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Not So Clean: Federal Circuit Upholds Trade Dress Preliminary Injunction, Finds Defenses Improperly Plead

The US Court of Appeals for the Federal Circuit upheld a “narrow” preliminary injunction in a trade dress case, finding that the opponent of a registered configuration mark failed to prove its lack of secondary meaning and functionality defenses. SoClean, Inc. v. Sunset Healthcare Solutions, Inc., Case No. 21-2311 (Fed. Cir. Nov. 9, 2022) (Newman, Lourie, Prost, JJ.)

SoClean manufactures Continuous Positive Airway Pressure (CPAP) machines. SoClean sued Sunset—a former distributor of SoClean products—for patent infringement and later added trademark infringement claims. At issue in this appeal was a single SoClean mark “for the configuration of replacement filters for its sanitizing devices.”

SoClean requested a preliminary injunction to stop Sunset from making or selling allegedly infringing CPAP filters. The district court granted the injunction but narrowly tailored the injunction to only enjoin Sunset from selling its filter cartridges without Sunset’s own brand name attached to the filter drawing so that customers would not falsely believe they were buying SoClean products. Sunset appealed.

While a party seeking preliminary injunction must prove all four eBay elements, this appeal focused on just one: “likelihood of success on the merits.” Sunset argued that the district court abused its discretion in finding that SoClean would likely defeat Sunset’s lack of secondary meaning defense and its functionality defense.

After noting that the parties agreed that SoClean’s trade dress was protectable only upon a showing that it had obtained secondary meaning, the Federal Circuit divided the secondary meaning issue into two subparts:

  1. Whether the district court should have questioned the validity of SoClean’s registration in light of Sunset’s evidence
  2. Whether the district court held Sunset to an improperly high standard of proof.

As to the first issue, the Court noted that federal registration is prima facie evidence of a mark’s validity. When, as here, the challenged mark was registered fewer than five years prior, the burden shifts from plaintiff to defendant, such that the defendant must rebut the presumption of validity. Sunset acknowledged that it had this burden, but its arguments to the district court focused only on the US Patent & Trademark Office’s decision to grant SoClean’s registration. The Court rebuffed that argument, noting that “scrutinizing the application process and deciding whether the trademark examiner was correct to issue the registration in the first place is the opposite” of the statutory presumption of validity.

Next, the Federal Circuit addressed Sunset’s standard of proof argument. The Court acknowledged that the district court misstated the law by suggesting that there was a “vigorous evidentiary requirement” on the challenging party, instead of simply a “preponderance of the evidence.” However, the Court also noted that the district court considered Sunset’s lack of secondary meaning evidence to be “equivocal, at best,” which “plainly fails to satisfy a preponderance-of-the-evidence standard.” Therefore, the Court judged the error to be harmless.

The Federal Circuit thus affirmed the finding that SoClean would likely defeat Sunset’s secondary meaning challenges.

The Federal Circuit next turned [...]

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Ordinary Observer Conducts Product-by-Product Analysis in View of Prior Art

In one of two concurrent opinions concerning the same design patent case, the US Court of Appeals for the Federal Circuit vacated a district court’s entry of a preliminary injunction after concluding that the court had failed to properly consider the accused products separately and in view of the prior art when determining the plaintiffs’ likelihood of success. ABC Corp. I v. P’ship & Unincorporated Ass’ns Identified on Schedule “A”, Case No. 22-1071 (Fed. Cir. Oct. 28, 2022) (Dyk, Taranto, Stoll, JJ.)

Hangzhou Chic Intelligent Technology and Unicorn Global (collectively, the plaintiffs) own four patents claiming designs for handle-less, two-wheeled, motorized, stand-on vehicles commonly referred to as “hoverboards.” Urbanmax, GaodeshangUS, Gyroor-US, Fengchi-US, Jiangyou-US, Gyroshoes and HGSM (collectively, the appellants) sell Gyroor-branded hoverboards. In 2020, the plaintiffs sued the appellants for patent infringement and sought a temporary restraining order and a preliminary injunction. As explained here, the district court granted the preliminary injunction in 2020, but thereafter invited the plaintiffs to file a second motion for a preliminary injunction in light of unsuccessful motions by Fengchi-US, Urbanmax and Gyroor-US to dissolve the 2020 preliminary injunction for lack of notice under Fed. R. Civ. P. 65(a). Heeding the court’s advice, the plaintiffs filed a motion for a second preliminary injunction on August 24, 2021.

The primary issue before the district court concerning the 2021 preliminary injunction was whether the plaintiffs had demonstrated a likelihood of success on the merits that the accused products infringed the plaintiffs’ patents in light of certain prior art hoverboards. The prior art included a hoverboard with an hourglass-shaped body, which was a significant feature of the patented designs and the majority of the accused products. Despite the similarities between the prior art board and the claimed designs, the plaintiffs generally disregarded the prior art in their analysis. After comparing the four accused products as a group to the claimed designs, the plaintiffs’ expert opined that the accused products infringed the asserted patents based in large part on their similar hourglass bodies, in addition to other features.

The appellants’ expert countered that “the attention of the hypothetical ordinary observer will be drawn to those aspects of the claimed design that differ from the prior art,” rather than the hourglass shape, and that the additional ornamental features of the accused products were not substantially similar to the claimed designs. While the district court acknowledged that “resolving this expert dispute will likely require a trial,” it nonetheless concluded that the plaintiffs had demonstrated likelihood of success and entered the preliminary injunction order. The appellants filed a notice of appeal.

On appeal, the Federal Circuit concluded that the lower court had erred in four material respects:

  • Applying the wrong legal standard
  • Failing to conduct the ordinary observer analysis in view of the prior art
  • Failing to apply the ordinary observer analysis on a product-by-product basis
  • Crafting an overbroad injunction.

First, the Federal Circuit took issue with the district court’s entry of a preliminary injunction despite its [...]

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Heads Up: Defendants Deserve Fair Notice of Preliminary Injunctions

In one of two concurrent opinions concerning the same design patent case, the US Court of Appeals for the Federal Circuit vacated a district court’s grant of a preliminary injunction and an order extending the preliminary injunction to new defendants for lack of notice under Rule 65(a). ABC Corp. I v. P’ship & Unincorporated Ass’ns Identified on Schedule “A”, Case No. 21-2150 (Fed. Cir. Oct. 28, 2022) (Taranto, Dyk, Stoll, JJ.)

On August 17, 2020, ABC Corporation I and ABC Corporation II (collectively, ABC) brought a design patent infringement action asserting four “hoverboard” design patents against several online merchants. The ABC patents claim designs for handle-less, two-wheeled, motorized, stand-on vehicles commonly referred to as hoverboards. Attached to its original and amended complaints, ABC provided a list of defendants in a Schedule A that was amended throughout the proceedings as new defendants were identified. Gyroor-US was an originally named defendant on Schedule A, but it was not served with the complaint and summons until January 29, 2021.

On November 24, 2020, the district court granted ABC’s November 20, 2020, motion for a preliminary injunction against the defendants then listed on Schedule A, including Gyroor-US, which had not yet been served and was not given notice of the motion under Fed. R. Civ. P. 65(a). On May 24, 2021, the court also granted ABC’s May 6, 2021, motion to amend Schedule A to add GaodeshangUS, Fengchi-US and Urbanmax, binding them to the 2020 preliminary injunction even though they too had not received Rule 65(a) notice and were not served with process until June 25, 2021. GaodeshangUS filed a notice of appeal immediately following the court’s May 24 order. After several unsuccessful motions to vacate the 2020 preliminary injunction for lack of notice, Fengchi-US, Urbanmax and Gyroor-US also filed notices of appeal.

The Federal Circuit first determined that it had jurisdiction to hear the three appeals by GaodeshangUS, Fengchi-US, Urbanmax and Gyroor-US under 28 U.S.C. § 1292(c)(1), which grants the Federal Circuit exclusive jurisdiction of an appeal from an “interlocutory order[] . . . granting, continuing, modifying, refusing or dissolving [an] injunction[], or refusing to dissolve or modify [an] injunction[]” in any case over which the Federal Circuit would have jurisdiction of an appeal under 28 U.S.C. § 1295, such as cases arising under the patent laws. The Court began by considering GaodeshangUS’s May 24, 2021, notice of appeal, which stated that the appeal was from the preliminary injunction “entered in this action on November 24, 2021 [sic],” rather than the May 24, 2021, order. The parties disputed whether GaodeshangUS’s notice of appeal was timely filed within 30 days of the relevant order and whether the May 24 order was appealable as a modification of the 2020 preliminary injunction. The Federal Circuit concluded that GaodeshangUS’s appeal should be interpreted to refer to the May 24 order because it was filed on the same day as the order and “a mistake in designating the judgment appealed from” is not fatal if “the intent to [...]

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Novel Derivative Sovereign Immunity Defense Struck as Forfeited

The US Court of Appeals for the Sixth Circuit affirmed a district court decision implementing a preliminary injunction and striking a new defense first asserted in an amended complaint as untimely and frivolous. ACT, Inc. v. Worldwide Interactive Network, Inc., Case Nos. 21-5889; -5907; -6155 (6th Cir. Aug. 23, 2022) (White, Bush, Reader, JJ.)

ACT publishes WorkKeys, a product designed to assess job performance skills. Three of the product’s assessments (Applied Mathematics, Locating Information and Reading for Information) were at issue in this case, and all included various “Skill Definitions” that describe the skills tested by the assessments. ACT and Worldwide Interactive Network (WIN) worked together from 1997 to 2011. During that time, WIN had the authority to develop and sell WorkKeys. After the business relationship ended, WIN began developing and promoting its own assessment tests.

In 2018, competing bids between ACT and WIN to provide educational material to the state of South Carolina showed that WIN’s “Learning Objectives” that were virtually indistinguishable from ACT’s Skill Definitions. ACT brought suit against WIN asserting claims, including copyright infringement, based on WIN’s alleged copying of ACT’s Learning Objectives. The district court granted partial summary judgment to ACT in March 2020 with the additional claims to go to trial, but trial was seriously delayed by COVID-19. During this time, WIN revised its Learning Objectives and claimed they no longer infringed. The district court ordered ACT to amend its complaint to include new allegations regarding the revisions. ACT complied. WIN then asserted a new derivative sovereign immunity defense in its amended answer, to which ACT objected. The district court agreed and struck the defense as untimely and frivolous. The district court entered a preliminary injunction in August 2021 barring WIN from distributing the original and revised Learning Objectives and assessments. WIN appealed, contesting the preliminary injunction and the striking of the defense.

After explaining its jurisdiction, the Sixth Circuit examined whether the district court had abused its discretion in imposing an overly broad preliminary injunction. Both the district court and the Sixth Circuit agreed that ACT was likely to succeed on its copyright claim. WIN’s argument on this issue was primarily based on its belief that the Skill Definitions were not creative or original to ACT and therefore were not copyrightable. The Court stated that while ACT’s selection of the skills was likely not copyrightable, the descriptions and arrangement of the skills were likely protectable. The Sixth Circuit also determined that the district court did not erroneously presume irreparable harm because it did not rely on a presumption but independently found irreparable harm. The Sixth Circuit also stated that the district court properly weighed the parties’ competing interests in the preliminary injunction and found minimal legitimate interest for WIN based on WIN’s business model essentially being infringement of ACT’s intellectual property.

The Sixth Circuit then explained why the district court properly struck the derivative sovereign immunity defense. While states generally enjoy sovereign immunity from suit, private contractors can sometimes obtain certain immunity in connection [...]

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Rebuttal Presumption of Irreparable Harm Still Alive When Assessing Trademark Preliminary Injunctions

In one of the first decisions to construe the Trademark Modernization Act of 2020 (TMA), the US Court of Appeals for the Third Circuit found that a district court properly applied the TMA’s rebuttal presumption of irreparable harm when it denied a trademark owner’s motion for a preliminary injunction. Nichino America, Inc. v. Valent U.S.A., LLC, Case No. 21-1850 (3rd Cir. Aug. 12, 2022) (Bibas, Matey, Phipps, JJ.)

Nichino and Valent sell pesticides for farming. Since 2004, Nichino has offered a trademarked product known as CENTAUR. Valent trademarked a competing product called SENSTAR in 2019, giving it a logo resembling CENTAUR’s colors, fonts and arrow artwork. Both pesticides are used in the same geographic areas against many of the same insects, and both are sold to farmers through distributors. SENSTAR is a liquid and uses a unique combination of two active chemicals. It costs $425 per gallon and ships in cases containing four one-gallon containers. CENTAUR is manufactured as a solid and sold by the pallet, with each pallet containing 622 pounds of pesticide packed into bags and cases. CENTAUR costs $24 per pound.

Nichino sued Valent for trademark infringement and sought a preliminary injunction against SENSTAR’s launch, arguing that Valent’s use of the SENSTAR mark would create confusion among consumers. The district court found that Nichino narrowly demonstrated that its infringement claim would likely succeed but explained that “there is not an abundance of evidence of likelihood of confusion” between the products. As part of its injunction analysis, the district court applied the TMA to presume Nichino would suffer irreparable harm without an injunction. However, the court noted that the presumption was rebuttable. The court credited Valent’s evidence of a sophisticated consumer class that makes careful purchases and noted the lack of any evidence of actual consumer confusion. The court also found that Nichino failed to proffer any affirmative evidence that it would suffer irreparable harm. Accordingly, the district court found that the presumption of irreparable harm was rebutted, and therefore denied the injunction request. Nichino appealed.

Nichino argued that the TMA precluded the district court from finding no irreparable harm. The Third Circuit, however, found that the district court “admirably navigated” the TMA’s rebuttable presumption by finding that Valent rebutted the presumption and Nichino did not independently show irreparable harm. The Court explained that the three-step process for applying the TMA’s rebuttable presumption requires the following:

  1. The court must assess the plaintiff’s evidence only as it relates to a likelihood of success on the merits.
  2. If the plaintiff’s evidence establishes likely trademark infringement, the TMA is triggered, and the burden of production shifts to the defendant to introduce evidence sufficient for a reasonable factfinder to conclude that the consumer confusion is unlikely to cause irreparable harm.
  3. If a defendant successfully rebuts the TMA’s presumption by making this slight evidentiary showing, the presumption has no further effect.

The Third Circuit found that the district court correctly followed this three-step analysis in finding that Valent rebutted the TMA’s [...]

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Don’t Dew It: Second Circuit Cans Likelihood of Confusion Argument

The US Court of Appeals for the Second Circuit reversed and vacated a district court’s preliminary injunction grant because the district court erred in assessing the strength of a trademark. RiseandShine Corporation v. PepsiCo, Inc., Case No. 21-2786 (2d Cir. July 22, 2022) (Leval, Chin, Menashi, JJ.)

Rise Brewing began selling canned coffee under the registered mark “RISE” in 2016. The registered mark consists of the word “rise” in large, red, regular capital letters with the words “Brewing Co.” below in a smaller, similar font on a horizontal line. The mark appears on every bottle of Rise Brewing’s canned coffee products.

In March 2021, PepsiCo launched a canned energy drink product under the mark “MTN DEW RISE ENERGY,” which contains the word “rise” on the top of each can, followed by the word “energy” running vertically up its side in a much smaller font and the MTN DEW house mark above the word “rise.”

Rise Brewing filed a complaint for trademark infringement and filed a motion for a preliminary injunction to enjoin PepsiCo from using or displaying the challenged in the market pending trial. The district court granted the motion, finding that Rise Brewing was likely to succeed on the merits regarding likelihood of confusion. PepsiCo appealed.

The Second Circuit explained that the party seeking a preliminary injunction over the use of a trademark can meet the likelihood of success prong of the preliminary injunction standard by showing that a significant number of consumers are likely to be misled or confused as to the source of the products in question. Here, the district court found that there would be a likelihood of reverse confusion—that consumers would mistake Rise Brewing’s coffee products (the prior user) as Mountain Dew products (the subsequent user). The Court disagreed and reversed, finding that the district court erred in the evaluation of the most important factor: strength of the mark.

The strength of a trademark is assessed based on either or both of two components:

  1. The degree to which it is inherently distinctive
  2. The degree to which it has achieved public recognition in the marketplace.

Although the Second Circuit agreed with the district court that the RISE trademark was a suggestive mark, it disagreed on the extent to which it was distinctive. The Court explained that “[t]he district court failed to note that the strong logical associations between ‘Rise’ and coffee represent weakness and place the mark at the low end of the spectrum of suggestive marks.” Because of the legal element in determination of the strength of a given mark, the district court’s mistake constituted a legal error.

The Second Circuit found that the lack of distinctiveness in using the term “rise” to describe coffee products can be demonstrated by the [...]

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Threat of ITC Exclusion Order Is Too Speculative to Constitute Irreparable Harm

The US Court of Appeals for the Federal Circuit affirmed a decision by a federal district court denying a defendant’s motion for a preliminary injunction seeking to enjoin a parallel International Trade Commission (ITC) investigation against it. The Federal Circuit agreed that the defendant’s alleged irreparable harm (a “cloud” over its business) was too conclusory and speculative to support relief. Koninklijke Philips N.V. v. Thales Dis Ais USA LLC, Case No. 21-2106 (Fed. Cir. July 13, 2022) (Moore, C.J., Dyk, Chen, JJ)

Koninklijke filed a complaint at the ITC requesting a Section 337 investigation based on alleged infringement by Thales of four patents designated essential to the 3G and 4G telecommunications standards. Koninklijke simultaneously filed a parallel district court action against Thales in the Delaware district court based on those four patents. At the district court, Thales moved for a preliminary injunction seeking to enjoin Koninklijke from pursuing an exclusion order at the ITC because of an alleged breach of contract. The district court denied that motion, and Thales appealed to the Federal Circuit.

Meanwhile, the ITC investigation continued, and the administrative law judge (ALJ) issued an initial determination finding no violation of Section 337 with respect to any of the four patents. Subsequently, the Federal Circuit held oral arguments on the district court appeal, during which the judges questioned whether there could be irreparable harm if the ITC were to adopt the ALJ’s determination and consequently not issue an exclusion order. Thales argued that the threat of an exclusion order had left a “cloud” over its business and cited customer concerns that Thales might not be able to deliver products in the future. The ITC subsequently affirmed the ALJ’s finding of no violation and terminated the investigation without issuing any exclusion order.

A week later, the Federal Circuit issued a decision affirming the district court’s denial of the preliminary injunction motion. The Court held that Thales had failed to meet its burden to establish irreparable harm because it had not presented any evidence that it had actually lost any customers, that any customers had delayed purchases or that it had struggled to gain new customers because of the threat from the ITC investigation. The Court also found that the cloud over Thales’ business and the potential loss of business were too speculative to justify a preliminary injunction.

Practice Note: While the ITC investigation was ongoing, Thales filed a civil action in France against Koninklijke—a fellow European company—alleging that Koninklijke’s attempt to obtain injunctive relief in the United States for standard essential patents constituted an anti-competitive act that violated French civil law. Thales sought EUR 13.5 million in damages for the legal fees that it had incurred in defending the ITC investigation.




Copyright Claim in Digital Message Format Fizzles Out

The US Court of Appeals for the Third Circuit found that digital message formats and messages generated using those formats were not copyrightable and thus vacated a preliminary injunction against an alleged infringer marketing a competing product using the same format and messages. Pyrotechnics Management Inc. v. XFX Pyrotechnics LLC et al., Case No. 21-1695 (3d Cir. June 29, 2022) (Hardiman, Nygaard, Fisher, JJ.)

Pyrotechnics, a manufacturer of hardware and software for fireworks displays, developed a system for controlling fireworks displays. The system contains a control panel that accepts user input and creates messages that it sends to field modules, which decode the messages and perform the desired task (e.g., igniting a firework). FireTEK reverse-engineered Pyrotechnics’ hardware to learn its communication protocol and, in 2018, developed a router that could send the same messages to Pyrotechnics’ field modules as the Pyrotechnics control panel. FireTEK marketed its router as a replacement for Pyrotechnics’ control panel.

In 2019, Pyrotechnics filed a deposit copy document with the US Copyright Office describing the communication protocol used in its fireworks control panel. Pyrotechnics’ communication protocol includes three components: a custom digital message format, specified individual messages that conform to the format and communicate specific information and a transmission scheme describing how individual digital messages are converted into a format that can be sent over the wires that connect the control panel to the field modules. The deposit copy also identified four specific messages (each a series of 12 bytes) that used Pyrotechnics’ digital message format. The Copyright Office issued a certificate of registration.

Pyrotechnics filed suit against fireTEK for copyright infringement, claiming that fireTEK violated Pyrotechnics’ copyright in the communication protocol it uses to control fireworks displays. Pyrotechnics sought and received a preliminary injunction from the district court enjoining fireTEK from selling or distributing its allegedly infringing router. FireTEK appealed.

FireTEK contested the district court’s likelihood of success finding, arguing that Pyrotechnics’ copyright in its communication protocol was invalid. The Third Circuit agreed, finding that neither the digital message format used by Pyrotechnics in its communication protocol nor the individual messages conforming to that format were copyrightable.

Turning first to Pyrotechnics’ digital message format, the Third Circuit found that the format was an uncopyrightable idea, not a protectable expression of ideas. Relying heavily on its 1986 decision in Whelan Assocs. v. Jaslow Dental Lab’y, the Court explained that “the purpose or function of a utilitarian work is the work’s idea.” For Pyrotechnics’ communication protocol, the purpose and function of the protocol (and therefore its idea) was to enable Pyrotechnics’ control panel and field modules to communicate with each other. As the Court explained, the digital message format created by Pyrotechnics was an essential part of that idea, and there was no other means of achieving the purpose of the communication protocol (permitting communication between the control panel and field modules) without using Pyrotechnics’ digital message format. Therefore, the Court determined that Pyrotechnics’ digital message format was part of an uncopyrightable idea.

The Third Circuit also [...]

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Counterfeit Dealer Gets Smoked in Trademark Preliminary Injunction Proceeding

The US Court of Appeals for the Ninth Circuit affirmed a preliminary injunction barring the defendant from selling counterfeit e-cigarette and vaping products bearing the plaintiff’s logo because the plaintiff’s psychoactive products were legal and could support a valid trademark. AK Futures LLC v. Boyd St. Distro, LLC, Case No. 21-56133 (9th Cir. May 19, 2022) (Kleinfeld, Fisher, Bennett, JJ.)

AK Futures manufactures e-cigarettes and vaping products, including delta-8 THC goods marketed under its “Cake” brand. Delta-8 THC is a psychoactive compound found in the Cannabis sativa plant, which encompasses both hemp and marijuana. The compound is similar in effect to delta-9 THC, the primary psychoactive agent in marijuana, but delta-8 THC is typically manufactured from hemp-derived cannabidiol (CBD). The cultivation and possession of hemp was legalized by the Farm Act in 2018.

AK Futures sued Boyd Street Distro, a Los Angeles purveyor of smoke products, for trademark and copyright infringement. Boyd Street sold virtually identical counterfeit Cake-branded e-cigarettes and vaping products containing delta-8 THC. At the time of suit, AK Futures had a registered copyright protecting its Cake logo—a stylized “C” overlaying a two-tier cake—and pending trademark applications for six marks incorporating the word “Cake” or the Cake logo for use in connection with e-cigarette products. The district court granted AK Futures’ motion for preliminary injunction. Boyd Street appealed.

On appeal, Boyd Street conceded the copyright claim, but argued that AK Futures could not own a valid trademark in connection with its e-cigarettes and vaping products because the sale of delta-8 THC was prohibited under federal law. In response, AK Futures argued that the 2018 Farm Act legalized delta-8 THC and products containing the compound.

The Ninth Circuit agreed that AK Futures’ use of the marks in commerce was lawful and could give rise to trademark priority. The Court found that the “plain and unambiguous” text of the Farm Act indicated that delta-8 THC products were lawful. The Farm Act removed “hemp” and “tetrahydrocannabinols in hemp” from Schedule I in the Controlled Substances Act, where “hemp” is defined as “the plant Cannabis sativa L. and any part of that plant, including . . . all derivatives, extracts, [and] cannabinoids . . . with a delta-9 concentration of not more than .3 percent.” The Court noted that the delta-9 THC concentration level was the only statutory metric for distinguishing marijuana from hemp, and that the terms “derivative, extract, or cannabinoid” were substantially broad. The Court thus concluded that “hemp” encompasses delta-8 THC products that contain no more than 0.3% delta-9 THC.

Boyd Street argued that the US Drug Enforcement Agency had interpreted the Farm Act as not applicable to delta-8 THC because it is “synthetically derived” and argued that US Congress never intended the Farm Act to legalize psychoactive substances. The Ninth Circuit perfunctorily dismissed these arguments based on the clear and unambiguous statutory language. Since the Cake-branded products allegedly contained less than 0.3% delta-9 THC, the Court held that AK Futures was likely to succeed in demonstrating that its [...]

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Ninth Circuit Once Again Preserves Competitor’s Data-Scraping Rights

On remand from the Supreme Court of the United States, the US Court of Appeals for the Ninth Circuit reaffirmed its own 2019 opinion that preliminarily enjoined a professional networking platform from denying a data analytics company access to publicly available profiles. HiQ Labs, Inc. v. LinkedIn Corporation, Case No. 17-16783, (9th Cir., Apr. 18, 2022) (Wallace, Berzon, Berg (sitting by designation) JJ.).

Previously, the Supreme Court had granted certiorari in this case, but subsequently vacated the judgment and remanded back to the Ninth Circuit for further consideration in view of its  2021 decision in Van Buren v. United States. In Van Buren, the Supreme Court attempted to clarify the reach of the Computer Fraud and Abuse Act of 1986 (CFAA), holding that authorized computer access for arguably improper purposes likely does not constitute a violation of the CFAA. On remand, the Ninth Circuit concluded that Van Buren reinforced its determination that hiQ had raised “serious questions” about whether LinkedIn may invoke the CFAA to preempt hiQ’s claim of tortious interference.

HiQ is a data company that sells “people analytics” focused on predictive employee data. HiQ’s data is largely obtained by scraping public LinkedIn profiles with automated bots. In 2017, LinkedIn sent a demand letter to hiQ asserting that hiQ’s scraping activity was in violation of the CFAA, the Digital Millennium Copyright Act (DMCA), the California penal code and common law. HiQ immediately filed suit seeking injunctive relief and a declaratory judgment that LinkedIn could not lawfully invoke the asserted claims. Granting hiQ’s motion for the preliminary injunction, the district court ordered LinkedIn to remove, and to refrain from implementing, any technical barriers to hiQ’s access to the LinkedIn public profiles.

The Ninth Circuit stated that a plaintiff seeking a preliminary injunction must establish the following:

  • It is likely to succeed on the merits.
  • It is likely to suffer irreparable harm absent the injunction.
  • The balance of equities tips in its favor.
  • The injunction is in the public interest.

This analysis required the Ninth Circuit to focus only on whether hiQ had raised serious questions on the merits of the factual and legal issues presented. The Ninth Circuit’s re-examination of these factors was nearly identical to its 2019 holding.

Starting with irreparable harm, the Ninth Circuit found that the survival of hiQ’s business was threatened since it depends on being able to access public LinkedIn member profiles. The Court also agreed, once again, with the district court’s determination that the balance of the equities tipped in hiQ’s favor. The Court found that the privacy interests of individuals who have opted to maintain a public LinkedIn profile did not outweigh hiQ’s interests in continuing its business. On this factor, the Court noted that “little evidence” suggested that LinkedIn users who choose to make their profiles public actually maintain an expectation of privacy with respect to publicly posted information. The Court also noted that LinkedIn does not own its users’ data, since users retain [...]

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