It has been over a decade since the U.S. Supreme Court’s decision in eBay, Inc. v. MercExchange, LLC, 547 U.S. 388 (2006) changed the near universal presumption of irreparable harm in injunction proceedings in intellectual property cases. While that sea change has touched all facets of IP litigation, trademark owners and their attorneys have been particularly affected because the nature of harm in the trademark context is quite different from patent and copyright cases.
In eBay, the Court held that in a patent infringement action, the customary four factors must be established for injunctive relief: (1) a likelihood of success on the merits; (2) irreparable injury; (3) balance of harms favors granting an injunction; and (4) the injunction is in the public interest. The Court specifically stated that the “decision whether to grant or deny injunctive relief rests within the equitable discretion of the district courts, and that such discretion must be exercised consistent with the traditional principle of equity, in patent disputes no less than in other cases governed by such standards.” eBay turned on its head the Federal Circuit’s prior, longstanding rule that courts issue permanent injunctions against patent infringement absent exceptional circumstances.
However, the plaintiff in eBay was a non-practicing entity so there conceivably would be no irreparable injury where there is no competing product on the market. Not so in trademark cases. A trademark owner necessarily uses its mark in commerce; thus, any infringement will cause irreparable harm. While the Court’s eBay decision arose out of a patent dispute, and the Court mentioned copyright cases in its decision, it did not specifically address the effect in the trademark context. Nonetheless, the Supreme Court then doubled down on the doctrinal concept of affirmative proof in Winter v. Natural Resources Defense Council, 555 U.S. 7 (2008), holding that a preliminary injunction cannot be entered on proof of the possibility of irreparable injury, and that all four factors of eBay must be considered.
In trademark cases, infringement is inherently harmful because it confuses or deceives the public. Yet, irreparable harm is difficult to prove without the presumption because reputational harm is difficult to quantify, and actual confusion is inherently very difficult to observe. Thus, while patent and copyright harm can typically be quantified and satisfied with a monetary amount, trademark harm often cannot be. Without the presumption, trademark owners face an uncertain battlefield with affirmative proof.
While the Fifth and Eighth Circuits have seemingly acknowledged the distinction and have maintained a presumption in trademark cases, other Circuits have not. The Ninth, Third, and Eleventh Circuits have expressly rejected the presumption of irreparable harm in Lanham Act cases in light of eBay and its progeny. Thus, the courts are split, brand owners have since struggled, and the Supreme Court has refused to revisit this decision in the trademark context. Indeed it has turned away opportunities to do so — most recently denying certiorari in Herb Reed Enterprises, LLC v. Florida Entertainment Management, Inc. in 2014.
Without a re-examination by the justices, important and influential organizations are stepping up and working on behalf of brand owners to restore this key legal standard in the fight against infringements.
In 2012, the American Intellectual Property Law Association (AIPLA) Board adopted a resolution to amend the Lanham Act to confirm that eBay does not overturn the “traditional rebuttable presumption” of irreparable harm in trademark infringement cases because “the results [of eBay and Winter] appear to be in conflict with the stated purposes of the Lanham Act to protect the public against a likelihood of confusion, deception, or mistake resulting from the use of infringing marks. Likewise, these results appear unwarranted in view of the courts’ long-established recognition that trademark or service mark infringement in and of itself gives rise to a likelihood of irreparable injury to the mark owner:”
RESOLVED, that AIPLA favors, in principle, legislation to amend the provisions of the Lanham Act providing for injunctive relief for the purpose of providing that, in trademark or service mark infringement cases where all other prerequisites for a preliminary and/or permanent injunction are met, a finding of probable success on the merits of the mark owner’s likelihood of confusion claim (with respect to a preliminary injunction) or a finding of a likelihood of confusion (with respect to a permanent injunction) shall give rise to a rebuttable presumption of irreparable injury sufficient to support entry of an injunction; and it is further
RESOLVED, that AIPLA specifically favors amendment of the remedial provisions of the Lanham Act for the purpose of effectuating these reforms, as follows:
• To provide that, in cases where all other prerequisites for the entry of preliminary and/or permanent injunctive relief for trademark or service mark infringement are met, a finding of probable success on the merits of the mark owner’s likelihood of confusion claim (with respect to a preliminary injunction) or a finding of a likelihood of confusion (with respect to a permanent injunction) shall give rise to a rebuttable presumption of irreparable injury sufficient to support entry of an injunction.
(Board of Directors’ Meeting, September 14, 2012)
The American Bar Association (ABA) also studied eBay’s consequences on brand owners and proposed relief. On August 9, 2015, ABA Resolution 460 was passed:
Section supports in principle recognition of a rebuttable presumption of irreparable injury sufficient to support entry of an injunction if there is a finding of reasonable likelihood of success on the merits of the mark owner’s likelihood of confusion claim (for a preliminary injunction) or a finding of likelihood of confusion (for a permanent injunction) and provided that all other equitable prerequisites for such relief have been met; and
FURTHER RESOLVED, the Section supports in principle legislation to amend Section 34 of the Lanham Act, 15 U.S.C. § 1116, to recognize such a presumption.
The Intellectual Property Owners Association Board of Directors similarly adopted, on March 16, 2016, a resolution supporting, in principle, legislation “to amend the Lanham Act to provide that when a claimant seeks injunctive relief a rebuttable presumption of irreparable harm shall apply where there has been a finding of a likelihood of confusion or likelihood of dilution, or in the case of a motion for preliminary injunction, a finding of probable success on the merits of a likelihood of confusion or likelihood of dilution claim.”
And in 2017, the International Trademark Association (INTA) also weighed in. In May 2017, the U.S. Subcommittee of the Legislation and Regulation Committee of INTA unanimously requested, and its Board adopted, a resolution in favor of amending Section 34 “to provide that, when a claimant seeks injunctive relieve, a rebuttable presumption of irreparable harm shall apply where there has been a finding of liability, or, in the case of a motion for a preliminary injunction, a finding of probably success on the merits of the claim.”
This look back at the past decade plus since the eBay decision reveals conflict at the judicial level but clarity among brand owners and practitioners. Brand owners have been hurt by the perhaps unintentional consequence of eBay and Winter and a potential remedy is amendment of the Lanham Act.
The views and opinions expressed in this article are those of the authors and do not necessarily reflect the views and opinions of Corsearch.