In today’s globalized world, strong bull markets on the home front simply aren’t enough if you wish to turn your company into a true Unicorn. Branching out into the world is a task that requires understanding and respect for different cultures and their laws. Failing to take such nuances into account may not only turn potential clients and customers off, it can also be the source of other, more...
Interim injunctions in e-commerce and how to react
An online shop without appealing photos and item descriptions is unimaginable these days. They’re a major part of the e-commerce battle for the best market position – which leads to some providers focusing too heavily on their competition. This can quickly lead to photo theft or other types of legal violations. To recognize this in time, you should regularly take a look at the competition and what they’re up to. Legal violations on the internet have been around for long enough to work their way into law, so if you find any, you can issue an out-of-court warning. If that’s not successful, you can quickly request the interim injunction. But what exactly is an interim injunction, and which criteria does your request need to fulfill to obtain one? If the roles are reversed and you’re on the receiving end of an interim injunction, how should you react?
- Aim and object of an interim injunction
- Criteria for an interim injunction
- “Forum shopping” in e-commerce
- You receive an interim injunction: expiration and reaction possibilities
Aim and object of an interim injunction
An interim injunction, also referred to as a preliminary or interlocutory injunction, is a provisional form of legal protection that takes place before any actual trial proceedings. This means that you don’t have to wait for a lengthy court trial to be able to make your legal claim. State courts set forth their own criteria for the issuance of an injunction, but the federal court criteria are as follows:
- Irreparable harm
- Likeliness of success
- Balance of harms
- Public interest
In e-commerce in particular, the interim injunction procedure is an effective means of rapidly counteracting possible infringements. As soon as you discover a violation, you should act as quickly as possible. Doing so will also help you to fulfill the main criteria to prove the necessity of your injunction, and as a result will make your case stronger. Be careful, though, to make sure that you do indeed have a case – if the later trial rules that the injunction was unnecessary, the party bringing the suit will be liable for monetary damages.
In the case of an interim injunction, the relief only applies to those who have received direct notice. Make sure that you properly notify any parties who you want to be affected by the order.
Criteria for an interim injunction
When applying for an interim injunction, the specific criteria and process will vary based on the state in which you’re requesting the legislation. As a general requirement, though, the application must be a standalone document containing very detailed information about the nature of the injunction, and specifically phrased to outline exactly what conduct is being prohibited, the reasons for its issuance, and any other necessary information. The duration of the injunction must also be clearly stated. This is usually until the date when the case is considered by a court.
A comprehensive example for the application of an injunction is provided by the Apple v Samsung case, which concerned anti-competition violations in an estimate evaluation of 2,000,000 dollars.
Claim for injunctive relief
By nature, an injunction is merely a temporary measure set in place to save time or spare a claim from harm before a trial can take place. Any claim for injunctive relief must be supported by full evidence, including disclosure of all facts – not only those directly relevant to or in support of the claimant’s case. Following the duty of disclosure, if an interim injunction is granted then the claimant must agree to notify the defendant as soon as possible. Failing to notify the subject of the injunction will result in failure of the injunction itself and the nullification of its validity. Interim injunctions generally equate to a cease and desist order, which prevents further damage to the claimant. Any further claims, such as damages claims, will be decided in the subsequent main court proceedings.
Grounds for injunction
As mentioned earlier, there are four basic grounds for the issuance of an interim injunction. The claimant has to satisfy all four criteria before an injunction will be granted: likelihood of success, potential for irreparable harm, balance of harm, and considerations of public policy.
- Likelihood of success: Based on the merits of the case, it is likely that it will go on to win at trial. This means that when applying for an injunction, you should be prepared with all required evidence to prove your claim that the activity you’re looking to block would in fact go against the law or cause unlawful harm to your business.
- Irreparable harm: Arguably the most difficult grounds to prove, the potential for irreparable harm in the absence of an injunction may or may not presumed. Instead, all evidence must be presented to and considered by the court, and many courts tend to conclude that monetary compensation would be enough to make the claimant whole again. Strong arguments to prove irreparable harm include the disclosure of trade secrets, the permanent loss of market shares, or the threat of physical injury without an injunction (unlikely in e-commerce cases, but still a factor to consider). To prove irreparable harm, you must also be prepared to prove that other remedies would be inadequate – for example, monetary damages. This is especially applicable if there is a question of how capable the defendant is of paying the proposed monetary damages. The nature of your business is also considered when determining irreparable harm. If you have previously been unwilling to license or have failed to commercialize, your argument will be weakened.
- Balance of harms: The grounds of harm weights the possible harm to the claimant if the injunction is not issued versus the possible harm to the defendant if the injunction is issued. This takes into consideration the possible loss of business and/or money that the defendant could suffer if forced to abandon certain activities or campaigns. These harms will be balanced and ruled upon by a judge when considering the issuance of an interim injunction.
- Public policy: A difficult requirement to describe, the consideration of public policy is different for each case and will be considered differently depending on the available facts. For example, it could be found that some detail present in the case is in violation of a public policy and therefore subject to immediate injunction. If there are no significant public policy considerations that are applicable to the case, then the decision to issue an injunction will be made only based on the other three grounds.
How can the court respond to your request?
When an application for injunction is submitted, the decision is usually made in court during a hearing with all parties present. Most courts will consider cases based on minimal comprehension of facts and witnesses, though judges can call for a more thorough hearing if they feel that they have reason to doubt your claims. The scope of the injunction following the court’s decision depends on which court and which federal court district the injunction was issued from – generally, for the application of an injunction beyond the state of its issuance, you must go through a federal court in the corresponding jurisdiction.
“Forum shopping” in e-commerce
The term “forum shopping” refers to the choice of court, judge, or jurisdiction in favor of the plaintiff. Generally, the case is brought in the district where the infringement was committed. But with e-commerce, it means that violations can be committed virtually anywhere within the reach of the internet. In theory, they fall under the jurisdiction of every federal court – although, as previously mentioned, this isn’t usually how the order is applied. As a result, the claimant can apply for an interim injunction in a number of different courts and therefore choose one that will help them gain an advantage over the defendant. For example, some courts require less burden of proof or have more lenient precedent with certain types of injunction cases. Past judgments on similar cases can give the claimant an indication of their chances of success, as well as considerably influence the court’s decision. It’s common practice for lawyers to file an application with several courts at the same time in order to achieve the best possible chances of winning.
Despite its legal validity, “forum shopping” is highly controversial in terms of fairness and ethics. The opponent of the application could find themselves at a clear disadvantage in this respect, in addition to the potential burden of considerable travel times or expenses.
You receive an interim injunction: expiration and reaction possibilities
Let’s turn the tables: You’ve received an interim injunction and are charged with a violation for your e-commerce. You could be faced with considerable losses. How should you react in this situation? What legal steps must you take to defend yourself in the event of an unlawful injunction? Are there any ways to have an injunction annulled?
Step 1: Accepting the restraining order
You are required to comply with the interim injunction as soon as it has been served to you. Whether or not the applicant’s claims are justified in your opinion is not yet decided at this phase. The expedited procedure is used to obtain a preliminary court order usually without oral proceedings. However, if you’re concerned about a restraining order, you can rest slightly easier with the guarantee that any injunction found to be wrongly issued will be compensated by monetary damages from the claimant.
Failure to comply with a court ordered injunction is a very serious offense. Regardless of whether or not you agree with it, violation of an injunction could result in jail time or monetary fines and should be avoided at all costs.
Step 2: Prepare evidence
If you believe that the injunction filed against you is unjustified, it is now your responsibility to gather as much evidence as you can to prove in court that the issuance was unnecessary. Remember that to receive the injunction, the claimant had to prove that their business would be irreparably harmed by your activities. It may also be helpful to review the precedent of the court where you will be making your argument.
Step 3: Main proceedings or suspension of the preliminary injunction
If the main proceedings are initiated, the case will be examined in the context of a civil proceeding. If the applicant decides against a court case or if the circumstances have changed, you can apply to suspend the injunction. If the interim injunction proves to be unjustified and has been issued unnecessarily, you have the right to monetary compensation. The claimant will be required to reimburse you for all costs incurred as result of the prohibition, including court costs. After the judgement, there is still an opportunity to appeal – although there is no standing Court of Appeals precedent.