Supreme Court Denies Cert in Herb Reed: Circuits to Remain Out of Tune as to Presumption of Irreparable Harm
The United States Supreme Court denied certiorari on October 6, 2014, in Herb Reed Enterprises, LLC v. Florida Entertainment Management, Inc., leaving trademark litigants uncertain as to whether to apply the traditional presumption of irreparable harm at the preliminary injunction stage.
Before 2006, it was well-established that a trademark owner seeking a preliminary injunction was entitled to a rebuttable presumption of irreparable harm upon a showing of a likelihood of success on the merits. But, following the Supreme Court's decisions in eBay v. MercExchange, 547 U.S. 388 (2006), and Winter v. Natural Resources Defense Council, 555 U.S. 7 (2008), application of the presumption has been inconsistent in trademark cases. The denial of certiorari means the rule varies depending on the circuit in which the case is brought.
The eBay and Winter Decisions
Courts and commentators have struggled with the applicability of eBay and Winter in the trademark context. In eBay, the Supreme Court rejected the Federal Circuit's categorical rule that a permanent injunction should automatically issue once patent infringement has been shown. The Court held that in cases involving patent infringement claims, lower courts must analyze the traditional four-factor test to determine whether a preliminary injunction should issue.
Similarly, in Winter, an environmental case, the Supreme Court examined the level of harm that must be shown before a preliminary injunction will issue, ultimately rejecting the Ninth Circuit's generally applicable rule that "when a plaintiff demonstrates a strong likelihood of prevailing on the merits, a preliminary injunction may be entered based only on a 'possibility' of irreparable harm." To the contrary, the Supreme Court reinforced that "irreparable injury [must be] likely in the absence of an injunction."
As a result of the eBay and Winter decisions, most courts have discarded the presumption of irreparable harm in patent and copyright cases. But, it has been unclear whether, and to what extent, eBay and Winter should apply to trademark cases.
Should eBay and Winter Apply to Trademark Cases?
Some advocate that the differences between trademark rights and other intellectual property rights make applicability of eBay and Winter inappropriate in the trademark context. First, the harm caused by infringement is different. For patent and copyright owners, infringement causes monetary harm that can be measured. But, for trademark owners, infringement causes a reputational harm that is difficult to quantify. Trademark infringement may also confuse or deceive the general public, causing a diffuse injury that is nearly impossible to calculate, let alone remedy.
Second, it is difficult for trademark owners to identify and submit concrete evidence of a harm that has yet to occur in order to secure a preliminary injunction. Failure to retain a presumption of irreparable harm would unfairly force trademark owners to bear a greater burden of proof at the preliminary injunction stage, possibly foreclosing a trademark owner's ability to secure such relief at all. On the other hand, some assert that retaining the presumption would not unfairly diminish a trademark defendant's rights, because the defendant may rebut the presumption with evidence that any harm is, in fact, compensable or reparable.
Background and Procedural History of Herb Reed
The case presented to the Court involves Herb Reed, founder of the 1950s singing group The Platters. For several decades, an entertainment company claimed that Reed had assigned his rights to the mark "The Platters," limiting Reed's ability to enforce his rights. It was not until 2011 that Reed finally attained a judgment affirming his rights to the mark. Shortly thereafter, Reed sought to limit the number of copycat Platters bands around the United States. Reed sought preliminary injunctions, requiring the copycat bands to terminate use of "The Platters" mark or to clearly identify themselves as tribute bands (e.g., "Marshak's Tribute to The Platters"). Although Reed passed away in June 2012, his estate continued pursuing these claims.
In one such action, his estate brought suit in the United States District Court for the District of Nevada, which granted a preliminary injunction against an unlicensed show featuring a group called The Platters. The district court held that "the viability of the presumption of irreparable harm in the trademark context is in question" and required Reed to show that "remedies available at law, such as monetary damages, are inadequate to compensate for that injury." In finding a likelihood of irreparable harm and granting the preliminary injunction, the district court noted that Reed was likely to lose goodwill if The Platters name continued to be used.
However, the Ninth Circuit Court of Appeals reversed the decision, holding that the district court's analysis of irreparable harm was "cursory and conclusory." The appellate court explained that the "practical effect of the district court's conclusions" was to "reinsert the now-rejected presumption of irreparable harm based solely on a strong case of trademark infringement."
The Circuit Split
At the time of the Ninth Circuit's decision in Herb Reed, that circuit was the first to hold that eBay and Winter applied in trademark cases to eliminate the presumption of irreparable harm. Most recently, the Third Circuit in Ferring Pharmaceuticals v. Watson Pharmaceuticals, 2014 U.S. App. LEXIS 16426, *31 (3d Cir. 2014), also rejected the presumption of irreparable harm in Lanham Act cases. The Third Circuit reasoned that the Lanham Act's injunctive relief provision, like the Patent Act's provision, is premised on traditional principles of equity, and therefore the Lanham Act should be interpreted in the same manner as the Patent Act in eBay. Accordingly, the Third Circuit held that traditional principles of equity require a trademark owner to demonstrate irreparable harm when seeking preliminary injunctive relief, and that allowing a presumption of such harm deviates from these principles.
Other courts of appeals have questioned the viability of the presumption of irreparable harm in trademark cases, but, to date, either have declined to decide the issue or have not yet had the opportunity to do so. For example, the Second Circuit noted the issue in a copyright case, suggesting, in dicta, that a post-eBay presumption of irreparable harm for trademark cases is no longer viable. Salinger v. Colting, 607 F.3d 68, 78 n.7 (2d Cir. 2010) ("[A]lthough today we are not called upon to extend eBay beyond the context of copyright cases, we see no reason that eBay would not apply with equal force to an injunction in any type of case.").
Similarly, the Eleventh Circuit has observed that "a strong case can be made that eBay's holding necessarily extends to the grant of preliminary injunctions under the Lanham Act." N. Am. Med. Corp. v. Axiom Worldwide, Inc., 522 F.3d 1211, 1228 (11th Cir. 2008). But that court also did not reach the issue by "declin[ing] to decide whether the district court was correct in its holding that the nature of the trademark infringement gives rise to a presumption of irreparable injury." Id. The First Circuit also has not decided the issue but has suggested that "there is no principled reason why eBay should not apply" to preliminary injunctions in the trademark context. Swarovski Aktiengesellschaft v. Bldg. #19, Inc., 704 F.3d 44, 54 (1st Cir. 2013).
In contrast, the Fifth Circuit in Abraham v. Alpha Chi Omega, 708 F.3d 614, 627 (5th Cir. 2013), cited eBay and nevertheless determined that it was not erroneous for a lower court to grant a preliminary injunction in a trademark infringement case by finding irreparable injury once the plaintiff had shown a likelihood of confusion. And the Sixth Circuit mentioned eBay just before determining that a trademark owner would be irreparably harmed by the potential that consumers could purchase counterfeit items, with no further mention of the presumption of irreparable harm or the presumption's post-eBay viability at all. See Audi AG v. D'Amato, 469 F.3d 534, 550 (6th Cir. 2006).
To summarize, the viability of the presumption of irreparable harm for preliminary injunctive relief varies by circuit:
- The Fifth Circuit appears to continue to recognize the presumption;
- The Sixth Circuit may continue to recognize it but has not yet taken a definitive position;
- The Ninth Circuit has affirmatively rejected the presumption in a trademark case;
- The Third Circuit held that there is no presumption of irreparable harm for parties seeking injunctive relief in Lanham Act cases;
- The First, Second, and Eleventh Circuits have questioned the presumption, and indicated an inclination to reject it in dicta, but have not yet taken definitive positions; and
- The Fourth, Seventh, Eighth, and Tenth Circuits have not yet looked at the issue.
Final Thoughts for Trademark Litigants and Practitioners
The law regarding the application of the presumption of irreparable harm in trademark preliminary injunction cases remains unclear. Further complicating the issue is that, in jurisdictions where eBay and Winter have been interpreted to eliminate the presumption of irreparable harm for preliminary injunctions in the trademark context, there is little guidance for litigants regarding what evidence is or is not sufficient to show irreparable harm to obtain relief.
Forum shopping can be expected until the Supreme Court weighs in on the issue, or until the Circuits naturally align, which seems unlikely given the current status. In the interim, parties seeking injunctive relief are advised to accumulate evidence that would show irreparable harm, such as direct testimony about lost or diverted sales, evidence of inferior product sales, and evidence that the infringing use is disparaging.
For further information, please contact your principal Firm representative or one of the lawyers listed below. General email messages may be sent using our "Contact Us" form, which can be found at www.jonesday.com.
John G. Froemming
Meredith M. Wilkes
Angela R. Gott and Candice M. Reder, associates in the Cleveland Office, assisted in the preparation of this Alert.
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