Ninth Circuit Finds Laches Where Mark Not Enforced Against Known Use of Similar Mark

In Tillamook Country Smoker, Inc. v. Tillamook County Creamery Association, 80 USPQ2d 1460 (9th Cir. 2006), the Ninth circuit affirmed summary judgment for a processed meat company because the cheese company’s trademark claims were barred by laches. Tillamook County Creamery Association (TCCA) is a long standing dairy cooperative which began using the “Tillamook” mark as early as 1918, and registered the mark in 1921 and 1950.  In 1975, a member of TCCA approached TCCA’s General Manager concerning his intention to start a processed meat company to operate under the mark “Tillamook Country Smoker.” The General Manager did not object, and Tillamook Country Smoker (TCS) was born.

From 1976 on, TCS used the “Tillamook Country Smoker” mark with no objection from TCCA.  In fact, TCCA offered TCS products for sale in its store and catalogs. 

TCS attempted to register the “Tillamook Country Smoker” mark but was rejected by the USPTO as “confusingly similar” to TCCA’s mark.  However, TCCA itself did not comment on the application despite having been notified.  In 1995, TCS was successful in registering a combined word and design mark consisting of the words “Tillamook Country Smoker” on a ribbon design. Again, TCCA did not oppose this mark.

TCS grew throughout the late 90s, helped by a rebranding and a huge expansion in direct sales to grocery stores and warehouses. Subsequently, TCS again tried to register the “Tillamook Country Smoker” mark; this time the PTO allowed the mark.  On this occasion, TCCA lodged its opposition to the mark to prevent registration. TCCA also tried to cancel the registered mark. The PTO later rejected a “Tillamook Jerky” mark as highly similar to TCCA’s “Tillamook” mark.

In 2005, TCCA submitted a cease-and-desist letter to TCS. TCS then brought suit seeking declaratory judgments 1) declaring TCS the owner of the “Tillamook Country Smoker” and finding it non-infringing; 2) declaring the ribbon mark to be valid; and 3) entitling TCS to the registration of the “Tillamook Country Smoker” mark. TCCA asserted counterclaims 1) seeking an injunction preventing TCS’s use of the name “Tillamook” or any other likely confusing mark and 2) seeking an order declaring that use of “Tillamook Country Smoker,” “Tillamook Jerky,” and “TillamookJerky.com” infringed TCCA’s registered mark.

Trademark Infringement Claim Fails Due To Laches

The Ninth Circuit affirmed the grant of partial summary judgment to TCS on the use of the “Tillamook Country Smoker” mark.   The Ninth Circuit found that the limitations period for laches started in 1975, when TCCA first had notice of the possibility of confusion, not 1998 when TCS began to expand into supermarket sales.  As such, TCCA had a protectable interest in 1975.  Additionally, while at that point the products may not have operated in identical commercial channels, their similar marks, complementary products, and similar geographic region should have put TCCA on notice of the possibility of confusion. 

The court also noted that neither party disputed the district court finding that the most analogous causes of action would have had their statutes of limitation run after either 2 or 10 years.  As 25 years had passed since the date on which the court held that TCCA had notice, there was a strong presumption favoring TCS’ laches defense due to the extreme delinquency in taking action.

Progressive encroachment not found

In response, TCCA claimed that the doctrine of “progressive encroachment” excused their non-enforcement for most of TCS’s history. Under this doctrine, a trademark owner need not sue for de minimus infringement, but may wait until the junior user moves into direct competition and causing actual market confusions.

The Ninth Circuit found that the district court did not abuse its discretion in rejecting TCCA’s progressive encroachment claim. The district court reasonably found that TCS’s use of the “Tillamook Country Smoker” mark had been constant over the entire period, and the rebranding (font, design, and color) did not make the mark more similar to TCCA’s products. Ninth Circuit also found that the district court did not abuse its discretion in finding that TCS’s expansion of supermarket sales represented normal business growth, not progressive encroachment, since the product being sold was still the same, and it was being sold in the same region.  Therefore, the progression was not into a new market within the meaning of the progressive encroachment doctrine.

No Invalidation of TCS’s Registered Marks Due To Discovery Admission

The court upheld the district court’s finding that TCCA admitted during discovery that TCS’s use of the “Tillamook Country Smoker” and the ribbon mark did not create a likelihood of confusion. In response to a discovery request, TCCA admitted that TCS began to violate its trademark in the “latter part” of the time period between 1995 and 2000.  The district court construed this as admitting that there was no infringement prior to 1997, and thus no likelihood of confusion.  Since there was no likelihood of confusion, the marks were correctly granted to TCS.  Thus, the court upheld the district court’s grant of summary judgment to TCS with respect to the registration claim.

 

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