Oriental Financial Group, Inc. v. Cooperativa de Ahorro y Crédito Oriental, Nos. 11–1473, 11–1476, 2012 WL 5073529 (1st Cir. Oct. 18, 2012)

The First Circuit joined several circuits this week in holding that the doctrine of progressive encroachment can bar the defense of laches in trademark lawsuits. Here, Oriental Financial Group (Oriental) sued competing financial institution, Cooperativa de Ahorro y Crédito Oriental (Cooperativa), for service mark infringement under the Lanham Act and Puerto Rico law. Oriental and Cooperativa both operate in Puerto Rico and had used their “oriental” marks since 1964 and 1966, respectively. Over the next few 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 defense, Cooperativa argued that laches barred Oriental’s challenge of logos and marks that 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 defense. 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.