Interim Injunctions; the Importance of Getting it Right (Case Study)
Whether you’re thinking of issuing an interim injunction against a suspected infringer, or you find yourself in the position where an interim injunction has been issued against you – injunctive relief is one of the highest magnitude actions that can be taken in an Intellectual Property matter.
Whichever side you are on, it is always serious and should be navigated with extreme care.
Interim injunctions are commonly issued in instances concerning registered rights (e.g. trade mark, registered design right infringement) or breach of confidence – but can be deployed across all available IP rights.
It is a court action that requires a high degree of intellectual property expertise to navigate and administer effectively.
If it not handled correctly, it can result in incredibly serious financial and legal exposure.
Interim injunctions: stopping the damage
If an infringement is occurring, in certain instances delay in seeking an interim remedy may mean that you are unable to stop significant damage to your business or brand. It is therefore very important to seek expert legal advice urgently.
An interim injunction immediately stops the alleged defendant from continuing alleged infringing activity, pending trial of the matter.
For example, this might be seen when a launch of a new range of clothes is going to happen which contains what is viewed as infringing material by a Claimant. The launch is a critical time where the infringer may be able to accrue the largest amount of profits at the behest of the Claimant in this time. As such, to stop the Claimant from suffering damage, the interim injunction can be granted that urgently halts the launch and sale of these goods.
Interim injunctions can be applied for with or without notifying the alleged Defendant. The latter is the most suitable approach for when the Claimant believes that the alleged Defendant might destroy importance evidence relating to the case (e.g. in counterfeiting and IT and software claims). These are typically limited to certain circumstances, such as the above, and can be appealed by the Defendant once granted.
It is important to establish when an interim injunction should be issued, as the legal costs involved, together with an adverse costs order should you not be successful (including paying for the Defendant’s loss of trade) is a high price to pay for no reward and humility in court.
As such, injunctive relief a very effective tool in stopping infringing activity, but equally is best wielded with great care and consideration.
Walking the line
Given the above, why would you not consider injunctive relief at every opportunity that infringement is suspected?
There are several reasons why it should be considered an “ace up the sleeve” rather than par for the course.
Indeed, interim injunctions are a discretionary measure to be granted by the court; and therefore, are typically reserved for urgent situations where you have a reasonable belief that infringement taking place and that allowing the infringer to continue would cause immediate and substantial damage to your business in the interim.
If an injunction is brought against a business and, through the process of litigation they are held not to be infringing, a claimant can then be found financially liable for their loss of trade a defendant experiences because of having an injunction issued against them.
Such missteps are further exasperated by the reputational damage a Claimant receives in respect of the subsequent declaration for non-infringement and commentary amongst competitors in the business arena.
Rather than setting out the legal test for obtaining an interim injunction we present an example from a recent case.
Virtuoso Legal recently successfully defended a leading UK glassware company, who faced an interim injunction against them in relation to their new piece of glassware.
The infringement action alleged was quite serious; with the claim being sought to be litigated in the UK High Court and, in part seeking to destroy a large quantity of our clients’ high-quality stock.
In this case, Virtuoso Legal were successful in arguing: 1) that such a case should be heard in the UK IPEC court, as opposed to the UK High Court; and 2) that application for the interim injunction be dismissed.
In deciding whether to grant an interim injunction the courts consider three criteria for the claimant to overcome;
Criteria #1: a serious question?
To begin, the Judge considered whether there was a “serious question to be tried” – in so far as whether the case was in its nature substantial, and not “vexatious” or “frivolous”.
On this point, the judge found that the question of whether the defendant’s glass is infringing was, in itself, serious enough to be tried. Specifically, citing the ability for the claimant to provide further evidence, and that the scope of the registered design be explored in more comprehensive detail.
However, to be successful, the claimant must be successful on all three criteria.
Criteria #2: damages?
The second question that was raised was whether, should an injunction not be granted, could the damage caused by the Defendant be recovered and paid to the Claimant if it were successful after trial.
In this case, the projected sales of Virtuoso Legal’s client were seen to be a fraction of their business, which was highly reputable. Thus, the Defendants would be capable of paying damages if proven to be infringing at trial.
As such, this criterion for an interim injunction was not met.
Criteria #3: the balance of convenience considering any special factors
The third question concerned who suffers the most harm should the interim injunction be granted or not granted, and if there are any special factors involved. This is referred to as the “balance of convenience” and utilises a concept know as the “status quo”.
Here, if all other parts of the test are equal, then the “status quo” should be preserved – in so far as neither party should be subject to unwarranted inconvenience until trial confirms the liabilities of the parties.
This also ensures that at the end of the litigation the broadest scope of remedies is available. Some such might not be if intervention occurs prior (e.g. a final injunction and full damages).
In this way, this measure preserves the status of the claim for the trial to follow.
Such was the case here, where given all the above, the Judge dismissed the application for interim injunction.
To conclude; interim injunctions are one of the most substantial litigation tools that can be brought to stop suspected infringement.
The above is cautionary tale to those seeking interim injunctions that it doesn’t always work, and as such they are a powerful legal tool to be wielded with great care. It is also a lesson for those defending interim injunctions that they ought not necessarily agree to such an injunction without taking expert IP legal advice.
Such tools are not brought lightly and ill-founded or badly advised applications are likely to be met with little reward (and high cost).
Similarly, if specialist IP solicitors are not involved to help deal with the allegations of infringement, with knowledge of the specific tests to prove or disprove, then a claim which appears to have good prospects on the face of it, may be ruined following the application of incorrect tests or principles.
In the case of our client, an injunction was brought that had not met the high standard required, and with expert IP advice was readily dismissed under scrutiny.
If you have any questions about this article or to talk to our intellectual property specialists about registering your trade marks, please call:
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Case Study: Interim Injunctions; the Importance of Getting it Right was written by Jordan Davies