In the past, a successful patent, trademark or copyright infringement plaintiff could almost automatically obtain an injunction in addition to damages. However, as reported in our September 2008 KLIP Alert, the Supreme Court’s decision in eBay Inc. v. MercExch., L.L.C. changed that rule in patent cases by obligating a patent owner to demonstrate that it would suffer irreparable harm without issuance of an injunction. Under eBay, such irreparable harm could no longer be automatically presumed by the mere fact of infringement (as had previously been the case). eBay left unanswered if the standard for obtaining an injunction had changed for trademark and copyright infringement claims. We predicted that the various circuit courts would move toward consensus on this issue, and noted a trend toward applying the eBay standard in trademark cases. A sign that our prediction was proving accurate appeared when, as reported in our March 2009 KLIP Alert, the eBay standard was applied by the Second Circuit Court of Appeals to theft of trade secrets cases. Now, our prediction continues to bear true as the Second Circuit, in the context of copyright infringement, broadly extended the applicability of the eBay standard.
Salinger v. Colting is a copyright infringement action that has received much press as it concerns the unauthorized sequel to the late J.D. Salinger’s most famous and celebrated novel, The Catcher in the Rye. In an April 30, 2010 decision, the Second Circuit vacated and remanded the Southern District of New York Court’s grant of Salinger’s motion for a preliminary injunction to prevent publication and sale of the sequel in the United States. In doing so, the Second Circuit jettisoned, as inconsistent with eBay, the Circuit’s longstanding standard for injunctions in copyright cases. Traditionally, the Second Circuit courts collapsed the accepted permanent injunction four-factor balancing test (irreparable harm, inadequacy of legal remedies, balance of hardships, public interest) into a simple inquiry into likelihood of success on the merits by presuming the requirement of showing irreparable harm once a copyright infringement plaintiff proved infringement (as the District Court found that Salinger had done). Thus, under the Second Circuit’s longstanding standard, injunctions were almost always granted as a matter of course any time a plaintiff proved copyright infringement. With its Salinger decision, the Second Circuit for the first time directly addressed the scope of eBay, and resolved the split of opinion on eBay’s reach in the district courts in the Circuit, by clarifying that trial judges should instead fully apply the traditional four-factor test in considering whether to issue an injunction, be it in a patent infringement case, a copyright infringement case or any other type of case.
The Second Circuit further clarified that, in copyright cases, in considering whether the plaintiff will suffer irreparable harm in the absence of an injunction in the related context of the balance of hardships between the plaintiff and defendant (involving both property and First Amendment interests), the relevant harm is the harm that occurs to the parties’ legal interests that cannot be remedied after final adjudication – whether by damages or a permanent injunction.
To maintain the status quo while the District Court reconsiders whether an injunction is appropriate, the Second Circuit allowed the preliminary injunction to stay in place for a limited period of time. Sadly, J.D. Salinger died during the pendency of the appeal.
What does this mean for you?
As the authors predicted, in the Second Circuit, the bar for obtaining preliminary injunctions and post-trial permanent injunctions is significantly raised not only in patent cases, but in copyright cases and any other type of case where actual evidence of irreparable harm is required. The authors further expect that the majority of the circuit courts will follow the influential Second Circuit’s Salinger holding.