Flexible Lifeline Systems, Inc v. Precision Lift, Inc., et al
Filing
FILED PER CURIAM OPINION (MARY M. SCHROEDER, M. MARGARET MCKEOWN and CONSUELO M. CALLAHAN) VACATED; REMANDED. FILED AND ENTERED JUDGMENT. [7865210]
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FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
FLEXIBLE LIFELINE SYSTEMS, INC.,
Plaintiff-counter-claim-defendantAppellee,
v.
PRECISION LIFT, INC.; JOHN
TOLLENAERE,
Defendants-counter-claimantsAppellants.
No. 10-35987
D.C. No.
6:10-cv-00044DWM
OPINION
Appeal from the United States District Court
for the District of Montana
Donald W. Molloy, District Judge, Presiding
Argued and Submitted
May 5, 2011—Seattle, Washington
Filed August 22, 2011
Before: Mary M. Schroeder, M. Margaret McKeown, and
Consuelo M. Callahan, Circuit Judges.
Per Curiam Opinion
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FLEXIBLE LIFELINE SYSTEMS v. PRECISION LIFT
COUNSEL
Robert L. Sterup, Shane P. Coleman, and Michael P. Manning
(argued), Holland & Hart LLP, Billings, Montana, for the
defendants-appellants.
Lisa H. Meyerhoff (argued), Myall S. Hawkins, Baker &
McKenzie LLP, Houston Texas; Jean E. Faure, Jason T.
Holden, Faure Holden Attorneys At Law, Great Falls, Montana, for the plaintiff-appellee.
OPINION
PER CURIAM:
Defendants-appellants John Tollenaere and Precision Lift,
Inc. (collectively “Precision”) appeal from the district court’s
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grant of a preliminary injunction against them in an action for
copyright infringement by plaintiff-appellee Flexible Lifeline
Systems, Inc. (“Flexible”). The district court found that Flexible was likely to succeed in its infringement suit, and granted
the injunction relying on long-standing precedent of this circuit that presumes irreparable harm in a copyright infringement case upon a showing of likelihood of success on the
merits. Precision appeals, claiming that such a presumption
runs afoul of two recent Supreme Court decisions, eBay Inc.
v. MercExchange, L.L.C., 547 U.S. 388 (2006) and Winter v.
Natural Resources Defense Council, Inc., 555 U.S. 7 (2008).
We agree, and therefore vacate the injunction and remand.
BACKGROUND
John Tollenaere formed Precision in the 1990s to market a
helicopter rescue lift product he had patented. In or around
2000, Precision expanded its business to include sales of aircraft maintenance stands and platforms for fixed- and rotorwing aircraft.1 Precision did not manufacture any of its own
stands or platforms. Rather, Precision sold stands or platforms
manufactured by others, even though it claims that it also had
the ability to independently design aircraft maintenance
stands. In early 2001, Precision again sought to increase its
business and became the sole distributor for aircraft maintenance stands designed and manufactured by West Coast Weld
Tech, Inc. (“West Coast”).
West Coast allowed Precision to use the technical drawings
of the stands manufactured by West Coast in order for Preci1
Maintenance stands and platforms are used by aircraft maintenance
personnel to stand on when working on aircraft. They provide greater stability and an easier base from which to work than a ladder. Due to the varied size and shape of different aircraft, maintenance stands come in a
variety of sizes, shapes, and configurations. In addition, while there are
generic stands available, stands and platforms are sometimes specifically
designed to fit a particular aircraft. This dispute involves stands and platforms specifically designed for a particular aircraft.
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sion to market the stands, but West Coast always claimed
ownership of the drawings.2 All of the drawings at issue were
stamped by West Coast as its confidential and proprietary
information. West Coast never transferred or sold ownership
of the drawings, or any of its intellectual property, to Precision. Precision never challenged West Coast’s ownership or
otherwise indicated that Precision believed it had any ownership interest in the drawings. In fact, in addition to the “confidential and proprietary information” stamp West Coast used
on all of its drawings, at one point Precision requested that
West Coast add a watermark across the face of the drawings
that said, “Property of West Coast Weld Tech” to more
clearly identify the drawings as West Coast’s property.
In July of 2008, Precision and West Coast entered into a
joint venture to compete for a United States Air Force contract to manufacture and sell maintenance stands for C-130
Hercules aircraft. Under this arrangement, West Coast was
responsible for designing and manufacturing the stands, and
Precision was responsible for submitting the bid to the government and handling the bid process. Rather than a single
maintenance stand, the government requested bids for a wraparound maintenance platform comprised of several stands for
use during extensive aircraft inspections.
West Coast included provisions to protect its ownership of
intellectual property in the Joint Venture Agreement (“JVA”).
First, the JVA expressly provides that each party acknowledges the need to disclose its confidential and proprietary
information to the other for the purposes of the venture. Second, the JVA contains an agreement that each party will not
disclose the confidential and proprietary information of the
other party to anyone else, except to the government, and
even then only as necessary to complete their duties in per2
As will be shown, Flexible is the plaintiff here because West Coast
sold its assets, including the rights to the drawings at issue, to Flexible in
2009.
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forming the venture. Third, the JVA expressly requires each
party to promptly return the other party’s confidential and
proprietary information upon termination of the venture or at
the request of the other party.
The parties dispute Precision’s role in the actual design of
the maintenance platforms and the creation of the drawings.
Precision contends it assisted in the design of custom, wraparound stands, and claims that it owns, or at least co-owns, the
drawings as a result of its part in their creation. Primarily,
Precision claims that its employees assisted in the design process (and thus presumably had a role in creation of the design
drawings) by going to on-site visits with West Coast engineers and employees to understand the customer’s requirements.
Flexible disagrees, countering that Precision did not contribute to the design and could not have done so because it
employed no engineers and did not have manufacturing or
design capabilities. West Coast, on the other hand, employed
an engineer and two draftsmen, and Flexible contends that
West Coast alone designed the maintenance stands and created the drawings at issue here. Moreover, the JVA specified
that West Coast was responsible for all engineering, technical
design work, and manufacturing, while Precision was responsible for completing the bid proposal and dealing with the
government during the bid process.
In July 2008, Precision submitted the initial proposal for
the Air Force C-130 platform, which, as required, included
the initial drawings. These drawings had to be submitted for
evaluation and revisions prior to submitting the final bid.
Thereafter, Precision communicated with the Air Force
regarding the proposal and West Coast continued its design
work on the stands, which included making revisions to the
design and technical drawings.
In 2009, West Coast encountered significant financial problems. Unable to continue operating on its own, West Coast
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sold the majority of its assets, including much of its intellectual property, to Flexible. In particular, the purchase agreement specified that “ALL drawings, details, production
schedules, etc. for design, construction and installation of
maintenance platforms for aircraft and land vehicles” were
included in the purchase. After the purchase, Flexible continued what had been West Coast’s work on the final C-130
drawings and forwarded them to the Air Force in December
2009. Meanwhile, Precision asked Flexible to discuss formalizing their continuing business relationship in light of Flexible’s purchase of West Coast’s assets.
On January 27, 2010, Flexible responded to Precision’s
requests to formalize their business relationship by advising
Precision that Flexible was not interested in continuing a joint
venture. Flexible presented Precision with alternate proposals,
including one by which Precision would become a sales agent
for Flexible’s products. Rather than proceed with either of
Flexible’s proposals, Precision found another joint venture
partner to take West Coast’s place in the C-130 maintenance
stand bid proposal. Precision joined with Carbis, one of Flexible’s competitors, and submitted a final bid for the project
totaling over $61 million. Flexible did not submit a bid of its
own for the proposal. The Air Force eventually awarded the
contract to another competitor at a contract price approximately $9.5 million higher than Precision’s bid, likely due to
the dispute between Precision and Flexible as to the ownership of the drawings. Precision protested the award, but the
Air Force ultimately denied the protest.
In the meantime, Flexible filed applications to register the
drawings it had purchased from West Coast, and the Copyright Office granted the registrations effective June 23, 2010.
Flexible then filed its complaint and an application for injunctive relief to enjoin Precision from using Flexible’s intellectual property on the C-130 bid. The district court denied the
motion for a temporary restraining order, but set a hearing on
the preliminary injunction. Prior to the hearing, Flexible filed
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an amended application for injunctive relief, expanding the
scope of the relief sought to include enjoining Precision from
using any of the drawings for maintenance stands for aircraft
other than the C-130. In both its application and supplemental
application, Flexible argued only that it was entitled to a presumption of irreparable harm and did not offer any evidence
of actual harm that it was likely to suffer in the absence of an
injunction. The district court held a hearing on the preliminary
injunction application on October 14 and 19, 2010. Following
the hearing, the court granted the injunction except as to the
use of the drawings for the C-130 bid.
The district court issued findings of fact and conclusions of
law in granting Flexible’s injunction application. It found that
the C-130 drawings at issue were created by West Coast
employees, and that West Coast gave Precision the drawings
to use for the C-130 contract proposal. The court also found
that: (1) the joint venture agreement required Precision to
return all of West Coast’s proprietary information upon the
termination of the agreement; (2) Flexible was likely to show
that Precision reproduced and used Flexible’s drawings without permission or license; and (3) Precision had distributed
copies of Flexible’s drawings without permission or license.
However, the court noted that Flexible “elicited no proof suggesting that it entered competing bids with contracts that Precision Lift, Inc. procured through the use of Flexible Lifeline
Systems, Inc.’s platform drawings.” On the other hand, it
observed that “[i]f a preliminary injunction is issued, Precision Lift, Inc. may lose existing or potential contracts.”
The district court’s conclusions of law included the following: (1) Flexible is likely to prove its drawings are copyrightable; (2) West Coast was the sole author and creator of the
drawings; (3) Flexible had valid copyrights in the drawings;
and (4) Flexible was likely to succeed on the merits of its
copyright infringement claim. The district court did not make
a finding on whether Flexible would be irreparably harmed
absent an injunction, but concluded that “[b]ecause Flexible
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Lifeline Systems, Inc. has shown a likelihood of success on
the merits, Flexible Lifeline Systems, Inc. is presumed to be
irreparably harmed.” The district court did not analyze the
issue of irreparable harm, but based on our precedent concluded “[w]hen a plaintiff is likely to succeed on the merits
of a copyright infringement claim, irreparable harm is presumed. Elvis Presley Enterprises, Inc. v. Passport Video, 349
F.3d 622, 627 (9th Cir. 2003).”
The court also found a “public . . . interest in the efficient
and economical performance of contracts,” but because of the
additional money the government would have to pay on the
C-130 contract, the public interest would not be served by
preventing Precision from using the drawings for that contract. The court concluded that Flexible was entitled to a preliminary injunction against Precision for the immediate return
of all intellectual property Precision had received from West
Coast, which was now owned by Flexible, and prohibited Precision from using such intellectual property other than in connection with the bid proposal on the Air Force C-130 contract.
Precision timely appealed the issuance of the preliminary
injunction. We have jurisdiction pursuant to 28 U.S.C.
§ 1292(a)(1).
DISCUSSION
I.
STANDARD OF REVIEW
A district court’s decision regarding preliminary injunctive
relief is subject to limited review. Harris v. Bd. of Supervisors, L.A. Cnty,, 366 F.3d 754, 760 (9th Cir. 2004) (review
“limited and deferential”) (internal quotation marks omitted);
Sw. Voter Registration Educ. Pro. v. Shelley, 344 F.3d 914,
918 (9th Cir. 2003) (en banc) (same). We will reverse only if
the district court has abused its discretion. Alliance for the
Wild Rockies v. Cottrell, 632 F.3d 1127, 1131 (9th Cir. 2011).
“The district court, however, ‘necessarily abuses its discretion
when it bases its decision on an erroneous legal standard or
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on clearly erroneous findings of fact.’ ” Earth Island Inst. v.
United States Forest Serv., 351 F.3d 1291, 1298 (9th Cir.
2003) (quoting Rucker v. Davis, 237 F.3d 1113, 1118 (9th
Cir. 2001) (en banc)). If “the district court is alleged to have
relied on an erroneous legal premise, we review the underlying issues of law de novo.” Id.
II.
STANDARD FOR PRELIMINARY INJUNCTIVE RELIEF
The Copyright Act provides that a court “may . . . grant
temporary and final injunctions on such terms as it may deem
reasonable to prevent or restrain infringement of a copyright.”
17 U.S.C. § 502(a). Thus, injunctive relief to prevent copyright infringement is available as an equitable remedy in the
court’s discretion. In order to obtain preliminary injunctive
relief, a plaintiff “must establish that he is likely to succeed
on the merits, that he is likely to suffer irreparable harm in the
absence of preliminary relief, that the balance of equities tips
in his favor, and that an injunction is in the public interest.”
Marlyn Nutraceuticals, Inc. v. Mucos Pharma GmbH & Co.,
571 F.3d 873, 877 (9th Cir. 2009) (quoting Winter, 555 U.S.
7, 129 S. Ct. 365, 374 (2008)). This is commonly referred to
as the “four-factor test.” See, e.g., Sierra Forest Legacy v.
Rey, 577 F.3d 1015, 1021 (9th Cir. 2009). Although Precision
also argues that the district court erred in finding Flexible
demonstrated a likelihood of success on the merits, the primary issue in this appeal is whether the district court used an
erroneous legal standard by presuming irreparable harm in
issuing injunctive relief.
A.
Presumption of Irreparable Harm
[1] We have long held that irreparable harm can be presumed in a copyright infringement case upon a showing of a
likelihood of success on the merits by the copyright owner.
Apple Computer, Inc. v. Formula Intern. Inc., 725 F.2d 521,
525 (9th Cir. 1984); see also Triad Sys. Corp. v. Se. Exp. Co.,
64 F.3d 1330, 1335 (9th Cir. 1995) (noting the general
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requirement of showing irreparable harm, but stating “[i]n a
copyright infringement action, however, the rules are somewhat different. A showing of a reasonable likelihood of success on the merits raises a presumption of irreparable harm.”).3
[2] Based on our precedent, the district court granted the
preliminary injunction after finding a likelihood of success on
the merits, without inquiring into whether Flexible would
actually suffer any irreparable harm absent relief. Instead, the
district court relied solely on the presumption of irreparable
harm, citing our 2003 decision Elvis Presley, 349 F.3d 622.
Precision objects, arguing that this circuit’s standard, as
expressed in Elvis Presley and relied upon by the district
court, has been effectively overruled by the Supreme Court.
According to Precision, after the Supreme Court’s eBay and
Winter decisions in 2006 and 2008, this circuit’s longstanding practice of presuming irreparable harm upon the
showing of likelihood of success on the merits in a copyright
infringement case is no longer good law. Precision is correct.
As we prophetically proclaimed in Elvis Presley that “[t]he
King is dead,”4 349 F.3d at 624, referring to Elvis Presley the
man, today we proclaim that the “King” is dead, referring to
Elvis Presley the case — to the extent it supported the use of
a presumption of irreparable harm in issuing injunctive relief.
3
We were not alone in presuming harm. Indeed, nearly thirty years ago
the prevailing view among the circuits was that “[a] copyright plaintiff
who [made] out a prima facie case of infringement [was] entitled to a preliminary injunction without a detailed showing of irreparable harm.” Apple
Computer, Inc. v. Franklin Computer Corp., 714 F.2d 1240, 1254 (3d Cir.
1983) (citing 3 Nimmer on Copyright § 14.06[A], at 14-50, 14-51 & n.16
(collecting authorities)).
4
See Elvis Presley, Wikipedia, http://en.wikipedia.org/wiki/Elvis_
Presley (last visited June 1, 2011) (explaining that Elvis Presley is “[a]
cultural icon, [ ] widely known by the single name Elvis [and] is often
referred to as the ‘King of Rock and Roll’ or simply ‘the King’ ”).
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1.
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eBay Inc. v. MercExchange, L.L.C.
In eBay, the Supreme Court reviewed a request for a permanent injunction after a jury found eBay had infringed
MercExchange’s patent. The district court refused to issue an
injunction notwithstanding the infringement, finding “that a
‘plaintiff ’s willingness to license its patents’ and its ‘lack of
commercial activity in practicing the patents’ would be sufficient to establish that the patent holder would not suffer irreparable harm.” eBay, 547 U.S. at 393 (quoting MercExchange,
L.L.C. v. eBay, Inc., 275 F. Supp. 2d 695, 712 (E.D. Va.
2003)). The Federal Circuit reversed the district court, “applying its ‘general rule that courts will issue permanent injunctions against patent infringement absent exceptional
circumstances.’ ” Id. at 391 (quoting MercExchange, L.L.C. v.
eBay, Inc., 401 F.3d 1323, 1339 (Fed. Cir. 2005)).
[3] The Supreme Court stated that the district court’s “categorical rule” regarding irreparable harm “cannot be squared
with the principles of equity adopted by Congress.” eBay, 547
U.S. at 393. However, by applying a “general rule,” the Federal Circuit had “departed in the opposite direction [as the district court] from the four-factor test.” Id. The Court explained
that “[j]ust as the district court erred in its categorical denial
of injunctive relief, the Court of Appeals erred in its categorical grant of such relief.” Id. at 394. The Court was very clear
that even where infringement had been proven, a plaintiff may
not be granted injunctive relief until he satisfies the fourfactor test, which includes demonstrating irreparable injury.
Id. (holding that because “neither court below correctly
applied the traditional four-factor framework that governs the
award of injunctive relief, we vacate the judgement of the
Court of Appeals, so that the District Court may apply that
framework in the first instance.”)
[4] Flexible tries to distinguish eBay on the grounds that
eBay involved patent infringement, not copyright infringement, and argues that the presumption remains valid for a
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copyright infringement case. However, the Court’s reasoning
in eBay cannot be so narrowly read. The Court based its conclusions on principles of equity, citing the Patent Act’s authorization to grant an injunction “in accordance with the
principles of equity.” Id. at 392. The Court made clear that
these principles apply equally to copyright infringement by
discussing the Copyright Act and drawing parallels between
patent and copyright protection throughout its analysis. It
explained that its “approach is consistent with our treatment
of injunctions under the Copyright Act,” id., and noted that
“[l]ike the Patent Act, the Copyright Act provides that courts
‘may’ grant injunctive relief ‘on such terms as it may deem
reasonable to prevent or restrain infringement of a copyright,’ ” id. (quoting 17 U.S.C. § 502(a)). The Court emphasized that it “has consistently rejected invitations to replace
traditional equitable considerations with a rule that an injunction automatically follows a determination that a copyright
has been infringed,” and based on its experience in copyright
cases, similarly rejected the invitation to adopt a categorical
rule in patent infringement cases. Id. at 392-93. Thus, under
eBay, a presumption of irreparable harm is equally improper
in a case based on copyright infringement as it is in a case
based on patent infringement.
[5] Nor does the fact that eBay concerned a permanent
injunction rather than a preliminary injunction sufficiently
distinguish the cases to result in a different outcome. The
Supreme Court has been more than clear on this point:
Finally, the Ninth Circuit distinguished [Weinberger
v. Romero-Barcelo, 456 U.S. 305 (1982)] on the
ground that the District Court in that case refused to
issue a permanent injunction after a trial on the merits whereas in this case the District Court denied preliminary injunctive relief. We fail to grasp the
significance of this distinction. The standard for a
preliminary injunction is essentially the same as for
a permanent injunction with the exception that the
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plaintiff must show a likelihood of success on the
merits rather than actual success.
Amoco Prod. Co. v. Gambell, 480 U.S. 531, 546 n.12 (1987).
Indeed, the eBay Court relied on a preliminary injunction case
in reaching its holding. 547 U.S. at 391 (citing Amoco, 480
U.S. at 542)). Thus, we conclude that eBay applies with equal
force to preliminary injunction cases as it does to permanent
injunction cases.
2.
Winter v. Natural Resources Defense Council, Inc.
If we harbored any doubts about the applicability of eBay
in the preliminary injunction context, they have been dispelled by the Supreme Court’s decision in Winter. In Winter,
the Supreme Court reaffirmed the equitable nature of the fourfactor framework and applied it to a case involving a preliminary injunction. The district court had issued an injunction
restricting the U.S. Navy’s ability to conduct war readiness
exercises off the coast of Southern California, and the Ninth
Circuit affirmed. Natural Res. Def. Council, Inc. v. Winter,
518 F.3d 658, 697 (9th Cir. 2008). We held that the district
court need only find a possibility of irreparable harm to issue
an injunction and rejected the Navy’s argument that any claim
of irreparable injury was merely speculative. Id.
[6] The Supreme Court reversed, holding that “the Ninth
Circuit’s ‘possibility’ standard is too lenient.” Winter, 555
U.S. at 22. The Court explained that its “frequently reiterated
standard requires plaintiffs seeking preliminary relief to demonstrate that irreparable injury is likely in the absence of an
injunction.” Id. (emphasis original). The Court clarified that
“[i]ssuing a preliminary injunction based only on a possibility
of irreparable harm is inconsistent with our characterization of
injunctive relief as an extraordinary remedy that may only be
awarded upon a clear showing that the plaintiff is entitled to
such relief.” Id. Thus, Winter reaffirms the principles relied
upon in eBay: a plaintiff must satisfy the four-factor test in
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order to obtain equitable injunctive relief, even if that relief
is preliminary. The Court cautioned that
[a] preliminary injunction is an extraordinary remedy
never awarded as of right. In each case, courts must
balance the competing claims of injury and must
consider the effect on each party of the granting or
withholding of the requested relief. In exercising
their sound discretion, courts of equity should pay
particular regard for the public consequences in
employing the extraordinary remedy of injunction.
Id. at 24 (quotation marks and citations omitted) (emphasis
added). If our past standard, which required a plaintiff to demonstrate at least a possibility of irreparable harm, is “too
lenient,” then surely a standard which presumes irreparable
harm without requiring any showing at all is also “too
lenient.”
B.
The Ninth Circuit After eBay and Winter
[7] Flexible contends that the presumption of irreparable
harm in a copyright infringement preliminary injunction case
survives the Supreme Court’s opinions in eBay and Winter.
Flexible’s primary argument for the continued viability of the
presumption is that this Circuit reaffirmed the presumption of
irreparable harm in Marlyn, in which we reviewed a preliminary injunction issued in an analogous trademark infringement case. There we quoted the proper four-factor test in
Winter and affirmed after stating “[t]he district court properly
considered each of these factors.” Marlyn, 571 F.3d at 877.
The district court there, like the district court here, rested on
a presumption of irreparable harm rather than finding that
such harm was likely. Id. Flexible contends that our affirmation of the district court in Marlyn is an affirmation of the
continuing vitality of the presumption of irreparable harm in
intellectual property infringement cases.
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[8] We do not agree. Marlyn contains no analysis concerning the use of the presumption of irreparable harm postWinter. In fact, there is no indication that the parties briefed
the issue of whether our long-standing presumption of harm
survived after eBay or Winter. The entire discussion of irreparable harm in Marlyn reads:
In evaluating irreparable harm, the court cited Ninth
Circuit law holding that “[i]n a trademark infringement claim, ‘irreparable injury may be presumed
from a showing of likelihood of success on the merits.’ ” El Pollo Loco, Inc. v. Hashim, 316 F.3d 1032,
1038 (9th Cir. 2003) (quoting GoTo.com, Inc. v.
Walt Disney Co., 202 F.3d 1199, 1205 n.4 (9th Cir.
2000)). Because the court found a likelihood of success on the merits, it reasonably presumed irreparable injury.
Id. The panel’s summary treatment of the presumption without consideration of the effect of eBay and Winter does not
bind this panel or constitute an affirmation of the presumption’s continued vitality. “[S]tatements made in passing, without analysis, are not binding precedent.” Thacker v. FCC (In
re Magnacom Wireless, LLC), 503 F.3d 984, 993-94 (9th Cir.
2007).
[9] Flexible also cites Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127 (9th Cir. 2011) as supporting the continued use of the presumption of irreparable harm in an
environmental case once a likelihood of success on the merits
is demonstrated. Alliance for the Wild Rockies does not so
hold. To the contrary, we stated that although the Supreme
Court has noted “ ‘[e]nvironmental injury, by its nature, can
seldom be adequately remedied by money damages and is
often permanent or at least of long duration, i.e., irreparable[,]’ . . . this does not mean that ‘any potential environmental injury’ warrants an injunction.” Id. at 1135 (quoting The
Lands Council v. McNair, 537 F.3d 981, 1004 (9th Cir. 2008)
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(en banc)). Nonetheless, we found that “actual and irreparable
injury, such as [Alliance] articulates here, satisfies the ‘likelihood of irreparable injury’ requirement articulated in Winter.”
Id. Thus, we appreciated the key distinction that although
some injuries may usually be irreparable and thus a likelihood
of irreparable injury easily shown, the plaintiff must still
make that showing on the facts of his case and cannot rely on
a presumption to do it for him.
[10] Another panel of this circuit very recently addressed
an argument nearly identical to the one Flexible is now making. See Perfect 10, Inc. v. Google, Inc., ___ F.3d ___, 2011
WL 3320297 (9th Cir. Aug. 3, 2011). Perfect 10 argued that
the district court erred in finding it had not demonstrated
irreparable harm because, having shown a likelihood of success on the merits of its copyright infringement case, it was
entitled to a presumption of irreparable harm. Id. at *2. The
panel in Perfect 10 rejected the argument, concluding, as we
do, that such a presumption does not survive eBay and Winter.
Id. at *4. The minor differences between this case and Perfect
10 — here the district court relied on the presumption of harm
while in Perfect 10 the court found that Perfect 10 failed to
establish irreparable harm and the panel subsequently refused
to rely on the presumption — are not enough to compel different results.
C.
Presuming Irreparable Harm Is Now
Impermissible
We conclude that presuming irreparable harm in a copyright infringement case is inconsistent with, and disapproved
by, the Supreme Court’s opinions in eBay and Winter. Id. at
*4. Thus, our long-standing precedent finding a plaintiff entitled to a presumption of irreparable harm on a showing of
likelihood of success on the merits in a copyright infringement case, as stated in Elvis Presley and relied on by the district court, has been effectively overruled. In other words,
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“Elvis has left the building.”5 Accordingly, we hold that even
in a copyright infringement case, the plaintiff must demonstrate a likelihood of irreparable harm as a prerequisite for
injunctive relief, whether preliminary or permanent.
D.
Other Circuits and Authorities Agree
[11] Our sister circuits agree with our holding. The Second
Circuit faced exactly the same question just a year ago, and
came to the same answer we do today. See Salinger v. Colting, 607 F.3d 68 (2d Cir. 2010). The Second Circuit, like the
Ninth, had a long-standing history of presuming irreparable
harm upon the showing of a likelihood of success on the merits in a copyright infringement case. In Salinger, the district
court issued an injunction based on Second Circuit precedent
establishing a presumption of irreparable harm after finding
the requisite likelihood of success on the merits. Id. at 74.
The Second Circuit reversed, holding that after eBay and
Winter such a presumption was no longer permitted. Id. at 77.
Salinger undertook a detailed examination of both eBay and
Winter, and their applicability to preliminary injunctions in
copyright infringement actions, and concluded “nothing in the
text or the logic of eBay suggests that its rule is limited to
patent cases. On the contrary, eBay strongly indicates that the
5
See Cecil Adams, The Straight Dope (Dec. 27, 2002),
http://www.straightdope.com/columns/read/2430/elvis-has-left-thebuilding-who-said-it-first, which explains that the quote has become “a
catchphrase whose meaning, usually tinged with irony, is clear to all: the
show’s over, the curtain has fallen, the sun has set, that’s all she wrote,
the fat lady has sung, our work here is done, move along, nothing more
to see, disperse, beat it, turn the page, hit the road, don’t forget to tip your
waitress, pack it up, turn out the lights, das ist alles, time’s up, toodle-oo,
exeunt omnes, class dismissed, back to work, don’t let the screen door hit
you where the good Lord split you, end of story, that’s all there is there
ain’t no more, so long, hasta la vista, you don’t have to go home but you
can’t stay here, later gator, 30, buh-bye, get lost, ite missa est, the end,
finito, Scotty, beam me up.” The same can be aptly said of the fate of the
presumption of irreparable harm described in Elvis Presley.
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traditional principles of equity it employed are the presumptive standard for injunctions in any context.” Id. at 77-78. The
Second Circuit recognized, as we have, that the Supreme
Court “expressly relied upon copyright cases in reaching its
conclusion” in eBay. Id. at 78.
The Second Circuit also had no trouble applying these principles to preliminary injunctions, reasoning:
Nor does eBay, as reinforced by the Supreme
Court’s very recent decision in Winter v. Natural
Resources Defense Council, ___ U.S. ___, 129 S. Ct.
365 (2008), permit an easier grant of a preliminary
than of a permanent injunction. First, as mentioned
above, one of the two cases eBay relied upon in stating the traditional equitable test involved a preliminary injunction. See Amoco Prod., 480 U.S. at 542;
see also id. at 546 n.12 (“The standard for a preliminary injunction is essentially the same as for a permanent injunction with the exception that the
plaintiff must show a likelihood of success on the
merits rather than actual success.”).
Id. at 78-79. Thus, the Second Circuit agrees with us that a
presumption of irreparable harm is no longer permitted in
issuing an injunction; a plaintiff must show a likelihood of
harm.
[12] The Fourth Circuit has also held that a plaintiff is no
longer “entitled” to an injunction on the showing of infringement, and applied eBay in requiring all four factors of the
four-factor test be shown. Christopher Phelps & Assocs., LLC
v. Galloway, 492 F.3d 532, 543 (4th Cir. 2007). Similarly, the
First Circuit has also applied eBay to a copyright infringement
injunction.6 CoxCom, Inc. v. Chaffee, 536 F.3d 101, 112 (1st
Cir. 2008).
6
More recently, the First Circuit applied eBay to a trademark infringement case, although it declined to decide whether a presumption of irrepa-
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[13] The leading treatises are in accord with our reading of
the effect eBay and Winter have had on the plaintiff’s burden
in copyright infringement injunction cases. Before eBay, Nimmer on Copyright was routinely cited as supporting the presumption. See Apple Computer, Inc. v. Franklin Computer
Corp., 714 F.2d at 1254 (citing 3 Nimmer on Copyright
§ 14.06[A], at 14-50, 14-51 & n.16 (collecting authorities)).
Nimmer has now seen the light, and recognizes that even in
the context of preliminary injunctions in a copyright infringement claim, “[t]he Supreme Court’s decision in eBay caused
a new day to dawn . . . . No longer applicable is the presumption of irreparable harm, which allowed the collapse of factors
that plaintiff must prove down to one. As one commentator
notes, ‘Harm must be proved, not presumed.’ ” 4 Nimmer on
Copyright § 14.06[A][5], at 14-149 (footnotes omitted). The
Rutter Guide also recognizes the change: “In the past, at least,
injuries to certain types of property were presumed to be
irreparable on the theory that monetary damages could not
compensate for harm done . . . . The continued validity of
these cases seems doubtful in light of eBay . . . .” Schwarzer,
Tashima & Wagstaff, Cal. Prac. Guide: Fed. Civ. Proc.
Before Trial, ¶¶ 13:58.25-26 (The Rutter Group 2011) (citations omitted). In our view, there really is no doubt; at the
very least the cases applying a presumption of harm after
finding copyright infringement are no longer valid in light of
eBay.
rable harm was valid after eBay. Instead, it held that the plaintiff was not
entitled to relief because of the excessive delay in seeking an injunction
and thus avoided the question. Voice Of The Arab World, Inc. v. MDTV
Medical News Now, Inc., ___ F.3d ___, 2011 WL 2090132, *5-7 (1st Cir.
May 27, 2011). We have not found, nor has Flexible cited, any case in
which a circuit court has upheld the presumption of irreparable harm after
analyzing the issue following eBay. For that matter, we have not found,
nor has Flexible cited, any case in which the Supreme Court has approved
of such a presumption, either before eBay or after.
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The District Court’s Presumption of Harm Was
Error
The district court, albeit reasonably in light of our precedent, relied solely on the presumption of irreparable harm to
issue its injunction. Applying our reading of eBay and Winter
to this case, reliance on a presumption of irreparable harm
was error. Perfect 10, 2011 WL 3320297, *4 (refusing to rely
on presumption of irreparable harm because such a presumption “is clearly irreconcilable with the reasoning of the
Court’s decision in eBay”) (internal quotation marks and citation omitted). Flexible must demonstrate a likelihood of irreparable harm in order to obtain injunctive relief.
[14] Flexible asks us to affirm the district court notwithstanding the error because, in its view, the record clearly demonstrates that it is likely to suffer irreparable harm absent the
requested injunction. However, the district court made no factual findings that would support a likelihood of irreparable
harm. In fact, its only finding that touches the issue weighs
against such a determination. The court found that “[Flexible]
elicited no proof suggesting that it entered competing bids
with contracts that [Precision] procured through the use of
[Flexible’s] platform drawings.”
[15] While we do not suggest that this finding establishes
a lack of irreparable harm, we believe it counsels against our
undertaking a searching review of an incomplete record to
make the required factual findings in the first instance. Flexible did not argue in its briefs below that it was likely to suffer
irreparable harm; it relied solely on its entitlement to a presumption of irreparable harm. Nor do its briefs on appeal set
forth sufficient facts demonstrating irreparable harm to compel us to find in its favor.7 We believe the better course is to
7
The evidence Flexible cites consists primarily of the unsubstantiated
testimony of its President. Precision points to testimony of its own which
seems to dispute Flexible’s evidence. We believe the district court, which
heard all the testimony and was presented with all the evidence, is in a better position to make this determination initially.
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remand to allow the district court to make the requisite factual
determinations regarding irreparable harm and apply those
factual findings to the four-factor framework to determine
whether injunctive relief is warranted. See eBay, 547 U.S. at
394 (vacating “the judgment of the Court of Appeals, so that
the District Court may apply that framework in the first
instance”). Accordingly, we vacate the injunction and remand
to the district court for further proceedings consistent with
this opinion.
III.
OTHER ISSUES
Precision also contends that the district court abused its discretion in concluding, as a matter of law, that Flexible was
likely to succeed on the merits and in issuing an overly-broad
injunction. Because we vacate the injunction based on the district court’s abuse of discretion in presuming irreparable
harm, we need not reach these contentions.
CONCLUSION
The preliminary injunction issued against Precision is
VACATED, and the matter REMANDED to the district
court for further proceedings consistent with this opinion.
However, the preliminary injunction will stay in place for ten
days following the issuance of the mandate so that Flexible
will have an opportunity to apply for a temporary restraining
order pending the rehearing of the motion for a preliminary
injunction.
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