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Understanding Equitable Defenses in Trademark Infringement: Laches, Equitable Estoppel, and Acquiescence

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A trademark is afforded legal protection when it designates a source or origin of its product or service by distinguishing its businesses’ good or service from others. The overarching goal in enforcing trademark rights is to limit consumer deception and unfair competition in the marketplace. However, a trademark holder’s conduct or delay in asserting its rights in litigation can interfere with enforcement. Here, we discuss three key equitable defenses of laches, equitable estoppel, and acquiescence that can be raised by an alleged infringer to potentially bar claims of trademark infringement.

  1. Laches: The Defense of Unreasonable Delay in Asserting a Claim

In general, laches is the inexcusable delay in protecting one’s rights. Laches is based on the idea that the unreasonable delay in asserting trademark rights unfairly causes prejudice to the alleged infringer. Put simply, if a trademark holder sits on their rights for an unreasonable amount of time, they may lose their ability to enforce those rights.

A defense of laches requires the alleged infringer to prove:

  1. Knowledge: The trademark holder must have had knowledge of the alleged infringer’s use of the mark. Thus, the laches clock starts when the trademark holder knew, or reasonably should have known, about the allegedly infringing use.
  2. Unreasonable Delay: The trademark holder must have inexcusably delayed in enforcing its rights. The determination for an unreasonable delay is fact specific and based on factors that may vary by jurisdiction. Some courts consider the state’s statute of limitations for the tort of fraud to determine when to apply a presumption of laches. For example, if the state’s statute of limitations for fraud is three (3) years, a presumption of laches will apply when the trademark holder waits over three (3) years to assert its trademark rights after it learned about the use of the infringing mark. When a presumption of laches applies, the burden will shift to the trademark holder to prove that the delay was not unreasonable.

    Certain delays by the trademark holder may be excusable. In one example, a delay may be reasonable where the trademark owner and infringer attempted to reach a pre-litigation settlement. The doctrine of progressive encroachment also provides a fallback for trademark holders where the alleged infringer redirects its use of a mark by modifying the mark or extending into a market that better aligns with that of the trademark holder. Here, courts may not determine that laches applies where a trademark holder waits until there is actual competition between the respective products or services.

  3. Prejudice: The alleged infringer must have been prejudiced by the delay. Prejudice to the alleged infringer may be established if the alleged infringer was in some way harmed by the trademark holder’s inaction (for example, economically). Examples of economic prejudice may include the alleged infringer’s material investment in marketing and/or branding efforts or expanding business related to the mark. Prejudice may also include establishing goodwill under the mark.

 

  1. Equitable Estoppel: The Defense of Reliance on Trademark Holder’s Misleading Conduct

Equitable estoppel is a potential defense when a trademark holder’s conduct is misleading, and the alleged infringer detrimentally relied on the misleading conduct.

A defense of equitable estoppel requires the alleged infringer to prove:

  1. Misleading Conduct: The trademark holder engaged in misleading conduct or misrepresentation. Misleading conduct can include silence or inaction, particularly when such silence or inaction is accompanied by other factors such as prolonged delay in enforcing trademark rights or overt conduct.
  2. Reliance: The alleged infringer must have reasonably relied on the trademark holder’s misleading conduct. Reliance could mean that the alleged infringer continued to use the mark or invest in its advertising because they believed they had the trademark holder’s implicit or explicit approval.
  3. Prejudice: The alleged infringer must have been prejudiced. Like laches, prejudice may include financial investment, branding efforts, or establishment of goodwill under the mark.

 

  1. Acquiescence: The Defense of Active Consent by Trademark Holder

Acquiescence is similar to laches but focuses on the idea that the trademark holder affirmatively represented that they would not bring a claim against the alleged infringer’s use of the mark. Here, the trademark holder’s words or conduct must have actively assured the alleged infringer to believe that the trademark holder consented to their use.  While the courts differ in their tests, acquiescence is typically distinguished from laches where there is active consent as opposed to passive consent.

A defense of acquiescence may require the alleged infringer to prove:

  1. Active Consent: The trademark holder must actively consent to an infringing use of the mark. This consent may be express or implied as long as the trademark holder in some way assured the alleged infringer it would not assert trademark rights against the infringing use.
  2. Reliance*: Most, but not all, courts require that the alleged infringer must have reasonably relied on the trademark holder’s conduct. Some circuits instead omit the “reliance” element and require a showing that the active consent and later assertion of rights involved inexcusable delay.
  3. Prejudice: Like laches and equitable estoppel, the alleged infringer must have been prejudiced by the trademark holder’s conduct.

 

Conclusion

While equitable defenses like laches, equitable estoppel, and acquiescence are based on principles of fairness, each application is fact-specific and tailored to each court’s jurisprudence. These equitable defenses are not automatically granted as courts will carefully examine the facts and circumstances surrounding each case. Notably, when a trademark holder can prove willful or intentional infringement, the equitable defenses may not be available at all.

For trademark holders, it is essential to enforce trademark rights promptly and consistently. For defendants, understanding these defenses and investigating their applicability can help protect interests against unfair or unjust claims. By considering these equitable defenses, courts strive to balance the rights of trademark owners with the need to prevent unfair outcomes for infringers who have relied on a trademark holder’s conduct over time.