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December 17, 2021 Articles

The Trademark Modernization Act of 2020 Reinstates the Presumption of Irreparable Harm

Recent decisions regarding the presumption in trademark infringement cases.

By Kyle R. Kroll

In the fall of 2020, Congress passed the COVID-19 stimulus package as part of the Consolidated Appropriations Act. Although stimulus checks received the bulk of press coverage, the bill included amendments to the Lanham Act that would have stolen the headlines if trademark and false advertising attorneys had been reporting.

The Trademark Modernization Act of 2020 (TMA) makes a number of important changes to existing law, but perhaps most importantly, it establishes a presumption of irreparable harm for violations of the Lanham Act. By doing so, it effectively overruled the Supreme Court’s decision in eBay Inc. v. MercExchange, 547 U.S. 388 (2006), which had held that there is no presumption of irreparable harm in patent infringement cases, a decision that several lower courts had extended to trademark infringement actions.

The new presumption of irreparable harm became effective upon the TMA’s enactment in December 2020. Yet, in the almost full year since then, the majority of courts ruling on motions for injunctive relief in Lanham Act cases have not noted this change and have instead continued to apply eBay. Had movants in these cases notified their courts of the statutory amendment in moving for relief, it is likely the results in several would have been different. Given this trend, it is essential for all attorneys practicing in Lanham Act cases to take note.

A Presumption of Irreparable Harm under the TMA

The TMA amended 15 U.S.C. § 1116(a) to establish a rebuttable presumption of irreparable harm upon a finding of certain Lanham Act violations for purposes of a motion for a permanent injunction. In addition, the TMA established a rebuttable presumption of irreparable harm upon a finding of likelihood of success on the merits for the purpose of a preliminary injunction. The new language of section 1116(a) provides:

A plaintiff seeking any such injunction shall be entitled to a rebuttable presumption of irreparable harm upon a finding of a violation identified in this subsection in the case of a motion for a permanent injunction or upon a finding of likelihood of success on the merits for a violation identified in this subsection in the case of a motion for a preliminary injunction or temporary restraining order.

Before this change, there was uncertainty among federal courts regarding the applicable standard for irreparable harm in Lanham Act cases. As noted, the Supreme Court had held in the patent infringement context in eBay that there is no presumption upon a finding of infringement. Courts across the country were split on whether the holding applied to trademark cases. Ferring Pharms., Inc. v. Watson Pharms., Inc., 765 F.3d 205, 216 (3d Cir. 2014) (holding “that there is no presumption of irreparable harm afforded to parties seeking injunctive relief in Lanham Act cases”); N. Am. Med. Corp. v. Axiom Worldwide, Inc., 522 F.3d 1211, 1228 (11th Cir. 2008) (declining to address whether eBay applies to trademark cases); Warner Bros. Entm’t v. X One X Prods., 840 F.3d 971, 982 (8th Cir. 2016) (holding there is a presumption of irreparable harm upon a finding of a likelihood of confusion).

The TMA clarified the law, establishing a presumption of irreparable harm. Given that the irreparable harm factor is generally the most important factor in any request for injunctive relief, it would be reasonable to expect that the statutory change would lead to more injunctions in trademark cases. And although this is the case, many practitioners and courts appear to be unaware of the change.

Lanham Act Injunction Rulings Since Enactment of the TMA

Despite the new statutory presumption of irreparable harm, many movants and courts across the country appear to have overlooked the change—likely affecting the results in those cases.

In fact, there have been numerous opinions on motions for injunctive relief since the effective date of the new statutory presumption in which courts continued to apply the holding in eBay. In some of these cases, the courts still found the movant would suffer irreparable harm without an injunction and issued relief. De Simone v. Alfasigma USA, Inc., 847 F. App’x 174 (4th Cir. 2021) (affirming issuance of preliminary injunction); Kelly Toys Holdings, LLC v. Pearlbuy Ltd., No. 21-CV-3084 (MKV), 2021 WL 3617382, at *2 (S.D.N.Y. July 7, 2021); Out-Grow, LLC v. Miami Mushroom, No. 21-60742-CIV, 2021 WL 2823266, at *9 (S.D. Fla. July 6, 2021); Louis Vuitton Malletier, v., No. 21-cv-60790, 2021 WL 2186226 (S.D. Fla. May 28, 2021); Hayward Indus., Inc. v. Saltwater Pool Supplies, No. 20-6105 (KM) (ESK), 2021 WL 1940711 (D.N.J. May 14, 2021); 3M Co. v. Ugly Juice, No. 5:21-cv-02338-EJD, 2021 WL 1947579, at *4 (N.D. Cal. May 14, 2021); Mahindra & Mahindra Ltd. v. FCA US, No. 18-cv-12645, 2021 WL 1960975 (E.D. Mich. May 17, 2021).

In other cases, however, the courts determined that the movant had not made out a showing of irreparable harm and denied injunctive relief. Dynatemp Int’l, Inc. v. R421A, LLC, No. 5:20-CV-142-FL, 2021 WL 3284799, at *11 (E.D.N.C. July 30, 2021); Sec. USA Servs., LLC v. Invariant Corp., No. 1:20-CV-01100 KWR-KRS, 2021 WL 2936612, at *5 (D.N.M. July 13, 2021); Zamfir v. Casperlabs, No. 21CV474-GPC(AHG), 2021 WL 1164985, at *9 (S.D. Cal. Mar. 26, 2021). In these cases, the courts did not acknowledge the statutory presumption—likely because they were unaware of the change.

It is likely that had the movant argued for application of the presumption and made it known to the court, the results in these cases would have been different, and the courts would have issued injunctions instead of denying them. Indeed, courts explicitly taking note of the presumption have overwhelmingly granted injunctive relief—as predicted. Bisous Bisous LLC v. CLE Grp., LLC, No. 3:21-CV-1614-B, 2021 WL 3618042, at *12 (N.D. Tex. Aug. 16, 2021); SoClean, Inc. v. Sunset Healthcare Sols., Inc., No. 1:20-CV-10351-IT, 2021 WL 3605013, at *13 (D. Mass. Aug. 13, 2021); Tee Turtle v. Christina Swartz, No. 2:21-CV-01771, 2021 WL 2349389 (S.D. Ohio June 9, 2021); ReBath v. Foothills Serv. Sols. Co., No. CV-21-00870-PHX-DWL, 2021 WL 2352426 (D. Ariz. June 9, 2021); Under Armour, Inc. v. Exclusive Innovations, Civ. No. SAG-20-03427, 2021 WL 2042320 (D. Md. May 21, 2021); Kinsley Tech. Co. v. Ya Ya Creations, No. 2:20-cv-04310-ODW (KSx), 2021 WL 2227394 (C.D. Cal. May 3, 2021); Neal Techs. v. Mike’s Bulletproof Diesel, No. 1:21-cv-01023-STA-jay, 2021 WL 1082536 (W.D. Tenn. Mar. 18, 2021); Suzie’s Brewery Co. v. Anheuser-Busch Cos., No. 3:21-cv-178-SI, 2021 WL 472915, at *12 n.3 (D. Or. Feb. 9, 2021).

Some courts recognizing the new presumption have declined relief. In these decisions, the courts focused on whether the plaintiff established a likelihood of success on the merits—rather than irreparable harm. Engine Capital Mgmt. v. Engine No. 1, No. 21 Civ. 149 (VM), 2021 WL 1372658 (S.D.N.Y. Apr. 10, 2021). Therefore, a possible result of the statutory enactment is that the likelihood-of-success factor will become more important and determinative in cases going forward.

The key insight for practitioners in Lanham Act cases is this: The TMA has established a potent presumption of irreparable harm that applies to trademark infringement and false advertising cases. Those who move for injunctive relief would do well to point to this presumption in support of their motions. Those who oppose injunctive relief will likely need to expend additional efforts either in rebutting the presumption of irreparable harm or in more forcefully countering the movant’s showing of a likelihood of success on the merits. Knowing this and taking proactive steps to address the changed landscape—whichever side you’re on—will increase the odds of success.

Kyle R. Kroll is an associate at Winthrop & Weinstine, P.A., Minneapolis, Minnesota.

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