Laches period begins from knowledge of confusing use, not mere knowledge of use

United States of America

In Ray Communications Inc v Clear Channel Communications Inc (Case 11-1050, March 8 2012), reviewing the defendants' laches defence to a trademark infringement claim, the US Court of Appeals for the Fourth Circuit has held that a district court had applied the wrong legal standard in determining when the defence was triggered, incorrectly measuring the laches period from the date the plaintiff first knew of the defendants’ use of a similar mark, instead of when a likelihood of confusion arose between the parties’ marks

Ray Communications Inc sued Clear Channel Communications Inc and other defendants for alleged infringement of its federally registered AGRINET service mark and for unfair competition under the Lanham Act. The defendants asserted the affirmative defences of laches, acquiescence and abandonment, alleging that the plaintiff knew of the defendants’ allegedly infringing use since the 1970s, but unreasonably delayed bringing suit for more than 30 years. 

The plaintiff countered that, while it knew of the defendants’ use of the AGRINET mark since the 1970s, such use was limited to a separate geographic region and was licensed by the plaintiff at that time. Thus, the plaintiff argued, there was no likelihood of confusion 30 years ago. The district court granted summary judgment to the defendants, concluding that the plaintiff's knowledge of the defendants’ use of the AGRINET mark since the 1970s was sufficient to trigger the laches period. The plaintiff appealed. 

The Fourth Circuit vacated the district court’s grant of summary judgment and remanded, holding that it had applied the wrong legal standard and failed to conduct a fact-intensive inquiry about when a likelihood of confusion arose.  In determining whether the laches defence bars a trademark infringement claim, courts consider three factors:

  • whether the owner of the mark knew of the infringing use;
  • whether the owner’s delay in challenging the infringement of the mark was inexcusable or unreasonable; and
  • whether the infringing user has been unduly prejudiced by the owner’s delay. 

Further, delay is measured from the time the owner knew of an infringing use, and legal action is not required until there is a real likelihood of confusion.

The Fourth Circuit held that the district court had erred by measuring the laches period from the time the plaintiff first knew of the defendants’ use of the AGRINET mark in the 1970s, when the plaintiff and the defendants’ use of their marks was geographically separate and thus unlikely to cause confusion. “Although a senior federal registrant has superior priority which extends nationwide”, the court explained, “there is no likelihood of confusion for a court to enjoin unless and until the senior user shows a likelihood of entry into the junior user’s territory”. As the movant for summary judgment on laches, the court found that the defendants were “charged with presenting evidence demonstrating that, at some identifiable point in time, a likelihood of confusion existed and that [the plaintiff] unreasonably delayed thereafter in taking responsive legal action”.

For the third prong (prejudice arising from the plaintiff's delay), the Fourth Circuit found that the record contained no legally cognisable evidence of prejudice. Other than the length of time the defendants’ used the mark, the defendants did not adduce any evidence of economic prejudice, such as loss of revenue from ceasing use of their mark. In remanding, the Fourth Circuit also instructed the district court to address whether the laches defence barred the plaintiff’s right to pursue injunctive relief, which the district court failed to address on summary judgment.

Rita J Yoon, McDermott Will & Emery LLP, Chicago

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