Join or Be Enjoined: Injunctive Relief Strategies in IP Cases

Panel members:Mark Edwards, Corporate Counsel, IP Litigation Department, E. I. du Pont de Nemours and CompanyGrant Kinsel, Senior Counsel, Foley Matthew Neco, Vice President & General Counsel StirlingBridge, Inc., & General Counsel to StreamCast Networks, Inc.James Nguyen, Partner, Foley

Injunctive Relief in Trademark & Copyright Cases

• Matthew A. Neco, VP and General Counsel, Stirling Bridge, Inc. (owner of StreamCast Networks, Inc., dba Morpheus(tm) P2P)

• James Nguyen, Foley & Lardner LLP

Drafting the Proposed TRO

Reno Air Racing Ass’n, Inc. v. McCord, 452 F.3d 1126 (9th Cir. 2006)

Ex Parte TROs

• Only proper in very narrow cases– Alleged infringer is likely to dispose of the

infringing goods before the hearing– Alleged infringer may transfer an inventory of

infringing goods to evade finding infringement

Practice TipsWhen drafting the proposed temporary restraining order:

(1) follow the exacting requirements of Rule 65 (2) avoid incorporation of documents into the order by

reference(3) reference the actual trademark registrations at issue (4) describe the trademarks themselves in the order (5) describe the prohibited conduct with specificity

Laches Defenses to Injunctive Relief

Tillamook Country Smoker, Inc. v. Tillamook County Creamer Ass’n,

465 F.3d 1102 (9th Cir. 2006)

9th Circuit: 6 factors to evaluate laches in trademark cases

(1) Strength and value of the trademark rights asserted

(2) Plaintiff’s diligence in enforcing the mark(3) Harm to senior user if relief is denied(4) Good faith ignorance by junior user(5) Competition between senior and junior

users(6) Extent of harm suffered by the junior user

because of senior user’s delay

Quiksilver, Inc. v. Kymsta Corp.466 F.3d 749 (9th Cir. 2006)

Marks At Issue

Practice Tip

Promptly investigate and enforce potential trademark violations

Judicial Estoppel

Abercrombie & Fitch, Co. v. Moose Creek, Inc.,

486 F.3d 629 (9th Cir. 2007)

1st Litigation

• Moose Creek Logo • Abercrombie & Fitch Moose Logo

• Moose Creek Logos • Abercrombie & Fitch Moose Logos

Judicial EstoppelBeware Of Judicial Estoppel Where The Injunction Involves A Previously-Litigated Mark(1)Party’s position must be clearly inconsistent with its earlier position(2) The party achieved success in the prior proceeding(3) If not estopped, the party seeking to assert an inconsistent position would derive an unfair advantage

.

Practice Tip

• Before bringing a trademark case based upon a mark previously-litigated (especially against competitors), review arguments made in any prior litigation to avoid judicial estoppel

Interlocutory Appeal of Injunctions

Pimentel & Sons Guitar Makers, Inc. v. Pimentel

477 F.3d 1151 (10th Cir. 2007)

Interlocutory Appeal of Injunctions

• Pimentel & Sons Guitar Makers, Inc. (Hector Pimentel)

• Lorenzo Pimentel

PIMENTELmark

Interlocutory Appeal of Injunctions

• 28 U.S.C. § 1292(a)(1) exception permits appeal of interlocutory orders “granting, continuing, modifying, refusing or dissolving injunctions, or refusing to dissolve or modify injunctions.”

• 10th Circuit: appeals court has no jurisdiction to review orders which merely clarify an existing trademark injunction

Practice Tips

(1) Remember right to appeal orders granting or denying interim injunctive relief

(2) When opposing an interlocutory appeal regarding an order which effects a previously-issued injunction, consider arguing that the order is non-appealable because it only clarifies a prior order, and does not modify the order.

Perfect 10 v. Amazon.com, Inc.,487 F.3d 701 (9th Cir. 2007)

Jurisdiction over Unregistered Works

Jurisdiction over Unregistered Works

Once jurisdiction attached under the Copyright Act (based on registered works), the Court may also enjoin infringement of unregistered copyrights

Practice Tip: If bringing suit for infringement of registered works, consider also requesting injunctive relief to protect unregistered copyrights. Still best to obtain copyright registrations for all works being enforced.

Impact of License Agreement on Injunctive Relief

Jacobsen v. Katzer and Kamind Associates, Inc.,N.D. Cal. Case No. C 06-01905 JSW (August 17, 2007)

Impact of License Agreement on Injunctive ReliefIf a defendant has a license to use a copyrighted work, it

can still infringe the copyright owner’s work if the licensee’s use exceeds the scope of the license.But existence of the license may raise sufficient factual

disputes to affect the plaintiff’s ability to show likelihood of success on the merits for a TRO or preliminary injunction.

Practice Tips• Plaintiff: Focus on

arguing that defendant committed copyright infringement (not just breach of contract) by exceeding scope of the license, to strengthen basis for injunction

• Defendant: Argue that the plaintiff’s action sounds in contract (the license agreement) and no injunctive relief is warranted

CASE STUDY:MGM v. GROKSTER

MGM v. Grokster: Supreme Court

• Refused to touch Sony (Betamax)• Grokster contributorily liable because it

actively induced users’ infringement.– Active inducement is a separate, independent

grounds for contributory liability

Per the Supreme Court in Grokster: What is “Active Inducement?”

• “[O]ne who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative stepstaken to foster infringement, is liable for the resulting acts of infringement by third parties.”

Ruling against StreamCast Networks

• Remanded to District Court• Summary Judgment Granted against

StreamCast Networks• October 16: Permanent Injunction Order

Issued

Pre-eBay

95%

5%

GrantedDenied

eBay: Before and After– Before: Injunctions

routinely granted.– After: 30 reported post-

eBay decisions23 injunctions issued (including one by consent)Injunctions denied 23% of the time

Post-eBay InjunctionsDenied

23%

Granted77%

DeniedGranted

Holding– Justice Thomas delivered “unanimous” decision– Injunctions may issue only when patentee satisfies four-part test:

Irreparable injuryInadequate remedy at lawBalance of hardshipsPublic interest

– Chief Justice Roberts, with Justices Scalia and Ginsburg concurredAgrees that there is no general rule, but cautioned that “a page of history is worth a volume of logic.”In other words, injunctions should almost always issue – even if no presumption

– Justices Kennedy, Steves, Souter and Breyer concurred separatelyHistory not as reliable a guide anymoreMay be many instances when injunctions are not appropriateE.g., non-practicing patentees using injunctions for leverage, business method patents that are vague or of suspect validity.

Irreparable Injury FactsGood– Head-to-head competitors

3M Innovative Properties Company v. Avery Dennison Corporation, 2006 WL 2735499 (D. Minn. 2006).Black & Decker Inc. v. Robert Bosch Tool Corporation, 2006 WL 3446144 (N.D. Ill. 2006).

– Developing marketTransocean Offshore Deepwater Drilling, Inc. v. Globalsantafe Corp., 2006 WL 3813778 (S.D. Tex 2006).

– Small patentee vs. large infringerTivo Inc. v. Echostar Communications Corp., 446 F.Supp.2d 664 (E.D. Tex. 2006).

Irreparable Injury FactsBad– Presumption of irreparable harm by infringement

Voda v. Cordis Corporation, 2006 WL 2570614 (W.D. Okla. 2006).

– No evidence of impact of infringement on sales/licensing efforts

z4Technologies, Inc. v. Microsoft Corporation, 434 F.Supp.2d 437 (E.D. Tex. 2006).

– Inability to license because of lawsuitPaice LLC v. Toyota Motor Corp., 2006 WL 2385139 (E.D. Tex. 2006).

– Fed. Cir. on 10/18 sent case back down to evaluate appropriateness of amount of compulsory license.

– Small part of large device/systemSundance, Inc. v. DeMonte Fabricating LTD., 2007 WL 37742 (E.D. Mich. 2007).

Inadequate Remedy at LawGood– Lost profits not available remedy

• Novozymes v. Genecor International, Inc., 2007 WL 506828 (D. Del. 2007).

– Actual proof of loss of market share• Smith & Nephew, Inc. v. Synthes, 466 F.Supp.2d 978

(W.D. Tenn. 2006).– Harm to reputation

• Black & Decker Inc. v. Robert Bosch Tool Corporation, 2006 WL 3446144 (N.D. Ill. 2006).

– “Sticky” customers• Tivo Inc. v. Echostar Communications Corp., 446

F.Supp.2d 664 (E.D. Tex. 2006).

Inadequate Remedy at LawBad– License offer during litigation

• Paice LLC v. Toyota Motor Corp., 2006 WL 2385139 (E.D. Tex. 2006).

– Licenses to others not before the court• Voda v. Cordis Corporation, 2006 WL 2570614 (W.D. Okla.

2006).– Large patent portfolios and no evidence of new market

• Praxair, Inc. v. ATMI, Inc., 2007 WL 906704 (D. Del. 2007).

Balance of HardshipsGood– Easy modification

• Transocean Offshore Deepwarter Drilling, Inc. v. Globalsantefe Corp., 2006 WL 3813778 (S.D. Tex 2006).

– Infringer already pulled product out of market• Novozymes v. Genecor International, Inc., 2007 WL

506828 (D. Del. 2007).– Long litigation using up substantial period of exclusivity

• 3M Innovative Properties Company v. Avery Dennison Corporation, 2006 WL 2735499 (D. Minn. 2006).

– Infringer’s only evidence of hardship is correcting infringement

• Smith & Nephew, Inc. v. Synthes, 466 F.Supp.2d 978 (W.D. Tenn. 2006).

Balance of HardshipsBad– Infringer driven out of business

– Sundance, Inc. v. DeMonte Fabricating LTD., 2007 WL 37742 (E.D. Mich. 2007).

– Multi-billion dollar modifications required– Praxair, Inc. v. ATMI, Inc., 2007 WL 906704 (D. Del. 2007).

– Substantial issues of piracy, significant impacts downstream costs

– z4Technologies, Inc. v. Microsoft Corporation, 434 F.Supp.2d 437 (E.D. Tex. 2006).

– Paice LLC v. Toyota Motor Corp., 2006 WL 2385139 (E.D. Tex. 2006).

Public InterestGood– Finding of willful infringement

• Black & Decker Inc. v. Robert Bosch Tool Corporation, 2006 WL 3446144 (N.D. Ill. 2006).

– No public health or safety ramifications– 3M Innovative Properties Company v. Avery Dennison

Corporation, 2006 WL 2735499 (D. Minn. 2006).

Public InterestBad– Infringer’s product is a staple of modern life

• z4Technologies, Inc. v. Microsoft Corporation, 434 F.Supp.2d 437 (E.D. Tex. 2006)

– Patentee fails to articulate any evidence – Voda v. Cordis Corporation, 2006 WL 2570614 (W.D.

Okla. 2006)

Final ThoughtsAlways make the showing– Injunctions can be denied, even when dealing

with head-to-head competitorsOffers to license infringer during litigation can be used against youIf you are relying on injury to licensees, their evidence of market share loss must be specific and before the Court