Trademark Modernization Act Resolves Disparate Handling Of Presumption Of Irreparable Harm In Trademark Cases

• Published date: 09 December 2021
• Subject Matter: Intellectual Property, Trademark
• Law Firm: Cooley LLP
• Author: Mr Bobby Ghajar and Marcus Peterson

The Trademark Modernization Act of 2020 ("TM Act"), which was signed December 27, 2020 and will go into effect on December 27, 2021, is notable for several major changes to trademark law and practice. One of the more consequential changes involves an amendment to the Lanham Act regarding the presumption of irreparable harm when determining injunctive relief in trademark cases. A new addition to Section 34 of the Lanham Act (15 USC '1116(a)) requires courts to apply a rebuttable presumption of irreparable harm if the plaintiff demonstrates a likelihood of confusion. This revised approach resolves a circuit split that developed over the past eight years, when some courts imported Supreme Court patent principles into trademark law and refused to apply such a presumption. Now, courts are required to apply it, although they must still consider principles of equity in determining whether to grant either a preliminary or permanent injunction.

Various approaches to irreparable injury

In Federal Courts, a plaintiff can obtain a permanent injunction if it can demonstrate: (1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by an injunction. See, e.g., Weinberger v. Romero'Barcelo, 456 U.S. 305, 311-313, 102 S.Ct. 1798, 72 L.Ed.2d 91 (1982). A plaintiff can obtain a preliminary injunction if it can show: (1) a likelihood of success on the merits; (2) a likelihood of irreparable harm to the moving party in the absence of preliminary relief; (3) that the balance of equities tips in favor of the moving party; and (4) that an injunction is in the public interest. Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20, 129 S.Ct. 365, 172 L.Ed.2d 249 (2008)

In trademark cases, many courts presume irreparable injury where the plaintiff shows likelihood of success on the merits (for a preliminary injunction) or prevails on the merits by showing likelihood of confusion (for a permanent injunction). This follows from the notion that consumer confusion over a brand causes its owner loss of goodwill in, or harm to, the brand - neither of which is easy to quantify - as well as harm to the public, given that confusion is likely. As one court explained, "By its very nature, trademark infringement results in irreparable harm because the attendant loss of profits, goodwill, and reputation cannot be satisfactorily quantified and, thus, the trademark owner cannot adequately be compensated. Hence, irreparable harm flows from an unlawful

"One of the more signifi cant changes involves an amendment to the Lanham Act regarding the presumption of irreparable harm."

trademark infringement as a matter of law." Societe Des Produits Nestle, S.A. v. Casa Helvetia, Inc., 982 F.2d 633, 25 U.S.P.Q.2d 1256 (1st Cir. 1992).

Courts varied in...