Nothing riles a business owner more than the discovery that someone else is using its intellectual property, whether it be a cyber-squatter using a website domain name, a foreign manufacturer marketing “knock-off” designer clothing, a new business using a well-established trademark, or a manufacturer reverse-engineering a patented product or process.
In those circumstances, the outraged owner of the intellectual property often wants an immediate shutdown of the offending mark, name, process or product. Anyone who watches motion pictures can name a number of methods to shut someone down fast, but the most common legal method to accomplish this result is through the injunction process.
What is an injunction? It is simply a court order which requires an individual or business either to do something or to refrain from doing something. This is to be distinguished from a typical civil court judgment, where the end result is a court order requiring, or not requiring, one side to pay money damages to the other. While requests for money damages frequently accompany an injunction request, it is the injunction which can get the offending infringer to stop what he or she is doing immediately.
Injunctions come in three phases, a temporary restraining order (TRO), a preliminary injunction, and a permanent injunction. With a TRO, the court enjoins the infringing party to perform or not perform some activity immediately, often without any advance notice to the infringing party. For instance, the court may order a party to cease the sale or use of a mark, domain name, product or process. TROs are granted where the violation is obvious, where the injury is immediate, and where there is not the time to conduct a leisurely-paced hearing. While TROs are usually hard to get, certain intellectual property statutes give property owners additional rights. TROs last for a short period of time, typically ten days. The court normally requires the party obtaining the TRO to post a bond, which may be cash but is usually a bond document obtained from an insurance company. A preliminary injunction may be granted any time from about two weeks to six months after the beginning of a lawsuit. The “offending” party receives advance notice and often the parties exchange documents or other information before the hearing. The court may permit live testimony at the hearing, which could last anywhere from 30 minutes to several days. Again, the party obtaining a preliminary injunction usually has to post some type of bond. A preliminary injunction lasts until the end of the case.
A permanent injunction is awarded only after a final trial on the merits. That can occur any time from three months to two years or so after the beginning of the lawsuit. Sometimes, the court combines the preliminary injunction hearing with the final hearing, so that the parties are afforded a final trial in a short period of time. If a permanent injunction is awarded, no bond should thereafter be required.
The strategy for obtaining an injunction may vary, depending upon the type of intellectual property infringement and the facts of the case. Sometimes it makes sense to strike immediately with a TRO; other times it is better to wait and develop facts while awaiting a preliminary injunction hearing, using information gathered from the other party as part of the court-supervised discovery process.
Injunctions involve more up-front legal work than a typical lawsuit. As a result, the expenses are front-end loaded. However, our experience is that the injunction process tends to set the tone of a case early on, and injunction-oriented cases are usually resolved more quickly than other types of cases. The speedier resolution of a case may save a party more money in the end.
Thomas J. Donovan is a director in the law firm of McLane, Graf, Raulerson & Middleton, Professional Association and a chairman of the Litigation Department. His practice focuses on commercial, intellectual property and insurance coverage disputes. He has handled major trials involving computer software copyrights and trade secrets, patent infringements, commercial construction problems, large loan collections and insurance coverage for hazardous waste claims.