Irreparable Harm and Trademark Law Demystified! A 2015 Perspective

Broadcast Date: Thursday, October 01, 2015 from 12:00 pm to 2:00 pm (ET)

Overview:

In 2006, the Supreme Court rejected the notion that there is a presumption of irreparable harm upon a showing of infringement regarding whether to grant a permanent injunction in patent cases in eBay v. MercExchange. Since then, both the appellate and district courts inconsistently have addressed a presumption of irreparable harm in Lanham Act cases. In October 2014, the Supreme Court denied certiorari in Herb Reed Enterprises L.L.C. v. Florida Entertainment Management Inc. Hence, plaintiffs in Lanham Act cases must take caution to show irreparable harm to obtain injunctive relief. Trademark and false advertising counsel now must present sufficient evidence in most courts demonstrating that failure to issue an injunction will cause irreparable harm.

The Knowledge Group has assembled an authoritative panel of thought leaders to provide the audience with an in-depth review and analysis of Lanham Act cases considering the required showing of proof of irreparable harm. This CLE webinar will help trademark counsel and others understand the treatment of irreparable harm by federal courts around the country since the eBay v. MercExchange decision. The panel will also discuss the requirements and strategies used to both demonstrate and disprove irreparable harm.

In a two-hour live webcast, the speakers will discuss:

Irreparable Harm and Lanham Act Law- An Overview
The eBay v. MercExchange decision
Adoption (or not) of eBay in Lanham Act cases by the various circuit courts
What constitutes irreparable harm in trademark cases
Types of evidence used to demonstrate irreparable harm
Strategies for challenging the assertion of irreparable harm
Proving irreparable harm in false advertising cases

Agenda:

Background [Ron – a-c]
- What is “irreparable harm” and why is it important in a Lanham Act case
  - Four-part test for entitlement to injunctive relief
  - Irreparable harm is the key issue – the "sina qua non" of injunctive relief
  - Special significance in trademark cases
- History of how courts have dealt with the irreparable harm requirement (presumption)
  - Presumption first articulated in Menley & James Labs Ltd. V. Approved Pharm. Corp. (438 F.Supp. 1061 (N.D.N.Y. 1977) (citing Wainright Sec., Inc. v. Wall St. Transcript Corp., 558 F.2d 91 (2d Cir. 1977) [copyright case])
- The two Supreme Court cases that changed the landscape
  - eBay Inc. v. MercExchange, LLC (2006)
    - Brief summary
  - Winter v Natural Resources Defense Council, Inc. (2008)
    - Brief summary
- Circuits that have/have not expressly applied eBay holding to Lanham Act cases [Griff – d.i-iii]
  - No presumption
    - 9th Circuit -- Herb Reed Entm’t, LLC v Florida Entm’t Mgmt., Inc., (2014); San Miguel Pure Foods Co. v. Ramar Int'l Corp., 2015 WL 5042914 (9th Cir. Aug. 27, 2015)
    - 3rd Circuit -- Ferring Pharmaceuticals, Inc. v. Watson Pharmaceuticals, Inc, 765 F.3d 205 (3rd Cir. 2014); but see Groupe SEB USA, Inc. v. Euro-Pro Operating LLC, 774 F.3d 192, 205 (3rd Cir. 2014) (irreparable harm can be inferred)
  - Presumption still applies
    - 5th Circuit -- Abraham v. Alpha Chi Omega, 708 F.3d 614 (5th Cir. 2013);
      - But recent district court cases have acknowledged some uncertainty. See, e.g., T-Mobile US, Inc. v. AIO Wireless LLC, 991 F.Supp.2d 888, 928 (S.D. Tex. 2014) (“The case law suggests that in [the Fifth Circuit], in a Lanham Act case, the presumption is somewhere between shaky and reaffirmed.)
    - 4th Circuit -- No circuit court decision, but district courts still seem to be applying the presumption. See, e.g., Rebel Debutante LLC v. Forsythe Cosmetic Grp., Ltd., 799 F.Supp.2d 558, 580 (M.D.N.C. 2011) (“the court will not discard the commonly-applied presumption of irreparable harm in preliminary injunction proceedings involving a trademark infringement claim”); Maaco Franchising, LLC v. Ghirimoldi, 2015 WL 4557382, at *2 (W.D.N.C. July 28, 2015) (“In considering a motion for a preliminary injunction, the Fourth Circuit has not adopted the view taken by other circuits that a ‘presumption [of irreparable harm] arises solely from the finding of [trademark] infringement.’”); Meineke Car Care Centers, LLC v. ASAR Inc., 2014 WL 3952491, at *4 (W.D.N.C. Aug. 13, 2014) (same).
  - Questioned the continued applicability of the presumption
    - 1st and 11th Circuits -- Have not ruled on the matter directly, but have indicated in dicta an inclination to apply eBay to trademark cases
      - Swarovski Aktiengesellschaft v. Bldg. No. 19, Inc., 704 F.3d 44, 54 (1st Cir. 2013) (noting that “there is no principled reason why [eBay] should not apply to a request for a preliminary injunction to halt trademark infringement” but declining to decide the question)
      - N. Am. Med. Corp. v. Axiom Worldwide, Inc., 522 F.3d 1211, 1228 (11th Cir. 2008) (“Although eBay dealt with the Patent Act and with permanent injunctive relief, a strong case can be made that eBay's holding necessarily extends to the grant of preliminary injunctions under the Lanham Act.”)
    - 6th Circuit -- Has applied eBay to a trademark case, but with almost no guidance or analysis. Audi AG v. D'Amato, 469 F.3d 534, 550 (6th Cir. 2006) (applying eBay to a permanent injunction in a trademark infringement case)
  - Have not addressed (but trending toward no presumption at district level) [Alex]
    - 2nd Circuit -- No circuit court decision addressing eBay in context of Lanham Act. Some district courts have suggested that the presumption is no longer applicable; some still apply the presumption.
      - See, e.g., Microban Prods. Co. v. API Indus., Inc., 2014 WL 1856471, at *20–21 (S.D.N.Y. May 8, 2014) (“We need not here decide whether a presumption of irreparable harm from trademark infringement can apply in light of [eBay and Salinger v. Colting], because no such presumption was applied here. The Second Circuit's decision in Salinger, however, suggests that this presumption should not continue.”) (internal citations omitted); U.S. Polo Ass'n, Inc. v. PRL USA Holdings, Inc., 800 F.Supp.2d 515, 540 (S.D.N.Y.2011) (“In light of Salinger' s clarification that ... a court deciding whether to issue an injunction must not adopt categorical or general rules or presume that a party has met an element of the injunction standard, the presumption of irreparable injury in trademark cases is no longer appropriate.” (internal citation and quotation marks omitted))
      - But see Guthrie Healthcare Sys. v. ContextMedia, Inc., 2014 U.S. Dist. LEXIS 84713, at *44 (S.D.N.Y. June 20, 2014) (“In a trademark case, proof of a likelihood of confusion . . . create[s] a presumption of irreparable harm, and thus a plaintiff [does] not need to prove such harm independently.”)
      - See also Time Warner Cable, Inc. v. DirecTV, Inc., 497 F.3d 144, 148 (2d Cir. 2007) (false advertising case decided after eBay and holding, “likelihood of irreparable harm may be presumed where the plaintiff demonstrates a likelihood of success in showing that the defendant’s comparative advertisement is literally false and … it would be obvious to the viewing audience that the advertisement is targeted at the plaintiff”)
    - 7th Circuit -- Has not directly ruled, but recent district court cases have gone the eBay direction. Nat'l Fin. Partners Corp. v. Paycom Software, Inc., 2015 WL 3633987, at *11 (N.D. Ill. June 10, 2015)(“ Although the Seventh Circuit has not addressed whether eBay applies to preliminary injunctions in Lanham Act cases … the Court sees no reason why the Seventh Circuit would reach a different conclusion in a Lanham Act case. The decisions of other appellate courts indicate a trend toward requiring irreparable harm before issuing an injunction in trademark infringement cases.”)
    - 8th Circuit: Although district courts have been split, the recent cases all seem to suggest following eBay. See, e.g., JDR Indus., Inc. v. McDowell, 2015 WL 4643084, at *15 (D. Neb. Aug. 4, 2015) (“The Court does not presume irreparable harm based solely on its finding of likely (or actual) confusion.”); Plasti Dip Int'l Inc. v. Rust-Oleum Brands Co., 2014 WL 7183789, at *7 (D. Minn. Dec. 16, 2014) (“Yet, a showing of irreparable harm must involve more than the possibility of harm. Plasti Dip's claim of injury to goodwill is, at this stage of the case, speculation and speculation is not enough to show irreparable harm.”)
Are trademarks different from other forms of IP when it comes to establishing irreparable harm [Ron – include questions for other panelists]
- Is a presumption appropriate for trademark infringement?
  - Purpose of trademarks are to identify source or sponsorship, connote reputation of product and provider, and give consumers information to allow knowing purchase decision
  - Likelihood of confusion by definition implicates trademark owner's goodwill and reputation
- Can you realistically quantify harms from trademark infringement
  - Goodwill among consuming public is difficult to quantify
  - Reputational harm is difficult to quantify (compare with harm flowing from infringement in copyright and patent cases)
  - Consumer confusion resulting in potentially (but unknown) lost sales and customer relationships is difficult calculate or remedy
What constitutes irreparable harm [Griff]
- Future harm to goodwill/reputation -- see, e.g., Starbucks Corp. v. Heller, 2014 WL 6685662, at *4 (C.D. Cal. Nov. 26, 2014)
  - However, “broad” or “vague” claims of damage to goodwill/reputation are insufficient
- Customer confusion/complaints -- see, e.g., Wells Fargo & Co. v. ABD Ins. & Fin. Servs., Inc., 2014 WL 4312021, at *12 (N.D. Cal. Aug. 28, 2014) (“If Wells Fargo were able to provide even one example of a customer who did switch (or is likely to switch) from Wells Fargo to defendants' company based on defendants' use of the “ABD” name, or based on a mistaken association with Wells Fargo, that would be enough to establish harm.”); United Tactical Sys., LLC v. Real Action Paintball, Inc., No. 14-CV-04050-MEJ, 2014 WL 6788310, at *23 (N.D. Cal. Dec. 2, 2014) (Evidence of phone calls from customers evidencing confusion: “Ongoing confusion over the source of PepperBalls is likely to contribute to loss of control over UTS's reputation and goodwill.”)
- Counterfeit or inferior products
- Inferior operations/service
- Loss of control over trademark and products/services
- Harm must be actual, not speculative -- see, e.g., Cutting Edge Solutions, LLC v. Sustainable Low Maint. Grass, LLC, 2014 WL 5361548, at *5 (N.D. Cal. Oct. 20, 2014) (“There is no evidence that CES's sales have suffered (or are likely to suffer) because of competition from SLMG or because SLMG has tarnished CES's reputation.”)
- Delay in taking legal action may weigh against showing of irreparable harm -- see, e.g., Champion-Cain v. MacDonald, 2015 WL 4393303, at *10 (S.D. Cal. July 15, 2015) (Re: 15-month delay in bringing suit: “Here, Plaintiffs' delay in seeking injunctive relief undermines its claim that it will be irreparably harmed.”; see also Cutting Edge Solutions, LLC v. Sustainable Low Maint. Grass, LLC, 2014 WL 5361548, at *5 (N.D. Cal. Oct. 20, 2014) (18-month delay cut against finding of irreparable harm); see also Hanginout, Inc. v. Google, Inc., 54 F.Supp.3d 1109, 1132 (S.D. Cal. 2014) (finding that even 7 month delay would be sufficient to weigh against a finding of irreparable harm.)
Types of evidence that can be used to show the likelihood of irreparable harm in different situations (or how do you demonstrate irreparable harm) [Ron – with questions to others]
- Testimony from business executives on harm to brand and reputation
- Testimony from customers/consumers who opted to do business with other parties -- see, e.g., Am. Bullion, Inc. v. Regal Assets, LLC, 2014 WL 6453783, at *5 (C.D. Cal. Nov. 17, 2014)
- Evidence of actual confusion; must be tangible evidence (e.g., consumer complaints or actually misled consumers -- see, e.g,. Pom Wonderful LLC v. Pur Beverages LLC, No. 13-cv-06917 (C.D. Cal. Aug. 6, 2015) (“There is a distinction between a likelihood of irreparable harm and a showing of actual harm. But one way to show likely irreparable harm is to show actual confusion or harm right now. “); see also, San Miguel Pure Foods Co. v. Ramar Int'l Corp., 2015 WL 5042914, at *3 (9th Cir. Aug. 27, 2015); Anhing Corp. v. Thuan Phong Co. Ltd., 2015 WL 4517846, at *23 (C.D. Cal. July 24, 2015)
- Changes in market share; loss of “prospective customers” -- see, e.g., San Miguel Pure Foods Co. v. Ramar Int'l Corp., 2015 WL 5042914, at *3 (9th Cir. Aug. 27, 2015) (loss of prospective customers sufficient evidence of irreparable injury)
- Survey evidence
  - However, the trend is toward requiring some solid causal nexus between the survey results and irreparable harm -- see, e.g., Wells Fargo & Co. v. ABD Ins. & Fin. Servs., Inc., 2014 WL 4312021, at *12 (N.D. Cal. Aug. 28, 2014) (likelihood of confusion survey was admitted into evidence, but given “very little weight” because of its “serious deficiencies” – in short, there was no direct correlation indicating that plaintiff’s “brand, reputation and/or goodwill will be harmed by defendants’ alleged trademark infringement …”)
- Marketing, etc. experts
- Actual or likely lost sales -- see, e.g., Am. Bullion, Inc. v. Regal Assets, LLC, 2014 WL 6453783, at *5 (C.D. Cal. Nov. 17, 2014) (finding evidence of lost sales, based on consumer testimony that they chose to do business with competitor was sufficient to constitute irreparable harm)
Strategies for challenging or disproving the likelihood of irreparable harm in different situations [Ron – with questions to others]
- Attack plaintiff’s evidentiary showing
  - Legal sufficiency (e.g., hearsay)
  - Factual sufficiency
    - Present contrary testimony, evidence
    - Conclusory statements re harm to reputation, goodwill, etc. are insufficient (but courts have yet to provide meaningful and consistence guidance re what evidence is sufficient)
- Delay by plaintiff in asserting rights is evidence of lack of irreparable harm
- Merely showing likelihood of confusion does not equate to proof of irreparable harm
  - Separate elements require separate showings
  - Otherwise, it's just the "presumption" by another name
- Evidence of past customer confusion is irrelevant to irreparable harm element
- Proof of loss of trademark rights by plaintiff (e.g., abandonment)
- No use by defendant on competing products or services
- Proof that alleged harm can be compensated by money damages
Proving irreparable harm in Lanham Act false advertising cases [Alex]
- Any differences in addressing irreparable harm in a false advertising case as compared to a trademark case?
  - Essentially the same analysis – harm from consumer confusion – but:
    - In TM, act of infringement inherently puts plaintiff’s mark at risk; in non-comparative false advertisement in multi-product markets, harm to plaintiff may not be so automatic
    - However, potential for stronger arguments of irreparable harm where false advertising statement is health or safety related.
  - Standard to establish irreparable harm is: (i) parties are competitors in relevant market; and (ii) there is a logical causal connection between the false advertising and the plaintiff’s sales position
- Bases for assertion of irreparable harm
  - Harm to public (in certain cases, i.e., health, safety)
  - Harm to plaintiff’s goodwill/reputation
  - Harm to product category as a whole (loss of faith by consumers)
- Evidence that can be used to prove irreparable harm in the false advertising context
  - Evidence of harm to reputation and goodwill is key; proof is easier in comparative ad context or two-player market
  - Evidence showing strength of plaintiff’s reputation, brand recognition, advertising expenditures
  - Evidence showing competitive relationship between parties
  - Evidence of rise of defendant’s market share and/or decline in plaintiff’s following onset of false ads
  - Evidence re the importance to consumers of the product features that are the subject of the false ads
- Recent Third Circuit cases (from 2014) applying eBay and developing the law on proving irreparable harm
  - Ferring: Rejected presumption finding equitable remedy under the text of the Lanham Act required proof
    - Found no irreparable harm where advertiser had certified to the Court that the (admittedly) false statements at issue would never be repeated
  - Groupe SEB: Re-affirmed Ferring’s rejection of the presumption and held the district court may have been influenced by abrogated precedent, but upheld the finding of irreparable harm as supported by sufficient evidence in the record of likely harm to plaintiff’s brand’s reputation and goodwill.
    - Discuss specific evidence in record Court points to
    - Court emphasized that drawing inference of irreparable harm from the record evidence is appropriate.
- Discussion of a couple district court cases finding or rejecting irreparable harm
  - Case Examples
- A note on presumptions of harm in the context of damages as opposed to injunctive relief
  - Often confusing language in opinions mixing up the applicability of a presumption of harm to establish injury as an element of a false advertising claim or entitlement to damages, versus a presumption of irreparable harm to establish entitlement to injunctive relief
Conclusion and questions [All]

Who Should Attend:

Intellectual Property Lawyers
Patent Attorneys
Trademark Lawyers
In-House Counsel
Corporate Owners
Trademark Owners
Other related/Interested Professionals and Organizations

Ronald T. Coleman, Jr. Partner Parker, Hudson, Rainer & Dobbs LLP

Ron is a trial lawyer who focuses his practice on complex business litigation, intellectual property disputes, and franchise and distribution …

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C. Griffith Towle Principal BARTKO ZANKEL BUNZEL & MILLER

C. Griffith Towle is a principal in the law firm of Bartko, Zankel, Bunzel & Miller. Mr. Towle is an …

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Alexander Kaplan Partner Proskauer

Alexander Kaplan is a partner in Proskauer’s Litigation Department in New York. He is a commercial litigator and trial lawyer …

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Course Level:
Intermediate

Advance Preparation:
Print and review course materials

Method of Presentation:
On-demand Webcast

Prerequisite:
NONE

Course Code:
145239

NASBA Field of Study:
Business Law

NY Category of CLE Credit:
Skills

Total Credits:
2.0 CLE

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