Laches, Trademark Enforcement, and Injunctive Relief

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One key aspect of protecting a trademark is policing the mark. A failure to police a mark may render the mark owner’s trademark unprotectable if another party begins infringing the mark without recourse, especially if the activity goes on unchallenged for a long period of time. However, a recent ruling by the 5th Circuit Court of Appeals demonstrates that even delayed enforcement can protect a trademark owner’s rights.

In Abraham v. Omega, the 5th Circuit Court affirmed a lower court’s grant of a partial injunction against the infringer, even though the infringer proved his laches defense, because imposition of an injunction would not expose the infringer to “substantial prejudice.”

Abraham, the plaintiff in this action, filed for a declaratory judgment that he and his business were not infringing on the defendants’ trademarks. The defendants in this action are 32 fraternities and sororities, and they asserted counterclaims for trademark infringement and unfair competition under the Lanham Act and under Texas state law.

Since 1961, Abraham has run a business that manufactures wooden paddles and decorations for sororities and fraternities; these products have remained the same since the business first started. The paddles are wood, with the shape of Greek letters and crests carved into the wood. Abraham operated unchallenged until 1990, when the Greek Organizations first contacted him about a licensing deal. Abraham declined to enter any license arrangement because he had been using the Greek marks and terminology for 29 years already without a license. Since then, the Greek Organizations have contacted him sporadically, complaining about his use of the marks, inviting him to enter into licensing agreements, and threatening to sue. During this time, Abraham continued business as usual, and also invested heavily into machinery and advertising, in addition to having to rebuild his business after several fires and a tornado.

In this suit and in response to the Greek Organizations’ counterclaim of trademark infringement, Abraham argued the defense of laches. At trial, the jury found that Abraham proved his laches defense. However, the court balanced the equities of issuing an injunction and determined that laches did not bar the entry of a permanent injunction on Abraham’s future use of the marks at issue, and fashioned a partial injunction. On appeal, the 5th Circuit affirmed, finding that the lower court did not abuse its discretion in fashioning the injunctive relief.

This decision turned on the issue prejudice against the infringer—both in terms of the laches defense and in terms of the permanent injunction. Laches has three elements: (1) delay in asserting trademark rights, (2) lack of excuse for that delay, and (3) that delay caused undue prejudice to the infringer. The jury found that Abraham had sufficiently shown undue prejudice by the delay, particularly in that Abraham rebuilt his business three times and would not have done so had he known that the Greek Organizations would later sue him.

Imposition of a permanent injunction requires the party seeking the injunction to prove: (1) irreparable injury; (2) inadequate remedies at law; (3) equity is warranted considering the balance of hardships; (4) an injunction is not against the public interest.

However, a finding of laches will not bar a permanent injunction by itself. Rather, the prejudice experienced by the infringer in a laches situation must be “substantial” in order for laches to bar an injunction. In this case, only one of Abraham’s products met the “substantial prejudice” test; for all other products, the permanent injunction is in place.

For more information:

http://www.forbes.com/sites/oliverherzfeld/2013/02/28/failure-to-enforce-trademarks-if-you-snooze-do-you-lose/

Abraham v. Omega, No. 12-10525 (5th Cir. Feb. 7, 2013)

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