The key litigated issue before the US Court of Appeals for the First Circuit was whether the doctrine of progressive encroachment would defeat a trademark infringement defendant's laches defense where the defendant initially engaged in de minimis or low-level infringement.

The parties in this case are competing financial institutions operating in Puerto Rico. The plaintiffs include Oriental Financial Group, Inc. and Oriental Financial Services Corp. (Oriental). In 1964, Oriental began used the trademark ORIENTAL in connection with financial services. The defendant, Oriental's competitor, Cooperativa De Ahorro y Credito Oriental (Cooperativa) began using the COOP ORIENTAL mark in 1966 to reflect its corporate name. When Cooperativa first used the COOP ORIENTAL mark, its operations were geographically limited. Later, starting in 2008, Cooperativa began to expand the geographical reach of its business and, in 2009, greatly increased its advertising. As part of this new advertising campaign, it adopted a new logo using the COOP ORIENTAL mark with an orange trade dress similar to that used in Oriental's logo.

In 2010, Oriental filed suit against Cooperativa claiming service mark infringement under the Lanham Act, and seeking an injunction. Cooperativa argued that Oriental's claims were barred by laches.

The district court found that a likelihood of confusion existed and issued a limited injunction ordering Cooperativa to cease using its 2009 logo with the COOP ORIENTAL mark and orange trade dress, but allowed Cooperativa to revert to its pre-2009 COOP ORIENTAL mark with different trade dress. The district court declined to address the merits of Cooperativa's laches defense.

On appeal, Oriental argued that the district court's injunction should have been broader to include any use of the COOP ORIENTAL and similar marks, even if without the orange trade dress that appeared in the 2009 logo. Cooperativa cross-appealed and argued that there was no likelihood of confusion and that Oriental's request for a broader injunction was barred by laches.

In its October 18, 2012 opinion, the First Circuit vacated the district court's opinion and remanded the case 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.

On the issue of Cooperativa's laches defense, the court joined several of its sister circuits in adopting the doctrine of progressive encroachment. The court ruled that:

The First Circuit explained that the doctrine of progressive encroachment is a countermeasure to a laches defense, which, when applicable, would bar a laches defense even if a plaintiff knew of and failed to act on the defendant's infringement. The First Circuit further noted that, to apply, the doctrine requires proof that:

Cooperativa argued that Oriental's request for an expanded injunction was barred because it had used the COOP ORIENTAL mark as early as 1995 and Oriental failed to challenge its use. The First Circuit disagreed and pointed out that between 2008 and 2010, Cooperativa materially altered the reach of its operations and its advertising, bringing it more squarely into competition with Oriental. The court ruled that the doctrine of progressive infringement permitted a plaintiff to tolerate de minimis or low-level infringements before suing and concluded that any pre-2009 use of the COOP ORIENTAL marks was, in fact, de minimis. The court further ruled that it was reasonable as a matter of law for Oriental to delay bringing suit against Cooperativa.

By adopting the doctrine of progressive encroachment, the First Circuit joined a host of other federal circuits that have expressly or impliedly embraced this doctrine as a counterweight to a laches defense.