ContractsProf Blog

Editor: Jeremy Telman
Oklahoma City University
School of Law

Tuesday, June 13, 2017

5-hour ENERGY + 3-year delay could = laches

5-hour ENERGY is one of those products that I feel like an entire class could be built around. I already teach a couple of 5-hour ENERGY cases in trademark, and here's a contracts case (that seems to also have patent and trade secret implications). The case is Innovation Ventures, LLC v. Custom Nutrition Laboratories, LLC, Case No. 12-13850 (behind paywall), out of the Eastern District of Michigan. 

The heart of the allegations currently at issue in this most recent litigation revolve around a previous settlement agreement between the parties, under which the defendant agreed not to use certain 5-hour ENERGY ingredients in any formulas for other energy shots. The defendant didn't deny that it did in fact use those prohibited ingredients. However, it raised a laches defense to try to shield it from liability, alleging that the plaintiff delayed filing the lawsuit for three years, during which the defendant was openly using the ingredients at issue, with the plaintiff's knowledge. During the time period that the plaintiff delayed suit, the defendant alleged that it developed and sold other products that it would have developed differently had the plaintiff indicated that it had an issue with the defendant's activities. The plaintiff's response, however, was that, because it brought suit within the applicable statute of limitations, laches can't apply. 

The plaintiff's argument was unavailing. The court noted that Michigan had again and again reiterated that statute of limitations not having run alone cannot be enough to defeat a valid laches defense. The defendant alleged that the plaintiff knew that the defendant was selling products with the prohibited ingredients and sat back and waited for more products to be developed and further damages to accrue before bringing suit. This behavior, if true, could support a finding of laches. 

(There were lots of other issues, allegations, and defenses in this litigation. I've focused on this one small piece.)

https://lawprofessors.typepad.com/contractsprof_blog/2017/06/5-hour-energy-3-year-delay-could-laches.html

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Comments


A recent patent case found the opposite: “Laches is a gap-filling doctrine, and where there is a statute of limitations, there is no gap to fill.”
http://www.scotusblog.com/2017/03/opinion-analysis-sca-hygiene/

This seems to be the case for federal cases. Perhaps 5-hour Energy was governed by state law?

Posted by: Justen Hansen | Jun 14, 2017 8:20:26 PM

Yes, Michigan state law governed this particular question.

Posted by: Stacey | Jun 19, 2017 11:10:32 AM