Top 10 Issues To Consider When You Are Sued: Issue #6: Best Practices for Responding to Requests for Immediate Injunctive Relief
The average case litigated to trial in the largest federal circuit, the Ninth, takes almost two years to get there.1 Many state systems are even slower. But there are many situations where a party seeks more immediate relief to protect alleged rights, such as in intellectual property or other valuable business interests, pending final disposition. If such relief is granted, the long road to final resolution becomes a boon to the plaintiff rather than the defendant, and often the interim relief is a final "KO." For example, a preliminary injunction to enforce a yearlong non-competition agreement will often be all the relief the plaintiff could expect to get. And the practical leverage that a preliminary injunction gives the plaintiff can be significant. The plaintiff might not even have been able to sustain the cost of full litigation, but the defendant is forced to compromise because the provisional relief is so disruptive of business plans.
Two recent preliminary injunctions demonstrate the potential usefulness of these procedural tools:
In August, Bristol-Myers Squibb, which distributes the anticoagulant drug known as Plavix within the United States, persuaded a New York federal court to enjoin a Canadian company from further shipments of a generic version of the drug pending a full hearing on the merits.
- In a trademark decision issued in September, a federal judge in San Diego enjoined a band formed for a CBS reality show called "Rock Star: Supernova" from using just "Supernova" as its name, favoring a band that had been performing under the name "Supernova" since 1989.
When a party requests immediate injunctive relief, the stakes are high, and the pace of litigation intensifies dramatically. The plaintiff always has more advance notice and time to prepare than the defendant. This client update describes some basic steps for the defendant to try to level the playing field.
What Are the Plaintiff's Early Options?
An injunction is simply a court order prohibiting a party from a specific course of action. There are two types of early injunctions, classified in terms of their duration.
Preliminary Injunction. A preliminary injunction is a provisional remedy that binds the conduct of the defendant pending the final outcome of the case.It may be issued only after a hearing that is often a "mini-trial."
Temporary Restraining Order. A TRO is a more immediate form of preliminary injunctive relief that may be entered with only minimal and sometimes no advance notice to the defendant. It is accompanied by a request for a preliminary injunction and serves to preserve the status quo pending the more comprehensive hearing on the motion for a preliminary injunction,2 which generally must be set within a certain time period (e.g., 10 days from entry of the TRO in federal court and somewhat longer in many state courts). A court that grants a TRO will often order expedited discovery so that the parties can quickly develop evidence for the preliminary injunction hearing.
What Are the Procedures for Obtaining an Injunction?
To obtain provisional injunctive relief, the plaintiff generally must show that it has a likelihood of ultimately succeeding on the merits of its claims and that it will suffer irreparable harm if the defendant's conduct is not enjoined pending final resolution. In many cases, the plaintiff files the TRO motion with the complaint. TROs can be dangerous because the plaintiff is not always required to give advance notice to the defendant, particularly in some state courts or where the plaintiff can show that it will suffer grave harm if it has to wait to give notice or where the defendant may, after receiving notice, take certain action before the court can act.
The plaintiff most likely will act promptly, but will still have more advance preparation time than the defendant. The plaintiff will have chosen the venue,3 determined whether preliminary injunction hearings in the jurisdiction typically involve live testimony, and prepared declarations and exhibits to satisfy the basic standard for provisional relief (likelihood of success on the merits and irreparable injury to the plaintiff).
Important Steps for Opposing Injunctive Relief.
Because courts can issue TROs with little or no notice to the other side, it is imperative to act quickly, if possible, even before receiving formal notice. Employees involved in sensitive activities—such as hiring from competitors, evaluating new product ideas and rolling out new products—should be counseled to observe indications of potential litigation. Sometimes the risk of litigation will, or should, be part of the analysis of the possible business course of action. If the risk is high enough, preparation for the litigation will proceed along with preparation for the business activity.
- "Cease and desist" letters must be immediately transmitted to litigation counsel and carefully analyzed.
- Actions a defendant can take in advance of formal notice include: compiling evidence and preparing declarations and exhibits; identifying travel plans and obtaining emergency contact information for critical company witnesses and decisionmakers; and considering the advisability of an affirmative claim or a declaratory judgment action to try to control the schedule or venue.
- In jurisdictions where TROs can issue without notice, it might be worthwhile to monitor the court, commissioner or judge most likely to be approached, especially if the timing of the likely request is reasonably narrow.
- If a TRO is issued without notice, the defendant will need to decide whether to go back to the court to ask that the TRO be vacated, clarified or modified, or whether to simply prepare for the preliminary injunction hearing. Part of that consideration will include whether the TRO language is careful and its limits understandable, whether the bond was sufficient and whether the justification for lack of notice was plausible.
- If given notice, a party sometimes can avoid a TRO or even a preliminary injunction by informally agreeing to certain restrictions on its conduct until the parties are able to more fully discuss or litigate the issues. (The plaintiff should agree not to use such restrictions for any purpose in the litigation, such as to suggest an acknowledgment of liability or a lack of hardship.) For example, a company may agree not to send a newly hired salesperson to call on customers of the former employer until a particular date or event. If the plaintiff agrees, the defendant will have additional time to prepare its case. If the plaintiff refuses, the defendant might be able to argue to the court evaluating the plaintiff's request for relief that the request is overreaching and seeks an unfair advantage.
- A decision to be made immediately after receiving notice of a TRO application in state court is whether to remove to federal court, if there is a basis for removal. Federal courts generally are more careful and deliberate about issuing TROs and preliminary injunctions.
- No matter how short the notice, it is essential to get counsel to the court to oppose the application and to inform the court of the injury the defendant will suffer if the TRO is issued. If litigation counsel is unavailable for some reason, even a non-lawyer should attend and ask for additional time for counsel to appear (but should not make any factual statements). Even unprepared counsel is better than nothing because knowledge of the underlying dispute is not necessary to object to unusually short notice or to seek a larger bond,4 expedited discovery or an earlier hearing date for the preliminary injunction.
- With either a TRO or preliminary injunction, it is critical to resist vague or broad language that says, in effect, "obey the law." Courts often find it easy to enjoin a company from "violating the plaintiff's copyright," or from "using the plaintiff's trade secrets,"on the theory that no defendant could claim harm from merely being required to respect the plaintiff's rights and obey the law. But such language can place a defendant in a difficult position when the nature of the plaintiff's rights is precisely what is unsettled. Moreover, because injunctions must be specific in order to be enforceable, the defendant can ask the court to clarify the injunction so that it fully understands what behavior is being prohibited and are less likely to inadvertently violate the injunction.
- Once a TRO or preliminary injunction is issued, the defendant must be sure that the appropriate employees and business affiliates understand the limitations on their freedom to operate. Violating a TRO, for example, will not only have direct consequences on the defendant but may seriously injure the defendant's credibility with the court when it considers the issue of the preliminary injunction.
- Because of the importance of the preliminary injunction hearing, there is an incredible amount of work that must be accomplished before the defendant walks into court. Responsibilities must be assigned early on in the preparation, and a plan for formal and informal discovery must be immediately developed. The effort should encompass not just the traditional elements—likelihood of success on the merits, irreparable injury to the parties and the appropriate bond—but the defendant also should examine whether there are defenses, like "unclean hands," that may be raised.
- And while it is imperative to focus on offensive discovery, it is equally important to ensure that the defendant's witnesses are adequately prepared and that document production is appropriate. Poor testimony or admissions in the preliminary injunction phase will be used against the defendant throughout the case. Inadvertent failure to produce and even the accidental destruction of requested documents pose significant risks to the defendant.
- The defendant should consider whether to ask that the case be expedited to such an extent that the preliminary injunction hearing is converted to the final trial on the merits of the request for permanent injunctive relief. This will usually require agreement to some form of preliminary injunction or at least continuation of the TRO. If the plaintiff's claim of irreparable injury is strong as compared to the ultimate case on the merits, this might be the best way to shorten the time that the defendant's business activities are compromised by the injunction.
- Because interlocutory appeals are generally available if preliminary injunctive relief is granted, the opposition effort should be sure to preserve all legal and procedural arguments.
 See http://www.uscourts.gov/judbus2005/appendices/c5.pdf. The Ninth Circuit covers federal courts located in Arizona, California, Nevada, Washington, Oregon, Alaska, Idaho, Hawaii and Montana. The time to trial is the same length in the Seventh Circuit, which covers Illinois, Indiana and Wisconsin.
 Some state courts entering TROs issue an "order to show cause," which shifts to the defendant the burden of showing why the TRO should not be converted to a preliminary injunction.
 A number of services now exist, particularly for federal courts, that have compiled or can be used to examine the historic success rate on preliminary injunctions in certain types of cases, such as patent or trademark, in specific venues.
 In federal and most state courts, as a condition of issuing an injunction, the court generally requires that the plaintiff who requests the injunction post a bond sufficient to cover the damages likely to be suffered by the opposing party whose conduct is governed by the injunction if the court later determines that the initial injunction should not have been issued.