AFL Telecommunications LLC v. SurplusEQ.com Incorporated et al

Filing 48

ORDER denying 39 Motion for Reconsideration. Signed by Judge David G Campbell on 11/15/2011.(NVO)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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AFL Telecommunications LLC,
Plaintiff,

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No. CV11-1086-PHX-DGC
ORDER

vs.
SurplusEZ.com, Inc., Tech Sales, LLC, and
Daniel Parsons and Jane Doe Parsons,

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Defendants.

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Plaintiff, AFL Telecommunications LLC (“AFL”) filed a motion seeking to enjoin

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Defendants from advertising and selling the Fujikura brand of fusion splicers in

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competition with AFL, pending resolution of AFL’s unfair competition, false

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advertisement, and copyright infringement claims. Doc. 6. This action was originally

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assigned to Judge Frederick J. Martone. Judge Martone denied the motion on the basis

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that Plaintiff had not shown “irreparable harm.” Doc. 32 at 6. This action has since been

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transferred to this Court, where AFL is involved in another action alleging similar claims

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against Defendants Fiberoptic Hardware, LLC and George Kyrias. See Doc. 34 at 16.

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AFL has now filed a motion for reconsideration of Judge Martone’s order denying

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its motion for a preliminary injunction. Doc. 39. Defendants have filed a response.

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Doc. 44. For the reasons set forth below, the Court will deny Plaintiff’s motion to

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reconsider.

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I.

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Legal Standard.
Motions for reconsideration are disfavored and should be granted only in rare

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circumstances.

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3348522, at *1 (D. Ariz. Oct. 15, 2009). A motion for reconsideration will be denied

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Aabsent a showing of manifest error or a showing of new facts or legal authority that

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could not have been brought to [the Court=s] attention earlier with reasonable diligence.@

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LRCiv 7.2(g)(1); see Carroll v. Nakatani, 342 F.3d 934, 945 (9th Cir. 2003). Mere

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disagreement with an order is an insufficient basis for reconsideration. See Ross v.

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Arpaio, No. CV 05-4177-PHX-MHM, 2008 WL 1776502, at *2 (D. Ariz. 2008). Nor

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should reconsideration be used to ask the Court to rethink its analysis. Id.; see N.W.

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Acceptance Corp. v. Lynnwood Equip., Inc., 841 F.2d 918, 925-26 (9th Cir. 1988).

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II.

See Stetter v. Blackpool, No. CV 09-1071-PHX-DGC, 2009 WL

Discussion.

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AFL is a wholly-owned subsidiary of Fujikura Ltd. and is the exclusive licensed

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distributer of the Fujikura fusion splicer (a machine used to fuse together separate lengths

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of fiber-optic cables) and its accompanying copyrighted software in North America. This

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action arises from AFL’s allegations that Defendants have engaged in unfair competition,

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false advertising, and copyright infringement by importing Fujikura fusion splicers

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manufactured for sale outside the United States – and containing foreign software – and

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selling altered versions of them to domestic consumers on the Internet. Plaintiff sought

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to preliminarily enjoin Defendants from advertising and selling the Fujikura brand of

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fusion splicers pending resolution of these claims.

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To obtain preliminary injunctive relief, Plaintiff must show that it is likely to

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succeed on the merits, that it is likely to suffer irreparable harm in the absence of

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preliminary relief, that the balance of equities tips in its favor, and that an injunction is in

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the public interest. Winter v. Natural Res. Def. Council, 555 U.S. 7, 20 (2008).

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The Court denied Plaintiff’s motion for a preliminary injunction because it found

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that the Ninth Circuit’s presumption of irreparable harm no longer applies to trademark

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cases. Doc. 32 at 6. The Court also found that Plaintiff had not alleged sufficient facts to

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make a claim of irreparable harm absent the presumption. Id. Plaintiff alleges legal

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error: “Specifically, the Court failed to follow Ninth Circuit law recognizing a

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presumption of irreparable harm where the plaintiff shows a likelihood of success on [a

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trademark claim].” Doc. 39 at 1-2.

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The Court, citing to Flexible Lifeline Systems Inc. v. Precision Lift, Inc., 654 F. 3d

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989, 995 (9th Cir. 2011), stated that “[i]rreparable harm is no longer presumed in a

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trademark or copyright case upon a showing of a likelihood of success on the merits.”

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Doc. 32 at 6. Plaintiff argues that Flexible Lifeline was a copyright case and that it did

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not deal with the presumption of irreparable harm in a trademark case. Doc. 39 at 3.

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Plaintiff also states that Flexible Lifeline did not overrule El Pollo Loco, Inc. v. Hashim,

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316 F. 3d 1032, 1038 (9th Cir. 2003), or Marlyn Nutraceuticals Inc. v. Mucos Pharma

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GmbH & Co., 571 F. 3d 873, 877 (9th Cir. 2009), both of which Plaintiff cited as

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supporting the Ninth Circuit’s presumption of irreparable harm in a trademark

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infringement action. Doc. 39 at 4; see Doc. 6 at 13.

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Plaintiff is technically correct. In Flexible Lifeline, the Ninth Circuit based its

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holding on the Supreme Court holding in eBay Inc. v. Mercexchange, L.L.C., 547 U.S.

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388 (2006), which found a presumption of irreparable harm invalid in patent

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infringement cases. 654 F. 3d at 995-96. The Court in eBay drew parallels between the

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equitable analyses required for issuing injunctions in the Patent Act and the Copyright

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Act, leading the Ninth Circuit to conclude that “under eBay, a presumption of irreparable

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harm is equally improper in a case based on copyright infringement as it is in a case

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based on patent infringement.”

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overruled Elvis Presley Ents., Inc. v. Passport Video, 349 F. 3d 622 (9th Cir. 2003),

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stating that “the ‘King’ [the Elvis Presley case] is dead . . . to the extent that it supported

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the use of presumption of irreparable harm in issuing injunctive relief.” 653 F. 3d at 995

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(cited in Judge Martone’s order, Doc. 32 at 6). Flexible Lifeline’s precise holding,

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however, was limited to overruling the presumption of irreparable harm in the copyright

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context: “we hold that even in a copyright infringement case, the plaintiff must

654 F. 3d at 996.

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Accordingly, the Ninth Circuit

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demonstrate a likelihood of irreparable harm as a prerequisite for injunctive relief,

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whether preliminary or permanent.” 654 F. 3d at 998.

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The Ninth Circuit’s analysis in Flexible Lifeline, as well as the Supreme Court

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cases on which Flexible Lifeline relied, however, suggests a lack of favor with any

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presumption of irreparable harm when issuing preliminary or permanent injunctions. In

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eBay, the Supreme Court rejected taking a categorical approach to injunctive relief and

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reaffirmed the practice of applying “traditional equitable considerations.” 547 U.S. at

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393-94. The adherence to equitable considerations that the Court noted in the language

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of both the Copyright Act and the Patent Act (547 U.S. at 392-93 (quoting 35 U.S.C. §

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283, 17 U.S.C. § 502(a))) is consistent with the Lanham Act’s provisions regarding

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injunctive relief in the trademark context. See 15 U.S.C. §§ 1116(a) (stating that “[t]he

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several courts . . . shall have power to grant injunctions according to the principles of

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equity and upon such terms as the court may deem reasonable”), 1125(c)(1) (referring to

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the issuance of injunctive relief “subject to the principles of equity”), 1125 (c)(5) (same).

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On the basis of this analysis, Flexible Lifeline’s extension of eBay’s rejection of

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presumptions in a patent case to a rejection of presumptions in a copyright case supports

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a like extension to the trademark context.

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In Flexible Lifeline, the Ninth Circuit also discussed the Supreme Court’s ruling in

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Winter v. Natural Resources Defense Council, Inc., 555 U.S. 7, 22 (2008). 654 F. 3d at

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996-97. This analysis also suggests that Flexible Lifeline’s rejection of presumptions of

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irreparable harm applies broadly to all actions for injunctive relief. In Winter, the Court

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found that the Ninth Circuit’s use of a “possibility” of irreparable harm standard was “too

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lenient” and that a plaintiff must show that irreparable harm is “likely.” 654 F. 3d at 996

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(citing to Winter, 555 U.S. at 22). The court opined that “[i]f our past standard, which

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required a plaintiff to demonstrate at least a possibility of irreparable harm, is ‘too

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lenient,’ then surely a standard which presumes irreparable harm without requiring any

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showing at all is also ‘too lenient’” 654 F. 3d at 997.

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Flexible Lifeline’s discussion of Marlyn, a post-Winter Ninth Circuit case upon

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which AFL relies, is not to the contrary. In Marlyn, the Ninth Circuit upheld the district

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court’s presumption of irreparable harm in a trademark infringement case in which “the

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[district] court cited Ninth Circuit law holding that ‘[i]n a trademark infringement claim,

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irreparable injury may be presumed from a showing of likelihood of success on the

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merits.’” 571 F. 3d at 877 (citing El Pollo Loco, Inc. v. Hashim, 316 F. 3d 1032, 1038

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(9th Cir. 2003) (quoting GoTo.com Inc. v. Walt Disney Co., 202 F. 3d 1199, 1205 n. 4

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(9th Cir. 2000) (internal quotation marks omitted). Flexible Lifeline concluded, however,

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that Marlyn did not constitute an affirmation of the continued use of this presumption

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because it gave only a summary treatment of it and it did not address its applicability in

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light of eBay and Winter. 654 F. 3d. at 997 (“The panel’s summary treatment of the

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presumption without consideration of the effect of eBay and Winter does not . . .

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constitute an affirmation of the presumption’s continued vitality.”).

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In light of Flexible Lifeline’s discussion of eBay, which reaffirmed applying

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principles of equity as opposed to categorical rules when issuing injunctive relief, and

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Winter, which held that a finding of irreparable harm requires not just a “possibility” of

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harm, but a showing that irreparable harm is “likely,” the Court does not find that Judge

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Martone’s order rejecting a presumption of irreparable harm in this case constituted

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manifest error.1

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IT IS ORDERED that Plaintiff’s motion to reconsider (Doc. 39) is denied.

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Dated this 15th day of November, 2011.

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Plaintiff also argues that the Court’s order in this case is inconsistent with its
order issuing a preliminary injunction in AFL Telecommunications LLC v. Fiberoptic
Hardware, LLC, 11-cv-1081-PHX-DGC. Doc. 39 at 2. This argument is not persuasive
because in Fiberoptic Hardware the Court based its finding of irreparable harm to the
Fujikura trademark on a specific showing of customer dissatisfaction with a Fujikura
fusion splicer sold by the defendant. Doc. 34 at 15.
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