Co-Existence Outside Of U.S. May Be Relevant To Obtaining Permanent Injunction In U.S.

La Quinta Worldwide LLC v. Q.R.T.M., S.A. de C.V., 762 F.3d 867 (9th Cir. Aug. 6, 2014)

It is a fundamental principle of trademark law, both in the United States and internationally, that trademark rights are territorial. That is, trademark rights are secured and protected within a certain territory (usually, a country), and what happens outside that territory is generally considered irrelevant to trademark rights in the territory. A recent ruling by the United States Court of Appeals for the Ninth Circuit ("Ninth Circuit") has called that territoriality principle into question. In doing so, the Ninth Circuit has continued a trend where injunctions are becoming more and more difficult to obtain in trademark infringement cases.

La Quinta Worldwide LLC v. Q.R.T.M., S.A. de C.V., dba Quinta Real (La Quinta) involves a trademark dispute between two hotel chains. La Quinta is a U.S.-based hotel chain in operation since 1968 with more than 800 mid-tier hotels across the United States. Quinta Real is a Mexico-based hotel chain with eight luxury properties in Mexico, the first having opened in 1986. The dispute arose because Quinta Real had an interest in opening a hotel under the QUINTA REAL name in the United States, and had entered into a letter of intent for that purpose in 1994 and again in 2007, although a U.S. hotel never materialized. At the same time, La Quinta had been operating hotels under the LA QUINTA name in Mexico since 2007 without objection by Quinta Real, the senior user in the territory.

In 2009, La Quinta filed a federal lawsuit in Arizona seeking to enjoin Quinta Real from opening a hotel in the United States. After conducting a bench trial, the district court determined that there was a likelihood of confusion between the marks LA QUINTA and QUINTA REAL, and granted a permanent injunction against use of QUINTA REAL in the United States.

Quinta Real appealed, raising four arguments, namely: (1) the court lacked subject matter jurisdiction; (2) no likelihood of confusion exists; (3) La Quinta's suit was barred by laches; and (4) the district court erred in issuing a permanent injunction. 762 F.3d at 871.

The Ninth Circuit affirmed the district court on the first three bases of appeal, but reversed and remanded on the question of whether plaintiff was entitled to a permanent injunction. 762 F.3d at 880.

Under the Lanham Act, courts have the "power to grant injunctions, according to the principles of equity and upon such terms as...