IP UPDATE
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Results for "Trademark appeal"
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Up in smoke: Eighth Circuit sends Lanham Act dispute to state court

by | Jun 25, 2026 |

The US Court of Appeals for the Eighth Circuit affirmed dismissal of a trademark dispute on forum non conveniens grounds, finding that the Lanham Act claims concerning ownership and scope of trademark rights arose out of a stock purchase agreement and therefore belonged in the state court designated by the parties’ forum selection clause. Vaughn Boyd v. Deadwood Tobacco Company, Case No. 25-1659 (8th Cir. June 8, 2026) (Smith, Kelly, Grasz, JJ.)

The dispute stemmed from the 2018 sale of Deadwood Tobacco, a South Dakota cigar business associated with the DEADWOOD family of marks. Prior to the sale, Deadwood Tobacco and Drew Estate had collaborated on a successful cigar line sold under names including Sweet Jane, Fat Bottom Betty, and Crazy Alice. The stock purchase agreement reserved trademark registrations associated with those three brands from the transaction. After acquiring the company, the new owners launched additional cigar products under other Deadwood Tobacco branding. Vaughn Boyd and Drew Estate (the sellers under the agreement) subsequently alleged that the new products infringed trademark rights they had retained under the agreement.

After the parties failed to reach a resolution, Boyd and Drew Estate filed suit under the Lanham Act in federal district court in Florida. The district court concluded that the asserted trademark claims arose out of the stock purchase agreement and therefore fell within the scope of the agreement’s South Dakota forum selection clause.

Following that dismissal, Deadwood filed a related contract suit in South Dakota state court and Boyd and Drew Estate countered with a Lanham Act claim in federal district court in South Dakota. The South Dakota district court likewise determined that the dispute arose from the agreement and that the forum selection clause was valid and mandatory. Boyd and Drew Estate appealed the district court decision.

On appeal, Boyd and Drew Estate argued that their claims arose exclusively under federal trademark law rather than contract law and therefore did not “arise out of” the agreement. They further contended that the forum selection clause was permissive rather than mandatory and could not divest federal courts of jurisdiction. Finally, they asserted that public policy favored adjudication of Lanham Act claims in federal court.

The Eighth Circuit rejected each argument. Beginning with trademark ownership, the Court emphasized that trademark rights are inseparable from the goodwill they represent. Because determining the scope of Boyd and Drew Estate’s retained trademark rights required analyzing what goodwill, if any, accompanied the reserved marks, resolution of the dispute necessarily depended on interpreting the stock purchase agreement. The Court therefore concluded that the trademark claims arose out of the agreement, notwithstanding that they were pleaded solely under the Lanham Act.

The Eighth Circuit also found that the forum selection clause was mandatory. The agreement provided that disputes arising out of the agreement “shall” be venued in Lawrence County, South Dakota, and that the Lawrence County circuit court “shall have jurisdiction.” Applying South Dakota law, the Eighth Circuit found the language unambiguously mandatory and concluded that the reference to [...]

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Hague Service Convention: A “closed universe” of permissible service methods

by | Jun 11, 2026 |

The US Court of Appeals for the Seventh Circuit reversed a district court decision denying a motion to vacate a default judgment for lack of proper service under the Hague Service Convention, finding that where the Convention applies, it provides the exclusive means of valid service and prohibits email service in China. Kangol LLC v. Hangzhou Chuanyue Silk Import & Export Co., Ltd., Case No. 25-2205 (7th Cir. May 29, 2026) (Kirsch, Jackson-Akiwumi, Pryor, JJ.)

Kangol sued several defendants, including Hangzhou, for trademark infringement, counterfeiting, unfair competition, false designation of origin, and trademark dilution. Kangol moved for a temporary restraining order (TRO) and permission to serve Hangzhou by email, which the district court approved. Kangol sent an email to Hangzhou that included a link to the complaint, TRO, and additional documents, after which the parties engaged in settlement discussions.

Because Hangzhou did not appear before the district court, the court entered default judgment in favor of Kangol. Subsequently, Hangzhou filed a motion to vacate the default judgment, arguing that the judgment was void under Federal Rule of Civil Procedure 60(b)(4) because the Hague Service Convention does not permit service by email in China. The district court denied the motion, concluding that the Convention allows service by email in China. Hangzhou appealed.

Hangzhou argued that the judgment was void under Rule 60(b)(4) for lack of personal jurisdiction because email service violated the Convention. The Seventh Circuit reviewed the issue de novo and analyzed whether the Convention applied, and if so, whether it prohibits email service in China.

Before reaching the merits, the Seventh Circuit rejected Kangol’s arguments that Hangzhou had waived its service objection and that its motion to vacate was untimely. The Court explained that Hangzhou’s participation in settlement discussions did not create a reasonable expectation that it would defend the suit on the merits or otherwise constitute waiver of its jurisdictional objections. The Court also found that Hangzhou’s Rule 60(b)(4) motion was filed within a reasonable time under Federal Rule of Civil Procedure 60(c)(1), noting that Hangzhou sought relief shortly after Kangol successfully enforced a portion of the default judgment by collecting funds from one of Hangzhou’s online accounts.

Kangol argued that the Hague Service Convention did not apply because Article 1 excludes cases in which the address of the person to be served is not known, and Kangol maintained that Hangzhou’s address could not be reliably determined despite Kangol’s efforts to do so. In evaluating whether a defendant’s address is “not known,” district courts generally require plaintiffs to undertake reasonably diligent efforts to ascertain the defendant’s mailing address. The district court, however, did not determine whether Kangol’s efforts satisfied that standard, concluding instead that it need not resolve the Convention’s applicability because, even if the Convention applied, it permitted service by email in China.

The Seventh Circuit first analyzed the text and structure of the Hague Service Convention, relying on Supreme Court precedent (including Société Nationale Industrielle Aérospatiale v. US District Court for the Southern District of Iowa [...]

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AIA reviews: An alternative to litigation, not a second chance

by | May 28, 2026 | ,

Addressing the scope of discretionary institution under the America Invents Act (AIA), the United States Patent and Trademark Office (USPTO) denied institution of inter partes review (IPR), concluding that the petitioner was attempting to use the Patent Trial & Appeal Board as a “second bite at the apple” after unsuccessfully litigating substantially similar invalidity issues in district court, contrary to the AIA’s purpose of providing a streamlined alternative to litigation. Magnolia Medical Technologies, Inc. v. Kurin, Inc., IPR2026-00097, Paper 17 (Director May 14, 2026).

Magnolia challenged the validity of Kurin’s patent directed to a blood-testing device in district court. After the district court excluded Magnolia’s invalidity expert based on disclosure deficiencies related to claim construction and a jury subsequently found the patent not invalid, Magnolia filed an IPR petition asserting substantially similar anticipation and obviousness grounds. The Director denied institution, concluding that Magnolia had already had a full and fair opportunity to litigate those issues in district court and was improperly attempting to relitigate them before the Board.

The Director explained that Congress created IPRs and post-grant reviews (PGRs) under the AIA to provide streamlined and cost-effective alternatives to district court litigation, not to facilitate repetitive validity challenges or expand parallel litigation. The decision noted that, in practice, many petitioners pursue AIA review alongside district court litigation, sometimes asserting overlapping invalidity theories or taking inconsistent positions across forums, thereby increasing costs and burdening both patent owners and the USPTO.

The Director further emphasized that AIA proceedings serve broader public-interest objectives beyond resolving private disputes, including promoting efficiency, fairness, predictability, and the integrity of the patent system. In exercising discretionary institution authority, the USPTO considers factors such as examiner error, inconsistent positions across forums, settled expectations, and whether institution would represent an appropriate use of USPTO resources.

Applying those principles, the Director concluded that Magnolia’s petition fell outside the intended purpose of AIA review because Magnolia was not using the Board as an alternative forum for resolving validity disputes, but instead to relitigate substantially similar invalidity theories after an unfavorable outcome in district court. The Director emphasized that Magnolia had already contested validity in district court using anticipation and obviousness grounds similar to those asserted in the petition and that the parties had expended substantial resources litigating those issues.

The Director rejected Magnolia’s argument that institution was warranted because no tribunal had adjudicated the merits of its anticipation and obviousness theories after the district court excluded its expert testimony. According to the Director, Magnolia had a full and fair opportunity to litigate those issues, and the exclusion of its expert resulted from deficiencies within Magnolia’s control. Permitting institution under those circumstances, the Director explained, would improperly allow Magnolia to obtain a “second bite at the apple” before the USPTO.

In discussing the public-interest considerations that inform discretionary institution decisions, the Director highlighted several precedential and informative decisions addressing issues such as substantial examiner error, inconsistent positions across forums, foreign sovereign petitioners, and settled expectations. The Director explained that these decisions reflect [...]

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Shocking: Fifth Circuit affirms disgorgement award based on willful infringement

by | May 21, 2026 |

The US Court of Appeals for the Fifth Circuit affirmed a finding of trademark infringement and unfair competition under the Lanham Act and Texas law, upholding an award of profits based on willful infringement. The Court vacated and remanded the permanent injunction as overbroad, however. Trojan Battery Co., L.L.C. v. Golf Carts of Cypress, L.L.C., Case No. 25-20243 (5th Cir. May 8, 2026) (Jones, Barksdale, Stewart, JJ.)

Trojan Battery has sold deep-cycle batteries, including batteries commonly used in golf carts, under the TROJAN mark for decades. It owns multiple federal registrations covering the Trojan name and related marks, including TROJAN for use on electric storage batteries; TROJAN BATTERY SALES for use in connection with retail and wholesale store services and wholesale distributorships; and the following graphic mark for use on electric storage batteries, deep-cycle electric storage batteries, and lithium-ion batteries:trojan-battery-company-logo

Golf Carts of Cypress (GCC) and Trojan EV (collectively, defendants), both owned by Federico Nell, entered the golf cart market between 2019 and 2020. Trojan EV marketed carts under the “Trojan-EV” name, and GCC sold those carts (bearing the below logo mark) alongside carts containing authentic TROJAN batteries.

Trojan Battery sued for trademark infringement and unfair competition. Following a five-day bench trial, the district court found liability, awarded disgorgement of defendants’ profits, and entered a permanent injunction. Defendants appealed.

Defendants challenged the district court’s likelihood-of-confusion analysis. The Fifth Circuit rejected that challenge, emphasizing that the district court did not clearly err in concluding that confusion was likely under the Fifth Circuit’s multifactor test. The Fifth Circuit acknowledged that the district court overstated the evidence of actual confusion. A single misdirected inquiry and several additional instances over more than two years were insufficient, standing alone, to show meaningful marketplace confusion. Nonetheless, the absence of convincing evidence on that factor was not dispositive.

Critically, the Fifth Circuit upheld the district court’s finding of intent. The trial court discredited Nell’s testimony that he was unaware of Trojan Battery’s marks and reasonably inferred that defendants adopted TROJAN-EV to capitalize on the senior mark’s goodwill. That finding weighed heavily in favor of confusion and supported the ultimate liability determination. Considering the record as a whole, the Court concluded that most factors favored Trojan Battery and affirmed the infringement finding.

The Fifth Circuit also affirmed the award of defendants’ profits. Applying the Lanham Act’s equitable framework, the Court found no abuse of discretion in awarding disgorgement as a deterrent against willful infringement. The Fifth Circuit endorsed the district court’s use of the Lanham Act’s burden-shifting approach to calculate profits, under which the plaintiff establishes gross sales and the defendant bears the burden of proving deductible expenses. Given the finding of willful infringement, the Court agreed that disgorgement was an appropriate remedy, particularly where injunctive relief alone might not deter future misconduct.

The Fifth Circuit reached a different conclusion as to the permanent injunction. Although injunctive relief [...]

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Personal jurisdiction: Are cease-and-desist letters enough?

by | Apr 30, 2026 |

In a decision clarifying how certain pre litigation enforcement efforts can establish personal jurisdiction, the US Court of Appeals for the Eleventh Circuit reversed the dismissal of Lanham Act and tortious interference claims for lack of personal jurisdiction, concluding that cease and desist letters sent into the jurisdiction satisfied the minimum contacts requirement and did not offend due process. Frida Kahlo Corporation v. Mara Cristina Teresa Romeo Pinedo, Case No. 24-10293 (11th Cir. Apr. 17, 2026) (Luck, Lagoa, Abudu, JJ.)

Frida Kahlo and Frida Kahlo Investments (collectively, Kahlo) manage and license a portfolio of trademarks and publicity rights associated with the artist Frida Kahlo. Kahlo sued Familia Kahlo and Mara Cristina Teresa Romeo Pinedo (collectively, Pinedo) alleging tortious interference and Lanham Act violations arising from Pinedo’s efforts to halt a traveling Frida Kahlo exhibition and related merchandise.

Central to the dispute were cease and desist letters sent by Pinedo to Kahlo’s Florida based business partners. The letters asserted that Pinedo held superior rights to Frida Kahlo’s name, likeness, and trademarks and threatened legal action if the recipients continued their involvement with Kahlo. Kahlo alleged those claims were false and caused business partners to withdraw or hesitate, disrupting Kahlo’s licensing relationships.

Kahlo filed suit in Florida. Pinedo moved to dismiss for lack of personal jurisdiction. The district court granted the motion, concluding that Florida’s corporate shield doctrine protected Pinedo from jurisdiction and that, in any event, Pinedo lacked sufficient minimum contacts with Florida. Kahlo appealed.

The Eleventh Circuit reversed, concluding first that the corporate shield doctrine did not bar jurisdiction over Pinedo. The Court focused on the language of the cease and desist letters, which expressly identified Pinedo as the “heiress of the painter Frida Kahlo” and stated that the letters were sent “in our capacity as representatives of Mara Cristina Teresa Romeo Pinedo.” The Court found that those representations showed that Maria Pinedo was acting in her personal capacity, not merely as a corporate agent. As a result, the corporate shield doctrine, which can protect corporate officers from jurisdiction based solely on acts performed for a corporation, did not apply. Because the doctrine was inapplicable, Pinedo was subject to Florida’s long arm statute, which permits jurisdiction where a nonresident commits a tortious act outside the state that causes injury within Florida.

The Eleventh Circuit next addressed whether exercising specific personal jurisdiction would comport with due process. The Court answered in the affirmative, explaining that Pinedo intentionally directed conduct into Florida by sending cease and desist letters to Florida entities. The alleged tortious interference claims arose directly from those communications, satisfying the relatedness requirement for specific jurisdiction.

The Eleventh Circuit also found purposeful availment because Pinedo plausibly alleged an intentional tort, the letters were expressly sent to Florida entities, and it was reasonable for Pinedo to anticipate having to defend itself in Florida based on its actions.

Finally, the Eleventh Circuit concluded that Pinedo failed to make a compelling case that exercising jurisdiction would violate traditional notions of fair play and [...]

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Patent disclosure erases trade secret protection

by | Apr 30, 2026 | ,

Addressing the boundary between patent disclosures and trade secret protection, the US Court of Appeals for the Federal Circuit reversed a jury’s findings of trade secret misappropriation, breach of contract, and improper inventorship, concluding that the asserted “trade secrets” were generally known and therefore not protectable under California law. The Court affirmed, however, a $1 million statutory damages award for trademark counterfeiting. International Medical Devices, Inc. v. Cornell, Case Nos. 25 1580; 1605 (Fed. Cir. Apr. 17, 2026) (Dyk, Reyna, Taranto, JJ.)

International Medical Devices, Menova International, and Dr. James Elist (collectively, the plaintiffs) manufacture and sell the Penuma® cosmetic penile implant. The plaintiffs sued Dr. Robert Cornell and associated individuals and entities after Cornell attended a Penuma® surgical training session under a nondisclosure agreement (NDA) and later helped develop a competing implant. The plaintiffs asserted claims for misappropriation of trade secrets, breach of the NDA, trademark counterfeiting based on unauthorized use of the Penuma® mark, and invalidity of two cosmetic implant patents for failure to name Elist as an inventor.

A jury found for the plaintiffs on all claims. After a bench trial on remedies, the district court awarded more than $17 million in trade secret and exemplary damages, entered a permanent injunction, and awarded $1 million in statutory damages for counterfeiting. Cornell appealed.

The Federal Circuit reversed the trade secret verdict in its entirety, concluding that none of the asserted trade secrets were protectable under California law. The Court concluded that the alleged technical trade secrets were disclosed in publicly available patents and thus were “generally known” as a matter of law.

In doing so, the Federal Circuit reaffirmed the long-standing principle that “that which is disclosed in a patent cannot be a trade secret.” Once information enters the public domain through patent disclosures, it cannot later be reclaimed as confidential business information through trade secret law.

The plaintiffs’ remaining alleged trade secret (a list of surgical instruments) fared no better. The Federal Circuit found that the list had been emailed to the defendants without any confidentiality designation or obligation, defeating any claim that reasonable measures were taken to maintain its secrecy.

Because the plaintiffs failed to identify any confidential information beyond the alleged trade secrets, the Federal Circuit also reversed the breach of contract verdict. The NDA expressly excluded information that was “generally available to the public,” and the Court found that an NDA cannot transform public domain information into protected confidential material.

The Federal Circuit reached a different conclusion on trademark counterfeiting, however, and affirmed the jury’s finding and the $1 million statutory damages award. The Court explained that the evidence showed that Cornell had advertised and offered Penuma® implants without authorization. Cornell argued that the Penuma® mark was registered only for goods, not services, and therefore could not support a counterfeiting claim tied to surgical procedures. The Court rejected that argument, concluding there was sufficient evidence that Cornell offered the Penuma® implant itself as a good, not merely a medical service.

Finally, the Federal Circuit [...]

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How ex parte is ex parte reexam?

by | Apr 16, 2026 |

Under a new procedure, announced in an Official Gazette Notice dated April 1, 2026, patent owners may now provide input before the United States Patent and Trademark Office decides whether to initiate an ex parte reexamination proceeding. Previously, while patent owners could participate after reexamination was ordered, they had no opportunity to submit arguments before the Office determined whether a request raised a substantial new question of patentability (SNQ). Under the new policy, patent owners may submit a limited pre-order paper to inform that threshold determination.

Ex parte reexamination is an administrative mechanism that allows third parties to challenge patent validity outside of court. Unlike inter partes review and post-grant review – both adjudicated by Patent Trial and Appeal Board judges – ex parte reexaminations are handled by the Central Reexamination Unit and initiation there turns on whether or not the request raises an SNQ.

The new procedure introduces an optional patent owner pre-order paper that must be filed within 30 days of service of the reexam request, with no extensions available. The submission is limited to 30 pages and must focus on why the cited prior art does not raise an SNQ. Supporting declarations are permitted and do not count toward the page limit, but incorporation by reference is not allowed.

The notice also places important limits on the scope of these submissions. The patent owner’s paper must be directed only to the issues raised in the request and should not address matters outside that scope. For example, the Office indicates that arguments regarding discretionary denial under 35 U.S.C. § 325(d) are not part of the SNQ determination and therefore should not be included.

Requesters have limited ability to respond to a patent owner’s pre-order paper. While responses are not ordinarily permitted, a requester may petition to file a reply (limited to 10 pages). Any such reply must be filed within 15 days of service of the patent owner’s paper and requires payment of a fee.

These changes may shift the dynamics of ex parte reexamination practice. Historically, institution decisions were made based solely on the requester’s submission. The new procedure allows patent owners to present arguments earlier in the process, potentially assisting the Office in evaluating whether the request satisfies the SNQ standard before ordering reexamination.

For challengers, this change increases the importance of the initial request. Requests should be drafted with the expectation that the patent owner may respond before institution and that opportunities to reply will be limited.



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“X” marks the spot: A single DuPont factor may be dispositive

by | Apr 16, 2026 |

The US Court of Appeals for the Federal Circuit affirmed dismissal of a trademark opposition, concluding that a single DuPont factor may be sufficient on its own to support a finding of no likelihood of confusion. Fuente Mktg. Ltd. v. Vaporous Techs., LLC, Case No. 24-1460 (Fed. Cir. April 8, 2026) (Prost, Taranto, Hughes, JJ.)

Fuente Marketing and Vaporous Technologies both sell smoking related products. Fuente owns two standard character trademark registrations for the letter “X,” used in connection with cigars and related accessories. Vaporous sought to register a highly stylized design mark for use with its vaping products. The parties stipulated that Vaporous’ mark consisted of “an abstract stick figure consisting of two diagonal intersecting lines in the shape of a wide stylized letter ‘X’ with a shaded circle above.”

Fuente opposed the application at the Trademark Trial and Appeal Board (TTAB), arguing that Vaporous’ mark was likely to cause confusion with Fuente’s “X” marks. Applying the DuPont factors, the Trademark Trial & Appeal Board dismissed the opposition, concluding that there was no likelihood of confusion. Fuente appealed.

The Federal Circuit reviewed the Board’s factual findings for substantial evidence and its ultimate likelihood of confusion determination de novo. Fuente challenged the Board’s analysis of two DuPont factors and argued that the Board improperly weighed the factors as a whole.

The Federal Circuit focused on the first DuPont factor, which evaluates the similarity or dissimilarity of the marks in their entireties as to appearance, sound, connotation, and commercial impression. The court found that substantial evidence supported the Board’s finding that this factor weighed heavily against a likelihood of confusion. The Federal Circuit agreed that consumers were more likely to perceive Vaporous’ mark as a stylized stick figure rather than the letter “X.” Unlike Fuente’s standard character mark, Vaporous’ design mark did not sound like the letter “X” as it had no pronunciation, and it incorporated prominent visual features – including a shaded circle comprising roughly one fifth of the mark – that were “not a minor or unnoticeable feature.”

Although the Board found that the remaining DuPont factors were neutral or favored Fuente, the Federal Circuit explained that it could “discern the Board’s path to dismissal” and affirmed the conclusion that in a case like this one DuPont factor was sufficient to establish dissimilarity between the marks. The Court emphasized that a likelihood of confusion analysis is a balancing test, and no minimum number of factors must favor one party.

Practice note: This decision reinforces that a single DuPont factor, particularly the dissimilarity of the marks, may be dispositive of likelihood of confusion. Parties should not assume that favorable findings on other factors can overcome a clear lack of similarity in appearance, sound, connotation, or commercial impression.



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Settled means settled: Broad settlement release equates to res judicata

by | Apr 16, 2026 |

The US Court of Appeals for the Fourth Circuit affirmed a summary judgment decision, concluding that an intellectual property owner’s claims were barred by the scope of a settlement agreement resolving earlier state court litigation between the parties. Clear Touch Interactive, Inc. v. The Ockers Co. et al., Nos. 25-1304, 25-1374 (4th Cir. Apr. 1, 2026) (Wynn, Harris, JJ.) (Rushing, J. concurring in part and dissenting in part).

Clear Touch, a designer and manufacturer of interactive technology products, entered into exclusive reseller agreements with information and communications technology reseller Ockers in 2014. After Clear Touch revoked Ockers’ exclusivity in 2017, Ockers began developing a competing product called TouchView. Clear Touch terminated Ockers as a reseller in 2019. The following year, Ockers filed suit in South Carolina state court alleging breach of contract and asserting various tort, trade secret, defamation, and civil conspiracy claims.

In June 2021, the parties resolved the state court action through a settlement agreement that dismissed the case with prejudice and included a broad mutual release of all claims and counterclaims – known or unknown – that were brought or could have been brought and that arose out of or related to the subject matter of the lawsuit.

Despite that settlement, Clear Touch filed a federal action one month later against Ockers, two of its officers (John J. Houser and Jason Houser), and TouchView Interactive, asserting claims for trademark infringement, trade secret misappropriation, and unfair competition based on the TouchView product. The defendants moved for judgment on the pleadings, arguing that the settlement agreement and the state court’s dismissal with prejudice barred Clear Touch’s claims.

The district court initially allowed some claims to proceed, including certain Lanham Act claims and claims against TouchView Interactive, but dismissed the remainder. After discovery, however, the court revisited the preclusion issue and granted summary judgment to Ockers and its officers, concluding that all of Clear Touch’s remaining claims were barred by res judicata. The district court also granted summary judgment to TouchView Interactive, finding it to be a shell entity with no commercial activity. Following a jury verdict in favor of Ockers, Clear Touch appealed.

Clear Touch challenged the district court’s res judicata determination, arguing both substantive error and procedural error under Rule 54(b). The Fourth Circuit rejected both arguments. Substantively, the Fourth Circuit held that Clear Touch failed to create a genuine dispute regarding the settlement agreement’s plain language or the parties’ mutual intent to release all claims, including those that could have been brought, arising from the same operative facts. Even when viewed in the light most favorable to Clear Touch, the federal claims were precluded because they could have been asserted as counterclaims in the prior state court action, which had been dismissed with prejudice.

Procedurally, the Fourth Circuit found no abuse of discretion in the district court’s decision to revisit its earlier rulings. Rule 54(b) permits revision of nonfinal orders when new evidence emerges or a legal error becomes apparent. Here, supplemental evidence showed that Clear Touch [...]

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Muddy paws? Franchisor’s unclean hands precludes full equitable relief

by | Apr 2, 2026 | ,

The US Court of Appeals for the Sixth Circuit affirmed a district court’s partial denial of a franchisor’s request for a preliminary injunction, finding that the franchisor’s inequitable conduct barred broader injunctive relief, even where the franchisor showed a likelihood of success on certain claims. Fetch! Pet Care, Inc. v. Atomic Pawz Inc., Case No. 25-1638 (6th Cir. Mar. 20, 2026) (Gibbons, Larsen, Murphy, JJ.)

Fetch! sued several former franchisee locations for breach of contract, trademark infringement, and trade secret misappropriation after the franchisees stopped paying royalties, downloaded client contact information, prepared transition plans, and continued operating competing businesses following termination of system access. Fetch! sought a temporary restraining order and then a preliminary injunction to bar operation of the competing businesses, use of alleged trade secrets, infringement of its registered trademarks, and interference with its business relationships.

The district court granted limited relief prohibiting use of Fetch!’s trademarks and restricting communications with existing Fetch! franchisees but declined to enjoin the defendants from continuing to operate competing businesses. The court concluded that although Fetch! was likely to succeed on certain claims, equitable relief was limited by Fetch!’s own conduct, including evidence that it aggressively marketed and sold its “2.0” franchise model while obscuring material differences from its legacy “1.0” model, and that it cut off certain franchisees’ system access under disputed circumstances. Fetch! appealed.

The Sixth Circuit emphasized that a preliminary injunction is an extraordinary equitable remedy and that equitable doctrines, including unclean hands, may independently bar relief. The Court agreed that the record supported a finding that Fetch!’s conduct in marketing and selling its 2.0 and managed-services franchises (particularly Fetch!’s removal of distinctions in disclosure materials and aggressive profitability representations) could constitute bad faith sufficient to deny broader injunctive relief.

The Sixth Circuit also addressed the three legacy 1.0 franchisees for which the district court had not applied unclean hands. Affirming on an alternative ground, the Court found that unclean hands likewise barred injunctive relief as to those defendants. The Court relied on evidence that Fetch! terminated or restricted their system access while they were current on payments and before they began operating competing businesses, and that Fetch! may have failed to comply with applicable state franchise law requirements governing notice and opportunity to cure.

Although it affirmed on unclean hands, the Sixth Circuit clarified aspects of its preliminary injunction jurisprudence:

  • It rejected the district court’s suggestion that a heightened showing of irreparable harm applies when claims are subject to arbitration, confirming that the traditional four-factor test governs.
  • It found that the district court erred in applying a clear-and-convincing standard for irreparable harm rather than the federal standard requiring a likelihood of irreparable injury.
  • It explained that competitive harms, such as loss of goodwill and customer relationships, can qualify as irreparable precisely because they are difficult to quantify.

Because Fetch!’s inequitable conduct supported denial of broader relief, the Sixth Circuit affirmed the district court’s refusal to enjoin the defendants’ competing operations while leaving in place the narrower [...]

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