Challenging Overbroad Injunctions in Federal Counterfeiting Cases

Challenging Overbroad Injunctions in Federal Counterfeiting Cases

Counterfeiting is a huge problem that costs U.S. businesses billions of dollars every year. Trademark owners have been taking aggressive legal action against counterfeiters under the Lanham Act. However, some of these injunctions have been overbroad and unfairly restrict lawful competition.

Background on Trademark Counterfeiting Litigation

The Lanham Act, which was amended in 1984, contains strong protections against trademark counterfeiting [1]. Trademark owners can sue counterfeiters for statutory damages up to $2 million per registered mark. They can also readily obtain preliminary and permanent injunctions to stop the counterfeiting activity.

Trademark owners often proceed ex parte to prevent the counterfeiters from hiding evidence. Ex parte seizures allow the trademark owner to seize counterfeit goods and related documents without notice to the defendant [1]. However, the Supreme Court has held that ex parte seizures implicate due process rights and must be narrowly tailored [2].

While counterfeiting litigation can be expensive, it helps protect a company’s reputation and preserve the value of its trademarks. For luxury brands, it maintains the prestige associated with their goods [1].

Overbroad Injunctions

In some cases, trademark owners have obtained injunctions that are overbroad and restrict lawful competition. For example, an injunction may cover products or geographic areas where no counterfeiting was shown. Or it may bar activities that are not infringing.

Overbroad injunctions can happen for several reasons:

• Trademark owners draft aggressive proposed orders that go beyond the scope of the counterfeiting activity.
• Courts rely too heavily on plaintiffs’ proposed orders without close scrutiny.
• There is limited adversarial briefing because many counterfeiting cases end in default judgments or consent decrees.

Defendants may not fully understand the terms of an injunction until they are threatened with contempt. This poses due process concerns. Defendants may also fear challenging an overbroad injunction, even on appeal, for fear of angering the court.

Challenging Overbroad Injunctions

There are several ways defendants can challenge an overbroad injunction:

1. Motion to Modify the Injunction. File a motion asking the court to modify the injunction to properly tailor its scope. Point out the specific overbroad provisions. Explain how they restrict lawful conduct and impair competition beyond what is necessary to protect the trademark owner. Provide proposed modifications to the injunction language.
2. Motion to Clarify. If an injunction is vague or ambiguous, file a motion to clarify its terms. Ask the court to explain what specific conduct is prohibited and permitted. An unclear injunction can function as an overbroad restriction if people avoid broad swaths of lawful conduct out of confusion.
3. Appeal. File an appeal challenging the overbroad aspects of the injunction. On appeal, overbreadth is reviewed de novo as a question of law [4]. Appeal immediately after the overbroad injunction is entered, don’t wait until after a contempt order.
4. Collateral Attack. During contempt proceedings for violating the injunction, challenge the validity of the overbroad aspects of the injunction. Argue it exceeds the court’s authority and cannot support a contempt finding.
5. Declaratory Judgment. Seek a declaratory judgment that specific conduct does not violate the injunction. This provides judicial clarification without risking contempt sanctions.

When challenging overbreadth, focus on the harm to lawful competition. Courts are very receptive to fair competition arguments. Emphasize that the Lanham Act balances trademark rights against restraints on commerce.

Also highlight any constitutional concerns, such as restrictions on commercial speech. Courts scrutinize injunctions that implicate constitutional rights.

Conclusion

Trademark counterfeiting causes tremendous harm, and trademark owners should have strong remedies. However, some injunctions have restricted lawful competition beyond what the law allows. Courts must strike the right balance between protecting trademarks and preserving free commerce.

Defendants have several options to challenge overbroad injunctions. The goal is not to allow counterfeiting, but to ensure injunctions are properly tailored. With vigilance against overbreadth, civil counterfeiting cases can achieve justice for both trademark owners and lawful competitors.