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May 26, 2022

Delay in Enforcing Trademark Measured from When Infringement Became Actionable

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Addressing laches and progressive encroachment, the US Court of Appeals for the Eighth Circuit reversed and remanded a district court's grant of summary judgment based on laches because the district court failed to "conduct a meaningful analysis" as to when the trademark infringement first became actionable. A.I.G. Agency, Inc. v American International Group, Inc., Case No. 21-1948 (8th Cir. May 13, 2022) (Loken, Gruender, Grasz, JJ.)

A.I.G. Agency (Agency) is a family-owned insurance broker in Missouri and American International Group, Inc. (International) is a large insurance company. Each company has used its version of an AIG trademark for decades. Agency first adopted the mark in 1958 while International began using AIG sometime between 1968 and 1970. In 1995, International sent a demand letter to Agency notifying it of International's trademark registration and requesting that Agency cease use of the AIG mark. Agency responded that it had the right to use AIG in Missouri and Illinois because it had been using the trademark in those states long before International obtained its registration. In 2008, International again reached out to Agency demanding that it stop using AIG as a mark. Agency again asserted that it had the right to use the mark in Missouri and Illinois. International responded that it did not object to Agency's use of AIG in St. Charles and St. Louis Counties in Missouri, but it would contest Agency's use beyond that limited geographic scope.

Nearly a decade later, in 2017, Agency sued International for common law trademark infringement and unfair competition. International asserted that Agency's claims were barred by laches and counterclaimed for trademark infringement, trademark dilution and unfair competition. Both parties moved for summary judgment, and the district court granted summary judgment for International, finding that Agency's claims were barred by the doctrine of laches. Agency appealed.

The Eighth Circuit explained the difference between the equitable affirmative defense of laches (which is meant to bar claimants from bringing unreasonably delayed claims) and the doctrine of progressive encroachment (under which the period of delay in a trademark infringement case is measured not from when a claimant first learned of the allegedly infringing mark, but from when that infringement first became actionable). The Court explained that "[t]he doctrine [of progressive encroachment] saves trademark holders from being hoisted upon the horns of an inequitable dilemma—sue immediately and lose because the alleged infringer is insufficiently competitive to create a likelihood of confusion, or wait and be dismissed for unreasonable delay." Here, Agency argued that it did not have an actionable and provable claim for infringement until 2012 when International changed its marketing strategy.

The Eighth Circuit found that the district court failed to "conduct a meaningful analysis" to determine when the infringement became actionable, noting that the district court found that laches barred the claims because "both parties have been using ‘AIG' in the same markets for decades, each with full knowledge of the other's activities." The Court further criticized the district court for not employing a specific test to determine when likelihood of confusion first began, stressing that an actionable claim for infringement should be determined by looking at the likelihood of confusion factors. Further, the Court found that in reviewing those factors, there appeared to be genuine issues of material fact that could sway the likelihood of confusion analysis, thereby precluding summary judgment. As a result, the Court reversed and remanded to the district court for further proceedings.

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