Pop the Champagne:

Louis Roederer's Trademark Infringement Suit May Not Be Too Late After All

 

By Geoffrey Williamson

 

H

ow should a trademark holder respond when a fledgling potential competitor tries to enter the market with a similar mark? At first blush, it can seem like a question with no good answer. If the trademark holder rushes to the courthouse, the suit will likely fail, because the new market entrant is not yet significant enough to create a likelihood of confusion. But if the trademark holder waits too long, a future suit could be dismissed for unreasonable delay.

That is precisely what happened to high-end champagne maker Louis Roederer, seller of the ultra-premium champagne “Cristal,” when the Minnesota District Court ruled that Roederer had waited too long to sue the Spanish corporation Carrion over sales of its cava—another type of sparkling wine—under the mark “Cristalino.”

However, in Roederer v. J. Garcia Carrion, S.A., the Eighth Circuit reversed the district court, finding that an alleged 11-year delay in bringing suit was not enough to bar Roederer’s claims, based on the doctrine of progressive encroachment.

According to the doctrine of progressive encroachment, the owner of a mark has no obligation to sue until the likelihood of confusion “looms large.” As a general matter, under the doctrine of laches, inexcusable delay in asserting a claim, resulting in undue prejudice to the defendant, can lead to the plaintiff’s claim being dismissed. The doctrine of progressive encroachment tell us that this "delay is to be measured from the time at which the plaintiff knows or should know she has a provable claim for infringement.”

Where the district court went wrong, according to the Eighth Circuit’s opinion, was in finding that Roederer had delayed bringing a claim since 1995 without properly finding that Roederer had a provable claim for infringement in 1995.

In finding that Roederer had inexcusably delayed bringing suit against Carrion, the district court had relied on its findings that 1) Roederer was on notice that Cristalino was being sold in the U.S. as of 1995, 2) Cristalino’s U.S. sales eclipsed U.S. sales of Cristal at about that same time, and 3) the evidence did not show a significant change in the quality of Cristalino after 1995.

The Eighth Circuit reversed on this point, finding the district court’s analysis deficient because it did not apply the accepted legal principles for evaluating the likelihood of confusion posed by an accused infringer’s actions, and thus did not establish whether Roederer had an obligation to sue at that time.  Without properly making such a determination, the court reasoned, no inexcusable delay could be ascribed to Roederer.

The Eighth Circuit opined that the district court should have applied the following well-established factors to evaluate the likelihood of confusion: 1) the strength of the plaintiff’s mark, 2) the similarity between the plaintiff’s and defendant’s marks, 3) the degree to which the allegedly infringing product competes with the plaintiff’s goods, 4) the alleged infringer’s intent to confuse the public, 5) the degree of care reasonably expected of potential customers, and 6) evidence of actual confusion. The district court’s reference to overall sales volume and other peripheral factors was deemed insufficient to demonstrate that Roederer had an actionable claim.

At the same time, the court stopped short of holding explicitly that Roederer’s delay was excusable.  Rather, the opinion took the less forceful position that the district court had not properly shown the delay to be inexcusable. The opinion did not stand for the proposition that Roederer acted properly by not filing suit for 11 years after allegedly being made aware of Carrion’s U.S. activities, as this question remained unanswered.

This brings us back to our original question: How should the holder of a widely-recognized trademark respond to the activities of a budding competitor? As the Roederer case suggests, a mad rush to the courthouse is not always required, and in fact may not be the right reaction.

On the other hand, a delay of as little as a few months has in some cases been sufficient to bar a claim on the basis of laches, to say nothing of 11 years. While the discrepancies might appear confusing, proper application of the doctrine of progressive encroachment clarifies the issue.

Under that doctrine, if the trademark holder does not have a provable claim of infringement, according to the factors identified by the Eighth Circuit in Roederer, then no obligation to sue has arisen. On the other hand, once the trademark holder has an actionable claim, the clock begins to tick, and a significant delay in bringing suit may adversely affect the trademark holder’s ability to enforce his rights against the infringer.

And so in the end, the trademark holder can distill the question of whether or not to sue to this vital essence: Do I have a claim? Once this question is answered, thanks to the doctrine of progressive encroachment, the question of whether legal action is necessary to preserve trademark rights is actually a rather simple one. If, and only if, there is a provable claim that could be brought, has the time to sue arrived.