## Facts

- PRL USA Holdings, Inc., affiliated with Ralph Lauren, owned trademark rights in a well-known logo depicting a single mounted polo player with a raised mallet used on apparel.
- The United States Polo Association, Inc. (USPA), the sport’s national governing body, licensed apparel bearing polo-themed marks, including four “double horsemen” logos showing two mounted players.
- Jordache, Ltd., a USPA licensee, manufactured and marketed clothing bearing the double-horsemen logos.
- PRL sued USPA and Jordache in the Southern District of New York, alleging trademark infringement and dilution under the Lanham Act and related state-law claims.
- USPA asserted equitable defenses including estoppel/acquiescence, contending PRL had effectively consented during prior negotiations and USPA had relied on that understanding.
- To support the defense, USPA offered testimony from Merle Jenkins describing statements made in settlement discussions; PRL objected under Federal Rule of Evidence 408.

## Issues

1. Whether Federal Rule of Evidence 408 bars admission of settlement-negotiation statements when offered to prove an estoppel/acquiescence defense that would defeat a trademark infringement claim.
2. If admission violated Rule 408, whether the error was harmless or required vacatur and remand.

## Decision

- The Second Circuit held that Rule 408 barred the settlement-negotiation testimony when offered to establish acquiescence/estoppel.
- The court concluded the district court erred by admitting the testimony over PRL’s Rule 408 objection.
- The court held the error was not harmless because the evidence was central to the defense and was relied upon in evaluating PRL’s claims.
- The court vacated the challenged portions of the judgment and remanded for further proceedings consistent with its ruling.

## Legal Principles

- Rule 408 excludes evidence of settlement conduct or statements when offered to prove or disprove the validity of a disputed claim, and the bar is not limited to proof of “liability” in a narrow sense.
- Evidence offered to establish defenses such as estoppel, waiver, or acquiescence may be excluded under Rule 408 when, in substance, it is used to defeat the plaintiff’s claim by showing consent or claim preclusion.
- Courts evaluate harmlessness by considering the importance of the improperly admitted evidence to the factfinder’s reasoning and the extent to which it likely affected the judgment.

## Conclusion

The Second Circuit ruled that settlement-discussion statements cannot be admitted to prove acquiescence or estoppel aimed at defeating a trademark claim, and because the improper evidence materially influenced the outcome, the court vacated and remanded for further proceedings.


PRL USA Holdings, Inc. v. United States Polo Ass'n, Inc., 520 F.3d 109 (2d Cir. 2008)