Lead Opinion
Opinion by Judge MCKEOWN; Concurrence by Judge WALLACE.
OPINION
“The Platters” — the legendary name of one of the most successful vocal performing groups of the 1950s- — lives on. With 40 singles on the Billboard Hot 100 List, the names of The Platters’ hits ironically foreshadowed decades of litigation — “Great Pretender,” “Smoke Gets In Your Eyes,” “Only You,” and “To Each His Own.” Larry Marshak and his company Florida Entertainment Management, Inc. (collectively “Marshak”) challenge the district court’s preliminary injunction in favor of Herb Reed Enterprises (“HRE”), enjoining Marshak from using the “The Platters” mark in connection with any vocal group with narrow exceptions. We consider an issue of first impression in our circuit: whether the likelihood of irreparable harm must be established — rather than presumed, as under prior Ninth Circuit precedent — by a plaintiff seeking injunctive relief in the trademark context. In light of Supreme Court precedent, the answer is yes, and we reverse the district court’s order granting the preliminary injunction.
Background
The Platters vocal group was formed in 1953, with Herb Reed as one of its founders. Paul Robi, David Lynch, Zola Taylor, and Tony Williams, though not founders, have come to be recognized as the other “original” band members. The group became a “global sensation” during the latter half of the 1950s,
Litigation has been the byproduct of the band’s dissolution; there have been multiple legal disputes among the original members and their current and former managers over ownership of “The Platters” mark. Much of the litigation stemmed from employment contracts executed in 1956 between the original members and Five Platters, Inc. (“FPI”), the company belonging to Buck Ram, who became the group’s manager in 1954. As part of the contracts, each member assigned to FPI any rights in the name “The Platters” in exchange for shares of FPI stock. Mars-hak I,
In 1972, FPI sued Robi and Taylor for trademark infringement in California, resulting in a 1974 judgment in Robi’s favor, which held that FPI “was a sham used by Mr. Ram to obtain ownership of the name ‘Platters.’ ” Robi v. Five Platters, Inc.,
In 1984, FPI sued Reed for trademark infringement in the Southern District of Florida. Marshak I,
In the event that a court of competent jurisdiction enters a final order with all appeals being exhausted that provides that The Five Platters, Inc. has no right in the name “The Platters,” then nothing contained herein shall be construed to limit Herbert Reed’s rights in the name “The Platters” and this agreement shall not inure to any party other than The Five Platters, Inc., and its successors and assigns or Herbert Reed.
A key question is whether the escape clause has now been triggered.
In 2001, Marshak, FPI, and other plaintiffs sued Reed and others for trademark infringement in the Eastern District of New York; Reed counterclaimed, also alleging trademark infringement. Marshak
Reed appealed Marshak I a second time on the basis that an unpublished Ninth Circuit memorandum issued around the same time triggered the 1987 settlement’s escape clause.
HRE, which manages- Reed’s business affairs and holds his rights, sued FPI and other defendants for trademark infringement in the District of Nevada in 2010. To get around the restrictions in the 1987 settlement, HRE creatively alleged that it owned the “Herb Reed and the Platters” mark and that defendants used a confusingly similar mark, namely “The Platters.” Herb Reed Enters., Inc. v. Bennett, No. 2:10-CV-1981 JCM (RJJ),
In 2012, HRE successfully obtained a preliminary injunction against Monroe Powell, FPI’s former performer employee, and his company in a trademark infringement action in the District of Nevada. Id.
In the period between the filing of the two Nevada actions, Marshak sued Reed for civil contempt in the Eastern District of New York, alleging that Reed’s first Nevada lawsuit violated the 2001 injunction. Marshak v. Reed, Nos. 96-CV-2292 (NG)(RML), 11-CV-2582 (NG)(RML),
Last year brought yet another lawsuit. HRE commenced the present litigation in 2012 against Marshak in the District of Nevada, alleging trademark infringement and seeking a preliminary injunction against Marshak’s continued use of “The Platters” mark. The district court held that HRE was not precluded from asserting a right in “The Platters” mark either by the 1987 settlement — the escape clause of which had been triggered by the 2011 Nevada default judgment — or by the equitable doctrine of laches. Herb Reed Enters., LLC v. Fla. Entm’t Mgmt., Inc., No. 2:12-cv-00560-MMD-GWF,
Analysis
I. Res Judicata
As an initial matter, we address whether HRE is foreclosed from bringing the underlying suit by the New York actions, Marshak I and Marshak II, which resulted in the 2001 injunction barring Reed from interfering with Marshak’s use of “The Platters” mark except as permitted by the 1987 settlement. The district court correctly held that the New York actions do not have res judicata effect.
This action is neither barred by claim preclusion, which prohibits “the parties or their privies from relitigating issues that were or could have been raised” in an action resulting in “[a] final judgment on the merits,” Federated Department Stores, Inc. v. Moitie,
Marshak quibbles with the district court’s reliance on the res judicata effect of the Nevada actions — the 2011 default judgment against FPI and the 2012 preliminary injunction against Powell. But the district court explicitly declined to use the 2011 default judgment as offensive collateral estoppel against Marshak on the issue of trademark ownership. HRE,
II. Laches
Next, we consider whether HRE is barred from challenging Marshak’s use of “The Platters” mark by laches — “an equitable time limitation on a party’s right to bring suit, resting on the maxim that one who seeks the help of a court of equity must not sleep on his rights.” Jarrow Formulas, Inc. v. Nutrition Now, Inc.,
The time gap from when HRE “knew or should have known about its potential cause of action” to when it filed its action was not long enough to be unreasonable. Id. at 838. HRE could not bring the trademark infringement suit until there was a final ruling with all appeals exhausted that triggered the escape clause. That ruling came in the Nevada default judgment in May 2011.
III. Preliminary Injunction
To obtain a preliminary injunction, HRE “must establish that [it] is likely to succeed on the merits, that [it] is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in [its] favor, and that an injunction is in the public interest.” Winter v. Natural Res. Def. Council, Inc.,
. Marshak’s key arguments are that .-the district court erred in concluding that HRE had established a likelihood of success on the merits because Reed abandoned “The Platters” mark and that the district court erred in finding a likelihood of irreparable harm.
A. Likelihood of Success on the Underlying Trademark Dispute
As to its trademark infringement claim, to establish a likelihood of success on the merits HRE must show that it is “(1) the owner of a valid, protect-able mark, and (2) that the alleged infringer is using a confusingly similar mark.” Grocery Outlet, Inc. v. Albertson’s, Inc.,
Marshak has not established either of the two requirements of abandonment under 15 U.S.C. § 1127: (1) discontinuance of trademark use, and (2) intent not to resume use. Although non-use for three consecutive years constitutes prima facie evidence of abandonment, the standard for non-use is high. Id. Non-use
HRE presented evidence that, despite the 1987 settlement, it continued to receive royalties from the sale of The Platters’ previously recorded material. The district court permissibly relied on the declaration of HRE’s general manager that “[s]inee ... approximately 1953, Reed continuously received royalties from Platters recordings, including during the time period after the 1987 Stipulation was signed and after the 2001 Injunction.” The declaration further indicates that HRE received and continues to receive royalties from domestic and international sales and names a range of companies that pay royalties for the use of The Platters’ original recordings in other compilations, television ads, movies, or other media. The receipt of royalties is a genuine but limited usage of the mark that satisfies the “use” requirement, especially when viewed within the totality of the circumstances— namely, that Reed was constrained by the settlement. See Electro Source,
We are not persuaded by Marshak’s view that HRE’s receipt of royalties violated the 1987 settlement and thus is not a “bona fide use” under 15 U.S.C. § 1127, capable of obviating abandonment. It is far from clear that the 1987 settlement, which focused on “the right to perform or entertain” and explicitly excluded “commercial recordings,” forbade HRE from collecting royalties on previously recorded material. Additionally, when Marshak sued Reed for civil contempt alleging that Reed had violated the 2001 injunction enforcing the 1987 settlement, Marshak “d[id] not contest that Reed was entitled to such royalties,” and the Eastern District of New York held that there was not sufficient evidence “that Reed used ‘The Platters’ mark in a manner inconsistent with the 2001 Injunction.” Marshak,
We conclude that the record supports the district court’s determination that HRE did not abandon “The Platters” mark.
B. Likelihood of Irreparable Harm
We next address the likelihood of irreparable harm. As the district court acknowledged, two recent Supreme Court cases have cast doubt on the validity of this court’s previous rule that the likelihood of “irreparable injury may be pre
In eBay, the Court held that the traditional four-factor test employed by courts of equity, including the requirement that the plaintiff must establish irreparable injury in seeking a permanent injunction, applies in the patent context.
In Winter, the Court underscored the requirement that the plaintiff seeking a preliminary injunction “demonstrate that irreparable injury is likely in the absence of an injunction.”
Following eBay and Winter, we held that likely irreparable harm must be demonstrated to obtain a preliminary injunction in a copyright infringement ease and that actual irreparable harm must be demonstrated to obtain a permanent injunction in a trademark infringement action. Flexible Lifeline Sys. v. Precision Lift, Inc.,
Having anticipated that the Supreme Court’s decisions in eBay and Winter signaled a shift away from the presumption of irreparable harm, the district court examined irreparable harm in its own right, explaining that HRE must “establish that remedies available at law, such as monetary damages, are inadequate to compensate” for the injury arising from Marshak’s
Marshak asserts that the district court abused its discretion by relying on “unsupported and conclusory statements regarding harm [HRE] might suffer.” We agree.
The district court’s analysis of irreparable harm is cursory and conclusory, rather than being grounded in any evidence or showing offered by HRE. To begin, the court noted that it “cannot condone trademark infringement simply because it has been occurring for a long time and may continue to occur.” The court went on to note that to do so “could encourage wide-scale infringement on the part of persons hoping to tread on the goodwill and fame of vintage music groups.” Fair enough. Evidence of loss of control over business reputation and damage to goodwill could constitute irreparable harm. See, e.g., Stuhlbarg Int’l Sales Co., Inc. v. John D. Brush and Co., Inc.,
In concluding its analysis, the district court simply cited to another district court case in Nevada “with a substantially similar claim” in which the court found that “the harm to Reed’s reputation caused by a different unauthorized Platters group warranted a preliminary injunction.” HRE,
Even if we comb the record for support or inferences of irreparable harm, the strongest evidence, albeit evidence not cited by the district court, is an email from a potential customer complaining to Marshak’s booking agent that the customer wanted Herb Reed’s band rather than another tribute band. This evidence, however, simply underscores customer confusion, not irreparable harm.
The practical effect of the district court’s conclusions, which included no factual findings, is to reinsert the now-rejected presumption of irreparable harm based solely on a strong case of trademark infringement. Gone are the days when “[o]nce the plaintiff in an infringement action has established a likelihood of confusion, it is ordinarily presumed that the plaintiff will suffer irreparable harm if injunctive relief does not issue.” Rodeo Collection, Ltd. v. W. Seventh,
In light of our determination that the record fails to support a finding of likely irreparable harm, we need not address the balance of equities and public interest factors.
REVERSED and REMANDED.
Notes
. The Platters Biography, Rock & Roll Hall of Fame, http ://rockhall. com/inductees/the-platters/bio/ (last visited June 27, 2013).
. The memorandum held that FPI and other plaintiffs "cannot assert a common law trademark in 'The Platters’ ”■ unless they "present evidence that they used the trademark in a way that was not false and misleading.” Five Platters, Inc. v. Powell,
. Marshak’s argument that HRE should have acted sooner to trigger the escape clause instead of waiting years until after FPI had become a defunct entity is inapposite. Mars-hak essentially seeks a roundabout way to raise a laches defense in a separate action— HRE's 2010 suit against FPI and others in the District of Nevada — that has already been decided and is not before this court. That argument should have been raised in a timely appeal of the 2011 default judgment.
. Marshak does not dispute the district court’s finding that HRE is the senior user, or the district court's reasoning invaliding Mars-hak’s claims of ownership. Nor does Mars-hak contest the district court’s determination that Marshak's use of “The Platters” mark is confusingly similar to HRE's use of both "The Platters” and “Herb Reed and the Platters” marks according to the Ninth Circuit’s test. See AMF Inc. v. Sleekcraft Boats,
. In assessing the evidence with respect to irreparable harm, we reject Marshak's assertion that the district court may rely only on admissible evidence to support its finding of irreparable harm. Not so. Due to the urgency of obtaining a preliminary injunction at a point when there has been limited factual development, the rules of evidence do not apply strictly to preliminary injunction proceedings. See Republic of the Philippines v. Marcos,
Concurrence Opinion
concurring:
I agree that the district court’s preliminary injunction should be reversed. However, I write separately to emphasize that we are solely reviewing a preliminary injunction, and that we thus can express no view on issues arising after a trial dealing with a permanent injunction. See, e.g., Barahona-Gomez v. Reno,
