GEORGE SINK PA INJURY LAWYERS, v. GEORGE SINK II LAW FIRM LLC, GEORGE SINK LAW FIRM LLC, SOUTHERN LEGAL ASSOCIATION LLC, and GEORGE (“TED“) SINK, JR.
2:19-cv-01206-DCN
IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF SOUTH CAROLINA CHARLESTON DIVISION
ORDER
I. BACKGROUND
This matter arises from a dispute between George Sink Sr. and his son, George Sink Jr. According to the complaint, George Sink Sr. started Sink P.A. in 1997, since which time he has used “GEORGE SINK-formative marks in connection with legal services.” ECF No. 17 ¶ 10. Plaintiff has expanded into 14 offices throughout South
Plaintiff alleges that in March 2013, George Sink Jr.—who had previously worked in marketing in New York City for ten years—moved to Charleston to perform marketing work for plaintiff. George Sink Jr. then attended the Charleston School of Law and graduated in 2016. In March 2018, George Sink Jr. transitioned from plaintiff‘s marketing team to work as an entry-level attorney at the firm. On April 30, 2018, George Sink Jr. signed a Confidentially and Non-Solicitation Agreement (“the Agreement“) with Sink P.A. The “circumstances surrounding entry into and the actual terms of [the Agreement] are set out by the Plaintiff‘s Amended Demand for Arbitration dated May 3, 2019.” Id. ¶ 31. George Sink Jr. worked as an attorney for Sink PA for eleven months and appeared in television advertisements with his father during that time. George Sink
Plaintiff alleges that defendants “have been using in commerce the designations GEORGE SINK and GEORGE SINK II in connection with” the offering and marketing “of identical legal services in the same geographical regions as plaintiff.” Id. ¶ 34. Plaintiff claims that these uses violate its exclusive right to use its protected mark. Plaintiff alleges various instances of confusion among the public from defendants’ use of plaintiff‘s marks.
Plaintiff filed this lawsuit on April 25, 2019, and filed an amended complaint on May 21, 2019, bringing the following claims: (1) trademark infringement in violation of
The court orders defendants to temporarily refrain from using the GEORGE SINK mark in an infringing manner. Specifically, the court enjoins defendants from using GEORGE SINK as a professional email address. The court enjoins defendants from using GEORGE SINK LAW FIRM as the web address for the law firm‘s website. The court enjoins defendants from using GEORGE SINK II LAW FIRM as the title of its website. Likewise, the court enjoins defendants from listing the name GEORGE SINK LAW FIRM on its website. This order applies to defendants’ use of these marks on its Facebook page, on the bar membership websites for the South Carolina and Georgia state bars, and in any other public or online space in which these marks are being used. The relief granted in this order is temporary, pending the final ruling by the Arbitrator on the matters that have been submitted by the parties to arbitration.
ECF No. 41 at 31. The August 9 Order did not require plaintiff to post a bond and did not otherwise discuss the requirement to provide security for defendants’ rights. On August 30, 2019, defendants appealed the August 9 Order‘s issuance of the preliminary injunction to the Fourth Circuit, where the appeal remains pending.
On October 9, 2019, defendants filed a motion to stay the August 9 Order pending resolution of their appeal to the Fourth Circuit. ECF No. 45. Plaintiff responded to the motion to stay on October 23, 2019, ECF No. 53, to which defendants replied, ECF No. 59. On October 10, 2019, defendants filed a motion to expedite the court‘s consideration of its motion to stay, ECF No. 48, to which defendants responded, ECF No. 50. On October 11, 2019, plaintiff filed a motion to modify the August 9 Order, ECF No. 51, to which defendants responded on October 25, 2019, ECF No. 55. Plaintiff replied on October 30, 2019. ECF No. 58. The court held a hearing on these matters on October 31, 2019. Therefore, these matters are now ripe for the court‘s review.
A. Motion to Modify
“While an appeal is pending from an interlocutory order . . . that grants . . . an injunction, the court may . . . modify . . . an injunction on terms for bond or other terms that secure the opposing party‘s rights. . . .”
B. Motion to Stay
III. DISCUSSION
Defendants’ motion to stay asks this court to stay the preliminary injunction issued by its August 9 Order during the pendency of their appeal of that order to the Fourth Circuit. In other words, defendants seek an injunction to enjoin the court‘s previously issued injunction. Defendants argue that they satisfy the four-factor test such that this court should stay the preliminary injunction during the pendency of their appeal. Instead of filing a response to defendants’ motion to stay, plaintiff first filed a motion to modify the August 9 Order, asking the court to cure the defect of the preliminary injunction by modifying it to include a requirement that plaintiff post a bond that secures defendants’ rights.
Because the court finds that it has the jurisdiction to modify the preliminary injunction, and because such modification would resolve the defect of the preliminary injunction, the court grants plaintiff‘s motion to modify the court‘s August 9 Order. Additionally, the court denies defendants’ motion to stay because the modification of the August 9 Order cures the reversible procedural defect of the preliminary injunction and defendants fail to show that a stay is otherwise warranted. Because resolution of the motion to modify is necessary to properly analyze the motion to stay, the court addresses the motion to modify first.
A. Motion to Modify
Plaintiff asks the court to “modify its August 9 Order to require the Plaintiff to post a nominal bond, or other amount as the Court in its discretion may determine, as a
Under
The August 9 Order issued a preliminary injunction in favor of plaintiff that temporarily enjoins defendants from using plaintiff‘s mark in an infringing manner while the merits of the action are resolved through arbitration. The August 9 Order, however, did not address the issue of a bond or other security. Although neither party argued for the issuance of a bond or otherwise mentioned the issue of security in their briefings or at the hearing on the preliminary injunction, the August 9 Order‘s failure to address the
Generally, “the timely filing of a notice of appeal confers jurisdiction in the court of appeals and divests the district court of its control over those aspects of the case involved in the appeal.” Dixon v. Edwards, 290 F.3d 699, 709 (4th Cir. 2002) (citing Griggs v. Provident Consumer Disc. Co., 459 U.S. 56, 58 (1982)) (internal quotation marks omitted). But that rule is not absolute. “One exception to the rule is that a district court does not lose jurisdiction to proceed as to matters in aid of the appeal.” Grand Jury Proceedings Under Seal v. United States, 947 F.2d 1188, 1190 (4th Cir. 1991) (citing In re Thorp, 655 F.2d 997, 998 (9th Cir. 1981)). “The rule is a judge-made doctrine designed to avoid the confusion and waste of time that might flow from putting the same issues before two courts at the same time.” Id. (citing Thorp, 655 F.2d at 998).
In Dixon v. Edwards, the Fourth Circuit held that in modifying an injunction to correct a clear error during the pendency of an appeal of that injunction, a district court did just that—aided the appeal and avoided the unnecessary expenditure of appellate resources. 290 F.3d 699, 720 n. 14 (4th Cir. 2002); see also Lytle v. Griffith, 240 F.3d 404, 408 (4th Cir. 2001) (finding that a district court possessed jurisdiction to modify its
Finally, the court finds the holding and analysis of Baron v. Strawbridge & Clothier, 1986 U.S. Dist. LEXIS 25914 (E.D. Pa. May 5, 1986), persuasive. The circumstances before that court were very similar to the circumstances present here. There, as here, the district court issued a preliminary injunction in favor of the plaintiff but failed to provide for security as required by the federal rules. Under those circumstances, the district court found that it had “the jurisdiction and the duty to correct what amounts to a ministerial or procedural error.” Baron, 1986 U.S. Dist. LEXIS 25914, at *2. Four legal principles served as the foundation for the court‘s conclusion. First, the court noted the spirit of the Federal Rules:
Fed. R. Civ. P. 1 explicitly states that the rules of procedure shall be construed to secure the just determination of every action. As Mr. Justice Black observed, “the principle function of procedural rules should be to serve as useful guides to help, not hinder, persons who have a legal right to bring their problems before the courts.”
Id. at *3 (citing Order Adopting Revised Rules of S. Ct. of U.S., Mon. April 12, 1954). Second, the court concluded that
Justice requires that the court‘s oversight be corrected, and it is within the plenary power of the court to do so. See 7 J. Moore, Moore‘s Federal Practice, § 60.20 (2d ed. 1985). Federal courts have an inherent equitable power to modify a decree of injunction. United States v. Swift & Co., 286 U.S. 106 (1932). Consistent with this mandate, the Supreme Court has held that a district court may entertain a Rule 60(b) motion without leave of the appellate court. Standard Oil Co. v. United States, 429 U.S. 17 (1976). In the interest of justice, the preliminary injunction issued by this court should likewise be subject to modification without leave of the appellate court, in order to allow for a bond under
Fed. R. Civ. P. 65(c) .
Id. at 5.
The court agrees with the reasoning of Baron and similarly has both the jurisdiction and the duty under these circumstances to modify the August 9 Order to require plaintiff to post a bond that secures defendants’ rights. Such a modification, although requested by plaintiff, secures the rights of defendants, the parties adverse to the preliminary injunction. If defendants are later found to be wrongfully enjoined, the posted bond will serve as security for the damage defendants may suffer. Moreover, defendants are not prejudiced by the modification to the preliminary injunction because it merely corrects a procedural defect and does not affect defendants’ other substantive arguments on appeal. Further, such a modification aids the appeal by eliminating the defect of the August 9 Order, preventing the expenditure of unnecessary judicial resources. For these reasons, the court grants the motion to modify its August 9 Order and requires plaintiff to post a bond consistent with this order.
A district court has wide discretion in determining an appropriate amount for a bond. Hoechst Diafoil, 174 F.3d at 421. “In fixing the amount of an injunction bond, the district court should be guided by the purpose underlying Rule 65(c), which is to provide a mechanism for reimbursing an enjoined party for harm it suffers as a result of an improvidently issued injunction or restraining order.” Id. at 421 n. 3. Security is generally fixed in an amount covering “the potential incidental and consequential costs” as well as either the losses the wrongly enjoined party will suffer or the amount of the complainant‘s unjust enrichment during the period of prohibited conduct. Id. “Where the district court determines that the risk of harm is remote, or that the circumstances otherwise warrant, the court may fix the amount of bond accordingly. In some circumstances, a nominal bond may suffice.” Candle Factory, Inc. v. Trade Assocs. Grp., Ltd., 23 F. App‘x. 134, 139 (4th Cir. 2001) (quoting Hoechst Diafoil, 174 F.3d at 421 n. 3).
The vital factor in determining a bond that adequately secures a party‘s rights is the harm the enjoined party would suffer from potential wrongful enjoinment. The court feels compelled to clarify the contours of its preliminary injunction, despite their clarity
Therefore, the harm defendants stand to suffer, in the event that the injunction is later determined to be wrongful, is the income they might lose by refraining from use of the GEORGE SINK mark in the marketing of their law practice during the life of the preliminary injunction. Sink Jr.‘s former salary at Sink P.A. is irrelevant to this inquiry. So too is the amount to which Sink Jr. is allegedly entitled under any severance package. Because Sink Jr. can still practice law and advertise his legal services without infringing on plaintiff‘s mark, the court does not find the potential harm to be severe. Indeed, the court reached the same conclusion in determining the harm defendants would suffer as a result of the preliminary injunction:
The effect on defendants of granting the requested relief will not be too severe. George Sink Jr. will not be prevented from practicing law, but will
merely need to clarify to the public that he is a separate business from Sink P.A. He will be required to change or temporarily remove his website, change or temporarily remove his business Facebook profile, change the infringing email addresses, and change his professional information on the various state bar websites. Given that much of this requested relief can be accomplished with relative ease and may be reversed after a final decision is issued from the Arbitrator, the court finds that the balance of equities weighs in plaintiff‘s favor.
Id. at 29.
The court finds that a nominal bond is appropriate here for two reasons. First, plaintiff has shown strong likelihood of success on the merits. See Arkansas Best Corp. v. Carolina Freight Corp., 60 F. Supp. 2d 517, 521 (W.D.N.C. 1999) (“Circumstances in the instant case warrant the posting of only a nominal bond in that Plaintiffs have shown a strong likelihood of success on the merits.“). Second, defendants are not at risk of suffering severe harm from the mandates of the injunction. See Candle Factory, 23 F. App‘x at 139 (finding a nominal bond appropriate where defendant “would suffer little harm if enjoined from further selling” of infringing product). Therefore, the court modifies its August 9 Order to require plaintiff to post a $500.00 bond for the security of defendants’ rights.
B. Motion to Stay
Defendants ask the court to “stay this action, particularly its August 9, 2019, order [sic] and the related arbitration proceeding, to protect Sink Jr. et al. from further harm while the Fourth Circuit Court of Appeals considers their arguments.” ECF No. 45 at 4. Because defendants cannot show that a stay pending appeal is appropriate, the court denies defendants’ motion to stay.
“A trial court has a long-established right to make orders appropriate to preserve the status quo while a case is pending on appeal[,] and this right is codified by the rule on
When considering whether to stay an order pending appeal under Rule 62(d), courts consider “(1) whether the applicant has made a strong showing that he is likely to succeed on the merits; (2) whether the applicant will be irreparably injured absent a stay; (3) whether issuance of the stay will substantially injure other parties interested in the proceeding; and (4) where the public interest lies.” Hilton, 481 U.S. at 776. “A stay of this kind is considered extraordinary relief for which the moving party bears a heavy burden.” Ohio Valley, 2017 WL 1712527, at *2 (citing Personhuballah, 155 F. Supp. 3d at 558) (internal quotation omitted). Motions for stay pending appeal are governed by the same standard as motions for preliminary injunction. McCammon v. United States, 584 F. Supp. 2d 193, 196 (D.D.C. 2008). Interestingly, then, the court applies the same standard it used in issuing an injunction in favor of plaintiff to determine if it should now stay that injunction during the pendency of defendants’ appeal. The court addresses each factor in turn and finds that each weighs against granting a stay.
a. Clear Showing of Success on the Merits
For this court to stay its August 9 Order and preliminary injunction, defendants must make a clear showing that they are likely to succeed on the merits of their appeal. See Hilton, 481 U.S. at 776. Although the likelihood-of-success inquiry requires defendants to make a clear showing that they are likely to succeed on appeal, they “need
Defendants make several arguments to show a clear likelihood of success on the merits of their appeal, a few which are identical to arguments made to this court in their opposition to the preliminary injunction. Specifically, defendants argue that the court abused its discretion in issuing the preliminary injunction because: (1) the August 9 Order failed to require a bond; (2) plaintiff acquiesced in defendants’ use of the mark; (3) the Confidentiality and Non-Solicitation Agreement limited plaintiff‘s recovery; (4) plaintiff did not make a showing of irreparable harm; (5) plaintiff‘s trademark is invalid due to plaintiff‘s fraud; (6) plaintiff‘s trademark lacks secondary meaning; and (7) the injunction was mandatory. Each of these arguments is either cured by the motion to modify or without merit. Moreover, a number of these arguments have already been addressed and rejected by this court.5 As such, the court finds that defendants have not
1. Failure to Require a Bond
Defendants’ first argument—that their appeal is likely to succeed because the August 9 Order failed to require a bond—has merit. Discussed above,
2. Plaintiff‘s Acquiescence
Defendants next argue that plaintiff is estopped from claiming infringement because plaintiff acquiesced in defendants’ use of the mark. Defendants derive this alleged acquiescence from plaintiff‘s promotion of Sink Jr. during his employment as a lawyer with Sink PA. The court agrees with plaintiff that defendants’ estoppel by acquiescence defense “conflates the use of ‘George Sink’ as a mark or trade name or business name versus an individual‘s name.” ECF No. 53 at 7. While plaintiff promoted
Moreover, the court already considered and rejected this argument. Defendants asserted their acquiescence by estoppel argument in opposition to the preliminary injunction.6 The court rejected this argument in its August 9 Order, holding that “[i]t is undisputed that plaintiff has not consented to defendants using the mark [to promote defendants’ own legal services].” ECF No. 41 at 17. The court correctly rejected this argument in its August 9 Order, and it rejects it again here. For these reasons, this argument does not show a likelihood of success on the merits of defendants’ appeal. No # 2.
3. Confidentiality and Non-Solicitation Agreement
Defendants next argue that plaintiff is barred from recovery in excess of $500.00 according to the terms of the Confidentiality and Non-Solicitation Agreement between Sink Jr. and plaintiff. The arbitration clause of the Agreement, defendants argue, limits ultimate recovery for claims by Sink P.A. against employees to $500.00. As such, they contend, Sink P.A. cannot seek temporary injunctive relief from this court. Here, defendants again resurrect an argument already rejected by this court. Considering this contention in its August 9 Order, the court stated:
[w]hen reading the [arbitration] clause in totality, it is clear to the court that this $500.00 provision exists merely to limit the amount of money damages that the Employer can receive. There is nothing in this sentence to indicate that $500.00 is the exclusive remedy or that the Employer may not seek injunctive relief in addition to this $500.00. To the contrary, just a few sentences above this $500.00 provision, the arbitration clause clearly states that the Arbitrator may enter injunctive relief and that the parties may seek temporary injunctive relief from a court while awaiting the Arbitrator‘s decision. Thus, the court denies the motion to dismiss on this ground.
ECF No. 41 at 7. Defendants have presented no additional evidence nor pointed the court to any additional law that might justify a departure from the court‘s above holding.
Moreover, even if the court were to accept defendants’ interpretation, it would not provide a ground for a successful appeal. Defendants’ argument, as the court understands it, is that the Agreement entitles Sink P.A. to seek temporary injunctive relief from a court, but the Agreement also limits Sink P.A.‘s ultimate relief from the arbitrator to $500.00.7 The court‘s August 9 Order grants Sink P.A. temporary injunctive relief. See ECF No. 41 at 31 (“The relief granted in this order is temporary, pending the final ruling by the Arbitrator on the matters that have been submitted by the parties to arbitration.“). Defendants’ interpretation of the contract cannot be a basis for overturning temporary injunctive relief since they concede that the Agreement entitles Sink P.A. to seek temporary injunctive relief. As such, this argument does not show a likelihood of success on the merits of defendants’ appeal. No #3.
Defendants also refute the August 9 Order‘s finding that plaintiff would suffer irreparable harm in the absence of a preliminary injunction. Defendants argue that the court erred in holding that instances of trademark infringement give rise to a presumption of irreparable harm. “In Lantham Act cases involving trademark infringement, a presumption of irreparable injury is generally applied once the plaintiff has demonstrated a likelihood of confusion, the key element in an infringement case.” Scotts Co. v. United Indus. Corp., 315 F.3d 264, 273 (4th Cir. 2002). Defendants rely on two cases that discuss the presumption of irreparable injury in the context of patent and copyright disputes and urge the court to extend those holdings to trademark law. These cases, however, are not applicable to cases of trademark infringement and do not provide this court with a valid basis to depart from well-settled law.
First, defendants urge the court to abandon the presumption of irreparable harm that arises in instances of trademark infringement based on eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006). Defendants’ reliance on this case is puzzling because the Supreme Court‘s decision does nothing to delegitimize the presumption of irreparable injury that arises in cases of trademark infringement. The Supreme Court in eBay rejected a “categorical approach” in infringement cases under which injunctions automatically issue in every case of patent infringement barring extreme circumstances. Id. at 393-394. Instead, the court held that the four-factor test governs the issuance of preliminary injunctions and issuing courts must consider the equities implicated by each factor. Id. This holding is hardly a rejection of the presumption of irreparable injury that arises in cases of infringement, and defendants’ conclusion to that effect is a bridge too
Second, defendants cite Christopher Phelps & Assocs., LLC v. Galloway for the proposition that the Fourth Circuit has eliminated the presumption of irreparable harm in cases of copyright infringement. 492 F.3d 532 (4th Cir. 2007). Defendants’ characterization of Christopher Phelps is misleading. There, the Fourth Circuit held that an underlying determination that plaintiff‘s copyright had been infringed did not automatically entitle it to injunctive relief. The court did not eliminate or even fail to apply the presumption of irreparable injury based on the finding of infringement, however. In fact, the court seemed to apply the presumption during its consideration of the four-factor test: “[i]rreparable injury often derives from the nature of copyright violations, which deprive the copyright holder of intangible exclusive rights.” Id. at 544. Based on the foregoing, defendants’ legal argument that the court improperly applied a presumption of irreparable injury falls flat.
Moreover, the court considered and rejected this legal argument in its August 9 Order, holding that defendants’ argument lacked “the requisite legal and logical support.” ECF No. 41 at 28. Because defendants have presented no additional legal or logical support since the court‘s August 9 Order, their argument remains uncompelling. Therefore, this argument does not show a likelihood of success on the merits of defendants’ appeal.8 No #4.
Defendants next contend that their appeal will be successful because plaintiff’s ‘500 mark “is the product of fraud upon the USPTO and must be cancelled.” ECF No. 45 at 14. This argument is procedurally inappropriate and substantively meritless.
Procedurally, defendants’ fraud argument cannot be a basis for a successful appeal because defendants have waived the right to make the argument on appeal. Defendants did not make this argument to the court during preliminary injunction proceedings. As such, they have waived their right to make the argument before the Fourth Circuit. See Muth v. United States, 1 F.3d 246, 250 (4th Cir. 1993) (“[I]ssues raised for the first time on appeal generally will not be considered. Exceptions to this general rule are made only in very limited circumstances . . . .”) (internal citations omitted). Therefore, this argument does not show a likelihood of success on appeal.
Substantively, defendants’ fraud argument is without merit and borders on being frivolous. Sink P.A. filed a request to amend its ‘500 mark pursuant to
6. Plaintiff’s Showing of Secondary Meaning
Defendants next argue that the court erred in concluding that plaintiff made a showing of secondary meaning for its trademark. According to defendants, plaintiff’s marketing and advertising efforts have given secondary meaning to George Sink, Sr., the human being, rather than Sink P.A., the law firm. This distinction is unconvincing for two reasons. First, the plaintiff’s registration of both marks at issue with the USPTO establishes a prima facie showing that the mark is suggestive, and thus a showing of secondary meaning is not required. Synergistic Int‘l, LLC v. Korman, 470 F.3d 162, 172 (4th Cir. 2006). Defendants have not presented any evidence that rebuts this prima facie showing. Secondly, the plaintiff’s marks clearly satisfy the Fourth Circuit’s test for secondary meaning, as the court thoroughly explained in the August 9 Order. See ECF No. 41 at 20–21. Therefore, this argument does not show a likelihood of success on appeal. No #6.
Finally, defendants argue that the court erred in finding that the injunction was prohibitory rather than mandatory. The court disagrees. “Prohibitory preliminary injunctions aim to maintain the status quo and prevent irreparable harm while a lawsuit remains pending.” Pashby v. Delia, 709 F.3d 307, 319 (4th Cir. 2013). “The status quo to be preserved by a preliminary injunction, however, is not the circumstances existing at the moment the lawsuit or injunction request was actually filed, but the last uncontested status between the parties which preceded the controversy.” Aggarao v. MOL Ship Mgmt. Co., 675 F.3d 355, 378 (4th Cir. 2012) (citing Stemple v. Bd. of Ed. of Prince George‘s Cnty., 623 F.2d 893, 898 (4th Cir. 1980). “To be sure, it is sometimes necessary to require a party who has recently disturbed the status quo to reverse its actions,” but “[s]uch an injunction restores, rather than disturbs, the status quo ante.” Id. (citing O Centro Espirita Beneficiente Uniao Do Vegetal v. Ashcroft, 389 F.3d 973, 1013 (10th Cir. 2004) and United Steelworkers of Am., AFL–CIO v. Textron, Inc., 836 F.2d 6, 10, (1st Cir. 1987).
Defendants contend that “the last uncontested status” before the present controversy should be defined as the time before Sink Sr. allegedly requested that Sink Jr. assign Sink P.A. the right to use Sink Jr.’s name professionally. Plaintiff contends that the controversy arose later, when Sink Jr. used the GEORGE SINK mark in commerce. The court agrees with plaintiff. The current controversy involves defendants’ infringing use of the GEORGE SINK mark. Defendants have never contested that Sink Jr. may use his name to identify himself as an individual, nor have they asked the court to enjoin such a use. Therefore, there was no controversy until George Jr. used the GEORGE SINK
b. Irreparable Injury
The next factor the court considers in determining whether to stay its previously issued injunction is whether defendants will be irreparably injured absent a stay. To make this showing, defendants present evidence of general harms that have resulted from this lawsuit. However, defendants have failed to present any compelling evidence of irreparable harm caused by the issuance of the preliminary injunction. Further, they fail to argue how a stay of the preliminary injunction would prevent any of their alleged injuries. Therefore, the court finds that this factor weighs heavily in favor of denying a stay.
A showing of irreparable injury requires more than the mere “possibility” of being irreparably harmed; rather, the plaintiff must “demonstrate that irreparable injury is likely in the absence of [a stay].” Winter, 555 U.S. at 20 (emphasis added). The narrow inquiry here is whether defendants will be irreparably harmed by the court’s enforcement of the preliminary injunction that enjoins them from using plaintiff’s trademarks. In other
Further, a stay of the preliminary injunction would do nothing to remedy these harms or prevent further public interest in this matter. Defendants have not even argued that a stay of the preliminary injunction would alleviate any of the harms they have suffered as a result of this controversy. Defendants even admit as much in their motion to stay: “The damage to Sink Jr. et al.’s reputation [] cannot be undone . . .” ECF No. 45 at 19. Indeed, a stay of the preliminary injunction would do nothing to stop the public’s interest in this matter. Nor would a stay address any of harms relied upon by defendants. Therefore, this evidence does not show that defendants would be irreparably harmed absent a stay of the preliminary injunction.
Moreover, in the August 9 Order, the court considered the injury that the preliminary injunction would cause defendants and determined that the injury would not be severe, as the court discussed above. Defendants have not presented any evidence that gives the court any reason to reconsider this holding. Therefore, defendants have not
c. Substantial Injury to Other Party
The court must next consider whether plaintiff would be substantially injured by a stay of the preliminary injunction. In their motion, defendants all but ignore this question. Instead, defendants reference the same irrelevant harms they rely upon for their own claim of irreparable injury. The August 9 Order and preliminary injunction were premised on the fact that plaintiff would experience irreparable injury absent legal intervention. If the court stayed its August 9 Order and preliminary injunction, defendants would be free to resume infringement of plaintiff’s intellectual property. The very same harms that the court sought to prevent through its preliminary injunction would result if the court now stayed that injunction. The injury that would result from defendants’ use of the plaintiff’s marks is thoroughly outlined in the August 9 Order and does not merit further discussion here. Therefore, the court finds that a stay would result in substantial harm to plaintiff, weighing heavily against granting a stay.
d. Public Interest
Finally, the court must consider whether the public interest would be served by granting a stay. Defendants claim that the public interest weighs in their favor because defendants’ use of the mark would not result in consumer confusion. Again, defendants point to no new evidence that gives the court reason to abandon its earlier analysis. In the August 9 Order this court outlined, in painstaking detail, each of the nine factors of the Rosetta Stone test10 and determined that defendants’ use of the mark clearly results in a
In their motion to stay, defendants also argue that the preliminary injunction is contrary to the public interest because it restricts Sink Jr.’s ability to practice law in violation of South Carolina Rule of Professional Conduct 5.6.11 This rule, however, is entirely irrelevant to this case. A cursory reading of Rule 5.6 reveals that it applies to “agreements” into which lawyers are restricted from entering. The rule applies to contracts between private parties that restrict a lawyer’s ability to practice law. It does not apply to court orders, and it is certainly not violated by the court’s preliminary injunction. At best, Rule 5.6 reflects a public policy against cumbersome non-compete agreements between lawyers. It has nothing to say about the public policy of an injunction that restricts a lawyer’s ability to commit trademark infringement.
Moreover, as the court made clear in the August 8 Order and reiterates here, the preliminary injunction does not impede Sink Jr.’s ability to practice law. Sink Jr. may continue to practice law under his birth name throughout the life of the preliminary injunction. The preliminary injunction merely enjoins him from using plaintiff’s trademark in a way that is likely to confuse consumers. Lawyers are not immune from
C. Motion to Stay Arbitration
Defendants’ motion to stay also asks this court to stay arbitration proceedings during the pendency of their appeal. The parties do not dispute that the Agreement contains a valid arbitration clause. Instead, Defendants advance three arguments for the court to stay arbitration, none of which convince the court that a stay is appropriate.
First, defendants contend that a stay is appropriate under
On application, the court may stay an arbitration proceeding commenced or threatened on a showing that there is no agreement to arbitrate. Such an issue, when in substantial and bona fide dispute, shall be forthwith and summarily tried and the stay ordered if found for the moving party. If found for the opposing party, the court shall order the parties to proceed to arbitration.
Defendants’ reliance on this statute is misplaced. In order to issue a stay of arbitration under the statute, there must be a substantial and bona fide dispute as to whether there is an agreement to arbitrate. No party in this lawsuit has presented for the court’s resolution the issue of whether such an agreement exists between the LLC
Second, defendants argue a stay is appropriate because a reversal of the court’s denial of its motion to dismiss by the Fourth Circuit Court of Appeals would bar arbitration through the doctrine of res judicata. Defendants are incorrect. A reversal at the Fourth Circuit would not invoke the doctrine of res judicata as to the merits of plaintiff’s infringement claim. Plaintiff’s Amended Complaint seeks only temporary injunctive relief from the court during the pendency of arbitration proceedings. This temporary relief exists only until final resolution of the claim by the Arbitrator. In other words, the preliminary injunction’s life ends upon the final decision of the Arbitrator. Dismissal of plaintiff’s complaint would merely determine the issue of temporary injunctive relief by invalidating the preliminary injunction. It would have no effect on
Third, defendants contend in their reply to the plaintiff’s response to their motion to stay that defendants have waived their right to arbitration. As a preliminary procedural matter, this argument is inappropriate. “The ordinary rule in federal courts is that an argument raised for the first time in a reply brief or memorandum will not be considered.” Clawson v. FedEx Ground Package Sys., Inc., 451 F. Supp. 2d 731, 734 (D. Md. 2006).
Even overlooking its fatal procedural flaw, defendants’ argument is without merit. An explanation of the unreasonableness of defendants’ position necessitates another dive into this case’s procedural history. The court found in its August 9 Order, as it again finds here, that the Agreement between Sink Jr. and Sink PA allows Sink PA to obtain temporary injunctive relief from this court without waiving its right to compel arbitration as to the merits of the controversy. And that is just what plaintiff’s Amended Complaint does—it seeks temporary injunctive relief in the form of a preliminary injunction. Defendants sought to dismiss the Amended Complaint on two grounds. First, it asserted that plaintiff sought relief from the court beyond what was allowed under the Agreement. Second, defendants argued that the Agreement limited plaintiff to $500.00 of recovery. Plaintiff responded to each ground, arguing that temporary injunctive relief was proper. Defendants now contend that in responding to their motion to dismiss, plaintiff has
IV. CONCLUSION
For the foregoing reasons the court GRANTS the motion to modify, DENIES the motion to stay and FINDS AS MOOT the motion to expedite.
AND IT IS SO ORDERED.
DAVID C. NORTON
UNITED STATES DISTRICT JUDGE
November 26, 2019
Charleston, South Carolina