Unpublished Disposition, 883 F.2d 1023 (9th Cir. 1989)

MEMORANDUM^* 

In this appeal, Critzas Industries, Inc. seeks reversal on a number of grounds of the final judgment in favor of Eclectic Products, Inc. in Eclectic's action for declaratory relief in a trademark dispute. Critzas Industries, Inc. is a Missouri corporation which has produced and sold a hand cleaner and general cleaning agent under the trademark "Goop" since 1948. In 1952, Critzas obtained federal registration for its "Goop" trademark, which has since become incontestable. Eclectic is a California corporation which has produced and sold an adhesive repair product under several trademarks, including "Automotive Goop," "Plumber's Goop," "Household Goop," "Sportsman's Goop," "Shop Goop," and "Industrial Goop." Eclectic's first sales, under the mark "Shoe Goop," occurred in 1975. After a brief period when the two companies marketed some of their products together, followed by Critzas' unsuccessful bid to buy Eclectic out, this litigation eventually ensued.

Critzas' first suit against Eclectic, Critzas I, started in a Missouri district court and was later transferred to a California district court. Critzas voluntarily dismissed it and brought Critzas II in a Missouri state court. Critzas II was removed by Eclectic to district court, and was eventually transferred to the same California district court. Shortly after Critzas II was filed, Eclectic filed the present declaratory judgment action. In this action, the district court granted partial summary judgment in favor of Eclectic with regard to "Sportsman's Goop" and "Household Goop," based upon the equitable defense of acquiescence. The remaining claims went to trial before a jury. The jury found no trademark infringement by any of Eclectic's marks, and further that Critzas was barred from challenging most of Eclectic's marks by estoppel, acquiescence, and laches. The district court rendered an independent judgment on equitable issues confirming the jury's verdict in all respects.

Critzas first challenges the district court's jurisdiction of Eclectic's claims for declaratory relief on the ground that such claims should have been raised as compulsory counterclaims in Critzas II, which Critzas had filed in Missouri only two weeks before the present action was filed. While courts generally require claims to be litigated in the first filed action, this rule is not to be mechanically applied, and where the second forum is the more convenient, flexibility is in order. See generally 6 C. Wright & A. Miller, Federal Practice and Procedure, Sec. 1418 (1971). District courts may exercise some discretion to take into account equitable considerations in determining the appropriate forum. See Kerotest Mfg. Co. v. C-O-Two Fire Equip. Co., 342 U.S. 180, 183-84 (1952). The appropriateness of the current forum is amply demonstrated by the fact that Critzas II was eventually transferred to it. There was no abuse of discretion in this case. Similar equitable considerations apply to the district court's exercise of discretion in denying the motion to stay proceedings in this case and in denying the motion to consolidate this case with Critzas II, and there was similarly no abuse of discretion in these rulings.

Critzas next challenges the district court's application of California law, which Critzas claims unfairly resulted in the imposition of a four-year statute of limitations and the use by Eclectic of equitable defenses. Because the Lanham Act contains no statute of limitations for unfair competition or trademark infringement, the district court did not err in applying the statute of limitations of California, the forum state, to Critzas' federal counterclaims. Critzas gives no reason why the law of Missouri should apply, other than its assertion that Missouri has a longer statute of limitations. Critzas' implied argument that Missouri is a better forum than California is fatally undercut by the fact that this litigation has twice been transferred from Missouri to California because of improper venue.

As for Critzas' state common law counterclaims, the statute of limitations is a procedural matter governed by the law of the forum. Alberding v. Brunzell, 601 F.2d 474, 476 (9th Cir. 1979). The existence of a California borrowing statute does not lend support to Critzas' contention that a longer general Missouri statute of limitations should apply, because the California statute will not borrow a foreign limitations period that is longer than California's. See Cal.Civ.Proc.Code Sec. 361. Accordingly, the district court properly applied the California statute of limitations to Critzas' state counterclaims.

Equitable defenses are available under both the law of Missouri and the law of California. See California W. School of Law v. California W. Univ., 125 Cal. App. 3d 1002, 1006-07, 178 Cal. Rptr. 685, 687 (1981); Cunetto House of Pasta v. Tuma, 689 S.W.2d 690, 692 (Mo.Ct.App.1985). The district court therefore correctly found that equitable defenses were available against Critzas' state counterclaims.

Critzas also argues that the district court should not have applied equitable defenses to federal infringement counterclaims because its mark was incontestable. The law of this circuit, however, is clear that equitable defenses do apply in this situation. Pyrodyne Corp. v. Pyrotronics Corp., 847 F.2d 1398, 1400-01 (9th Cir.), cert. denied, 109 S. Ct. 497 (1988); Park 'N Fly v. Dollar Park and Fly, Inc., 469 U.S. 189 (1985). The panel is not in a position to change the law of this circuit in the manner urged by the appellant.

Critzas next challenges the district court's entry of partial summary judgment with respect to "Sportsman's Goop" and "Household Goop" based on the equitable defense of acquiescence. Although Critzas maintains there were triable issues of fact, the record indisputably shows that Critzas failed to object to Eclectic's use of the "Sportsman's Goop" and "Household Goop" marks for over three and one-half years, actively assisting in Eclectic's use of the "Sportsman's Goop" mark and expressing no concern over Eclectic's use of the "Household Goop" mark. Summary judgment was proper. See Celotex Corp. v. Catrett, 477 U.S. 317 (1986). Since we uphold the court's judgment on these claims, the appellee's cross-appeal is moot and must therefore be dismissed.

Critzas challenges three evidentiary rulings of the district court: the exclusion of survey evidence, the preclusion of the evidence of the filing of the Critzas I suit in 1985, and the admission of Exhibit 560, a bar graph entitled "Evolution of Goop Product Packaging." There was no reversible error. First, Critzas' survey did not simulate actual marketing conditions, see Levi Strauss & Co. v. Blue Bell, Inc., 632 F.2d 817, 822 (9th Cir. 1980), and also included two of Eclectic's trademarks that were not before the jury. The evidence had little probative value and could have confused the jury. There was no abuse of discretion in excluding it. See Fed.R.Evid. 403. Second, the district court did not abuse its discretion in excluding reference to Critzas I on the grounds that it had little probative value and could have confused the jury on the issue of whether Critzas acted promptly with proper motives in defending its mark. Although Critzas I was filed during the time period used in establishing laches, it was voluntarily dismissed, and there was no indication that it ever proceeded beyond the pleading stage. With respect to Exhibit 560, the record does not support Critzas' assertions that the exhibit contained misrepresentations. Although the exhibit does not contain all of the evidentiary matters that Critzas would have liked the jury to consider, Critzas remained free to present its own evidence and arguments concerning the exhibit's quality to the jury. There was no abuse of discretion in admitting the exhibit.

Critzas raises a number of challenges to the court's instructions to the jury, but only one has any possible merit. The district court incorrectly instructed the jury that Critzas had to establish secondary meaning if the jury found that Critzas' mark was only descriptive. Since the mark became incontestable as applied to hand cleaner products, this was not accurate. There was, however, no objection to the instruction at the time of trial, and so the district court was not made aware of any concerns about the instruction on the part of Critzas. Accordingly, the propriety of the instruction is not properly before us on appeal. See Benigni v. City of Hemet, 868 F.2d 307, 310 (9th Cir. 1988). Moreover, even if we could review the belatedly challenged instructions, the jury found in favor of Eclectic and against Critzas on alternative grounds on all but one of Eclectic's marks, so that the challenged instruction would not have affected the judgment on most of the claims.

Critzas' arguments that the district court should have ordered a new trial are without merit.

The judgment is AFFIRMED, and the cross-appeal, No. 88-5617, is DISMISSED.