As discussed in our previous blog post Puma Treads New Territory Hitting Forever 21 with Copyright Allegations after the Supreme Court’s Star Athletica Decision, Puma sued Forever 21 for design patent infringement, trade dress infringement, copyright infringement and unfair competition in the Central District of California. Specifically, Puma alleged that Forever 21 copied its “Fenty” label shoes which were designed by Puma with the help of famous pop star, Rihanna. Below are images of Puma’s “Fur Slide” and “Bow Slide” sandals which are part of its “Fenty” line, side-by-side with Forever 21’s alleged copycats:
On April 11, 2017, shortly after filing the lawsuit, Puma moved for a preliminary injunction requesting that the Court order Forever 21 to immediately cease selling the alleged copycat shoes. This request was made after the Court denied Puma’s request for a temporary restraining order. Once again, Puma was unsuccessful.
In order to obtain a preliminary injunction, a party must show: (1) a likelihood of success on the merits; (2) a likelihood of irreparable injury if the injunctive relief is not granted; (3) a balance of hardships in favor of plaintiff; and (4) an advancement of public interest. Here, the Court found that Puma failed to show that it was at risk of irreparable harm. The Court did not discuss the other factors such as the likelihood Puma will prevail on its claims against Forever 21.
In order to establish irreparable harm, a party must submit evidence of irreparable harm that is real and significant and that monetary damages are inadequate. However, the only evidence submitted by Puma to show irreparable harm was a declaration from its Global Director of Brand and Marketing. He explained that Forever 21’s “fast fashion” products injure brands that are knocked-off by decreasing sales and volume. He claimed that there was decreased excitement following a “Fenty” shoe release, that there was a lower than expected conversion of sales from “Fenty” shoes to other Puma shoes, and that the “Bow Slide” shoe took longer than expected to sell out due to Forever 21’s alleged copycat shoes.
But the Court was troubled by the fact that Puma’s only evidence of irreparable harm was a single declaration from one of Puma’s directors. The director’s statements that the Forever 21 shoes “diminish the brand value for Puma’s customers” and “the prestige of the Puma brand is diminished” were unsupported. The Court suggested that Puma could have submitted evidence showing consumers’ perception that Puma’s brand had been weakened. Further, Puma needed non-speculative evidence that it had lost or was likely to lose customers or goodwill due to Forever 21’s shoes. Puma also failed to provide evidence supporting its allegation that monetary damages could not compensate it for the slower sales of the “Fenty” shoes.
A brand owner who is not able to obtain preliminary injunctive relief against a copycat or counterfeit can suffer severe damage. The time from filing a lawsuit to trial is approximately one to three years. Thus, if a brand owner has to wait until a final decision at trial to stop the copycat or counterfeiter, the damage may already be done, particularly in fashion where the designs and styles are changing so rapidly.
From this case, it is clear that brand owners can no longer rely solely on the merits of their claims to obtain preliminary injunctive relief. The Court pointed out that a likelihood of success on the merits no longer means that the Court will presume a likelihood of irreparable harm. Further, the Court found that evidence of consumer confusion is not enough to prove irreparable harm.
So what can brand owners do to put themselves in a better position to obtain preliminary injunctive relief against a copycat or counterfeiter? Evidence of lost sales is not sufficient because this can be adequately compensated with monetary damages. As suggested by the Court in this case, a brand owner can obtain a survey of consumers to determine whether the infringing product has diminished their perception of the brand. Since surveys are costly and time-consuming, however, another option would be to obtain declarations from several consumers in which they explain how the copycat product diminished their perception of the brand. The brand owner must provide evidence that its goodwill or reputation is diminished, and a declaration from one employee is not enough.