E-Alert Case Updates

Defendant Not Entitled to Summary Judgment on Affirmative Defense of Laches

Ray Communications, Inc. v. Clear Channel Communications, Inc., et al.
Case No.: 11-1050 (U.S. Court of Appeals for the Fourth Circuit)
by Eric M. Leppo, Associate
Semmes, Bowen & Semmes (www.semmes.com)

In this recently issued opinion from the United States Court of Appeals for the Fourth Circuit, the Court vacated the U.S. District Court for the Eastern District of North Carolina’s grant of summary judgment based on the affirmative defense of laches in a trademark infringement suit. As such, the case was remanded for further proceedings.

The Plaintiff, Ray Communications, Inc. ("RCI"), filed this case in Federal District Court alleging trademark infringement under Section 32(1) of the Lanham Act (“the Act”), 15 U.S.C. § 1114(1); and unfair competition under Section 43(a) of the Act, 15 U.S.C. § 1125(a). Specifically, RCI claimed that Clear Channel Communications, also in the radio broadcasting business, had infringed on its registered trademark AGRINET. The AGRINET mark is used to identify RCI as a source of agricultural news radio programming.

In the late 1970’s and 1980’s, Clear Channel (through its predecessors) began using the terms Oklahoma Agrinet, Tennessee Agrinet, and Kentucky Agrinet to identify their agricultural news programming on the air and in marketing. There is no question that such use was without RCI’s permission. At later times, Clear Channel also used the terms “Agrinet of the High Plains” and “Alabama Agrinet.” There was no dispute that RCI was aware of such usage.

In 2008, RCI filed this infringement action. Clear Channel asserted several affirmative defenses including laches. After the close of discovery, Clear Channel moved for, and obtained, summary judgment based on laches. RCI appealed the decision to the Fourth Circuit Court of Appeals arguing that Clear Channel could not establish the affirmative defense of laches, as a matter of law, when all facts were viewed in a light most favorable to RCI.

The Act does not have a limitations period for filing actions, but trademark infringement claims under the Act are subject to defenses including the equitable doctrines of laches. See 15 U.S.C. § 1115(b)(9). The Court noted that the doctrine of laches is applied to address the inequity created by a trademark owner who, despite having a colorable infringement claim, has unreasonably delayed in seeking redress to the detriment of the defendant. Sara Lee Corp. v. Kayser-Roth Corp., 81 F.3d 455, 461 (4th Cir. 1996).

In determining whether laches presents a defense in a trademark infringement matter, the Court considers three (3) factors: (1) whether the owner of the mark knew of the infringing use; (2) whether the owner’s delay in challenging the infringement of the mark was inexcusable or unreasonable; and (3) whether the infringing user has been unduly prejudiced by the owner’s delay. What-A-Burger of Virginia, Inc. v. Whataburger, Inc. of Corpus Christi, Texas, 357 F.3d 441, 447-48 (4th Cir. 2004).

The Fourth Circuit indicated that in applying the first factor, it is not enough that a prospective Plaintiff knows of the use of the trademarked term, but that the Plaintiff be aware of an infringing use of the term. The question whether a trademark owner has knowledge of an infringing use of its mark, thereby triggering the laches period, is an objective determination, and not a subjective one as applied by the District Court.

Moreover, the Court found that Clear Channel failed to establish—as a matter of law—that it was prejudiced by RCI’s delay in seeking to enforce its rights. A Defendant suffers economic prejudice when it relies on the trademark owner’s inaction by developing a valuable business around the trademark. The Court instructed that a fact intensive review of the potential economic prejudice would be necessary on remand, and that summary judgment was not appropriate in this regard.