Opinion ID: 3039136
Heading Depth: 4
Heading Rank: 2

Heading: The second E-Systems factor: diligence in

Text: enforcement When reviewing a district court’s grant of summary judgment on the basis of laches, certain aspects of the district court’s decision are reviewed de novo, such as whether the district court decided material factual disputes that need to be resolved at trial. See Jarrow Formulas, 304 F.3d at 833-34. On the other hand, the district court’s application of the different E-Systems factors is entitled to deference. Id. at 834. [8] Creamery raises the doctrine of progressive encroachment in an effort to explain and excuse its long delay in bringing suit. Under this doctrine, the trademark owner need not sue in the face of de minimis infringement by the junior user. The owner may wait until “the junior user of a mark moves into direct competition . . . selling the same ‘product’ through the same channels and causing actual market confusion.” Prudential Ins. Co. of America. v. Gibraltar Fin. Corp. of California, 694 F.2d 1150, 1154 (9th Cir. 1982); see also ProFitness Physical Therapy Center, 314 F.3d at 70 (asking whether “the [junior user], after beginning its use of the mark, redirected its business so that it more squarely competed with plaintiff and thereby increased the likelihood of public confusion of the marks”). Common methods of encroachment are the junior user’s expansion of its business into different regions or into different markets. See Grupo Gigante, 391 F.3d at 1103 (citing Prudential Ins. Co., 694 F.2d at 1154). [9] We hold that the district court did not abuse its discretion when it found no progressive encroachment from SmokTILLAMOOK COUNTRY v. TILLAMOOK COUNTY 17539 er’s redesign of its labels, or Smoker’s direct sales to grocery stores. As to the labeling, the district court reasonably concluded that Smoker’s 1997 redesign “[did] not in any way make the new packaging more similar to Creamery’s packaging.” Tillamook I, 311 F. Supp. 2d at 1035. The pre-1997 labels all had used the phrase “Tillamook Country Smoker,” and some had emphasized the word “Tillamook.” Id. The 1997 redesign, adopting a uniform font and adding a “circle T” logo, was an insignificant change. Id. Likewise, the district court did not abuse its discretion in finding that Smoker’s new font and color scheme did not cause a material increase in consumer confusion. [10] Similarly, the district court did not abuse its discretion in finding that Smoker’s commencement of sales to supermarkets in 1997 represented normal business growth, not progressive encroachment. To establish progressive encroachment, Creamery would have had to show that Smoker “expand[ed] its business into different regions or into different markets.” Grupo Gigante, 391 F.3d at 1103 (emphasis added). A junior user’s growth of its existing business and the concomitant increase in its use of the mark do not constitute progressive encroachment. See Prudential Ins., 694 F.2d at 1154 (“[G]rowth alone does not infringement make.”). Had Smoker “expanded its business” into selling cheese in grocery stores, it would be a different story. 3. The fourth E-Systems factor: good faith ignorance by the junior user Creamery also argues that Smoker may not claim a laches defense because it did not act in “good faith ignorance” of Creamery’s trademark right. The district court did not abuse its discretion in rejecting this argument. [11] The district court relied on two pieces of evidence in the record to reject Creamery’s assertions. First, the court recounted the 1975 meeting between Creamery General Man17540 TILLAMOOK COUNTRY v. TILLAMOOK COUNTY ager Beale Dixon and Smoker founder Crawford Smith, where Dixon stated that he would object to “Tillamook Country Smoker” only if Smoker was “going to build a cheese plant.” Tillamook I, 311 F. Supp. 2d at 1026, 1032. Second, the court noted that Creamery had sold Smoker’s products in its factory store and catalog for years without objecting to the use of the mark. Id. at 1032. These facts refute any claim of bad faith on the part of Smoker.