What happens when a trademark owner waits over 30 years to enforce its trademark? The Fifth Circuit recently addressed this question in an opinion regarding a dispute between a maker of decorative sorority and fraternity paddles and several Greek organizations.
Thomas Kenneth Abraham has been designing, marketing and selling his products—long, wooden paddles decorated with Greek letters and insignia—since he founded his company, Paddle Tramps Manufacturing Co., in 1961. Abraham originally marketed his products directly to sororities and fraternities by showing samples and taking orders at Greek house visits. By the late 1960s, he began selling kits wholesale to bookstores and craft stores for customers to assemble. Over the last several decades, Abraham has invested millions of dollars to completely rebuild his company three times: once after a tornado hit and twice after fires.
The Greek organizations first contacted Abraham nearly three decades later regarding trademark infringement and licensing. Abraham did not respond. Over the next 17 years, Abraham periodically received cease and desist letters requesting that he stop manufacturing the paddles, but he ignored the letters and refused to enter into a licensing agreement.
In 2007, the parties entered litigation. On summary judgment, the U.S. District Court for the Northern District of Texas determined that Abraham had infringed the 32 Greek organizations’ trademarks, and a jury later found that laches precluded an award for money damages but allowed injunctive relief barring Abraham from making certain uses:
The injunction prevents Abraham from selling or using in his advertising three categories of the Greek Organizations’ marks: (1) the Greek letter combinations associated with the parties to this lawsuit; (2) the full names or nicknames associated with the parties to this lawsuit; and (3) any crest, coat of arms, seal, flag, badge, emblem, or slogan identifiable with any of the parties to this lawsuit, including copies of the Greek Organization’s crests Abraham carved out of wood.
Both sides appealed.
On appeal, the Greek organizations argued that Abraham should have been barred from a laches defense because he had “unclean hands,” a term used to describe someone who intentionally infringes a trademark in bad faith. But the Fifth Court did not buy the argument, noting that Abraham had created a market for these paddles decades before the Greek organizations had a licensing program, and never in an attempt to pass himself off as being affiliated or endorsed with the organizations.
The Fifth Circuit also agreed with the district court’s finding that Abraham was unduly prejudiced by the Greek organizations’ delay in bringing suit. The sororities and fraternities argued that Abraham’s infringement was de minimus until the launch of his website and product sales on the website, in 1997 and 2001, respectively. But the Fifth Circuit affirmed the district court’s balance of equities and judgment based on Abraham’s evidence that he would not have made certain costly business decisions if he knew he would later be sued.
In the end, the injunction will affect less than three percent of Abraham’s sales, and permits the future sale of one infringing product: the double raised crest backings.
So what does this means for trademark owners?
Well, the good news is that even when an infringer has prevailed on a laches defense against a trademark holder, the court may still find it appropriate to issue an injunction preventing further trademark infringement. However, as this ruling demonstrates, the best way to protect a trademark is to diligently monitor USPTO registration applications and other potentially infringing uses through the use of a watch service or good old-fashioned “watching out” by trademark owners and their allies. While it is not necessary to discover and go after every possible infringement, a rigorous protection strategy will prevent owners from suffering losses related to the weakening of their trademarks over time, and—as in this case—the potential bar of monetary damages awards.