The Hotel Meliá ("HMI") has been in business since the 1890s, in the same location in Ponce, Puerto Rico, and hosted the likes of President Theodore Roosevelt. It never registered its mark with the USPTO, or with the Puerto Rico Department of State.
Dorpan, a subsidiary of Sol Meliá, a Spanish company that owns hotels around the world, owns the rights to several marks including the word "Meliá" (referenced together as "Dorpan"). In 2007, Dorpan opened the Gran Meliá, a luxury resort in Coco Beach, Puerto Rico.
HMI sued Dorpan in Puerto Rico Superior Court, Dorpan sued HMI in federal court and removed the state claim to federal court, where both cases were consolidated. The district court granted Dorpan's motion for summary judgment on its declaratory judgment claim that, under the Lanham Act, Dorpan had the right to use the Gran Meliá mark in Puerto Rico, except in Ponce where HMI was located. HMI appealed.