Article
Source: Law360
Article
10.17.14
This article was originally published on Law360 on October 17, 2014.
On Oct. 6, 2014, the U.S. Supreme Court denied cert (13-1271) in Herb Reed v. Florida Entertainment, 736 F3d 1239 (9th Cir 2011), a case already slowly working a revolution in preliminary injunction motions practice in trademark infringement cases. For many years, PIs have been the standard remedy of choice to challenge and stop trademark infringements at an early stage. That long tradition may be in for a big change.
Like the lethal inducement of a Colt revolver, the trademark PI motion was a “peacemaker.” In a trademark case, the possibility of a PI imperils the rollout of a defendant’s new product and brand. In many courts, the PI motion is briefed, heard, and decided in a matter of weeks or a few months. The sudden issuance of a PI can padlock warehouses full of branded product and advertisements, with potentially disastrous economic effects on defendants. Thus a strong inducement to settle, e.g., by promising to phase out the challenged brand, redesign it, buy the plaintiff, or the like.
Since the first element of an injunction is “likelihood of success on the merits,” the loser on the PI motion has little to look forward to by exercising its right to go to trial, even if it manages to avoid summary judgment in between. The judge’s mind is already made up. Nor does appeal hold much hope: the standard of review is very narrow — abuse of discretion. Therefore, PI decisions generally end trademark litigations as a practical matter by putting the PI loser out of its misery. Furthermore, the other requirements of a PI motion — irreparable injury, balance of harms and the public interest — generally fell like dominoes once likely success on the merits was established. Whatever the outcome, the PI decision curtailed the time and expense of pretrial proceedings and trial.
Irreparable injury, in particular, was automatically presumed upon a finding of “likelihood of confusion” — the test for likelihood of success on the trademark infringement claim. The presumption was rebuttable, but rarely rebutted. The theory was that customer confusion by its nature injures the brand and the goodwill it represents; the trademark owner “loses control” over its own brand; and the injury is irreparable because it is psychological — in the minds of customers — and cannot be quantified in dollars.
Download: The Latest on Preliminary Injunctions in Trademark Cases