Plaintiff Wilcox Associates, Inc. (“Wilcox”) sold meteorology machines under the trademarks BROWN & SHARPE, HEXAGON, HEXAGON METEOROLOGY, ROMER, and PC-DMIS (collectively, the “Wilcox Marks”). Defendant Xspect Solutions (“Xspect”) sold meteorology machines in competition with Wilcox. Xspect registered numerous domain names incorporating the Wilcox Marks. Xspect also advertised on its website that it was the approved source for some of Wilcox’s machines, even though Xspect’s goods and services were not authorized by or affiliated with Wilcox in any way. In May 2005, Wilcox and several related companies filed a UDRP complaint alleging that Xspect had registered and used in bad faith 42 domain names that were confusingly similar to the Wilcox Marks. The UDRP panel found that Xspect had no rights or legitimate interests in any of the domain names and had acted with bad faith in registering and using the domain names, and ordered transfer of the 42 domain names to Wilcox.
In November 2008, Wilcox sued Xspect for trademark infringement, cybersquatting, and false advertising, among other violations. Wilcox indentified 52 domain names containing the Wilcox Marks, including the 42 names involved in the UDRP proceeding. The district court denied Xspect’s motion to dismiss on the ground that Wilcox’s complaint was barred by laches. Xspect argued that because it had registered the disputed domain names by January 2005, Wilcox had actual or constructive notice of their existence as of their registration date and, at the very latest, by May 2005 when Wilcox filed its UDRP complaint. The court initially found that the applicable statute of limitations for determining laches under Michigan law was the three-year statutory period for injury to personal property. Because Wilcox did not file this lawsuit until November 2008, Xspect argued that Wilcox exceeded this three-year period and its complaint should be barred by laches. Wilcox claimed that it had no knowledge of the ten additional domain names at issue
in this lawsuit. The court agreed with Xspect that Wilcox should have been aware of the ten other domain names when it filed the UDRP complaint, and that Wilcox presumably should have filed this lawsuit within three years of the UDRP filing, i.e., by May 2008. The court noted that the laches presumption could be rebutted by showing (1) a lack of prejudice to Xspect, (2) an acceptable excuse for Wilcox’s delay, or (3) that Xspect engaged in “particularly egregious conduct which would change the equities significantly in [Wilcox’s] favor.” Here, Wilcox rebutted the presumption of laches in two ways. First, Xspect did not specifically allege any prejudice from Wilcox’s delay. Second, the court accepted Wilcox’s allegations regarding Xspect’s egregious conduct for purposes of the motion to dismiss, including Xspect’s intentional and willful effort to profit from the goodwill of Wilcox’s marks by registering and using nearly identical or confusingly similar domain names, the UDRP action in which Xspect was found to have no legitimate rights or interests in the 42 domain names it registered and used in bad faith, and Xspect’s continuous use of the ten additional domain names after the adverse UDRP decision involving similar domain names.