Third Circuit: Inferences of Irreparable Harm Permissible in Seeking Preliminary Injunction

Although plaintiffs seeking a preliminary injunction in Lanham Act cases are not entitled to a presumption of irreparable harm, they can rely on inferences of harm, the Third Circuit has ruled.

In Groupe SEB USA, Inc. v. Euro-Pro Operating LLC, a manufacturer of steam irons sued a competitor for false advertising under Section 43(a) of the Lanham Act, alleging that the competitor’s advertising wrongly stated that its product delivered more steam at half the price. No. 14-cv-2767, 2014 WL 7172253, at *9 (3d Cir. Dec. 17, 2014). Following the district court’s grant of plaintiff’s motion for a preliminary injunction, the defendant appealed, arguing, among other things, that the manufacturer failed to establish a likelihood of irreparable harm.

The Third Circuit noted that under Ferring Pharmaceuticals, Inc. v. Watson Pharmaceuticals, Inc., courts may award preliminary injunctive relief under the Lanham Act only upon a “clear showing” of a likelihood of irreparable harm. 765 F.3d 205 (3d Cir. 2014). That decision relied on eBay, Inc. v. MercExchange, LLC, in which the Supreme Court held that patent plaintiffs are not entitled to a presumption of irreparable injury.

The defendant in Groupe SEB USA argued that the district court erroneously applied a de facto presumption of harm standard. The Third Circuit, however, determined that even if the district court erred, the record still contained sufficient evidence of likely harm to plaintiff’s reputation and goodwill. The plaintiff’s marketing director, for example, testified that defendant’s false advertising would likely harm plaintiff’s “first-rate reputation” among retailers and consumers.

In finding that the plaintiff established a likelihood of irreparable harm, the Third Circuit explained that Ferring “does not bar drawing fair inferences from facts in the record. Indeed, a key lesson from Ferring is that courts considering whether to grant injunctive relief must exercise their equitable discretion in a case-by-case, fact-specific manner.” Id. at *11.