             United States Court of Appeals
                        For the First Circuit


Nos. 11-1473, 11-1476

                    ORIENTAL FINANCIAL GROUP, INC.,
                  ORIENTAL FINANCIAL SERVICES CORP.,
                        ORIENTAL BANK AND TRUST,

                Plaintiffs, Appellants/Cross-Appellees,

                                  v.

               COOPERATIVA DE AHORRO Y CRÉDITO ORIENTAL,

                 Defendant, Appellee/Cross-Appellant.


             APPEALS FROM THE UNITED STATES DISTRICT COURT

                    FOR THE DISTRICT OF PUERTO RICO

               [Hon. José A. Fusté, U.S. District Judge]


                                Before

                         Boudin, Selya and Dyk,*
                            Circuit Judges.



     Roberto C. Quiñones-Rivera, with whom Leslie Yvette Flores,
and McConnell Valdes LLC, were on brief, for appellants.
     James W. McCartney, with whom Jean G. Vidal Font, and Cancio,
Nadal, Rivera & Diaz, P.S.C., were on brief, for appellee.



                           October 18, 2012




     *
         Of the Federal Circuit, sitting by designation.
            DYK,   Circuit Judge.     The    parties    in   this   case are

competing    financial   institutions       operating   in    Puerto   Rico.

Plaintiffs-Appellants/Cross-Appellants, Oriental Financial Group,

Inc., Oriental Financial Services Corp., and Oriental Bank and

Trust1 (collectively, “Oriental”), have for many years used the

ORIENTAL mark in connection with the advertising, promotion, and

offering of financial services in Puerto Rico.           Oriental contends

that       beginning     in   or          around    2009,       Defendant-

Appellee/Cross-Appellant, Cooperativa De Ahorro y Crédito Oriental

(“Cooperativa”), used a confusingly similar mark, COOP ORIENTAL,

and a confusingly similar logo containing that mark in connection

with its financial business and services, in violation of Section

43(a) of the Lanham Act, 15 U.S.C. § 1125(a), and Puerto Rico

trademark law.

            Finding a likelihood of confusion, the district court

ordered Cooperativa to cease all use of its new 2009 logo (which

used the COOP ORIENTAL mark with an orange trade dress), but

allowed Cooperativa to revert back to using its pre-2009 logo (also

containing the COOP ORIENTAL mark, but with a different trade

dress).     On appeal, Oriental contends that the district court’s

injunction should have been broader to include any use of the COOP

ORIENTAL mark and similar marks (even when divorced from the trade



       1
          Oriental Financial Services Corp. and Oriental Bank and
Trust are subsidiaries of Oriental Financial Group, Inc.

                                    -2-
dress in the 2009 logo).        Cooperativa counters that Oriental’s

claim for injunctive relief against the COOP ORIENTAL mark and

similar marks fails on the merits because there is no likelihood of

confusion and the claim is barred by laches.

          We hold that Oriental’s claims are not barred by laches

because of the doctrine of progressive encroachment, and remand to

the district court to determine whether there is a likelihood of

confusion as to the COOP ORIENTAL mark and other marks and whether

the injunction should be broader, as Oriental contends.

                                    I.

          Oriental     first    began    using   the    ORIENTAL    mark   in

connection with its financial services business in 1964, when

Oriental’s predecessor, Oriental Federal Savings, opened its first

branch in the city of Humacao, located in southeastern Puerto Rico.

Until the late 1980s Oriental operated six branches, each located

in the southeastern region of Puerto Rico.             In the early 1990s,

Oriental began to expand to other regions of Puerto Rico, and by

1996, Oriental had relocated its main office from Humacao to San

Juan, in northern Puerto Rico, and operated sixteen branch offices

located in the metropolitan (near San Juan), eastern, and western

regions of Puerto Rico.        By 2009, Oriental operated 21 branches

throughout Puerto Rico, and by 2010, 43.

          Oriental’s    competitor,      Cooperativa,    is   a    non-profit

credit union offering various banking services such as personal


                                   -3-
checking   and    savings     accounts,     loans,   and   credit    products.

Cooperativa first began using the mark ORIENTAL in 1966 when its

full corporate name was “Cooperativa De Crédito Oriental.”2                Thus,

Cooperativa began to use the COOP ORIENTAL mark after Oriental, and

on appeal, it is undisputed that Oriental is the senior user

entitled    to     trademark       protection.           See     Volkswagenwerk

Aktiengesellschaft v. Wheeler, 814 F.2d 812, 815 (1st Cir. 1987)

(“The right to trademark and service mark rights is based on prior

use, or the one who first uses the marks in connection with a

peculiar line of business.”).

           At the time that Cooperativa first used the COOP ORIENTAL

mark, Cooperativa’s operations were geographically limited. In

1966, Cooperativa operated one branch (its current headquarters)

located in Humacao.      As of 1996, it operated three branches, with

two of those branches based in Humacao and one branch based in

Loiza, which is in northeastern Puerto Rico.               Starting in 2008,

Cooperativa began expanding its geographic reach by purchasing

branches   of    other   cooperatives.       Cooperativa       purchased   three

branches in      San   Juan   in   2008,   2009,   and   2010,   respectively.

Additionally, in 2010, Cooperativa purchased a branch in Ponce,

located in southern Puerto Rico.            As described in detail below,

Cooperativa’s allegedly infringing advertising and other activity



     2
          In 1973, Cooperativa changed its name to its current
corporate name, “Cooperativa De Ahorro y Crédito Oriental.”

                                      -4-
was    limited   until   the    late    2000s.       But   consistent      with    its

geographic expansion, in 2009, Cooperativa also began an expansive

advertising campaign in newspapers and on television, including the

use of advertising media not previously used by it, such as

billboards and cable television. As a part of its new advertising

campaign, Cooperativa also adopted a new logo using the COOP

ORIENTAL mark.      Cooperativa’s new logo contained an orange trade

dress similar to the orange trade dress used in Oriental’s logo.

Additionally,      the   size    of    the    term    “COOP”     was    reduced     in

Cooperativa’s new logo, emphasizing the term “ORIENTAL,” when

compared to prior versions of its logo also containing the COOP

ORIENTAL mark.

            On December 9, 2009, Oriental sent Cooperativa a cease

and desist letter “demand[ing] that [Cooperativa] IMMEDIATELY CEASE

AND DESIST from the unauthorized use of the ORIENTAL mark or any

variant    or    derivative     thereof      as   part     of   its    corporate    or

commercial name, services or the domain name of its website.” J.A.

800.    Despite the letter, Cooperativa continued to use the COOP

ORIENTAL mark.

            On May 21, 2010, Oriental filed suit against Cooperativa

in the United States District Court for the District of Puerto

Rico, asserting causes of action for, inter alia, service mark




                                        -5-
infringement under the Lanham Act and Puerto                Rico law.3    In

particular, Oriental alleged that Cooperativa’s “COOP ORIENTAL name

is confusingly similar to [Oriental’s] ORIENTAL Marks,” and that

Cooperativa’s “COOP ORIENTAL logo . . . is confusingly similar with

the ORIENTAL Marks.”        J.A. 15.        Oriental thus sought to enjoin

Cooperativa from, among other things, “directly or indirectly

infringing any of [Oriental’s] rights in the ORIENTAL Marks . . .

[by] use of: (i) the term ORIENTAL, including stylized depictions

thereof; (ii) any composite trademark that includes the term

ORIENTAL; or (iii) any composite trademark, including design marks

and slogans,      that   comprises    the    term   ORIENTAL[.]”   J.A. 28.

Oriental   also    sought   damages    for     Cooperativa’s   infringement.

Cooperativa contended that Oriental’s claims were barred by laches.

           The district court held a preliminary injunction hearing

in September 2010.       The parties agreed to convert the hearing into

a permanent injunction hearing.             On October 20, 2010, after the

hearing, the district court issued an Opinion and Order granting a

limited injunction against Cooperativa.              See Oriental Fin. Grp.

Inc. v. Cooperativa De Ahorro y Crédito Oriental (“Injunction

Order”), 750 F. Supp. 2d 396, 401 (D.P.R. 2010). In its opinion,



     3
          Oriental   also   asserted    causes   of   action   for
cybersquatting under the Anticybersquatting Consumer Protection
Act, 15 U.S.C. § 1125(d); unfair competition and service mark
dilution under the Lanham Act, 15 U.S.C. § 1125(a),(c); and unfair
competition under Puerto Rico law, P.R. Laws Ann. tit. 10, § 259.
However, these claims are not involved in these appeals.

                                      -6-
before addressing the merits, the court “briefly consider[ed]

[Cooperativa’s] argument that [Oriental’s] claims are barred by

laches.”     Id. at 402.    The court reasoned that although Oriental

“claim[s] an exclusive right to use the term ‘Oriental’ in relation

to financial services in Puerto Rico, . . . their submissions to

the court indicate their view that the infringing activity began in

2009, with Defendant’s deployment of its new logo and advertising

campaign.”    Id.   Thus, the court found “inapposite [Cooperativa’s]

arguments     as    to   [Oriental’s]    delay   in     complaining   about

[Cooperativa’s] use of ‘Oriental,’ which dates back to 1966, or

‘Coop Oriental,’ which dates back to 1995.”           Id.   Accordingly, the

district court declined to address the merits of Cooperativa’s

laches defense.

            The court found that Oriental’s new logo infringed the

ORIENTAL mark by creating a likelihood of confusion. Id. at 404.

The court also determined that Oriental suffered ongoing and

irreparable harm because of Cooperativa’s infringement, that the

balance of hardships favored Oriental, and that the public interest

would be served by an injunction.         Id. at 405; see eBay Inc. v.

MercExchange, L.L.C., 547 U.S. 388, 391-94 (2006).                Thus, the

district court enjoined Cooperativa from “using its new logo—in

particular, the prominent placement of the word ‘Oriental’—and its

new color scheme, the combination of which infringes [Oriental’s]




                                   -7-
service mark under both federal and Puerto Rico law.”    Injunction

Order, 750 F. Supp. 2d at 406.

          In contrast, the district court specifically allowed

Cooperativa to “revert to the mark and dress it used prior to

2009,” which included use of the COOP ORIENTAL mark, or to “adopt

new [logos] consistent with th[e] injunction.”   Id.   The district

court did not address the likelihood of confusion posed by the COOP

ORIENTAL mark or other similar marks, noting that it did not “find

that [Cooperativa’s] use of ‘Oriental’ in all instances constitutes

infringement, nor [that] . . . its use of ‘Coop Oriental’ [was] per

se infringing.”   Id. at 404.

          The district court declined to award Oriental damages for

Cooperativa’s infringement, noting that Oriental presented “no

evidence of quantifiable damages,” and “[t]he controversy is now

resolved and no discernible major future damages seem apparent.”

Id. at 405.   Damages are not an issue on appeal.

          On November 18, 2010, the district court held a status

conference with the parties during which Cooperativa submitted

several proposed new logos for the court’s approval.    The district

court indicated which logos were permissible by either circling or

crossing out the proposed logos.       The district court crossed

through every logo that used the COOP ORIENTAL mark (each of which

no longer contained an orange trade dress), but approved nearly all

of the logos that used only Cooperativa’s full corporate name,


                                 -8-
“Cooperativa De Ahorro y Crédito Oriental.” On December 6, 2010,

Oriental filed a motion seeking attorneys’ fees. Cooperativa and

Oriental   settled   the   fees    issue   on    December    23,    2010,    with

Cooperativa agreeing to pay $55,000 in fees to Oriental.

           On January 11, 2011, the district court denied Oriental’s

motion to amend or alter the court’s injunction order, in which

Oriental sought to broaden the district court’s injunction to

extend to all use of the COOP ORIENTAL and COOPERATIVA ORIENTAL

marks.   The   district    court   reasoned      that    Oriental       “presented

evidence of    consumer    confusion   that      was    limited    to    the time

following the 2009 overhaul of [Cooperativa’s] corporate image—that

is, not coinciding with the use of its shortened names, which began

in 1995,” and thus refused to “find that use infringing under

federal trademark law.”       J.A. 505.         The district court entered

final judgment on March 10, 2011.          Oriental timely appealed, and

Cooperativa cross-appealed.

                                    II.

           Section 43(a) of the Lanham Act provides, in relevant

part:

     Any person who, on or in connection with any goods or
     services, . . . uses in commerce any word, term, name,
     symbol, or device, or any combination thereof, . . .
     [which] is likely to cause confusion . . . as to the
     origin, sponsorship, or approval of his or her goods,
     services, or commercial activities by another person, .
     . . shall be liable in a civil action by any person who
     believes that he or she is or is likely to be damaged by
     such act.


                                    -9-
15 U.S.C. § 1125(a)(1).4 “Generally speaking, the [Lanham] Act

proscribes   the    unauthorized   use    of    a    service    mark    when   the

particular usage causes a likelihood of confusion with respect to

the identity of the service provider.”              Int’l Ass’n of Machinists

& Aerospace Workers, AFL-CIO v. Winship Green Nursing Ctr., 103

F.3d 196, 200 (1st Cir. 1996); see also Two Pesos, Inc. v. Taco

Cabana, Inc., 505 U.S. 763, 769 (1992) (“It is, of course, . . .

undisputed   that   liability   under     §    43(a)    [of    the   Lanham    Act]

requires proof of the likelihood of confusion.”).

          While the district court’s overall approach to this case

was generally both careful and correct, we conclude that the

district court made an error that requires a remand.                 The district

court was correct that Oriental sought injunctive relief only based

on Cooperativa’s alleged infringing activities beginning in 2009

(when Cooperativa combined use of the COOP ORIENTAL mark with a new

orange trade dress similar to that used in Oriental’s logo).                   But

to the extent that the district court concluded that Oriental did

not challenge the COOP ORIENTAL mark divorced from the 2009 orange

trade dress, it was incorrect.

          The record is clear that Oriental challenged not only

Cooperativa’s use of the 2009 logo and trade dress, but also


     4
          “The Puerto Rico Trademark Act of 2009 incorporates
elements of federal trademark law . . . . Article 26 of the Act is
the analogue to [section 43(a) of the Lanham Act], and it similarly
creates civil liability for infringement of service marks used in
Puerto Rico.” Injunction Order, 750 F. Supp. 2d at 405.

                                   -10-
Cooperativa’s use of the COOP ORIENTAL mark and similar marks apart

from that trade dress.      Oriental’s complaint alleged that “[i]n or

around 2009,” Cooperativa expanded its business to San Juan and

“launched a new brand identity featuring the confusingly similar

name COOP ORIENTAL in advertising and sales literature published in

a variety of media.”      J.A. 15.         Oriental also explicitly asserted

that   Cooperativa’s     “use   of    the    name    COOP   ORIENTAL    infringes

[Oriental’s] ORIENTAL Marks and is likely to cause confusion,

mistake and deception of the public as to the identity and origin

of [Cooperativa] and its business, product and services . . . .”

J.A. 21.      Accordingly, Oriental sought an injunction barring

Cooperativa’s use of “the name COOP ORIENTAL or any other name

substantially similar to the ORIENTAL Marks.”                    J.A. 22.   Thus,

Oriental’s claims were not limited to the COOP ORIENTAL mark

combined with the trade dress used in the 2009 logo, but were

directed to all use of the COOP ORIENTAL mark and other confusingly

similar    marks.      (Oriental     did    not,    and   does   not,   object   to

Cooperativa’s use of its full corporate name.)

            Although     Oriental      clearly       asserted      a    claim    of

infringement against Cooperativa’s use of the COOP ORIENTAL mark

standing alone, the district court’s treatment of this claim is

seemingly in tension.        On the one hand, the district court (1)

apparently found that Oriental challenged only the 2009 logo and

trade dress, (2) found that use of the COOP ORIENTAL mark was not


                                      -11-
“per se infringing,” and (3) granted an injunction which permitted

Cooperativa to “revert to the mark and dress it used prior to 2009”

(which contained the COOP ORIENTAL mark). Injunction Order, 750 F.

Supp.   2d   at    404,   406.     In    an    apparent    conflict       with   these

determinations,      in   its    post-injunction      status      conference,       the

district court rejected Cooperativa’s use of all proposed logos

containing the COOP ORIENTAL mark standing alone (without the 2009

trade dress).

             Then, following the status conference, the district court

rejected Oriental’s request that the injunction be broadened to

include all use of the abbreviated COOP ORIENTAL mark on the ground

that    Oriental    had   not    presented      pre-2009       evidence   of     actual

consumer confusion relating to Cooperativa’s use of the COOP

ORIENTAL mark. See J.A. 505.

             This ruling is contrary to the established principle that

evidence of actual confusion is not necessary to establish a

likelihood of confusion. Although “an absence of actual confusion,

or a negligible amount of it, between two products after a long

period of coexistence on the market is highly probative in showing

that    little     likelihood      of    confusion        exists,”    Aktiebolaget

Electrolux v. Armatron Int’l, Inc., 999 F.2d 1, 4 (1st Cir. 1993),

“a plaintiff [suing under the Lanham Act] need only show that a

likelihood    of    confusion     is    in    prospect;    a    showing    of    actual

confusion is not required.”            Societe Des Produits Nestle, S.A. v.


                                        -12-
Casa Helvetia, Inc., 982 F.2d 633, 640 (1st Cir. 1992) (emphasis

added).5   Thus, contrary to the district court’s statement, the

fact that there was no pre-2009 evidence of actual confusion is not

dispositive of Oriental’s challenge to Cooperativa’s use of the

COOP ORIENTAL mark (though, as we note below, this lack of pre-2009

evidence   should    be   considered     by   the     district   court   in   its

likelihood of confusion analysis).

           Given the district court’s treatment of this issue, we

think that a remand is necessary to consider whether Oriental is

entitled   to   broader     injunctive      relief.      In   addressing      that

question, the key issue is whether the use of COOP ORIENTAL

standing alone      would   create   a   likelihood      of   confusion.       (As

discussed below, the likelihood of confusion issue is also raised

with respect to other similar marks, but the record is less well

developed as to these other marks.)




     5
          See also Venture Tape Corp. v. McGills Glass Warehouse,
540 F.3d 56, 61-62 (1st Cir. 2008) (“While evidence of actual
confusion is often deemed the best evidence of possible future
confusion, proof of actual confusion is not essential to finding
likelihood of confusion.” (quoting Borinquen Biscuit Corp. v. M.V.
Trading Corp., 443 F.3d 112, 120 (1st Cir. 2006)) (internal
quotation marks omitted)); Volkswagenwerk Aktiengesellschaft v.
Wheeler, 814 F.2d 812, 818 (1st Cir. 1987) (“A showing of actual
confusion is not essential in order to find a likelihood of
confusion.”); Baker v. Simmons Co., 307 F.2d 458, 463 (1st Cir.
1962) (noting that “to satisfy the standard of a likelihood of
confusion,” “[a]ctual examples of confusion were not required”).

                                     -13-
                                    III.

            “Eight factors . . . are typically used to assess the

likelihood of confusion: (1) the similarity of the marks; (2) the

similarity of the goods; (3) the relationship between the parties’

channels of trade; (4) the relationship between the parties’

advertising;     (5)   the   classes   of    prospective   purchasers;     (6)

evidence    of   actual   confusion;   (7)    the   defendant’s   intent   in

adopting its mark; and (8) the strength of the plaintiff’s mark.”

Beacon Mut. Ins. Co. v. OneBeacon Ins. Grp., 376 F.3d 8, 15 (1st

Cir. 2004).      This court has made clear that “[t]he application of

[the eight] factors to the record is a highly fact-intensive

inquiry.”    The Shell Co. (P.R.) Ltd. v. Los Frailes Serv. Station,

Inc., 605 F.3d 10, 22 (1st Cir. 2010). “A proper analysis takes

cognizance of all eight factors but assigns no single factor

dispositive weight.”         Peoples Fed. Sav. Bank v. People’s United

Bank, 672 F.3d 1, 10 (1st Cir. 2012) (quoting Borinquen Biscuit

Corp., 443 F.3d at 120); see also Venture Tape, 540 F.3d at 61 (“No

single criterion is necessarily dispositive in [the likelihood of

confusion] inquiry.”).

            In its injunction order, the district court appeared to

analyze the eight factors only with respect to the 2009 logo.

However, many of the findings made by the district court are not

specific to the orange trade dress contained in the 2009 logo, and

thus are equally relevant in assessing Cooperativa’s use of the


                                    -14-
COOP ORIENTAL mark standing alone. For example, the district court

weighed    the   second   (similarity      of    the     goods)   and     third

(relationship between the parties’ channels of trade) factors in

favor of Oriental, noting that Oriental and Cooperativa “offer many

of the same services to some of the same geographical regions in

Puerto Rico.”     Injunction Order, 750 F. Supp. 2d at 403.                 The

district court similarly weighed the fourth (relationship between

the   parties’   advertising)   and    fifth     (classes    of   prospective

purchasers) factors in favor of Oriental, recognizing that Oriental

and   Cooperativa    “advertise       in   the    same      newspapers,     and

[Cooperativa] does not limit its clientele to a particular income

level.”6   Id.   Finally, as to the eighth factor (strength of the

plaintiff’s mark), the court found (as conceded by Cooperativa)

that Oriental’s “mark is strong in Puerto Rico.”              Id. at 403-04.

These factual findings equally support a finding of likelihood of

confusion with respect to the COOP ORIENTAL mark divorced from the

2009 logo.

           In addition to these findings by the district court,

Oriental urges that evidence with respect to other factors also

weighs in favor of finding a likelihood of confusion.              While the

evaluation of this evidence is for the district court in the first



      6
          Oriental contended that although Cooperativa claimed to
serve primarily low-income customers, with its 2009 expansion,
Cooperativa sought to cater to a larger segment of the population.
The district court agreed with Oriental.

                                  -15-
instance, we conclude that there is at least evidence in the record

that would support Oriental’s position. Oriental points out with

reference to the first factor (similarity of the marks) that the

only difference between the marks is the use of the term “COOP” in

Cooperativa’s mark.            “COOP” (short for cooperative (or in Spanish,

cooperativa)) is merely a descriptive term.                            “[A]ddition of a

suggestive          or    descriptive     element     [to     an   arbitrary          mark]   is

generally         not     sufficient    to    avoid    confusion.”7             4    J.   Thomas

McCarthy, McCarthy on Trademarks and Unfair Competition § 23:50

(4th ed. 2012).            Moreover, the ORIENTAL mark is used as a surname

in Oriental’s family of marks to identify businesses and services

associated with Oriental, rendering the addition of “COOP” even

less significant.            See J & J Snack Foods Corp. v. McDonald’s Corp.,

932 F.2d 1460, 1462 (Fed. Cir. 1991) (“A family of marks is a group

of marks having a recognizable common characteristic, wherein the

marks       are     composed   and     used    in    such    a   way     that       the   public

associates          not    only   the     individual         marks,      but        the   common

characteristic of the family, with the trademark owner.”).                                 Thus,

the         first     factor      could       weigh     in       favor     of         Oriental.

                  As to the sixth factor (evidence of actual confusion), as

noted above, the district court erred to the extent that it held



        7
          The district court found that the ORIENTAL mark is “an
arbitrary mark that merits protection under federal trademark law.”
Injunction Order, 750 F. Supp. 2d at 403. Cooperativa does not
challenge this finding.

                                              -16-
that   an    absence      of    evidence   of    pre-2009   actual   confusion

necessitates a finding of no likelihood of confusion.                But, even

though not required, Oriental presented evidence of post-2009

actual confusion arguably attributable to use of the COOP ORIENTAL

mark standing alone.

             A supervisor at one of Oriental’s branches testified that

several customers had attempted to cash checks bearing the name

COOPERATIVA ORIENTAL at the Oriental branch, apparently associating

that name with Oriental’s business.             The supervisor also testified

that customers with Cooperativa accounts had attempted to withdraw

or deposit money at the Oriental branch.                 A customer relations

officer     at    a   different    Oriental     branch   also   testified    that

customers had called an Oriental branch attempting to verify their

accounts,        which   were   actually   held    by    Cooperativa.       These

customers, according to the employee’s testimony, relied on the

similarity of Oriental’s marks and the COOP ORIENTAL mark in

assuming that Cooperativa was a subsidiary of Oriental.                 Oriental

also presented several other examples of actual consumer confusion,

including telephone calls by Cooperativa customers to Oriental

branches and inquiries by Oriental customers about branches that

actually were a part of Cooperativa.              Each of these instances of

actual confusion appeared to be attributable to the use of the name

COOP ORIENTAL without the logo.            Such evidence of actual customer




                                       -17-
confusion could support a finding of likelihood of confusion with

respect to use of the COOP ORIENTAL mark standing alone.

            At the same time, Cooperativa argues that Oriental’s lack

of   pre-2009    evidence   of    actual    confusion   also   bears   on   the

likelihood of confusion question, especially given that the COOP

ORIENTAL mark was used by Cooperativa before 2009, and there is no

evidence of pre-2009 confusion. As we discuss above, the absence of

such evidence might be pertinent, though that seems unlikely given

the very limited nature of Cooperativa’s pre-2009 activity, as

addressed in detail below.

            Finally, as to the seventh factor (defendant’s intent in

adopting its mark), Oriental contends that Cooperativa was aware of

and seeks to benefit from Oriental’s reputation and recognition in

the financial services industry by using the COOP ORIENTAL mark.

Indeed, as Oriental points out, the district court has already

found, based on the similarity of Cooperativa’s mark and trade

dress, that Cooperativa “knew of and intended to benefit from

[Oriental’s] considerable advertising efforts.”           Injunction Order,

750 F. Supp. 2d at 403.          A similar inference might also be drawn

based upon Cooperativa’s use of the COOP ORIENTAL mark standing

alone.

            In short, the district court has already found that some

of the eight factors support a finding of likelihood of confusion.

As   to   the   others,   Oriental    has   presented   evidence   that,    if


                                     -18-
credited, could also weigh in favor of finding a likelihood of

confusion based upon use of the COOP ORIENTAL mark on its own.

However, we have warned that “this court on appeal will not

undertake to find the facts or to lay down rulings on specific

issues . . . , but will remand the case to the court below for

final disposition on the evidence.”         Munoz v. Porto Rico Ry. Light

& Power Co., 83 F.2d 262, 270 (1st Cir. 1936). Accordingly, we

remand to the district court to determine whether Cooperativa’s use

of the COOP ORIENTAL mark creates a likelihood of confusion,

entitling Oriental to broader injunctive relief.

            We note that Oriental also challenges Cooperativa’s use

of the COOPERATIVA ORIENTAL mark and other potentially infringing

marks.     It does not appear that the district court has made any

findings regarding these allegedly infringing marks. On remand the

district    court   should    also   consider   whether   the   COOPERATIVA

ORIENTAL mark (and other potentially infringing usages of the

ORIENTAL mark) poses a likelihood of confusion. This consideration

does not include evaluation of Cooperativa’s full corporate name,

which Oriental concedes is non-infringing.

                                     IV.

            We   turn   now   to   Cooperativa’s   cross-appeal.     While

Cooperativa asserts the defense of laches as a cross-appeal, it is

in reality offering another ground for affirming the judgment of

the district court.      Cooperativa does not challenge the judgment


                                     -19-
entered by the district court, enjoining it from use of the 2009

logo and trade dress, but rather urges that the judgment be

affirmed.       And Cooperativa is clear that it no longer seeks to use

the new logo adopted in 2009, and it has fully complied with the

district court’s injunction.          Cooperativa contends only that the

expanded injunction sought by Oriental is barred by the doctrine of

laches because the COOP ORIENTAL mark and earlier variations               were

used       by   Cooperativa   as   early   as   1995,   but   such   use   went

unchallenged by Oriental.

                “Laches . . . is an equitable doctrine which penalizes a

litigant for negligent or wilful failure to assert his rights . .

. .”   Valmor Prods. Co. v. Standard Prods. Corp., 464 F.2d 200, 204

(1st Cir. 1972).         Although the circuits vary somewhat in their

interpretations as to when the laches defense can operate to bar

injunctive relief, the defense is now generally accepted whether

asserted as a defense to an injunction or damages, and we agree

that the defense is available in some circumstances to defend

against an injunction.8 We need not address those circumstances in


       8
          “The argument that laches is never a defense to an
injunction, no matter what the equities, has been asserted and
rejected in several cases.” 6 McCarthy, supra, § 31:6 n.2.
          The general rule of the circuits, as quoted with approval
by Professor McCarthy, has been that “‘mere delay’ will not, by
itself, bar a plaintiff’s suit, but there must be some element of
estoppel, such as reliance by the defendant. . . . All this means,
however, is that a balancing of the equities is required, which
would be the case with any principle of equity.” 6 Id. § 31:6
(quoting Saratoga Vichy Spring Co. v. Lehmann, 625 F.2d 1037, 1040
(2d Cir. 1980)). This view is corroborated by a majority of the

                                      -20-
detail because, as will be seen, we conclude that the defense is

not available here.




circuits. See, e.g., Ray Commc’ns, Inc. v. Clear Channel Broad.,
Inc., 673 F.3d 294, 307 (4th Cir. 2012) (noting that “laches may
act as a bar to both monetary and injunctive relief under certain
circumstances,” such as where aggravating factors cause the balance
of the equities to strongly favor the defendant (emphasis in
original));   Univ. of Pitt. v. Champion Prods., Inc., 686 F.2d
1040, 1045 (3d Cir. 1982) (noting that cases can “give rise to
affirmative rights in the defendant as a result of detrimental
reliance” under a laches theory, but that cases involving “mere
delay” will not bar prospective injunctive relief); Prudential Ins.
Co. v. Gibraltar Fin. Corp., 694 F.2d 1150, 1152 n.1 (9th Cir.
1982) (noting that that “[t]here is a wealth of authority in other
circuits that laches can bar injunctive relief” and citing several
cases where the balancing of the equities favored the defendant);
Armco, Inc. v. Armco Burglar Alarm Co., Inc., 693 F.2d 1155, 1161
n.14, 1161-62 (5th Cir. 1982) (noting that “[t]here is no doubt
that laches may defeat claims for injunctive relief” and
considering the equitable factors involved in the laches defense);
Saratoga Vichy Spring Co., 625 F.2d at 1040 (noting that a
balancing of the equities beyond “mere delay” is needed to bar the
plaintiff’s prayer for injunctive relief under a laches theory);
Seven-Up Co. v. O-So-Grape Co., 283 F.2d 103, 106 (7th Cir. 1960)
("Laches does not necessarily constitute a conclusive and automatic
bar to injunctive relief in trademark actions. However, in many
instances, the delay may be so prolonged and inexcusable that it
would be inequitable to permit the plaintiff to seek injunctive
relief as to future activities.").
          Currently only the Sixth Circuit has suggested that
laches cannot be a defense to injunctive relief. Kellogg Co. v.
Exxon Corp., 209 F.3d 562, 568 (6th Cir. 2000) (“Although laches
precludes a plaintiff from recovering damages, it does not bar
injunctive relief.”). McCarthy suggests that “a careful reading of
[this case] reveals either that such language was dictum, that [the
case was] lacking the traditional elements of an estoppel by laches
or that [it] was merely referring to ‘delay’ per se.” 6 McCarthy,
supra, § 31:6. Indeed, Kellogg acknowledges that ‘there is that
narrow class of cases where the plaintiff’s delay has been so
outrageous, unreasonable and inexcusable as to constitute a virtual
abandonment of its right.’” 209 F.3d at 569 (quoting Univ. Of
Pitt., 686 F.2d at 1044).

                               -21-
              “Laches requires proof of (1) lack of diligence by the

party against whom the defense is asserted, and (2) prejudice to

the party asserting the defense.”            Museum of Fine Arts, Bos. v.

Seger-Thomschitz, 623 F.3d 1, 10 n.9 (1st Cir. 2010) (quoting

Costello v. United States, 365 U.S. 265, 282 (1961)).                However,

laches applies only where the plaintiff knew or should have known

of the infringing conduct. See Valmor Prods., 464 F.2d at 204; see

also What-A-Burger of Va., Inc. v. Whataburger, Inc. of Corpus

Christi, Tex., 357 F.3d 441, 450 (4th Cir. 2004) ("Instead of

focusing on when the trademark owner first knew that another party

was using its mark, the court should be trying to determine the

time at which the use became infringing and the time at which the

owner should have known it . . . ."); ProFitness Physical Therapy

Ctr. v. Pro-Fit Orthopedic & Sports Physical Therapy P.C., 314 F.3d

62, 70 (2d Cir. 2002) (“[A] plaintiff should not be obligated to

sue until its right to protection has ripened such that plaintiff

knew or should have known . . . that plaintiff had a provable

infringement claim against defendant.”).

              Oriental    contends   that   Cooperativa’s   laches    defense

should   be    rejected    both   because:    (1)   Cooperativa   failed   to

establish that Oriental had actual or constructive knowledge of

Cooperativa’s use of the COOP ORIENTAL mark prior to 2009, and (2)

Cooperativa failed to establish prejudice. We need not resolve

these questions — which involve factual disputes between the


                                     -22-
parties — for we conclude now that, even if both knowledge and

prejudice were established — the laches defense is barred by the

doctrine of progressive encroachment.

            As the Sixth Circuit noted in Kellogg, “Progressive

encroachment is an offensive countermeasure to the affirmative

defense[]   of   laches    .     .    .    ;     upon   a   finding   of   progressive

encroachment,      the   delay       upon      which    [laches     is]    premised   is

excused.”   Kellogg Co. v. Exxon Corp., 209 F.3d 562, 571 (6th Cir.

2000). There is general agreement in other circuits that the

doctrine of “progressive encroachment” can bar the defense of

laches, and that “a trademark owner is not forced by the rule of

laches to sue” where the doctrine applies. 6 McCarthy, supra, §

31:20; see Roederer v. J. Garcia Carrion, S.A., 569 F.3d 855, 859-

60 (8th Cir. 2009); Tillamook Country Smoker, Inc. v. Tillamook

Cnty.   Creamery    Ass’n,     465        F.3d    1102,     1110   (9th    Cir.   2006);

ProFitness Physical Therapy, 314 F.3d at 69-70; Chattanoga Mfg.,

Inc. v. Nike, Inc., 301 F.3d 789, 794 (7th Cir. 2002); Kellogg, 209

F.3d at 570-73; Kason Indus., Inc. v. Component Hardware Grp.,

Inc., 120 F.3d 1199, 1205-06 (11th Cir. 1997).                     We join our sister

circuits in holding that the doctrine of progressive encroachment

can bar the laches defense in a trademark case, and we conclude

that, based on the undisputed facts, this doctrine is applicable

here.




                                           -23-
            As a general rule the progressive encroachment doctrine

requires    proof   that   (1)   during   the    period   of    the   delay   the

plaintiff could reasonably conclude that it should not bring suit

to challenge the allegedly infringing activity; (2) the defendant

materially altered its infringing activities; and (3) suit was not

unreasonably delayed after the alteration in infringing activity.

See generally 6 McCarthy, supra, § 31:20.              Here, satisfaction of

the second and third requirements are not open to serious dispute.

            The second requirement “turns . . . on the likelihood of

confusion resulting from the defendant’s moving into the same or

similar market area and placing itself more squarely in competition

with the plaintiff.”       Kellogg, 209 F.3d at 573 (emphasis added).

Put succinctly, we ask “whether [the] defendant, 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.”             ProFitness Physical

Therapy, 314 F.3d at 70 (emphasis added); Kason Indus., 120 F.3d at

1205; see also Tillamook Country Smoker, 465 F.3d at 1110 (“To

establish progressive encroachment, [a plaintiff] . . . ha[s] to

show that [the defendant] ‘expand[ed] its business into different

regions or into different markets.’” (quoting Grupo Gigante SA De

CV v. Dallo & Co., Inc., 391 F.3d 1088, 1103 (9th Cir. 2004)

(emphasis    added))).     Increases      in    the    allegedly      infringing

advertising are also pertinent.


                                     -24-
           During     the    period      from     2008     to    2010,    Cooperativa

materially   altered       the   reach    of    both     its    operations     and   its

allegedly infringing advertising. As to its operations, Cooperativa

operated only three branches in the mid to late 1990s, and these

branches were located almost exclusively within Humacao. At that

time, Cooperativa had no presence in San Juan. Oriental, meanwhile,

was operating several branches throughout the northern, eastern,

and western regions of Puerto Rico, with its main office in San

Juan. It was not until 2008 that Cooperativa began to expand its

business into San Juan, acquiring three San Juan branches by 2010.

           So too in 2009, Cooperativa expanded its advertising

efforts to reach more consumers throughout Puerto Rico using the

allegedly infringing mark.         Rather than primarily advertising its

products and services in local publications as it had done in the

past, Cooperativa used much more expansive efforts to advertise its

services   using     the    allegedly      infringing          mark,     and   included

billboards, cable television, and athletic sponsorship in those

efforts.     There    is    no   dispute       that    Cooperativa       expanded    its

business from a regional to an island-wide business and expanded

its allegedly infringing activity “such that it [was] placed more

squarely in competition with the plaintiff.”9


     9
          As the McCarthy treatise notes, changes in the mark can
also support a finding of progressive encroachment: specifically,
“[c]hanges in the quality or quantity of the allegedly infringing
use can often excuse delay in suing.” See 6 McCarthy, supra, §
31:20.   McCarthy notes that, “[f]or example, where defendant

                                         -25-
            As to the third requirement, there is no doubt that

Oriental brought suit shortly after these changes occurred. The

complaint   was   filed   on    May   21,     2010,   which    was   just   after

Cooperativa   began   redirecting       its    operations     and    advertising

efforts in 2008 and 2009, respectively. There is not even a

contention that Oriental unreasonably delayed bringing suit after

Cooperativa   began   its      corporate     expansion   and    increased     its

advertising activities.

            The primary dispute in this case concerns the first

requirement. This prong of the test asks first whether the right to

relief was uncertain at an earlier time as to justify delay in


incorporated   as   ‘Ever-Ready   Fluorescent   Company,’   selling
electrical products under other marks, and 27 years later in 1971
began selling high-intensity lamps and bulbs with the trademark
‘Ever-Ready’ on them, the court found that Union Carbide’s suit
filed in 1971 was timely.” 6 Id. (citing Union Carbide Corp. v.
Ever-Ready, Inc., 531 F.2d 366 (7th Cir. 1976)). This view has been
adopted by some circuits. See, e.g., Mead Johnson & Co. v. Baby’s
Formula Svc., Inc., 402 F.2d 19 (5th Cir. 1968)(holding that, where
the defendant used a non-infringing mark for years and then changed
the mark to an infringing use, the years of non-infringing use are
not counted towards laches); Indep. Nail & Packing Co. v.
Stronghold Screw Prods., Inc., 205 F.2d 921 (7th Cir. 1953)
(rejecting laches defense under the doctrine of progressive
encroachment where plaintiff knew that the defendant was making a
minimal use of an infringing mark but did not sue until the
defendant changed its corporate name to include the infringing
mark); O. & W. Thum Co. v. Dickinson, 245 F. 609, 623 (6th Cir.
1917) (rejecting laches defense under progressive encroachment
theory where plaintiff “took definite action” after the defendant
had made “radical and apparently permanent changes in [its]
trademark and trade dress”).
     Changes in the mark here cannot support a progressive
encroachment finding because Oriental seeks to invoke the doctrine
of progressive encroachment not as to the changed mark, but as to
the earlier COOP ORIENTAL mark and similar marks.

                                      -26-
bringing suit; that is, the defendant’s activities did not present

a clear case of infringement. Thus, the progressive encroachment

doctrine allows the plaintiff to “wait[] until the ‘likelihood of

confusion looms large’ to bring the action.”                   See, e.g., Kellogg,

209 F.3d at 570-71 (quoting Sara Lee Corp. v. Kayser-Roth Corp., 81

F.3d 455, 462 (4th Cir. 1996)); Profitness Physical Therapy, 314

F.3d at 67 (same).           This is so because “the plaintiff [should have]

some latitude in the timing of its bringing suit” where the

infringement has not become clearly actionable. Kellogg, 209 F.3d

at 570.     This test requires the court to perform a likelihood of

confusion analysis, “determin[ing] . . . whether and when any

likelihood of confusion may have ripened into a claim.” Id. at 571

(quoting Kason Indus., 120 F.3d at 1206-07 (emphasis added)).

            Alternatively, the inquiry under the first prong is

whether the earlier infringement (in this case, the pre-2009

infringement), even if actionable, was so small in scope that a

reasonable trademark owner could conclude that an infringement suit

was not     worth      the    costs of     bringing    suit.    Specifically,     the

“trademark     owner         need   not   sue    in   the   face   of   de   minimis

infringement by the junior user.” Tillamook Country Smoker, 465

F.3d at 1110 (emphasis in original); see also Grupo Gigante, 391

F.3d at 1103 (“The [progressive encroachment] doctrine allows a

plaintiff    to     delay      when   a   defendant     engages    in   de   minimis

infringement      at    first,      but   then   gradually     encroaches    on   the


                                          -27-
plaintiff’s market.”); AM Gen. Corp. v. DaimlerChrysler Corp., 311

F.3d 796, 823 (7th Cir. 2002)(noting that a trademark owner can

“‘tolerate de minimis or low level infringements’ and still have

the right to ‘act promptly’”)(quoting 6 McCarthy, supra, § 31:21));

6 McCarthy, supra, § 31:20 (noting that progressive encroachment

does not require the trademark owner to sue immediately for a “low

level infringement”).

           We    agree   that   the   progressive    encroachment     doctrine

allows an infringement plaintiff to tolerate de minimis or low-

level infringements prior to bringing suit (assuming that the other

requirements of the doctrine are satisfied). Here, we conclude that

any potential pre-2009 infringement relating to Cooperativa’s use

of the COOP ORIENTAL marks was de minimis. Although Cooperativa

produced some evidence of advertisements from between 1995 and 1998

that   used     the   COOP   ORIENTAL    mark,    all   but    one   of    these

advertisements were from a single newspaper in the Humacao region,

and the one exception appeared in another regional newspaper. And

although Cooperativa also provided evidence that it ran a handful

of national television advertisements in 1997, there is no evidence

that   these    advertisements    used   the     allegedly    infringing    COOP

ORIENTAL mark, as opposed to Cooperativa’s full corporate name.

Further, although the COOP ORIENTAL mark may have appeared in

Cooperativa’s logo since 1996, Cooperativa did not furnish any

evidence from between 1999 and 2009 demonstrating how or in what


                                      -28-
degree this logo was disseminated in Puerto Rico. Indeed, there are

no advertisements of any sort from Cooperativa in the record dated

between 1999 and 2009. Finally, although Cooperativa provides

evidence that it registered the domain name www.cooporiental.com in

2004, and such a domain had the potential to reach a wide audience,

Cooperativa failed to provide evidence that either (1) the website

was   consistently    active    since   2004   (indeed,    record   evidence

indicates that the site was still under construction in 2010); or

(2) the website was frequented by its customers or other users —

specifically, Cooperativa furnished no evidence of hit counts or

other indicators or website traffic. Given the national scope of

Oriental’s business, the limited geographic scope of Cooperativa’s

business, and the limited scope of the allegedly infringing uses,

we conclude that the allegedly infringing activity was de minimis

before 2009 and that the doctrine of progressive encroachment

applies. Thus, it was reasonable as a matter of law for Oriental to

delay bringing suit against Cooperativa with respect to the COOP

ORIENTAL mark and similar marks.

           Based     on   the   undisputed     facts,     the   doctrine   of

progressive encroachment defeats the laches defense asserted by

Cooperativa. On remand, Cooperativa’s laches defense is precluded.

                                    V.

           For the foregoing reasons, we vacate the district court’s

judgment to the extent that the district court found that Oriental


                                   -29-
did not assert claims of infringement based on Cooperativa’s use of

the COOP ORIENTAL mark and similar marks.       We remand to the

district court to determine whether the COOP ORIENTAL mark and

similar marks create a likelihood of confusion, and to fashion an

appropriate injunction if a likelihood of confusion is established.



Affirmed-in-part; Vacated-in-part; and Remanded.

Costs to neither party.




                               -30-
