Armco, Inc. v. Armco Burglar Alarm Co., Inc.
217 U.S.P.Q. (BNA) 145, 35 Fed. R. Serv. 2d 753, 693 F.2d 1155 (1982)
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Rule of Law:
For the purpose of the laches defense in a trademark infringement case, the period of delay begins not when the plaintiff has actual knowledge of the infringing use, but when the plaintiff knew or should have known of the use.
Facts:
- Armco, Inc., a large diversified corporation founded as American Rolling Mill Company, has used and registered the 'Armco' trademark since 1948.
- In the late 1960s, a small burglar alarm business was founded, originally named Alarmco Burglar Alarm Co.
- In 1970, at a supplier's request, the business changed its name to Armco Burglar Alarm Co. ('Armco Burglar Alarm').
- In 1970, Armco, Inc. became aware of a listing for Armco Burglar Alarm in the Fort Worth telephone directory.
- Armco, Inc. hired a commercial tracing service in 1970 which failed to locate Armco Burglar Alarm, despite the company being in business at the address and phone number listed in the directory.
- Between 1970 and 1976, Armco, Inc. took no action against Armco Burglar Alarm.
- During this six-year period, Armco Burglar Alarm's business grew from approximately 15-25 accounts to 400-600 accounts, and its annual sales multiplied fifteen times over.
- In 1976, an employee of Armco, Inc. saw an advertisement for Armco Burglar Alarm in the yellow pages, which prompted Armco, Inc. to send a letter demanding that the company cease using the 'Armco' name.
Procedural Posture:
- Armco, Inc. sued Armco Burglar Alarm Co. in federal district court for trademark infringement and unfair competition, seeking damages and an injunction.
- Armco Burglar Alarm filed an answer asserting the affirmative defense of laches.
- Before trial, Armco, Inc. effectively withdrew its claim for damages, and the court struck the defendant's jury demand.
- The case was tried with an advisory jury, which found in favor of Armco Burglar Alarm, concluding there was no likelihood of confusion and that laches applied.
- The district court judge rejected the advisory jury's findings and entered judgment for Armco, Inc.
- The trial court found there was a likelihood of confusion, rejected the laches defense, and issued an injunction prohibiting Armco Burglar Alarm from using the 'Armco' name.
- Armco Burglar Alarm, the defendant, appealed the district court's judgment to the U.S. Court of Appeals for the Fifth Circuit.
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Issue:
For the purpose of the laches defense in a trademark infringement case, does the period of delay begin when the plaintiff has actual knowledge of the infringing use, or when the plaintiff knew or should have known of the use?
Opinions:
Majority - Patrick E. Higginbotham
The period of delay begins when the plaintiff knew or should have known of the use. The court holds that for the defense of laches, the clock starts ticking when a trademark owner has constructive, not necessarily actual, knowledge of an infringing use. The court reasoned that an objective 'knew or should have known' standard is a logical implementation of a trademark owner's duty to police its mark. There is no principled reason to distinguish between inexcusable delay in obtaining knowledge and inexcusable delay after obtaining it. Because Armco, Inc. knew of the telephone directory listing in 1970, it could have discovered the defendant's business simply by calling the listed number. Therefore, as a matter of law, Armco, Inc. should have known of the infringing activity in 1970, and the trial court erred by measuring the delay from 1976. The court also affirmed the trial court's finding of a 'likelihood of confusion' as not clearly erroneous, based on the strength of the 'Armco' mark and evidence of actual confusion, despite several other factors pointing against confusion.
Analysis:
This decision solidifies the objective 'knew or should have known' standard for determining the start of delay for a laches defense in the Fifth Circuit. It places a significant affirmative duty on trademark holders to be vigilant in policing their marks. A plaintiff cannot defeat a laches defense by claiming ignorance if the infringing use was reasonably discoverable. This precedent raises the bar for plaintiffs, requiring them to act on constructive notice and discouraging them from 'sleeping on their rights,' thereby providing more protection to good-faith junior users who have invested in a mark over time.
