IP Law Daily, TRADEMARK—E.D. Cal.: Infringement claims in RACK MAN shelving brand dispute barred by laches, (Mar 13, 2026)

By Carolin Dennis, B.Sc., LL.B., LL.M.

The trademark owner unreasonably delayed by filing suit in 2023, despite being on constructive notice of infringing use well before 2020. The delay prejudiced the defendant, which had invested in the brand.

A warehouse equipment seller operating under the mark “Rack Men” was barred by the equitable doctrine of laches from pursuing Lanham Act trademark infringement, state-law trademark infringement, and state-law unfair competition claims against another company for using an allegedly similar brand. A California federal district court determined that the seller unreasonably delayed bringing suit, causing the defending business to suffer economic prejudice from the investment it had put into developing its business under the challenged brand. The court granted summary judgment in favor of the defending business (Material Handling Systems, Inc. v. Rack Men Equipment Co., Inc., No. 2:23-cv-1089 WBS SCR (E.D. Cal. Mar. 11, 2025)).

Background. Rack Men Equipment Company, Inc., was a Georgia company that since 1989 had sold warehouse equipment under the mark RACK MEN. It had registered a design mark incorporating those words with the USPTO. Material Handling Systems, Inc. (MHS) was a California company selling rack and shelving under the brand “Rack Man!” MHS used a logo incorporating those words. Rack Men sent a cease and desist letter to MHS in early 2023; a few months later MHS applied to register its own trademark and brought suit for a declaration of non-infringement. Rack Men filed counterclaims for infringement and dilution under state and federal law. MHS moved to dismiss the counterclaims. The district court denied the motion to dismiss Rack Men’s counterclaims, and MHS then filed a motion for summary judgment.

Laches. MHS argued that Rack Men’s federal and state-law trademark infringement counterclaims and state-law unfair competition claim were barred by laches. In the Ninth Circuit, the laches analysis was a two-step process: (1) assess the plaintiff’s delay by looking at the most analogous state statute of limitations, and (2) assess the equity of applying laches using the six factors set forth in E-Systems, Inc. v. Monitek, Inc., 720 F.2d 604 (9th Cir. 1982) (Pinkette Clothing, Inc. v. Cosmetic. Warriors Ltd., 894 F.3d 1015, 1020, 1025 (9th Cir. 2018)).

Constructive knowledge; delay in filing. The district court noted that Rack Men did not dispute that it had utilized the internet, including search engines such as Google, since 2000 to continually search for potential trademark infringement of its alleged mark. Yet, Rack Men did not make any effort to assert any claims against MHS until after MHS filed its declaratory relief action in June 2023. Rack Men also attempted to dispel constructive knowledge by disclaiming any knowledge of MHS’ billboards or other advertising in the Sacramento region, emphasizing that it is a Georgia-based company However, Rack Men simultaneously attested that it had been operating and marketing within the Sacramento region since 2011. Given that, since 2011, MHS had been selling similar items in the same geographic area under a remarkably similar name as Rack Men, a prudent businessperson should have recognized the likelihood of confusion long before 2020. Rack Men also failed to show progressive encroachment because a junior user's growth of its existing business and the concomitant increase in its use of the mark did not constitute progressive encroachment.

Accordingly, the district court concluded that because the limitations period had long expired by June 2023, and progressive encroachment is inapplicable, the presumption was that laches barred Rack Men’s claims.

Equitable factors. The six E-Systems equitable factors were: (1) strength of the trademark right asserted, (2) plaintiff’s diligence in enforcing the mark, (3) harm to the senior user if relief was denied, (4) good faith ignorance of the junior user, (5) competition between senior and junior users, and (6) the extent of harm suffered by the junior user because of the senior user’s delay.

Rack Men provided no evidence of “marketplace recognition” or a “lengthy” period of “exclusive use” of its mark that would establish its strength. Thus, the first factor weighed in favor of MHS. MHS began utilizing the “Rack Man!” mark through various media in 2011, but Rack Men did not bring any claims challenging that usage until after MHS filed the instant action for declaratory relief in June 2023. Rack Men also pointed to the fact that it sent one cease-and-desist letter to an infringing company in Texas in 2002 to demonstrate its diligent enforcement efforts, but this argument proved that Rack Men had long possessed the ability to identify and enforce its mark outside of Georgia but chose not to do so in this instance. Therefore, the second factor also weighed in favor of MHS.

As MHS noted, Rack Men identified no lost sales, no diverted customers no lost contracts, and no damages of any kind. Thus, the district court said it could not identify any harm that would accrue to Rack Men were it to deny relief. Further, Rack Men claimed that its registration of the “Rack Men” mark provided MHS with “constructive knowledge” sufficient to establish bad faith as a matter of law, but it cited no authority supporting this proposition of dubious legal significance that falsely equates “constructive knowledge” with the “actual awareness” required to demonstrate bad faith. Additionally, Rack Men nowhere showed that MHS sought to capitalize on its good will via usage of the “Rack Man!” mark. Accordingly, the third and fourth factors also weighed in favor of MHS.

The fifth factor, competition between the junior and senior user, was the only factor in favor of Rack Men. Both MHS and Rack Men sold racking and shelving equipment in California. Although the parties disputed the extent of Rack Men’s sales in California and, by extension, the degree to which they competed, the undisputed facts established that they competed with each other in some capacity.

The sixth factor strongly favored MHS. The district court found that MHS continued to build a valuable business around its trademark during the time that Rack Men delayed the exercise of its legal rights, so it had suffered “expectation” or “economic prejudice.” Indeed, MHS provided substantial evidence detailing its efforts through the period of Rack Men’s delay to build its business by way of advertising and marketing tied through the Rack Man! Identity from 2011 through 2023 in the absence of any challenge. Thus, prejudice to MHS would be severe if it were to now lose the rights to the “Rack Man!” name. Accordingly, considered together, the E-Systems factors weighed strongly in favor of MHS.

Accordingly, the district court found that Rack Men’s Lanham Act trademark infringement, state-law trademark infringement, and state-law unfair competition claims were barred by laches.

The Case is No. 2:23-cv-01089-WBS-AC.

Judge: Shubb, W.

Attorneys: Bradley C. Carroll (Downey Brand LLP) for Material Handling Systems, Inc. David G. Halm (Quintairos, Prieto, Wood & Boyer, P.A.) for Rack Men Equipment Co., Inc.

Companies: Material Handling Systems, Inc.; Rack Men Equipment Co., Inc.

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