Monday, January 08, 2018

Finding of willful infringement still doesn't merit injunction under Herb Reed

A.C.T. Prods., Inc. v. W.S. Indus., Inc., No. 16-0476, 2017 WL 4708152 (C.D. Cal. Jul. 14, 2017)

Herb Reed strikes again.  The jury found that defendant had engaged in willful trademark infringement and false advertising, but also that the four-year statute of limitations had run. The court found that there was sufficient evidence before the jury to so hold, because of evidence that the defendant was infringing before the limitations period by being willfully blind to infringement: it was aware that it was buying the products at issue from a manufacturer that did not own the mark.

The plaintiff argued that the jury’s findings were irreconcilably inconsistent, but that wasn’t the case. It was possible to reconcile the jury’s conclusion as to liability with the factual finding establishing the affirmative defense because there was evidence that willful infringement and advertising occurred only from 2010 to 2011.  Once the jury found that the plaintiff knew before the relevant timeframe, the court could conform the determination of liability to the factual finding.

In addition, a permanent injunction was unwarranted, because the plaintiff didn’t show irreparable injury.   The plaintiff argued that the infringement (1) damaged its reputation and goodwill because its witness testified during trial that its customers called to complain about the defendant’s inferior goods that they thought were manufactured by the plaintiff; and (2) caused the loss of business opportunities because the parties competed.  Economic injury won’t suffice to show irreparable harm, but intangible injury like loss of customers or damage to a party’s goodwill can do so, as can lost control over a business.  Here, the allegations of harm to business, goodwill, and reputation were in the past tense, and there was no evidence of continued infringement or an inclination to restart, nor any evidence of continuing customer complaints, making continuing reputational harm speculative. The jury’s finding of the affirmative defense of statute of limitations also weighed against an injunction. 

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