IP Law Daily, TRADEMARK—5th Cir.: Gun-barrel maker’s claims against competitor time-barred under Louisiana law, (Oct 2, 2023)

By Linda Panszczyk, J.D.

All actions Carbon Six Barrels alleges Proof Research took were discrete rather than ongoing, and each began and ended more than a year before this lawsuit was filed.

The U.S. Court of Appeals for the Fifth Circuit has affirmed the dismissal of trademark infringement claims as the district court correctly held that Carbon Six’s claims were untimely, and that its LUTPA claim was also legally deficient. Carbon Six Barrels, LLC (Carbon Six), a gun-barrel manufacturer, waited too long to bring its defamation, unfair trade practices, and fraud claims against a competitor against Proof Research, Inc. (Proof), after an unsuccessful lawsuit by Proof against Carbon Six’s sister company, McGowen Precision Barrels, LLC. Carbon Six’s claims against Proof arise from conduct related to, or occurring in the course of, the prior litigation. The court found that Carbon Six had not met the one-year statute of limitations for its claims, and that the arguments it brought for tolling them did not apply (Carbon Six Barrels, L.L.C. v. Proof Research, Inc., September 29, 2023, Elrod, J.).

Background. Proof Research, Inc. and Carbon Six Barrels, LLC both manufacture carbon-fiber gun barrels. Proof entered the market first and obtained a trademark for the unique appearance of its barrels. When Proof found out that Carbon Six intended to begin manufacturing and selling similar-looking carbon-fiber gun barrels of its own, Proof responded with litigation. However, Proof did not file suit against Carbon Six, but rather against McGowen Precision Barrels, LLC, Carbon Six’s sister company. McGowen then initiated separate proceedings to have Proof’s trademark cancelled. McGowen was ultimately successful, and the Trademark Trial and Appeal Board cancelled Proof’s trademark for its carbon-fiber gun barrels in 2021.

On February 9, 2022, Carbon Six filed this lawsuit against Proof for defamation and violation of the Louisiana Unfair Trade Practices Act (LUTPA) stemming from Proof’s efforts to register, renew, enforce, and defend its previously valid trademark. However, Carbon Six brought its claims after the one-year statute of limitations had run. Carbon Six failed to convince the district court that any of its claims were timely. The district court also held that Carbon Six’s LUTPA claim was legally deficient. The Fifth Circuit agreed with the district court on all fronts. Despite advancing several arguments to save its claims from prescription, Carbon Six was simply too late.

This appeal raised two issues: (1) whether Carbon Six’s LUTPA claim is timely and legally sufficient; and (2) whether Carbon Six’s defamation claim is timely.

State unfair trade practices claim. In its complaint, Carbon Six alleged that because Proof’s trademark was never valid, Proof’s trademark-enforcement actions violated LUTPA. The district court dismissed the claim as both untimely and legally insufficient.

LUTPA has a one-year statute of limitations period and, according to the Fifth Circuit, there was no doubt that the violations Carbon Six alleges occurred more than one year before Carbon Six filed suit on February 9, 2022. In its complaint, Carbon Six alleges that Proof violated LUTPA by sending the two cease and desist letters (in 2016 and 2017); registering and renewing its trademark (in 2013 and 2018, respectively); filing the trademark litigation (in 2017); and accusing McGowen of trademark infringement (at the latest on November 21, 2020, when Proof filed its trial brief in the cancellation proceeding). Even if each of these actions could individually give rise to liability under LUTPA, an action for any of them would have been untimely on February 9, 2022, and would therefore be time barred under Louisiana law.

Carbon Six attempted to save these bases for LUTPA liability by relying on the continuing tort doctrine, which suspends prescription while the defendant’s violations remain ongoing. Under Carbon Six’s theory, all of Proof’s actions relating to its trademark continuously violated LUTPA because they were premised on the falsehood that Proof’s trademark was legitimate. In effect, said the Fifth Circuit, Carbon Six argued that Proof had an ongoing duty to remedy this falsehood. The prescriptive period would thereby not have started to run until May 20, 2021, when the TTAB granted McGowan’s petition to cancel Proof’s trademark and the proceeding came to a close.

However, according to the Fifth Circuit, Carbon Six immediately runs into a conceptual problem. Louisiana law recognizes a distinction between an ongoing action and ongoing damage resulting from an action. All actions Carbon Six alleges Proof took were discrete rather than ongoing, and each began and ended more than a year before this lawsuit was filed. Carbon Six’s LUTPA claim is therefore time-barred.

The district court also held that regardless of timing, Carbon Six could not recover under LUTPA for Proof’s attempts to enforce its trademark rights. First, the lawsuit Proof filed was against McGowen rather than Carbon Six. Second, filing even a losing lawsuit, barring extreme circumstances, is not a LUTPA violation. Both points are correct, according to the Fifth Circuit.

Even if Carbon Six could do so, Proof’s attempt to enforce a later-invalidated trademark does not violate LUTPA. The Louisiana Supreme Court has emphasized that the "range of prohibited practices under LUTPA is extremely narrow" and that in "establishing a LUTPA claim, a plaintiff must show that the alleged conduct offends established public policy and is immoral, unethical, oppressive, unscrupulous, or substantially injurious.” Here, said the Fifth Circuit, the act of filing a lawsuit is not enough to support a LUTPA claim, and Proof’s conduct falls short of the types of egregious behavior necessary to support a LUTPA claim. Based on the existence of a registered trademark, Proof filed suit against a company it believed was producing barrels that would arguably be covered by the trademark, and it was far from obvious that Proof’s eventually terminated trademark was clearly invalid from the start. It took the TTAB nearly four years to consider and resolve the cancellation proceeding, which it did in a 49-page, highly technical opinion. When Proof initiated the trademark litigation, it was at least arguable that it possessed cognizable claims.

Defamation claim. In Louisiana, as with LUTPA claims, defamation claims are subject to a one-year statute of limitations. Like its LUTPA claim, Carbon Six’s defamation claim was untimely. Carbon Six, however, attempted to avoid this conclusion by arguing that the prescriptive period should have been suspended until either the TTAB rendered its opinion in the cancellation proceeding or when the Montana trademark litigation was dismissed.

According to the Fifth Circuit, it need not weigh in on which of these theories should apply here. Under either rationale, the statute of limitations on Carbon Six’s defamation claim was not suspended. First, as the district court pointed out, Carbon Six was not a party to the Montana trademark litigation nor the cancellation proceeding before the TTAB. Although Proof may have named Carbon Six in its briefing, Proof never named Carbon Six as a defendant.

Second, Proof’s allegedly defamatory comments do not arise out of the same set of operational facts as those set forth in either the Montana trademark litigation nor the cancellation proceeding and are material to neither. Whether Carbon Six infringed on any of Proof’s then-existing trademarks was not an element that needed to be proven in the suit, and any allegation that Carbon Six did so was completely tangential to that litigation. Quite simply, said the Fifth Circuit, Carbon Six was never at risk of being found liable for infringement and could not have been held to a judgment in favor of Proof. Thus, Carbon Six cannot claim that the question of any alleged infringement was material to the ongoing litigation. The same is even more true for the cancellation proceeding. There, any question of Carbon Six’s infringement of Proof’s trademark had no bearing on the validity of that trademark. As a result, Carbon Six was therefore free to bring a defamation claim against Proof at any point while the two proceedings were ongoing. It cannot now claim that the prescriptive period was suspended.

The case is No. 22-30772.

Attorneys: Kyle M. Keegan (Keegan, Juban, Lowe & Robichaux, LLC) for Carbon Six Barrels, L.L.C. Judy Y. Barrasso (Barrasso, Usdin, Kupperman, Freeman & Sarver, L.L.C.) for Proof Research, Inc.

Companies: Carbon Six Barrels, L.L.C.; Proof Research, Inc.

Cases: Trademark LouisianaNews MississippiNews TexasNews GCNNews