Podcast Episode 19—”Unclean Hands”—a Third Equitable Defense
Podcast Episode Timestamps
00:00 — Unclean Hands – a third equitable defense to trademark infringement.
00:07 — Intro
00:31 — What led to this episode topic, and the goal of this episode.
01:25 — Unclean hands and laches are equitable defenses available in both the trademark infringement and trade secret misappropriation context.
01:50 — Reminder of what a cause of action is.
02:55 — Most defenses have essential elements too – but that’s not necessarily the case with unclean hands.
03:30 — Defendants may have equitable defenses to a plaintiff’s trademark infringement cause of action.
04:00 — The definition of unclean hands (i.e., the clean-hands doctrine or the unclean-hands doctrine).
04:27 — Unclean hands is available under the Lanham act and unfair competition.
05:02 — The concept behind unclean hands.
05:32 — When courts will enforce the unclean-hands doctrine.
06:34 — Equitable defenses are personal defenses – meaning they are based on action or inaction with specific relation to the defendant, not with relation to the world in general.
07:25 — The party alleging unclean hands must establish personal harm or injury from the unclean hands behavior.
07:52 — The defendant also has to show a direct connection between the alleged bad behavior and the specific issue in front of the court.
08:20 — An example where unclean hands was alleged but denied by a court.
09:19 — Examples in which a trade secrets owner can be denied trade secret protection in the face of an unclean hands defense.
09:40 — A plaintiff can use the unclean-hands doctrine to prevent a defendant from benefiting from defenses that would otherwise prevent defendant’s liability.
10:31 — This episode’s takeaway.
11:15 — Please subscribe, check the show notes, and email or schedule a call with your questions.
11:41 — Outro
The Situation
During part of episode 1 of the Keith Law, PLLC Podcast, I touched briefly on defenses to a cause of action for trademark infringement including equitable defenses. Later, in episode 8, at a listener’s suggestion, I dug into the details of the equitable defense called laches. More recently, in episode 16 I focused on the equitable defense of acquiescence. Another of the equitable defenses is called “unclean hands.” Although I mentioned the word in previous episodes, it might be helpful to explain what it means in more detail. So, in this episode, I’ll try to describe the concept of unclean hands in more detail.
Even though I’m focusing on the trademark infringement context here, note that unclean hands and laches are equitable defenses available in both the trademark infringement and trade secret misappropriation contexts.
As a reminder (or for the first time if you haven’t tuned in before), a cause of action is a legal theory that a plaintiff (the party suing) must establish for legal relief (such as an injunction or a money judgment) to become available. The analogy I use is a cake recipe. Without every ingredient in the recipe, the cake won’t turn out right. Similarly, without proving every essential element of a cause of action, the plaintiff cannot access a remedy from the court.
But, just as the plaintiff must establish every element of its cause of action for relief to become available, a defendant (the party being sued) may have defenses available that, if proven, can prevent the plaintiff from getting its legal remedy even if the plaintiff proves all the elements of its cause of action. Most defenses have essential elements all of which must be proven in order for the defense to be effective. In this case, unclean hands doesn’t really have essential elements.
Seeking an injunction for trademark infringement will be subject to the alleged infringing party’s (i.e., the defendant’s) available equitable defenses, if any. Because an action for injunction of the infringement is equitable in nature, the availability of injunctive relief is subject to the common equitable defenses—called “laches,” “acquiescence,” and “unclean hands.”
Definition
Black’s Law Dictionary defines the clean-hands doctrine (also known as the unclean-hands doctrine) as “[t]he principle that a party cannot seek equitable relief or assert an equitable defense if that party has violated an equitable principle, such as good faith.” Unclean hands is an equitable defense available under the Lanham Act (i.e., the federal trademark statute) and unfair competition (which includes misappropriation of trade secrets, passing off or palming off [explanations of which exceed the scope of this post], and common law misappropriation [which has similarities to misappropriation of trade secrets, but doesn’t have a secrecy requirement]).
Unclean hands is based on the principle that a party can’t obtain equitable relief (such as an injunction) or assert an equitable defense (such as laches, acquiescence, or unclean hands) if the party has itself violated equitable principles (which I would translate to “fairness principles”). The defense of unclean hands is enforced by courts when the party asking for relief (either a plaintiff in its affirmative claim for relief or a defendant asserting defenses) has been guilty of intentional conduct so contrary to the “fundamental conceptions of equity jurisprudence” that a court is justified in refusing to grant the requested relief (either affirmative or defensive relief).
Because an action to obtain a court order stopping acts of infringement or unfair competition is equitable in nature, the availability of injunctive relief (i.e., the court order stopping the infringement) is subject to the common equitable defenses: laches, acquiescence, and unclean hands. These are personal defenses based on the trademark owner’s conduct with respect to the defendants, as opposed to the world at large. So, the alleged wrongdoing, will not be enough for under the unclean hands doctrine unless the party alleging unclean hands also establishes harm or injury from the alleged wrongdoing.
Defendant’s Use
When a defendant asserts the defense of unclean hands, they must establish that there is a logical nexus, or connection, between the trademark holder’s conduct and the claim the trademark owner is asserting. So, a defendant cannot simply point to alleged bad behavior, but must point to bad behavior connected to the situation brought before the court. Also, the proof of the unclean hands must be strong.
For example, a restaurant owner that operated a restaurant without an assumed name certificate on file with the Texas Secretary of State, as required by Texas Business and Commerce Code, was not barred by unclean hands from asserting a trademark infringement claim against a former employee who opened a competing restaurant with an identical name in the same town, when there was no evidence that the restaurant owner intended to deceive the public or that the owner was ever charged with violating the statute requiring the assumed name certificate be on file, as well as no evidence of how the owner’s operation of the restaurant under an assumed name personally injured any of the defendants. The plaintiff’s alleged wrongdoing will not bar plaintiff’s legal remedies unless the defendant can prove it was harmed or injured by the plaintiff’s conduct.
In the misappropriation of trade secrets context, a trade secret owner may be denied equitable relief if the owner has breached a contract, violated a legal duty owed, or engaged in other wrongful conduct toward the defendant which would give rise to a defendant’s unclean hands defense.
Plaintiff’s Use
As an example, when a defendant intentionally infringes on a trademark, the plaintiff may assert that under the unclean hands doctrine, that intentional infringer lacks the clean hands necessary to assert defenses of laches or acquiescence.
Takeaway
It’s important to be careful not to take any action that may be framed as wrongful such as fraudulent, in bad faith, or otherwise unfair to reduce the chances of a defendant asserting an unclean hands defense to your trademark infringement or misappropriation of trade secrets cause of action. In the misappropriation of trade secrets context, there’s a risk that if you have obligation under a confidentiality or nondisclosure agreement and you breach your obligations, the unclean hands defense might be available to the defendant to prevent you from obtaining an injunction to protect your trade secrets.
Disclaimer: This audio, and blog post are for informational purposes only and should not be misinterpreted as legal or other professional advice. If you have a legal question, you should consult with an attorney in your jurisdiction. Thank you for tuning in to Keith Law, PLLC.