Survival of the Presumption of Irreparable Harm - NYIPLA

NYIPLA Annual Meeting 

May 21, 2013 

Workshop: Trademark & Copyright 

Supreme Court & Appellate Round-Up 

20879031

• Pina M. Campagna – Moderator 

• Siegrun D. Kane, Kane Advisors – Irreparable Harm 

• Tony Fletcher, Fish & Richardson – Anti-Dilution 

• Dale Cendali, Kirkland – Copyright First Sale 

• Jyotin Hamid , Debevoise – Aesthetic Functionality 

• Katie McCarthy, King & Spalding – Fraud 

• Jonathan Sobel, Sobel & Feller – Covenants Not to Sue

Siegrun Kane 

Irreparable Harm

Survival of the 

Presumption of Irreparable 

Harm 

Siegrun D. Kane 

NYIPLA 

May 22, 2013 

Swarovski v. Building #19 First 

Circuit 2013 

Kane Advisors LLP 

siegrundkane@gmail.com 

914-762-4155 

© 2013 Siegrun D. Kane 

4

The Supreme Court in eBay v 

MercExchange Says: 

There is no presumption of irreparable 

harm in patent disputes. 

Courts must look to the traditional 

principles of equity. 

© 2013 Siegrun D. Kane 

5

Traditional Principles of Equity 

1) irreparable injury; 

2) the inadequacy of remedies at law; 

3) the balance of hardships to the parties 

from granting versus denying relief; 

4) the effect of the injunction on the public 

interest. 

eBay v. MercExchange LLC, 547 U.S. 388, 394 (2006). 

© 2013 Siegrun D. Kane 6

Has eBay Abolished the 

Presumption in Copyright and 

Trademark Cases? 

Answer: Yes, as to copyright cases. 

The Second Circuit in Salinger says: 

“nothing in eBay limits its application to 

patent cases.” 

Salinger v. Colting, 607 F.3d 68, 78 (2d Cir. 2010) (reversing preliminary 

injunction barring defendant’s publication of book using characters from J.D. 

Salinger’s The Catcher in the Rye). 


What About Trademark Cases? 

Answer: Yes, says a slew of district court 

decisions. 

But what about appellate courts? 

Answer: Maybe not, says the First 

Circuit in Swarovski v Building #19. 


Building #19 

“good stuff cheap,” includes: 

Swarovski crystal figurines 

Purchased in original packaging with 

Certificate of Authenticity from 

insurer’s salvage sale after severe 

storm damaged warehouse. 


Swarovski’s View of 

Irreparable Harm 

No circuit court has yet to decide whether 

the presumption of irreparable harm applies 

in trademark cases. 

Swarovski also notes: 

The concurring opinion in eBay v 

MercExchange suggests that the 

presumption of irreparable harm may apply 

in some circumstances. 


Justice Kennedy and Chief Justice 

Roberts Concurring Opinion 

Such presumptions “could survive as 

lesson[s] of historical practices that 

might inform the court’s equitable 

discretion when 

the circumstances of a case bear 

substantial parallels to litigation the 

courts have confronted before.” 


What’s More, Swarovski Said: 

Harm to a trademark owner 

cannot be adequately 

compensated by money 

damages. 

But, Swarovski's statements 

were dicta. 

Swarovski Aktiengesellschaft v. Bldg. No. 19, Inc., 704 F.3d 44, 46 (1st Cir. 2013) 


Swarovski On Remand 

The First Circuit remanded so the 

district court could clarify its 

decision on likely confusion. 

It turns out that clarification was 

not necessary- the district court 

has set the case for trial 


Audience Questions 

1. Will the First Circuit’s analysis in 

Swarovksi lead other circuits to 

follow suit? 

1. Does it really matter? 


Give a Hand to 

Rachel Reisman for her contributions to this short 

but sweet presentation. 

Siegrun D. Kane 

Kane Advisors LLP 

siegrundkane@gmail.com 

(914) 762 – 4155 

PO Box 2564 

Briarcliff Manor, NY 10510 


Dale Cendali 

Copyright First Sale

The First Sale Doctrine: 

Kirtsaeng v. John Wiley & Sons, Inc. 

& 

Ninestar Technology Co. v. ITC 

NYIPLA | May 21, 2013 

Dale Cendali 

212-446-4846 

dale.cendali@kirkland.com

First Sale 

Kirtsaeng: Background 

• While petitioner Supap Kirtsaeng, a native of Thailand, 

attended U.S. universities, he domestically resold textbooks 

that his friends and family first purchased in Asia. 

– The Asia-published textbooks were nearly identical to the U.S. versions 

but cost significantly less. 

• Publisher John Wiley & Sons sued for copyright infringement. 

www.kirkland.com | 18

First Sale 

Kirtsaeng: Importation Right v. First Sale Defense 

• Wiley argued that Kirtsaeng violated Wiley’s § 106 

distribution right and § 602 authority over importation. 

– Section 106(3) grants copyright holders an “exclusive right[] … to 

distribute copies … of the copyrighted work to the public by sale 

or other transfer of ownership, or by rental, lease, or lending.” 

– Section 602 provides that “[i]mportation into the United 

States…, without the authority of the owner of copyright under 

this title, of copies or phonorecords … is an infringement of the 

exclusive right to distribute copies … under section 106.” 

• Kirtsaeng asserted the first sale defense of § 109(a): 

– “[T]he owner of a particular copy … lawfully made under this 

title … is entitled, without the authority of the copyright owner, 

to sell or otherwise dispose of the possession of that copy ….” 

(emphasis added) 


First Sale 

Kirtsaeng: Second Circuit Holding 

• The S.D.N.Y. found the first sale defense inapplicable. 

• And the Second Circuit upheld the lower court: 

– “[T]he phrase ‘lawfully made under this title’ in § 109(a) 

refers specifically and exclusively to copies that are made 

in the territories in which the Copyright Act is law, and 

not to foreign-manufactured works.” 


First Sale 

Kirtsaeng: Two Prior Cases 

Quality King Distribs., Inc. v. L’anza Research Int’l, Inc.: 

• Manufacturer of hair care products (with copyrighted labels) sued 

an importer that had purchased the products abroad and resold 

them in the U.S. 

– The products were made in the United States, then first sold 

overseas. 

• The Supreme Court held that the first sale doctrine applies to 

imported copies that were made domestically then first sold 

overseas. 531 U.S. 135 (1998). 


First Sale 

Kirtsaeng: Two Prior Cases 

Costco Wholesale Corp. v. Omega S.A.: 

• Watchmaker sued Costco for purchasing in New York from third 

parties watches (with copyrighted logos) that were manufactured 

and first sold abroad. 

• With Justice Kagan recused, the Supreme Court divided 4–4. 131 S. 

Ct. 565 (2010). 

• The Ninth Circuit had held that the watches were not “lawfully 

made” under the Copyright Act because they were made and first 

sold overseas. 

– Prior Ninth Circuit precedent held that goods made abroad then 

first sold domestically were subject to the first sale defense. 


On March 19, 2013, 

the Supreme Court reversed the 

Second Circuit and held that 

the first sale doctrine applies to 

works manufactured abroad.

First Sale 

The Supreme Court’s Kirtsaeng Holding 

• The first sale defense applies to works “lawfully made under 

this title.” 

• The six-member majority, in an opinion authored by Justice 

Breyer, accepted Kirtsaeng’s “nongeographical” interpretation 

of this phrase to mean “lawfully made in accordance with the 

Copyright Act.” 

– The phrase says nothing of geography, and “under” can mean 

“in accordance with” (as opposed to governed by). 

– Consistent with the rest of the Act and with the legislative and 

common-law histories of the first sale defense. 


First Sale 

Kirtsaeng: Justice Ginsburg’s Dissent 

• Justice Ginsburg argued that statutory arguments—the plain 

language of § 109, the rest of the Copyright Act, and the 

legislative history of the relevant statutory sections—favor a 

geographically limited first sale defense. 

– “Lawfully made under this title” is “most sensibly read as 

referring to instances in which a copy’s creation is governed by, 

and conducted in compliance with” the Copyright Act, which 

“does not apply extraterritorially.” 

– A copy made abroad is “‘lawfully made’ not under the United 

States Copyright Act, but instead under the law of some other 

country.” (quoting Quality King) 


First Sale 

Kirtsaeng: Justice Ginsburg’s Dissent 

• Justice Ginsburg also wrote that the Court’s ruling “shrinks to 

insignificance” the § 602 importation right, limiting it to one 

narrow application: 

– To prevent importation by those in lawful possession but not 

lawful ownership of copies – for example, distributors who are 

only authorized to sell outside the U.S. 


First Sale 

Kirtsaeng: The “Parade of Horribles” 

• The majority also seemed influenced by the “parade of 

horribles” that could follow ruling for Wiley. 

– Libraries, for example, arguably would be burdened with 

identifying and obtaining distribution permission from copyright 

owners for over 200 million circulating books printed abroad. 

– Many amici briefs stressed this argument. 

• The Court thought these problems were “too serious, too 

extensive, and too likely to come about” to be dismissed. 

– Justice Ginsburg disagreed: In the 30 years since a court first 

limited the first sale defense geographically, none of this has 

occurred. 

– Justice Breyer speculated that a Supreme Court ruling would be 

salient enough to change behavior such that it would occur. 


First Sale 

Kirtsaeng: Implications 

• Will copyright holders offer fewer works for sale in poorer 

countries to prevent arbitrage? 

• Could other legal protections, such as trademark law, 

contracting, or digital licensing, substitute? 

• Should Congress revise the first sale defense or the 

importation right? 


First Sale 

Ninestar Tech. v. ITC, No. 12-552 (U.S. Mar. 25, 2013) 

• In March 2013, the Supreme Court denied cert. in Ninestar Tech. 

– Ninestar presented a patent-law corollary to the issue in Kirtsaeng: 

“whether the initial authorized sale outside the United States of a 

patented item terminates all patent rights to that item.” 

– The ITC had fined Ninestar for importing patented ink cartridges: 

Ninestar purchased used cartridges that were made and sold in China, 

refilled them, and imported them to the U.S. to resell. 

• The ITC and Federal Circuit rejected Ninestar’s first-sale defense: 

– Under Federal Circuit precedent, a foreign sale does not exhaust one’s 

patent rights. See Jazz Photo Corp. v. ITC, 264 F.3d 1094 (2001). 

• One key difference: Whereas the first sale defense is codified in the 

Copyright Act, under patent law it remains a common-law doctrine. 


The First Sale Doctrine: 

Kirtsaeng v. John Wiley & Sons, Inc. 

& 

Ninestar Technology Co. v. ITC 

NYIPLA | May 21, 2013 

Dale Cendali 

212-446-4846 

dale.cendali@kirkland.com

Joe Hamid 

Aesthetic Functionality

Aesthetic Functionality: The 

Christian Louboutin v. YSL 

and Betty Boop Cases 

Jyotin Hamid 

Debevoise & Plimpton LLP 

May 21, 2013

Aesthetic Functionality at the Supreme 

Court 

• Qualitex Co. v. 

Jacobson Products 

Co., 514 U.S. 159 

(1995) 

• Held: No per se rule 

against trademark 

protection for a color. 

• TrafFix Devices, Inc. v. Marketing 

Displays, Inc., 532 U.S. 23 (2001) 

• Court viewed Qualitex as a case 

about aesthetic functionality 

• Aesthetic functionality inquiry: 

Would protecting the product 

feature put competitors “at a 

significant non-reputation-related 

disadvantage”?

Aesthetic Functionality in the 9th 

Pagliero v. Wallace, 198 F.2d 339 

(9th Cir.1952) 

• Are the features that defendant 

is imitating an “important 

ingredient in the commercial 

success of a product” 

(unprotected) or a “mere 

arbitrary embellishment . . . 

primarily adopted for the 

purposes of identification” 

(protected)?


Int’l Order of Job’s Daughters v. 

Lindeburg and Co., 633 F.2d 912 

(9th Cir. 1980) 

• Job’s Daughters focused on 

whether defendant used 

plaintiff’s mark as a merely 

“functional aesthetic component” 

of defendant’s product.


Au-Tomative Gold v. 

Volkswagen of America, 

457 F.3d 1062 (9 th Cir. 2006)

Aesthetic Functionality in the 2nd 

Wallace Int’l Silversmiths, Inc., 

v. Godinger Silver Art Co., 916 

F.2d 76 (2d Cir. 1990)


Knitwaves, Inc. v. Lollytogs, 

Ltd., 71 F.3d 996 (2d Cir. 

1995)


Forschner Group, Inc. v. Arrow 

Trading Co., Inc., 124 F.3d 

402 (2d Cir. 1997)

Aesthetic Functionality Elsewhere 

Ashley Furniture Industries, 

Inc. v. SanGiacomo N.A. 

Ltd., 187 F.3d 363 (4th Cir. 

1999) 

Boston Prof. Hockey Ass’n 

v. Dallas Cap & Emblem 

Mfg., Inc., 510 F.2d 1004 

(5th Cir. 1975) 

Board of Supervisors for LSU v. 

Smack Apparel Co., 550 F.3d 465 

(5 th Cir. 2008)


Abercrombie & Fitch 

Stores, Inc. v. American 

Eagle Outfitters, Inc., 280 

F.3d 619 (6th Cir. 2002). 

Maker’s Mark Distillery, 

Inc. v. Diageo, 

679 F.3d 410 (6th Cir. 

2012)


Jay Franco & 

Sons v. 

Franek, 

615 F.3d 855 

(7th Cir. 

2010) 

Dippin’ Dots, Inc. v. 

Frosty Bites 

Distribution, LLC, 369 

F.3d 1197 (11th Cir. 

2004).

Aesthetic Functionality 

Fleischer Studios, Inc. v. A.V.E.L.A., Inc., 654 F.3d 958 (9th Cir. 2011), 

after remand, No. 06-cv-6229 (ABC), – F. Supp. 2d. ---, 2012 WL 

7179374 (C.D. Cal. Nov. 14, 2012)

Louboutin v. YSL

YSL Use of Red Soles 

– YSL has used red soles since 1970s for 

aesthetic/design purposes

Competitive Use of Red Soles 

Galliano Dior Steffans Paciotti Chanel Marc Jacobs 

Ferragamo Dolce Balenciaga Chloe Celine


– Challenged shoes are monochromatic for 

aesthetic/design purposes 

Palais Tribtoo Woodstock Tribute 

– Challenged shoes come in a range of colors


– Challenged shoes match the seasonal collection for 

aesthetic/design purposes

District Court Decision 

• Key Rulings 

• Louboutin’s mark is 

likely not entitled to 

trademark protection 

because it is 

ornamental and 

functional 

• Single color applied to 

entire surface of 

article of apparel 

cannot constitute a 

valid mark 

Christian Louboutin S.A. v. Yves Saint Laurent, 

778 F. Supp. 2d 445 (S.D.N.Y. 2011)

Court of Appeals Decision 

Christian Louboutin S.A. v. Yves Saint Laurent, 

696 F.3d 206 (2d Cir. 2012)

Court of Appeals Decision 

• Rejects “per se” rule against trademark protection for a 

single color in fashion because aesthetic functionality is a 

fact-intensive inquiry 

• Louboutin’s red outsole is entitled to protection only when it 

contrasts with the color of the rest of the shoe 

• YSL did not “use” Louboutin’s trademark (as limited to 

contrasting colored shoes) and therefore did not infringe 

– Court did not reach YSL’s fair use or functionality 

defenses, or its defense that confusion was not likely 

– YSL (+ others) free to produce monochromatic red shoes 

• Affirms the validity of the doctrine of aesthetic functionality, 

which bars trademark protection if extending protection to 

the ornamental features of a design would significantly limit 

the range of competitive designs available and significantly 

undermine ability to compete in the relevant market.

Functionality After Louboutin v. YSL 

• Utilitarian Functionality: Is the feature essential to the 

use or purpose of the product? 

• Utilitarian Functionality: Does the feature affect the 

cost or quality of the product? 

• Aesthetic Functionality: Would extending protection 

to the ornamental features significantly limit the 

range of competitive designs available and 

significantly undermine a competitor’s ability to 

compete in the relevant market?

Katie McCarthy 

Fraud

The Basic Elements of 

the Standard Test for Fraud 

• False representation 

• of a material fact; 

• with an intent to deceive; 

• justifiable reliance upon the misrepresentation 

by the party deceived which induces him to act 

thereon; and 

• injury to the party deceived as a result of his 

reliance on the misrepresentation.

The Medinol Test for Fraud in the 

Trademark Office 

• false statement, misrepresentation or 

omission; 

• of a material fact; 

• that the affiant knew or should have known 

was false; 

• intent to deceive inferred from knowledge of 

falsity or reckless disregard for the truth; and 

• but for the false statement, the PTO would not 

have issued or maintained the registration

In re Bose Corp. 

580 F.3d 1240 (Fed. Cir. 2009) 

• An honest misunderstanding or inadvertence 

without a willful intent to deceive cannot 

amount to fraud 

• “Mere negligence” or “Gross negligence” 

insufficient 

• There must be a knowingly false, material 

representation with the intent to deceive the 

PTO

John Welch’s Fraud-O-Meter

Supreme Court GlobalTech Case 

(2011) 

• Given the long history of willful blindness and its 

wide acceptance in the Federal Judiciary, we can see 

no reason why the doctrine should not apply in civil 

lawsuits. 

• One who is willfully blind “can almost be said to have 

actually known” the facts. 

• The “traditional rationale for [the willful blindness] 

doctrine is that defendants who behave in this 

manner are just as culpable as those who have actual 

knowledge.”

11 th Circuit Sovereign Military Case 

(2012) 

• Fraud found in district court; reversed on appeal 

• Dicta: the Global-Tech willful blindness standard 

should not be applied in trademark fraud cases 

• The fraud claim involved the initial application oath 

• The person who signed the oath was personally 

unaware of the facts allegedly rendering the 

statement inaccurate 

• Significant questions regarding whether or not the 

allegedly false statement could be considered false, 

even if the signatory had been made personally 

aware of the facts

Typical Sworn Statements 

• The applicant believes it owns the mark 

– Verification for all applications 

• The mark is in use in commerce 

– Use-based application under § 1(a) 

– Statement of Use or Amendment to Allege Use for § 1(b) application 

• The applicant has a bona fide intent to 

use the mark in commerce 

– Application under §§ 1(b); 44(d); 44(e); 66 

– Extension of time to file statement of use under § 1(b) 

• The mark is in substantially exclusive use 

– § 2(f) Affidavit 

• The mark is still in use in commerce 

– § 8 Affidavit

Pay Attention to Language Used 

• Application Statement - qualified by “belief”: 

The affiant “believes the applicant to be the owner 

of the mark sought to be registered” and “to the best 

of his/her knowledge and belief no other person… 

has the right to use the mark in commerce [in a 

manner likely to cause confusion]” 

• Section 2(f) statement - not so qualified: 

The mark has become distinctive of the goods and/or 

services through applicant’s substantially exclusive 

and continuous use in commerce for at least the five 

years immediately before the date of this statement.

Wording of Declaration in Either Case

Jonathan Sobel 

Covenants Not to Sue

ALREADY V. NIKE: 

U.S. Supreme Court Upholds Finding of 

Mootness of Trademark Invalidity 

Counterclaim, Because Covenant Not 

To Sue Was Sufficiently Broad 

Jonathan M. Sobel 

May 21, 2013 

SOBEL & FELLER LLP 

305 Madison Avenue, Suite 1420 

New York, NY 10165 

(212) 308-0600 

www.sobelfeller.com 

SOBEL & FELLER LLP | www.sobelfeller.com 64

Already v. Nike – Background of Case 

– Nike sued Already for trademark infringement based on sale of 

Already’s “Sugars” and “Soulja Boys” sneakers 

– Nike alleged infringement of its “Air Force 1” mark 

SOBEL & FELLER LLP | www.sobelfeller.com 

65

Already v. Nike – Background of Case 

• Already filed DJ counterclaims: 

– Asserted that a stitching design did not function 

as a valid trademark 

– Sought to invalidate the registration 


66

Nike Issues Covenant Not to Sue 

• 4 months after c/c filed, Nike sent Already a 

written Covenant Not to Sue. 

• Covenant’s Whereas clause: 

– “Nike has recently learned that Already’s actions 

complained of in the Complaint no longer infringe 

or dilute the Nike [Air Force 1] Mark at a level 

sufficient to warrant the substantial time and 

expense of continued litigation and Nike wishes to 

conserve resources relating to its enforcement of 

the Nike Mark.” 


67

Nike Issues Covenant Not to Sue 

• Terms of Covenant specified that Nike would not sue 

specific parties for a defined set of products. 

• Nike covenants not to 

– Sue Already or any of its affiliated entities, distributors, or their 

customers … 

– …for infringement or related claims “relating to the Nike Mark 

based on the appearance of any of Already’s current and/or 

previous footwear product designs, and any colorable imitations 

thereof, regardless of whether [made, sold or distributed before 

or after the date of the Covenant]” 


68

Nike Argued DJ Jurisdiction No Longer Existed, 

and Won Below and On Appeal 

• District Court dismissed DJ counterclaims without prejudice 

and found Already no longer had DJ jurisdiction 

• Factors considered by District Court: 

– Broad covenant – encompassing future colorable imitations, and 

past and future sales 

– No evidence that Already was developing any shoes covered by 

the covenant 

• 2d Circuit Affirmed applying the same reasoning: 

– “[I]t is hard to imagine a scenario that would potentially infringe 

[the Air Force 1 mark] and yet not fall under the Covenant.” 


69

Supreme Court Affirmed – Applied 

Voluntary Cessation Doctrine 

• The Voluntary Cessation doctrine was taken from an environmental law case 

in which a defendant in a Clean Water Act suit argued that its shutdown of a 

waste processing facility and start of compliance efforts mooted the case. 

• In Nike, the Supreme Court raised the concern that a defendant might engage 

in unlawful conduct, then stop that conduct after being sued and assert the 

claim is moot, only to restart the conduct thereafter. Applying the Voluntary 

Cessation doctrine, the Court held that “a defendant claiming that its 

voluntary compliance moots a case bears the formidable burden of showing 

that it is absolutely clear the allegedly wrongful behavior could not reasonably 

be expected to recur.” (Quoting Friends of the Earth, Inc. v. Laidlaw Envtl. 

Services (TOC), Inc., 528 U.S. 167, 190 (2000), emphasis added.) 

• Thus, Nike -- the DJ defendant -- had the burden of proving it could not 

reasonably be expected to resume enforcing its Air Force 1 trademark against 

Already. 


70

Nike Met the Voluntary Cessation 

Standard with its Broad Covenant 

• Nike’s covenant sufficiently met the “could not reasonably be 

expected to recur” burden because it was sufficiently broad: 

– unconditional and irrevocable; 

– prohibited Nike from making any claim or demand; 

– covered both Already and its distributors and customers 

– covered not just Already’s current and previous footwear designs, 

but also colorable imitations thereof. 

• Also key: Already had not identified any plans to make a shoe 

that would not be covered by the Covenant. Even during 

argument, and it could not identify any such plans. 

• Thus, no DJ jurisdiction; case is moot. 

• Already, LLC dba YUMS v. Nike, Inc., No. 11-982 

(U.S. Sup. Ct. Jan. 9, 2013, ) 


71

Implications for Future 

Trademark Plaintiffs 

• Pros: requirements for the covenant are spelled out; 

meet them and the covenant should be sufficient to 

defeat DJ jurisdiction 

• Cons: 

– Risk of diluting the trademark by granting a license to use 

the mark 

– Risk sending message to other companies that the mark 

will not be vigorously enforced 

– Possible side litigation over what is in the product pipeline 

[See Justice Dyk dissent] 


72

Implications in the Patent Area 

• Issue is a common one 

• Query whether colorable imitations needs to be recited now 

• Super Sack - 57 F.3d 1054 (Fed. Cir. 1995) – pre-Medimmune: no DJ 

jurisdiction where covenant applied to just the products currently 

manufactured and sold. 

• Note Benitec v. Nucleonics – 495 F.3d 1340 (Fed. Cir. 2007) – no DJ 

jurisdiction because no current infringement under the research 

exception, even thought the prospect of future infringing product was 

foreseeable; strong dissent by Judge Dyk, arguing failure to apply 

voluntary cessation standard (i.e., patentee must demonstrate there is no 

possibility of future controversy with respect to invalidity). 


73

Questions and Comments? 


74

For more information, 

please contact us or visit our website 

Sobel & Feller LLP 

305 Madison Ave., Suite 1420 

New York, NY 10165 

(212) 308-0600 

www.sobelfeller.com 

Jonathan M. Sobel 

jmsobel@sobelfeller.com 


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Survival of the Presumption of Irreparable Harm - NYIPLA

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