Another IP plaintiff fails to show irreparable harm (false advertising/trade secret)

Impax Media Inc. v. Northeast Advertising Corp., No. 17 Civ. 8272, 2018 WL 358284 (S.D.N.Y. Jan. 10, 2018)

Impax, which provides digital video screens that show ads (mostly in supermarkets), sought to enjoin defendants (AdCorp) from competing with Impax by installing or contracting to install new digital signage platforms at supermarket checkout counters during the term of the parties’ Commission Sales Agreement in the northeastern United States and Washington D.C. AdCorp pays supermarkets and other venues to permit the installation of digital and print advertising platforms.  

Impax initially talked to AdCorp about providing services in the northeast, especially for introductions to supermarkets with which AdCorp had relationships, including Wakefern, a large grocery store cooperative.  AdCorp told Impax that AdCorp would pitch Wakefern on Impax, but then Wakefern terminated its discussions with Impax, and Impax learned that Wakefern had entered into an agreement to have AdCorp install AdCorp’s own digital signage. AdCorp then told Impax that it would limit digital media screen sales going forward, focus on print advertising, and would continue to serve as Impax’s exclusive agent for the sale of local advertising.   The parties then executed a Commission Sales Agreement granting AdCorp an exclusive right to sell ads on Impax’s behalf in the relevant territory for 3 years.  AdCorp promised to use its best efforts to sell ads, in return for a commission.  The agreement also covered Impax’s trade secrets.  Before the agreement was signed, the phrase that Adcorp “may not sell Advertising under his own or any other name” was removed, and a statement that AdCorp was “mandated” to sell 15-second ads was changed to “allowed.” An addendum allowed Impax to sell local ads in the territory.  In 2017, Impax began to develop a relationship with Foodtown, a large supermarket cooperative, then found that Foodtown had decided to install AdCorp digital screens at its checkout counters.

Impax sued for false advertising and related claims.  The court addressed only the issue of irreparable harm, finding it wanting. Impax argued that it “faces the very real possibility of losing the benefit of two years of hard work developing its product and its market opportunity and being driven out of this market altogether.”  Impax argued that it had identified “strategic gaps and opportunities in the U.S. market for digital signage and advertising at supermarkets,” and AdCorp’s alleged misappropriation of its information would keep it from effectively marketing its own platform, losing out on incalculable future profits.

However, Impax didn’t show evidence of potential clients with whom Impax was currently contracted, in talks with, or even planning to negotiate, and the sum of whose potential business revenue was incalculable. Impax’s claim was “even more speculative because of [its] own admission that its digital platform program is in its ‘infancy.’” It was speculative to claim, without more evidence, that Impax would have to drop out of the market.  The misappropriation also didn’t threaten irreparable harm because AdCorp wasn’t threatening to disseminate Impax’s trade secrets, only to use them; no presumption of irreparable harm was warranted because “damages will often provide a complete remedy for such an injury.”

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