The Presumption of Irreparable Harm May Be a Thing of the Past in Trademark Cases, 0514 SCBJ, SC Lawyer, May 2014, #1

Author:Hunter Freeman
 
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The Presumption of Irreparable Harm May Be a Thing of the Past in Trademark Cases

Vol. 25 Issue 6 Pg. 17

South Carolina Bar Journal

May, 2014

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0 Hunter Freeman

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA02014 may prove to be a difficult year for trademark owners seeking preliminary injunctions. In December 2013, the Ninth Circuit became the first federal appeals court to unequivocally reject the long established presumption of irreparable harm in trademark infringement cases.1 Ordinarily a party seeking a preliminary injunction must show that (1) the party is likely to succeed on the merits; (2) the party is likely to suffer irreparable harm in the absence of preliminary relief; (3) the balance of equities tips in favor of the party; and (4) an injunction is in the public interest.2 For decades, however, trademark owners routinely satisfied .the second factor through a presumption of irreparable harm that they enjoyed after proving a likelihood of success on the merits.

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0The long standing precedent in the Fourth Circuit has been that "a presumption of irreparable injury is generally applied once the plaintiff has demonstrated a likelihood of confusion, the key element in an infringement case."3 The Fourth Circuit has gone so far as to say that "irreparable injury regularly follows from trademark infringement,"4 thus alleviating the need for any specific evidence of irreparable harm. This presumption has generally been applied throughout the nation. Even in the Ninth Circuit, the rule had long been that "[o]nce the plaintiff in an infringement action has established a likelihood of confusion, it is ordinarily presumed that the plaintiff will suffer irreparable harm if injunctive relief does not issue."5 This is no longer the case, at least in the Ninth Circuit. The Ninth Circuit's decision in Herb Reed Enterprises v. Florida Entertainment Mgmt. eliminated any presumption of irreparable harm in trademark infringement cases.

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0The Herb Reed decision relied upon a 2006 Supreme Court decision, which altered the landscape of preliminary injunctions for intellectual property cases by rejecting the presumption of irreparable harm that had been customarily applied in the p atent context. In eBay, Inc. v. MercExchange, LLC, the Supreme Court explained that a permanent injunction should not automatically follow a patent infringement determination, but instead should only be awarded if the "four-factor test historically employed by courts of equity"6 warranted such relief. In its 2008 Winter v. Natural Res. Def. Council decision, the Supreme Court again emphasized the importance of the four-factor test when it overruled the Ninth Circuit's possibility of irreparable harm standard and made it clear that a party seeking an injunction must show that irreparable harm is "likely" rather than "possible."7 The Winter decision also changed the standard applied by the Fourth Circuit, which had been that plaintiffs need only show "the possibility of permanent loss of customer to a competitor or the loss of good will."8 While not an intellectual property case, the Winter decision further questioned the validity of the irreparable harm presumption in trademark cases.

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0The trademark cases following eBay made one thing clear—that it was unclear whether courts should apply a presumption of irreparable harm when considering requests for preliminary injunctions. Some district courts have continued to apply the presumption,9 while others have not.10 The district court decisions in the Fourth Circuit have suffered from a similar inconsistency. Some district courts in the Fourth Circuit have continued to apply the presumption, while others have questioned the validity of the presumption or outright rejected it. In a decision that was issued approximately three months after the eBay decision, the District of South Carolina applied the presumption of irreparable harm, and even cited cases for the proposition that "the requirement of irreparable harm carries no independent weight, as we have held that a showing of likelihood of confusion (a requirement of both trademark infringement and unfair competition claims) establishes irreparable harm."11The Western District of North Carolina has applied the presumption of irreparable harm in a Lanham Act infringement case involving trade dress (a particular type of trademark which consists of the unique design of the product or its packaging— think the Coca-Cola bottle).12

\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0\xA0The Middle District of North Carolina stated that "in the absence of any indication from the Fourth Circuit to the contrary, the court will not discard the commonly-applied presumption of irreparable harm in preliminary injunction proceedings involving a trademark infringement claim."13 Interestingly, the court applied this presumption despite the fact that (1) the defendant had already discontinued the infringing activity and declared that it would not resume such activities; and (2) the plaintiff waited six months to file suit after learning of the infringing activities.14 In so holding, the Middle District of North Carolina distinguished eBay on the grounds that it involved a permanent injunction rather than a preliminary injunction, despite the fact that the Supreme Court noted in Winter that the irreparable harm standard for preliminary and permanent injunctions is identical and that a likelihood of i rreparable harm must be shown to warrant either injunction.15 The court also reasoned that "there are distinctions between copyright and patent infringement actions, where monetary damages are often central, and trademark infringement, where confusion may have long-lasting effects."16 However, what may have swayed the court most was a decision issued by that district a year after eBay, which refused to "attempt to resolve eBay's impact [on trademark infringement cases] at the preliminary injunction stage"17 and was affirmed by the Fourth Circuit. Other district courts within...

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