On December 27, 2020, the Trademark Modernization Act (TMA) was signed into law as part of the latest COVID-19 relief and spending package. As one of the major changes to U.S. trademark law in recent years, the TMA will have a significant impact on trademark owners' rights―and particularly on the ability to enforce those rights at the outset of litigation―as the new legislation makes it easier for trademark owners to obtain preliminary injunctive relief against an accused infringer.
Injunctions are court orders that compel one party to a lawsuit to do or refrain from doing specific acts. An injunction can be preliminary or permanent depending on the stage of litigation in which the injunction is sought. For trademark holders, injunctions can be used to prevent an accused infringer from using allegedly infringing trademarks. Because forcing a party to act in a specific way can have a significant impact on that party, U.S. courts have set forth a four-factor test that all parties seeking injunctive relief must meet. The TMA alters one of those factors in favor of the trademark owner seeking an injunction.
Prior to the TMA's enactment, the Supreme Court of the United States' decision in eBay Inc. v. MercExchange, 547 U.S. 388 (2006) set the standard for granting an injunction in trademark infringement cases. While eBay was a patent infringement case, the injunctive relief factors set forth have been applied to trademark cases across the country, although not uniformly. To succeed under the eBay injunction standard, a party had to show:
- That it has suffered irreparable harm;
- That remedies available through the law are inadequate to compensate for that harm;
- That considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and
- That the public interest would not be disserved by an injunction.
For the past 14 years, the various U.S. Circuit Courts have debated whether the first factor, irreparable harm, can ever be presumed or whether the party seeking an injunction had to provide evidence that it is suffering irreparable harm. The TMA has now clarified that irreparable harm is presumed by the continued infringement of the trademark owner's mark(s) if there is also a finding of likelihood of success on the merits, although that presumption can be rebutted by the accused infringer.
What Does This Mean for Trademark Owners?
When a trademark owner now seeks injunctive relief, they will enjoy the benefit of this presumption, no matter which circuit they are in, and will no longer have to demonstrate irreparable harm through specific evidence. As such, trademark owners will have an easier time obtaining injunctive relief since it is presumed that the continued infringement of a party's trademark(s) equates to irreparable harm if the trademark owner can show a likelihood of confusion exists due to the infringement.
Overall, this will allow trademark owners to protect their trademark rights more quickly and less expensively. Because irreparable harm is now presumed, we can expect to see more trademark holders seeking preliminary injunctive relief early in infringement cases, especially when the party may not have previously been able to demonstrate that the harm they were experiencing was irreparable. While a party will still have to demonstrate success under the other three injunction factors, courts will no longer have to analyze specific irreparable harm evidence to determine that a party meets its burden under the first factor.
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.