Thursday, March 5, 2015

Hakkasan denied preliminary injunctive relief in cybersquatting case for failure to establish irreparable harm

Trademark attorneys in the Ninth Circuit continue to face the fallout from last year’s Ninth Circuit decision in Herb Reed Enterprises, LLC v. Florida Entertainment Management, Inc., 736 F.3d 1239, 1249 (9th Cir. 2013), cert. denied, 2014 WL 1575656 (Oct. 6, 2014) (“Herb Reed”).  In Herb Reed, the Ninth Circuit, following the Supreme Court’s precedents in eBay Inc. v. MercExchange, 547 U.S. 388 (2006) (which held that the traditional four factor test, including establishing irreparable harm, must be employed in patent cases) and Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7 (2008) (which held that parties seeking a preliminary injunction must demonstrate that irreparable harm is likely in the absence of an injunction), rejected the notion that a plaintiff in a trademark infringement lawsuit was entitled to a presumption of irreparable harm upon demonstrating a likelihood of confusion from alleged trademark infringement and held that a plaintiff seeking a preliminary injunction in a trademark infringement case must demonstrate irreparable harm in order to get preliminary injunctive relief:

Gone are the days when “[o]nce the plaintiff in an infringement action has established a likelihood of confusion, it is ordinarily presumed that the plaintiff will suffer irreparable harm if injunctive relief does not issue.” Rodeo Collection, Ltd. v. W. Seventh, 812 F.2d 1215, 1220 (9th Cir. 1987) (citing Apple Computer, Inc. v. Formula International Inc., 725 F.2d 521, 526 (9th Cir.1984)). This approach collapses the likelihood of success and the irreparable harm factors. Those seeking injunctive relief must proffer evidence sufficient to establish a likelihood of irreparable harm.

The Herb Reed case has since left many trademark litigation practitioners (at least those practicing in the Ninth Circuit), after years of being able to obtain preliminary injunctions based on a showing strong showing of likelihood of confusion and the presumption of irreparable harm thereby, now trying to figure out what type of actual “evidence” can be shown to overcome this threshold of demonstrating a likelihood of irreparable harm and having to inform some trademark clients that a preliminary injunction might not be as easily obtainable for trademark infringement as it once was. 
The latest example of the struggle to overcome this irreparable harm threshold comes from a court decision by Nevada District Judge Jennifer Dorsey who denied the owner of the Hakkasan nightclub chain preliminary injunctive relief for alleged cybersquatting against an individual who had registered various domain names containing the term “hakkasan.”  See Hakkasan LV, LLC et al v. Eddie Miller, Case No. 2:15-cv-290-JAD-PAL (D. Nev).

Hakkasan had filed a cybersquatting lawsuit against Defendant Miller for his registration of the domain names domain names , , , , and (the “Contested Domain Names”) – one of which was linked to a website offering the domain name for sale for $5000 and the other four linked to a webpage located at (also owned by Miller), which encouraged third parties to “partner” with him. 

Along with the filing of the complaint, Hakkasan also sought an ex parte temporary restraining order and preliminary injunction against Miller.  However, the Court – without receiving any opposition from Miller – denied Hakkasan’s request for preliminary injunctive relief on the grounds that Hakkasan had failed to show any evidence of a likelihood of irreparable harm arising from Miller’s actions.

In rejecting Hakkasan’s arguments of irreparable harm, the Court stated that “there is no evidence that Miller has taken any steps to compete with Hakkasan’s business beyond registering the Contested Domain Names and offering them for sale.”   And while Hakkasan alleged that Miller was using the domain names to “solicit partners to offer counterfeit services to the public,” the Court found
no indication that Miller has sold any of the domain names, partnered with any other person, or constructed a website designed to create confusion with Hakkasan’s business, siphon customers from Hakkasan’s business, or otherwise cause Hakkasan irreparable harm. Speculation of what Miller will do with the domain names is hardly enough to bridge the legal gap between Miller’s actions and Hakkasan’s irreparable injury. Instead, these are the sorts of “platitudes” that the Herb Reed court warned may show harm Hakkasan might suffer, but not harm a party seeking injunctive relief is likely to suffer
Order at p. 4 (emphasis in original).

The Court also rejected as unpersuasive several other cases cited by Hakkasan as support that its evidentiary proffer was sufficient to show irreparable harm.  One case – Starbucks Corp. d/b/a Starbucks Coffee Company v. Heller, 2014 WL 6685662, at *8 (C.D. Cal. Nov. 24, 2014) – involved a case where the court found irreparable harm where the presence of infringing products in the market could damage business goodwill.  However, the Court noted that Hakkasan had not offered any evidence that Miller had “introduced any competing or counterfeit ‘products’ into the marketplace or taken any steps other than to register the domain name and attempt to sell it to third parties.” Order at p. 4. The second case – Kalologie Franchising LLC v. Kalologie Skincare Medical Group of California , 2014 WL 953442, at *5 (C.D. Cal. Mar. 11, 2014) – involved a defendant who was continuing to use the alleged infringing mark at the defendant’s facility through a point of sale system and a website and where the court found irreparable harm from “plaintiff’s loss of control over its business reputation resulting from a defendant’s alleged unauthorized use of its protected mark during the pendency of an infringement action.”  In the case of Hakkasan, however, there was no indication that Hakkasan’s marks were being used by Miller in a manner that was similar to the Kalologie case. 

Finally, Hakkasan made one final “Hail Mary” argument that Herb Reed was a trademark infringement case and that the Ninth Circuit’s decision did not expressly overrule the presumption of irreparable harm in a cybersquatting case.  The Court rejected such argument, especially given the Ninth Circuit past statements that “cybersquatting is a form of trademark infringement.”  The Court further noted two other cybersquatting court decisions issued post-Herb Reed where the plaintiffs were granted preliminary injunctive relief   one involving an evidentiary record showing systematic cybersquatting that was intended to deceive customers (Bittorrent, Inc. v. Bittorrent Marketing GMBH, 2014 WL 5773197 (N.D. Cal. Nov. 5, 2014) and another where “loss of control over business reputation” established irreparable harm in circumstances where the domain name owner actually operated a business in the same market as the plaintiff and sold products “slightly dissimilar” from plaintiff’s products (Kreation Juicery, Inc. v. Shekarchi, 2014 WL 7564679, at *12 (C.D. Cal. Sept. 17, 2014)).  The Court found that Hakkasan had failed to show use of the Contested Domain Names by Miller that reached the same levels as those in the Bittorrent and Kreation Juicery cases. 

Accordingly, because Hakkasan had failed to demonstrate a likelihood of irreparable harm, the Court denied both Hakkasan’s Application for Temporary Restraining Order and Motion for Preliminary Injunction.

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