Forever 21 has had a busy year in the intellectual property world, defending lawsuits and warding off cease and desist letters for numerous claims of IP infringement and counterfeit. In a particular lawsuit brought by Puma, Puma initially moved for a temporary restraining order, which the Court denied. In April, Puma then moved for a preliminary injunction requesting the Court to order Forever 21 to immediately cease selling the allegedly copied shoes. Puma was again unsuccessful, as the Court denied the preliminary injunction request last month. While unsuccessful, some great practice points come out of the Court’s ruling on the preliminary injunction.
As a legal standard, a party seeking a preliminary injunction must make a clear showing of: (1) a likelihood of success on the merits, (2) a likelihood of irreparable injury to the plaintiff if injunctive relief is not granted, (3) a balance of hardships favoring the plaintiff, and (4) an advancement of the public interest. Here, the Court looked only at the second prong to determine whether Puma sufficiently met its burden as to “irreparable injury”. The Court noted that “[i]t is well established that as the party seeking emergency relief,[Puma] must make a clear showing that it is at risk of irreparable harm, which entails showing a likelihood of substantial and immediate irreparable injury.”
In order to prevail on the “irreparable injury” prong, Puma must have shown that remedies available at law, such as monetary damages, would be insufficient to compensate Puma’s injury. As evidence in support of its “irreparable injury”, Puma submitted a declaration of Mr. Adam Petrick, the company’s Global Direct of Brand and Marketing. In the declaration, Petrick detailed how Forever 21’s knock-offs injure brands, depress sales volume and prices, and diminished the excitement after the launch of Puma’s “Fenty” line with global superstar Rihanna. However this is all that Puma submitted. And the Court found it grossly insufficient, stating “Puma dedicates a mere two and a half pages to this factor in its motion.”
Lesson learned: IP owners cannot solely rely on the merits of their claim to obtain a preliminary injunction. As a practice point, to better align yourself in order to obtain a preliminary injunction, remember that the “irreparable injury” should not lend itself to be compensated by monetary damages. If monetary damages are an appropriate remedy for your “injury”, then a preliminary injunction is not your best route. An effective way to show “irreparable injury” is to submit evidence showing the damage done to your brand, not financially, but in the eyes of the consumer. This can be done by surveying consumers, or via affidavits from specific for a less financially cumbersome approach.
For the Court’s Order, the case is Puma SE v. Forever 21, Inc., No. 2:17-cv-02523-PSG-E (C.D. Cal).