In a much anticipated ruling, the Third Circuit held courts no longer may presume irreparable harm when considering a preliminary injunction motion in a Lanham Act false advertising case even where a plaintiff shows a likelihood of success on the merits. Ferring Pharmaceuticals, Inc. v. Watson Pharmaceuticals, Inc., No. 13-2290, slip op. (August 26, 2014). Instead, a plaintiff seeking a preliminary injunction must present affirmative evidence it is likely to suffer irreparable harm.
The Ferring court based its ruling on the Supreme Court’s decisions in eBay v. MercExchange, 547 U.S. 388 (2006), and Winter v. Natural Resources Defense Council, 555 U.S. 7 (2008), which the Third Circuit described as “revisit[ing] the analytical framework governing injunctions.” Ferring, slip op. at 12. In eBay, the Supreme Court held it was error to replace “traditional equitable considerations” with a rule that an injunction should automatically follow the determination a patent had been infringed. Thus, before an injunction may issue in a patent infringement case, the movant must show:
- it has suffered an irreparable injury;
- remedies available at law are inadequate;
- the balance of the hardships favors the party seeking the injunction; and
- the public interest would not be disserved by the injunction.
eBay, Inc., 547 U.S. at 391. Post-eBay, a number of circuit courts held that applying a presumption of irreparable harm is no longer permissible in patent and copyright infringement cases. While the Third Circuit had never applied a presumption of irreparable harm in a false advertising case, it had held that a plaintiff alleging trademark infringement was entitled to a presumption of harm upon demonstrating a likelihood of success on the merits of that claim.
The Ferring court rejected the argument that the holding of the eBay case was limited to patent and copyright cases, finding instead that it “is widely applicable to various different types of cases.” Slip op. at 16. Ferring, the plaintiff and appellant, had argued that Lanham Act claims were “materially distinct from patent or copyright claims” because injury to, for example, goodwill and reputation can be “difficult to measure in dollars and cents.” The Third Circuit found this argument unpersuasive. It noted the eBay opinion suggested “a major departure from the long tradition of equity practice” should be permitted only to the extent that Congress intended such a deviation. Id. at 18. Moreover, like the Patent Act, the “text of the Lanham Act clearly evinces congressional intent to require courts to grant or deny injunctions according to traditional principles of equity.” Id.
The Third Circuit’s holding erects a high bar to attaining a preliminary injunction in a false advertising case, particularly in light of the difficulty of showing harm that cannot be redressed with money damages. This is especially true during the early stages of a case, when preliminary injunctive relief will be the most desirable. However, recent cases from other circuits indicate it is still possible for false advertising plaintiffs to win injunctive relief in the right circumstances, even without applying an express presumption. This appears especially true in cases involving comparative advertising.
Reckitt Benckiser v. Motomco, 760 F. Supp. 2d 446, 453 (S.D.N.Y. 2011), is instructive. There, the court found that to prove irreparable harm, the plaintiff only had to show (1) the parties are competitors in the relevant market, and (2) there is a logical causal connection between the alleged false advertising and its own sales position. While acknowledging that irreparable harm may no longer be presumed in Lanham Act cases, the court found that on the evidence before it, i.e., that the parties were competitors in the market for rodenticides, and that “the allegedly false statements were made in the context of advertising campaigns directly referencing, and indeed aimed at, the opposing manufacturer’s products,” the movant presented adequate proof of likely irreparable harm. Id. at 454 (explaining: “A misleading comparison to a specific competing product . . . . diminishes that product’s value in the mind of the consumer.”)
Similarly, in CJ Prods., LLC v. Snuggly Plushez, LLC, 809 F. Supp. 2d 127, 149 (E.D.N.Y. 2011), the district court entered a preliminary injunction upon finding the plaintiff demonstrated irreparable harm in a false advertising case, where the parties were competitors in the plush toy market and “sales of one party’s products would certainly impact the sale of the other party’s product.” Even more recently, the Select Comfort Corp. v. Tempur Sealy Int’l, Inc., 2013 WL 6767821 (D. Minn. Dec. 23, 2013), court found that “misleading comparisons” in comparative flyers about competing mattress and bedding products could “diminish a product’s value in the minds of a consumer.” Thus, proof that the flyers were being used constituted evidence of “irreparable harm” and warranted entry of a preliminary injunction.