Unclean Hands Archives

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

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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That’s So Metal: Ninth Circuit Confirms Standard of Review for Finding Unclean Hands on Summary Judgment

In a trademark infringement dispute over the brand name “METAL,” the US Court of Appeals for the Ninth Circuit resolved an issue of first impression in holding that when reviewing a grant of summary judgment on an unclean hands defense in a trademark infringement case, the correct standard of review is abuse of discretion. Metal Jeans, Inc. v. Metal Sport, Inc., et al., Case No. 19-55923 (9th Cir. Feb. 16, 2021) (VanDyke, J.) (Wardlaw, J., concurring).

Metal Jeans, an apparel brand claiming ownership of the trademark METAL, brought an infringement claim against Metal Sport, a powerlifting brand with a similar stylized mark that was also used on certain apparel items. In the district court, both parties sought summary judgment on the issue of likelihood of consumer confusion with respect to Metal Sport’s use of the METAL trademark in view of Metal Jeans’ rights in the brand name. The district court determined that material facts on the issue of infringement remained in dispute, and denied both parties’ motions on the merits. However, the district court granted a separate motion for summary judgment filed by Metal Sport claiming that Metal Jeans was barred from pursuing its infringement claim on grounds of unclean hands, while rejecting Metal Jeans’ counter-defense that Metal Sport also acted with unclean hands.

Metal Jeans appealed the unclean hands judgment, which presented an issue of first impression to the Ninth Circuit, namely the standard of review when a district court concludes that a party has acted with unclean hands. The Ninth Circuit noted that its two trademark decisions addressing unclean hands never specified the standard of review applied, and so turned to other cases in which it reviewed district courts’ application of similar equitable doctrines. With this background, the Court found abuse of discretion to be the correct standard of review.

In a separate decision memorandum, the Ninth Circuit explained that to successfully allege unclean hands, a defendant must show that the plaintiff’s conduct (1) is inequitable and (2) relates directly to the subject matter of its claims. The court also noted that factual questions related to the defense of unclean hands may only be resolved on summary judgment if evidence presented by both sides would permit the trier of fact to come to only one conclusion.

The Ninth Circuit assessed the six alleged instances of misconduct on the part of Metal Jeans, which included facts alleging that Metal Jeans provided varying accounts of how it acquired the METAL trademark and provided inaccurate or false information to the US Patent & Trademark Office, along with allegations that Metal Jeans sourced certain products from China despite its use of an “American Made” slogan. The Court determined that many of the factual allegations of unclean hands did not relate directly to Metal Jeans’ trademark infringement claims, nor did such allegations appear to have caused any harm or demonstrate malintent on the part of Metal Jeans.

Applying the abuse of discretion review standard, the Ninth Circuit determined that the district court’s findings [...]

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