The U.S. Court of Appeals for the Third Circuit recently was asked to determine whether “a party seeking a preliminary injunction pursuant to the Lanham Act, is entitled to a presumption of irreparable harm.” Ferring Pharms.. Inc. v. Watson Pharms.. Inc., 2014 U.S. App. LEXIS 16426 at *1 (3d Cir. N.J. Aug. 26, 2014). The Court, departing from the decisions of many federal courts over the years, held that a trademark owner who seeks to enjoin someone else from unlawfully using his trademark, must establish irreparable harm through competent proofs, and may not rely on a “presumption” of such harm.
Appellant, Ferring Pharmaceuticals, Inc. (“Ferring”) and appellee, Watson Pharmaceuticals, Inc. (“Watson”), market competing progesterone supplements, Endometrin and Crinone, respectively, which aid women in the pregnancy process. Ferring’s lawsuit was based on an event that occurred on September 11, 2012. On that
date, Watson hosted presentations, viewed by doctors and other medical professionals. Ferring took issue with misleading statements that Dr. Silverberg, a paid consultant, made during the presentations in the following areas: (1) a false reference to a black box warning on Ferring’s product’s insert; (2) a discussion of a purported patient survey, representing a preference for Watson’s product; and (3) the mischaracterization of studies about the effectiveness of Ferring’s drug in women over thirty-five. Dr. Silverberg later admitted that those statements were incorrect and agreed not to repeat them.
In response to those misleading statements, Ferring moved for a preliminary injunction against Watson. The district court denied the motion, holding that there was no presumption of irreparable harm, and that, without such a presumption, Ferring had presented insufficient evidence to demonstrate the likelihood of irreparable harm. The Court, citing Novartis Consumer Health. Inc. v. Johnson & Johnson-Merck Consumer Pharms. Co., 290 F.3d 578, 586 (3d Cir. 2002), reasoned that preliminary injunctive relief is an “extraordinary remedy” and should only be granted in limited circumstances. Accordingly, a plaintiff seeking a preliminary injunction must establish “that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest.” Winter v. Natural Resources Defense Council. Inc., 555 U.S. 7, 20 (2008).
The Court recognized past rulings by other federal courts that favored a presumption of irreparable harm. Those courts held that a misleading comparison diminishes product value in the minds of the consumer and creates “potential” for damage to product and/or brand reputation. However, the Court refused to apply such a broad presumption of harm, instead electing to follow the reasoning of eBay Inc. v. MercExchange L.L.C., 547 U.S. 388, 393-94 (2006), in which the U.S. Supreme Court held that categorical rules and presumptions do not apply when courts are tasked with deciding whether to issue an injunction. Although eBay was a case arising under patent law, the Third Circuit found no persuasive reason not to apply its reasoning to Lanham Act cases. The Court reasoned that the Lanham Act and the Patent Act both address the grant of injunctive relief “in accordance with the principles of equity” and the nearly identical wording in the two statutes should be construed similarly.
Accordingly, the Court held that Ferring could not benefit from a “presumption” of irreparable harm. Therefore, Ferring would be required to actually demonstrate irreparable harm through competent evidence. Although Ferring presented evidence, including a declaration by a doctor, that after Dr. Silverberg’s presentation, she “would be less likely” to prescribe the medication, the Court deemed that declaration to be inadequate. The Court reasoned that such evidence was merely speculative, since the declaration stated “doctors may prescribe [Ferring’s] medication less often and not have prescribed the drug less frequently.”
In conclusion, the Court stated that, “[a] party seeking a mandatory preliminary injunction that will alter the status quo bears a particularly heavy burden in demonstrating its necessity.” (Citing Acierno v. New Castle Cnty., 40 F.3d 645, 653 (3d Cir. 1994).) In light of this heavy burden, and since the evidence presented was merely speculative, the Court ruled that Ferring did not demonstrate that irreparable harm is “likely.” In the wake of this decision in Ferris, trademark owners will find it more difficult to secure injunctive relief in the federal courts.