Kars 4 Kids Inc. v. America Can! Cars for Kids

Two kids’ charities battled over trademarks. America Can and Kars 4 Kids are charities that sell donated vehicles to fund children’s programs. The charities used similar trademarks. Each sued the other, alleging violations of state and federal law related to using those marks. A jury found that America Can had trademark rights and that Kars 4 Kids willfully infringed those rights. The District Court then held a bench trial on the equitable claims and remedies. The District Court held that the defense of laches did not apply and ordered Kars 4 Kids to disgorge its profits. Both parties appealed. The Third Circuit affirmed in part and reversed in part. First, the Third Circuit reviewed the evidence and held that the jury reasonably found that America Can had established continuous use prior to 2003 and, thus, owned the trademark. Kars 4 Kids argued that America Can’s mark was invalid because it was descriptive and had not established secondary meaning before Kars 4 Kids’ first use. The Third Circuit ruled that Kars 4 Kids waived this argument by failing to present it in its Rule 50(a) motion. Concerning laches and disgorgement, the Third Circuit remanded for the District Court to reexamine the issues. To properly determine whether the doctrine of laches applied, the Third Circuit ordered the District Court to consider the evidence of Kars 4 Kids’ national activity and whether it nevertheless excused America Can’s delay in filing suit. The Third Circuit then found that the District Court erred regarding disgorgement because the Court did not address every factor in determining whether equity supported disgorging the infringer’s profits.

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