This article originally was published by Law360 on September 19, 2018.
Almost four years ago, I anticipated new evidentiary problems in preliminary injunction motions in trademark cases due to recent U.S. Supreme Court precedent. In subsequent case law in the lower courts, the difficulties have proved out and proved hard on plaintiffs. In response, after research and resolutions, the leading intellectual property and trademark law associations have acted. On Sept. 4, they sent a joint letter to Congress seeking legislation to restore the status quo ante.
This is a tale of two histories — one, of the principles of equity, and the other, of the practice and practicalities of trademark preliminary injunction motions.
In the beginning of this jam, the Supreme Court held in a patent case (following copyright precedent) that plaintiffs seeking an injunction "must" prove "irreparable injury." The court characterized the requirement as "well established" in a "long tradition" of equity as "historically employed." A weighty pronouncement. The ruling from a patent case has been adopted by judges in many trademark cases, although critics consider it unsuitable to the unique character of trademarks as symbols of customer goodwill.
Preliminary injunction motions are entrusted to a judge's equitable discretion. The decision is reversible only for abuse of discretion, a very steep hill for any appellant to climb. So far, there have been a few recent cases where judges found likelihood of success on the merits of infringement but denied preliminary injunctions anyway due to lack of proven irreparable harm. How rare or frequent such decisions will be remains to be seen if patience permits case law to evolve in the usual way. Judges who hear compelling cases of infringement will be open to finding, in their discretion, irreparable injury if plaintiffs proffer adequate evidence. To find and present such evidence, good lawyering is required but has never been in short supply. Case law is already providing examples of evidence that works. Clearly, presumptions, rehashing the merits and mere argument no longer suffice.
For trademark cases, the recent petitioners to Congress stated: "[H]istorically, U.S. federal courts, when considering a claim under the Lanham [trademark] Act, almost uniformly applied a rebuttable presumption of irreparable harm upon a finding a liability, or, in the context of a preliminary injunction, when liability was found to be probable." This is true. Indeed, most trademark civil actions for decades began and ended on preliminary injunction motions. The preliminary injunction was universally considered the remedy "of choice." In such cases, the chief concern was likelihood of success on the merits of infringement, that is, likelihood of customer confusion. Winning that factor almost always created a domino effect on the other preliminary injunction factors, which were perfunctorily checked off on the way to issuance of an order.
The petitioners to Congress noted that a defendant had the right to rebut the presumption of irreparable harm. Under the former regime, very few could or did. A proven likelihood of success on the merits was, as a practical matter, insurmountable. Another practicality is that a preliminary injunction usually ends the whole case, even though the loser has a continuing right to trial. A defendant with a new mark that has been enjoined is far more economically motivated to create an alternative mark as quickly as possible than to spend more going to summary judgment or trial on a mark the judge has already found likely to be infringing. The preliminary injunction process may effectually deny the right to trial in a trademark case decided by a presumption engaged with a likelihood of a likelihood.
The Trademark Act, like the Patent Act, provides for injunctions "according to principles of equity." How is Congress to stop Supreme Court precedent requiring proof of irreparable injury without disturbing other intricacies and delicate balances built into the equity matrix evolved over centuries? Another conundrum: Irreparable harm is, as the petitioners rightly pointed out, "typically not readily or immediately quantifiable." Indeed, it is hard to prove quantitatively or otherwise, as recent case reports demonstrate. The problem of proving reputational harm in the minds of customers has given pause to many trademark law practitioners. The result may be fewer trademark preliminary injunction motions being litigated, and fewer being granted. But, by the petitioners' own reasoning, would not a statutory right to rebut a presumption of irreparable injury be illusory? If it is now so hard for plaintiffs to prove harm, proving the negative would seem all the harder for defendants.
Instead of letting the problem judicially simmer, putting it to a polarized Congress may have unintended and undesired effects, depending on which side of the courtroom one occupies in the future.
Statutes as enacted are often worded more broadly or more indefinitely than as originally proposed. A new bill on a very particular point may acquire many other amendments or additions to the statute unwelcome by the originators. How well will the present-day legislative process mix with a very specific, traditional principle of equity?
Altering historic and traditional principles of equity by statute can be a sword that cuts both ways, or any which way.