review was not discussed in two previous trademark infringement cases reviewed by the Ninth Circuit that involved a judgment of unclean hands by a district court. Noting that the doctrine of unclean hands arises in equity and that a grant of equitable relief by a district court under other doctrines generally is reviewed for abuse of discretion, the appellate court found that the general rule was appropriate under these circumstances. However, the court cautioned, whether the district court erroneously resolved disputed facts in reaching its decision is reviewed under the de novo standard.

Unclean hands. In a related but unpublished decision issued the same day, the Ninth Circuit applied this rule to the district court’s decision and determined that the lower court had erred in reaching its conclusion that Metal Jeans had acted with unclean hands. With respect to the six instances of alleged misconduct identified by the district court, the lower court had erred in resolving five issues of disputed fact in favor of Metal Sport, the moving party. In addition, five of these six instances did not necessarily relate directly to the trademark infringement claim, did not appear to have harmed Metal Sport, and did not definitely show bad intent by Metal Jeans.

The Ninth Circuit remanded the decision for the district court to develop the defendant’s unclean hands defense, the plaintiff’s unclean hands counter-defense, and the merits of the infringement claims.

Concurrence. In a concurring opinion to the unpublished decision joined by Judge Hillman, Judge Wardlaw found that while many of the facts of the case related to the unclean hands doctrine were disputed, the facts that were not in dispute were insufficient to establish that Metal Jeans acted with unclean hands.

This case is No. 19-55923.

Attorneys: Stanley Martin Gibson (Jeffer Mangels Butler & Mitchell LLP) for Metal Jeans Inc. Yuval H. Marcus (Leason Ellis LLP) for Metal Sport, Inc.

Companies: Metal Jeans Inc.; Metal Sport, Inc.

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