First Circuit adopts progressive encroachment doctrine

United States of America

In Oriental Financial Group Inc v Cooperativa de Ahorro y Crédito Oriental (Nos 11-1473, 11-1476, 2012 WL 5073529, October 18 2012), the US Court of Appeals for the First Circuit joined several circuits in holding that the doctrine of progressive encroachment can bar the defence of laches in trademark lawsuits.

Oriental Financial Group sued competing financial institution Cooperativa de Ahorro y Crédito Oriental for service mark infringement under the Lanham Act and Puerto Rico law. Oriental and Cooperativa both operate in Puerto Rico and had used their respective ‘oriental’ marks since 1964 and 1966, respectively. Over the ensuing decades, Oriental grew into an island-wide brand. Cooperativa, however, remained a mainly local institution until its major expansion of offices and advertising between 2008 and 2010. Oriental brought suit in 2010 and obtained a permanent injunction barring the use of Cooperativa’s new logo, but allowing Cooperativa to revert to its pre-2009 mark and dress.

On appeal, Oriental asked the court to broaden the scope of the injunction to bar all use of Cooperativa’s ‘oriental’ marks, including its pre-2009 mark and dress. In its defence, Cooperativa argued that laches barred Oriental’s challenge to the logos and marks Cooperativa had used for years.

Citing decisions by the Seventh, Eighth, Ninth, and Eleventh Circuits, the First Circuit held that the doctrine of progressive encroachment applied to bar Cooperativa’s laches defence. Under this doctrine, Oriental could wait to sue until Cooperativa’s use caused a level of likelihood of confusion that presented a significant danger to Oriental’s mark. The First Circuit held that Cooperativa’s allegedly infringing activity before 2009 was de minimis, and thus the progressive encroachment doctrine applied to allow Oriental to wait until 2010 to file its suit.

Shiveh R Roe and Charles H Hooker III, Kilpatrick Townsend & Stockton LLP, Atlanta, Georgia

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