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April 07, 2021 Practice Points

Trademark Modernization Act: Discontinuance and Delay

Rebuttals to the presumption of irreparable harm following the TMA.

By Matt Acosta

In many jurisdictions throughout United States, the Trademark Modernization Act (TMA) of 2020 has revived the rebuttable presumption of irreparable harm in trademark infringement cases. Section 34(a) of the Lanham Act (15 U.S.C. § 1116(a)) now provides that irreparable harm should be presumed upon a finding of infringement or likelihood of infringement for the purposes of imposing permanent and preliminary injunctions, respectively. This resolves a circuit split on the issue that formed after the Supreme Court decision in eBay, Inc. v. MercExchange, 547 U.S. 388 (2006).

The TMA will undoubtedly cause a measured increase in the number of trademark infringement lawsuits across the country that begin with a request for preliminary injunctive relief. Thus, the question is now more relevant than ever: Under what circumstances can a defendant rebut this presumption of irreparable harm?

The answer in all practical contexts, in good lawyer fashion, is both few and many. In general, there are only two primary categories of circumstances that will rebut the presumption of irreparable harm: (1) lack of future harm and (2) unreasonable delay. But within those categories, and especially the second, there often exists a variety of conduct that is often, at least arguably, present in practical application.

The first category focuses on a defendant’s conduct and is more akin to a general issue of a plaintiff’s standing to seek an injunction. Only future ongoing injury, not solely past harm, can be the basis of a finding of irreparable harm. Hoop Culture, Inc. v. Gap Inc., 648 F. App'x 981, 986 (11th Cir. 2016). If the defendant will not be selling any goods or services bearing a confusingly similar mark during the litigation or in the future, then there can be no threat of irreparable injury. Id. However, a simple representation by the defendant that the infringing activity has ended is not enough to rebut the presumption, unless there is some evidence that it cannot restart. W.L. Gore & Assocs., Inc. v. Garlock, Inc., 842 F.2d 1275, 1282 (Fed. Cir. 1988) (patent infringement case).

The second category, a plaintiff’s unexcused delay, encompasses a broader array of conduct that might serve as the basis of rebutting the presumption. See Citibank, N.A. v. Citytrust, 756 F.2d 273, 276 (2d Cir.1985) (delay bringing lawsuit and motion for preliminary injunction for years despite open and notorious action by defendants constituted unreasonable delay). But the delay must be substantial and inexcusable.

The “delay” can manifest in several forms. The delay can be in first bringing the lawsuit. Tough Traveler, Ltd. v. Outbound Prod., 60 F.3d 964, 968 (2d Cir. 1995). But pre-suit delay may be excusable if the plaintiff does not know the severity of the infringement, if the delay was caused by the plaintiff's ignorance of the defendant's competing product or the plaintiff's making good faith efforts to investigate the alleged infringement. See Id.; Tom Doherty Assocs., Inc. v. Saban Entm't, Inc., 60 F.3d 27, 39 (2d Cir.1995). However, even following some evidence that the infringement has ended, delay may be inexcusable if a plaintiff has not acted with reasonable diligence to determine whether that is, in fact, the case. See Laukus v. Rio Brands, Inc., No. 5:07CV2331, 2008 WL 11383506, at *6 (N.D. Ohio Sept. 24, 2008).

Diligent attempts to resolve the dispute outside of litigation do not constitute periods of unreasonable delay. See King v. Innovation Books, a Div. of Innovative Corp., 976 F.2d 824, 831 (2d Cir. 1992). However, the delay can again become unreasonable where there is an extended period following negotiations before filing suit. Voice of the Arab World, Inc. v. MDTV Med. News Now, Inc., 645 F.3d 26, 36 (1st Cir. 2011). The period of excusable pre-suit delay can also be relative to the size of the plaintiff’s business. Jones v. Am. Council on Exercise, 245 F. Supp. 3d 853, 868 (S.D. Tex. 2017) (eleven-month delay in bringing motion was excusable when plaintiff was a small business).

In addition to pre-suit delay, post-suit delay in filing a motion for preliminary injunction can rebut the presumption of irreparable harm. Tough Traveler, 60 F.3d at 968; Gonannies, Inc. v. Goupair.Com, Inc., 464 F. Supp. 2d 603, 609 (N.D. Tex. 2006). Indeed, in some district courts, there is a soft “presumption” that a certain time period of post-suit inexcusable delay is inexcusable. Leaf Trading Cards, LLC v. Upper Deck Co., No. 3:17-CV-3200-N, 2019 WL 7882552, at *2 (N.D. Tex. Sept. 18, 2019) (“courts generally consider anywhere from a three-month delay to a six-month delay enough to militate against issuing injunctive relief.”).

Despite pre-suit and post-suit delay, in very limited circumstances, the presumption of irreparable harm might be revived by new acts of infringement. The Second Circuit, in dicta, stated that the novel acts of infringing use could be considered “new” if they were “so qualitatively different from the harm flowing from the prior uncontested use that the injured party could not reasonably foresee the new harm. . . . However, where the prior harm reasonably alerts the injured party to the infringer's future intentions, the injured party must act or cannot expect to obtain preliminary relief when it later brings suit.” Bourne Co. v. Tower Recs., Inc., 976 F.2d 99, 102 (2d Cir. 1992); Voice of the Arab World, 645 F.3d at 36.

In sum, although a presumption of irreparable harm offers trademark owners a substantial advantage in obtaining preliminary injunctive relief, the many flavors of “delay” rebutting that presumption arise frequently. It is critical that trademark owners act quickly and diligently to identify and investigate potential infringement and use reasonable diligence to determine that infringement has indeed been remedied pre-suit. After a lawsuit is filed, motions for preliminary injunction should be filed quickly to ensure that the presumption of irreparable harm is maintained.

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Matt Acosta is a partner with Platt Cheema Richmond PLLC in Dallas, Texas.

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