Sunday, June 28, 2009

8th Circuit decision on laches and "progressive encroachment"

Did the 8th Circuit recently make “progressive encroachment” more of a formalistic, procedural headache than it had been? That’s how its decision in Champagne Louis Roederer v. J. Garcia Carrion, S.A., No. 08-2907 (8th Cir. June 24, 2009), seemed to me.

Roederer makes the famous CRISTAL high-end champagne; Carrion and its predecessor (“Carrion”) make a much cheaper Spanish sparkling wine under the marks CRISTALINO and CRISTALINO JAUME SERRA. There were plenty of times when Roederer had been aware of CRISTALINO. Roederer opposed Carrion’s attempts to register one or more of these marks in Spain in 1989, in Colombia in 1991, and in the U.S. in the mid-1990s. Roederer also saw an affidavit in another case in 1995 from which it learned that a Cost Plus store in California was stocking CRISTALINO. In 2002, Carrion filed another application for CRISTALINO in the U.S., and Roederer filed a TTAB opposition.

But Roederer didn’t file a district court action until 2006. The district court dismissed the lawsuit based on laches because it found that Roederer learned in 1995 that Carrion was selling CRISTALINO in the U.S., and by that time Carrion was selling as many bottles of CRISTALINO as Roederer was selling of CRISTAL.

The 8th Circuit reversed. It held that progressive encroachment can alter the date that a laches defense begins to run (which other courts have noted). But where the 8th Circuit seemed (at least to me) to go further was in holding that, where progressive encroachment is asserted, the date runs from the time that the trademark holder first possesses an “actionable and provable” claim. It then said that this analysis requires an assessment of all of the likelihood of confusion factors at the time that the plaintiff first received notice of the defendant’s infringing use (in this case, the court assumed that was 1995, when Roederer found out about the California Cost Plus sales). The 8th Circuit reversed and remanded because the district court hadn’t made that full assessment.

My two cents: This test just seems too formalistic. Also, it would almost necessarily seem to have the effect of unduly lengthening and complicating trials. The parties will have to prove infringement at two times: the present time, and whatever the laches date is alleged to be. I have always conceptualized progressive encroachment as focusing on a less rigid analysis. Courts would look at objective and subjective facts concerning what the infringer had been doing and how confusing and damaging that was, and then see whether there was any substantial and relatively sudden change to the nature of the use or the extent of damage, as opposed to the simple results of natural growth in the marketplace. If it was just natural growth, laches began running at the earlier date; if there was a big, sudden change, laches began running at the later date. My view, of course, could be wrong, but in any event be forewarned about how the 8th Circuit apparently now analyzes progressive encroachment allegations.


Anonymous said...

You are correct to point out one of the underlying difficulties of progressive encroachment--it requires duplicative findings on actionability. However, I think if you look at the case law, McCarthy's Trademarks treatise, and the authorities cited by the Eighth Circuit, you're somewhat incorrect in your understanding of the doctrine of progressive encroachment. It is not a matter of sudden versus gradual change, as that has little to do with the equities underlying the doctrine, i.e. not forcing plaintiffs to sue too early or too late. The decision adds nothing new to the doctrine.

Tom Casagrande said...

Anonymous, thanks for the comment. One of my points, however, was that I disagree with that way of assessing progressive encroachment. I think it should be less formalistic, which I believe conforms with the way buisinesses actually assess trademark threats: they don't go through a formal, factor-by-factor analysis of whether they can amass enough evidence to convince a jury that a likelihood of confusion exists under the Polaroid or Sleekcraft or other circuit's factor test. They eyeball the situation and make an off-the cuff business decision, and then move on to their more core business concerns. So I don't think they ought to be punished in a laches analysis for behaving as most reasonable businesses behave. Now, I'd LIKE for them to do the formal analysis because it would mean more billable work for me, but that's not the way they roll in everyday reality.

Anonymous said...

That's a good point. But, to the extent to which your suggesting that progressive encroachment places undue burdens on would be plaintiffs by requiring that they "go through a formal, factor-by-factor analysis of whether they can convince a jury that a likelihood of confusion exists," the only thing I would say is that it places a burden on defendants, not plaintiffs. A defendant asserting the defense of laches must show that the plaintiff had an actionable claim at the time from which delay is measured. The doctrine is an aid to plaintiffs alleging infringement.

This Vegan Rants said...

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