Winning at the Outset: Improving Chances of Success on a Preliminary Injunction Motion. AIPLA Presentation October 2010 Lynda Zadra-Symes

Transcription

1 Winning at the Outset: Improving Chances of Success on a Preliminary Injunction Motion AIPLA Presentation October 2010 Lynda Zadra-Symes

2 TRO/Preliminary Injunction Powerful, often case-ending if successful Sets tone for entire case Equitable, discretionary in nature Judge makes preliminary findings of fact

3 TRO v. Preliminary Injunction TRO ex parte, emergency With notice/without notice Statement of defendant s position Must act promptly File with verified complaint

4 Ex Parte Seizure Orders Must show: (a) Order other than ex parte seizure order not adequate (b) No publicity (file under seal) (c) Likely to succeed on trademark counterfeit/infringement claim (d) Immediate irreparable injury if seizure order not granted (e) Goods to be seized will be at stated location (f) Harm to applicant if seizure denied outweighs harm of seizure to legitimate interests of defendant (g) Defendant would destroy, move or hide matter to be seized if given notice 15 U.S.C. Sec. 1116(d)(9)

5 Ex Parte Seizure Orders Findings of fact and conclusions of law must be set forth in proposed order; Order must particularly describe matter to be seized and each place where it is to be seized Should not apply to non-counterfeit goods/marks Order must specify time period for seizure within 7 days Must specify amount of security bond Set a date for a hearing on the seizure Include statement that seizure has not been publicized Include provision for videotaping/photography during seizure

6 P.I. Motion Considerations Expedited discovery routinely granted - expensive Effect on settlement Judge vs. jury Prevailing Plaintiff must be ready to post bond Defendant should provide evidence supporting large bond Injunction unambiguous; narrowly tailored Grant or denial of PI immediately appealable 6

7 Winter v. Natural Resources Defense Counsel 1. Likely to succeed on the merits 2. Likely to suffer irreparable harm in the absence of preliminary relief 3. Balance of equities tips in Plaintiff's favor; and 4. Injunction is in the public interest 129 S.Ct. 365 (Nov. 12, 2008) 7

8 (1) Likelihood of success on the merits Evidence of actual confusion is best evidence of likelihood of confusion (difficult to obtain) Trademark surveys are critical Injunctions more frequently granted where survey evidence admitted Reports of consumer mistake; evidence of lost sales 8

9 Trademark Surveys pre ebay Survey Presented No Survey Presented 9 Injunction granted? Less similar marks at issue Poorly conducted survey Adverse inference? Injunction granted in 76% of cases Injunction granted in 61.5% of cases Survey presented but not admitted: injunction granted in 5.6% of cases Injunction granted in 51.8% of cases Injunction granted in 4% of cases 4.5% of cases drew adverse inference from failure to present survey

10 Trademark Surveys, cont d. Hire experts knowledgeable in trademark survey law Survey evidence almost always admissible; methodological flaws go to weight, rather than admissibility (except incorrect universe) Courts have generally accepted two types of surveys: (1) Squirt/lineup/sequential surveys (accused product and asserted product shown) (2) Ever-Ready surveys (accused product shown) Knobbe Martens Olson & Bear LLP

11 Squirt/Lineup/Sequential Survey 1. (For infringing/control product) Was this product in the first display? 2. What causes you to recognize this product as having been in the first display? Knobbe Martens Olson & Bear LLP

12 Ever-Ready Survey Respondents shown allegedly infringing product only. allegedly infringing product fictitious control product 1. Who, or what company, if any, do you believe puts out this product? 2. Why do you say that company puts out this product? Knobbe Martens Olson & Bear LLP

13 Forward vs. Reverse Confusion Reverse confusion consumers mistakenly believe better-known junior user s mark was source of senior user s goods. Sterling Drug v. Bayer AG, 14 F.3d 733 (2d Cir. 1994). Relevant universe = potential purchasers of senior user s products

14 Relevant Universe Potential consumers of junior user s products (forward confusion) Potential consumers of senior user s products (reverse confusion) Sufficiently large universe to be representative of universe of potential customers If wrong persons surveyed, results are irrelevant and can be held inadmissible J & J Snack Foods, Corp. v. Earthgrains Co., 220 F. Supp. 2 nd 358, 368 (D.N.J. 2002)

15 Marketplace Conditions Survey must replicate marketplace conditions Marks must be presented as used in the marketplace, on the parties goods as seen by consumer THOIP v. The Walt Disney Co., 2010 U.S. Dist. LEXIS (S.D.N.Y. Feb. 9, 2010) (excluding lineup survey; parties products would not be proximately encountered in the marketplace). Nat l Distillers Prods. Co., LLC v Refreshment Brands, Inc., 198 F. Supp. 2d 474 (S.D.N.Y. 2002) (excluding lineup survey; senior user had weak sales; survey exposed participants to product they would not have seen in the market).

16 Grounds for attacking survey: (1) Improper universe or insufficient sample size; (2) Lack of a control or an improper control; (3) Failure to replicate market conditions; (4) Leading or ambiguous questions; (5) Incomplete or inaccurate raw data; (6) Failure to apply accepted statistical principles; (7) Unqualified or lawyer-controlled expert; (8) Interviewers who are incompetent or know about the litigation; and (9) Lack of validation Knobbe Martens Olson & Bear LLP

17 Ebay v. Mercexchange Plaintiff must show: 1. that it has suffered an irreparable injury; 2. that remedies at law are inadequate to compensate for that injury; 3. that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and 4. that the public interest would not be disserved by a permanent injunction. 547 U.S. 388 (2006). 17

18 Winter v. Natural Resources Defense Counsel Plaintiff must prove likelihood of irreparable harm rather than just possibility of irreparable harm Injunctive relief is an extraordinary remedy that may only be awarded upon a clear showing that the plaintiff is entitled to such relief. 129 S.Ct. 365 (Nov. 12, 2008) 18

19 Post ebay/winter - Does Showing of Likelihood of Confusion = Presumption of Irreparable Harm? 2nd Circuit 3d Circuit 5th Circuit 6th Circuit 9th Circuit 10th Circuit No presumption: must submit evidence of irreparable harm Looks at evidence and invokes presumption District courts have both required evidence and applied presumption Presumption based on pre-ebay precedent No presumption: must submit evidence of irreparable harm. No presumption: must submit evidence of irreparable harm Warner Cable, Inc. v. Directv, Inc. (2d. Cir. 2007) Alliance Bank v. New Century Bank (E.D. Pa. July 27, 2010) Blue Bell Creameries v. Denali (S.D. Tex. July 31, 2008) (required evidence of irreparable harm); Philip Morris USA v. Lee (W.D. Tex. 2008) (applied presumption based on pre-ebay precedent) Microsoft v. McGee, (S.D. OH, May 18, 2007) Volkswagen AG v. Verdier et al. (N.D. Cal. 2009); Canfield v. Health Commc ns, (C.D.Cal. April 1, 2008); In-N-Out Burgers v. Chadders Restaurant (D. Utah, June 29, 2007)

20 2d Circuit Warner Cable, Inc. v. Directv, Inc., 497 F.3d 144 (2d Cir. 2007) likelihood of injury will not be presumed, but must be demonstrated Evidence of harm: Survey showed 90% of U.S. households have either cable or satellite; defendant s claim of superiority aimed at diminishing value of cable Cable synonymous with Time Warner Cable 20

21 Post ebay and Winter: California No presumption of irreparable harm; must demonstrate that irreparable injury is likely in the absence of an injunction. Volkswagen v. Verdier Microbus, 2009 WL (N.D. Cal. 2009) Harm must be real, imminent and significant Not speculative or potential Evidence: (1) actual confusion evidence; (2) defendant s vehicle nominated for award. Loss of control over mark. 21

22 California CytoSport v. Vital Pharmaceuticals, 617 F. Supp.2d 1051 (E.D. Cal. 2009) Showing of likelihood of success on the merits insufficient Need evidence of loss of control over mark, reputation, goodwill PI granted: (a) Two customer complaints; (b) Declaration from experienced beverage distributor; (c) Confusion at trade show; (d) employee-witness actual confusion 22

23 Utah In-N-Out Burgers v. Chadders Restaurant, 2007 WL (D. Utah, June 29, 2007) No presumption of irreparable harm from a finding of likelihood of success Evidence of irreparable harm: In-N-Out maintains rigorous quality control over trademarks (does not franchise any of its restaurants) Actual confusion (customer s) Injury = loss of quality control of the In-N- Out products Injury = loss of consumer goodwill and reputation is largely unquantifiable 23

24 Evidence of Irreparable Harm Loss of quality control Loss of licensees and license revenues Harm to goodwill/reputation Loss of business volume/market share Customer complaints Good survey results re confusion 24

25 (3) Balancing the Harms Plaintiff s hardship > Defendant s hardship No hardship where injunction simply requires compliance with Lanham Act 25

26 (4) Public Interest Public interest served in preventing confusion/deception of consumers Public interest not served by recall order where no danger to public: Marlyn Nutraceuticals, Inc. v. Mucos Pharma, 571 F.3d 873 (9 th Cir. 2009) Gucci Am., Inc. v. Daffy s, Inc., 354 F.3d 228 (3 rd Cir. 2003) 26

27 Summary Check Local Rule notice requirements TRO/PI Order preserve status quo; unambiguous Expedited discovery Evidentiary hearing/advanced trial Bond requirements Immediately appealable 27

28 Lynda Zadra Symes 2040 Main Street, 14 th Floor Irvine, CA kmob.com