Opinion ID: 777678
Heading Depth: 2
Heading Rank: 2

Heading: Irreparable Harm, Balance of Harms, and the Public Interest

Text: 70 Before granting a preliminary injunction, a district court must consider the extent to which the moving party will suffer irreparable harm without injunctive relief. Clean Ocean, 57 F.3d at 331. Here, the District Court found that Novartis would likely suffer irreparable harm if a preliminary injunction did not issue. See 129 F.Supp.2d at 367-68. The Court further concluded that the balance of harms and the public interest weighed in favor of issuing the injunction. See id. at 368-69. J & J objects to each of these findings. All are reviewed for clear error, and the ultimate decision to grant the injunction is reviewed for abuse of discretion. See Sandoz, 902 F.2d at 226. 71 J & J argues that the District Court applied the wrong standard when evaluating whether Novartis had demonstrated irreparable injury. The District Court stated that although the plaintiff need not come forward with specific evidence that the challenged claims actually resulted in some definite loss of sales, the plaintiff must establish that it has a reasonable basis for believing that it is likely to suffer injury as a result of the false advertising. 129 F.Supp.2d at 367 (citing Johnson & Johnson v. Carter-Wallace, Inc., 631 F.2d 186, 190 (2d Cir.1980), and Breathasure, 204 F.3d at 95-96). J & J argues that whether the plaintiff has a reasonable basis for believing that it is likely to suffer injury is the standard for determining whether the plaintiff has standing to bring a false advertising claim seeking, as an ultimate remedy, that a permanent injunction be imposed against the defendant. It maintains that to satisfy the irreparable injury requirement for obtaining a preliminary injunction, Novartis was required to satisfy the additional burden of demonstrating potential harm which cannot be redressed by a legal or an equitable remedy following a trial. Instant Air Freight, 882 F.2d at 801. 72 We agree that the cases relied upon by the District Court, Carter-Wallace and Breathasure, discussed the standing requirement for a Lanham Act claim rather than the irreparable injury requirement for obtaining a preliminary injunction. Carter-Wallace, 631 F.2d at 190; Breathasure, 204 F.3d at 95-96. In those cases, we reviewed district court decisions denying and granting, respectively, permanent injunctions after bench trials on the merits. See Carter-Wallace, 631 F.2d at 187-88; Breathasure, 204 F.3d at 90-91. In both, we concluded that, as a matter of standing and as a substantive element of a Lanham Act violation, the plaintiff must demonstrate a reasonable basis for the belief that the plaintiff is likely to be damaged as a result of the false advertising. Carter-Wallace, 631 F.2d at 189-90; accord Breathasure, 204 F.3d at 93. Carter-Wallace and Breathasure did not discuss, however, the standard for evaluating whether a plaintiff seeking a preliminary injunction will suffer irreparable harm if the injunction is not issued. We agree that this standard — i.e., potential harm that cannot be redressed following trial — differs from the standing requirement and injury element for a Lanham Act claim — i.e., a reasonable basis for believing that a plaintiff is likely to suffer injury. 73 Nonetheless, we conclude that the District Court's error in citing the wrong standard was harmless because there is sufficient evidence in the record to support a finding of irreparable harm necessary to issue a preliminary injunction. The District Court observed that the promotion and sale of MNTS had already had a measurable effect on Maalox's market share as reflected by a decrease in sales of Maalox that corresponds to the increased sales for MNTS. 129 F.Supp.2d at 369. We are satisfied that this loss of market share constitutes irreparable harm. See Moltan Co. v. Eagle-Picher Indus., Inc., 55 F.3d 1171, 1175 (6th Cir.1995) (affirming decision to grant preliminary injunction where manufacturer's false claims were causing irreparable injury to a competitor in the form of lost sales and market share); Cordis Corp. v. Medtronic, Inc., 835 F.2d 859, 864 (Fed.Cir.1987) (a loss in market share caused by an injunction could result in irreparable harm); see also Pappan Enters., Inc. v. Hardee's Food Sys., Inc., 143 F.3d 800, 805 (3d Cir.1998) (Grounds for irreparable injury include loss of control of reputation, loss of trade, and loss of goodwill.); Opticians Ass'n v. Indep. Opticians, 920 F.2d 187, 195 (3d Cir.1990) (same). In a competitive industry where consumers are brand-loyal, we believe that loss of market share is a potential harm which cannot be redressed by a legal or an equitable remedy following a trial. Instant Air Freight, 882 F.2d at 801. 74 Before granting an injunction, a district court must balance the relative harm to the parties, i.e., the potential injury to the plaintiff if an injunction does not issue versus the potential injury to the defendant if the injunction is issued. Sandoz, 902 F.2d at 226. In this case, the Court concluded that the balance of harms favored issuing the injunction. 129 F.Supp.2d at 368-69. We agree. 75 J & J argued before the District Court that it would suffer substantial injury if a preliminary injunction were to issue because, after a certain period of time, it would be unable to relaunch the MNTS product. It maintains that if that were to occur it would lose the value of its substantial investment and goodwill in the MNTS product name. 76 The District Court discounted J & J's claims of potential injury, in part because any financial loss that will be suffered by J & J as a result of its decision to name its product `Night Time Strength' is self-imposed. 129 F.Supp.2d at 369. We reject J & J's assertion that it was error for the Court to have done so. As we have previously ruled, the injury a defendant might suffer if an injunction were imposed may be discounted by the fact that the defendant brought that injury upon itself. See Pappan, 143 F.3d at 806 (The self-inflicted nature of any harm suffered by [the party opposing the injunction] also weighs in favor of granting preliminary injunctive relief.); Opticians Ass'n, 920 F.2d at 197 (By virtue of this recalcitrant behavior, the [party opposing the injunction] can hardly claim to be harmed, since it brought any and all difficulties occasioned by the issuance of an injunction upon itself.). 77 Moreover, we disagree with J & J's assertion that the potential harm to it from losing the MNTS product line if the injunction were issued outweighs the potential harm to Novartis from losing market share if the injunction were not issued. A case relied upon by J & J, Genovese Drug Stores, Inc. v. TGC Stores, Inc., 939 F.Supp. 340, 350-51 (D.N.J.1996), does not persuade us otherwise. There, the District Court was persuaded that an injunction would have put the defendant out of business by forcing it to change the name of its two, new health care stores. It noted that if defendant were forced to preliminarily change its name and then succeed in this lawsuit, it would be economically unsound and, most likely, financially unfeasible for defendant to return to its original name. Id. at 350-51. The Court found that [s]uch harm is irreparable, and more devastating than the possibility of harm to plaintiff's reputation and good will [if the injunction did not issue]. Id. Because of this, and because the plaintiff had failed to demonstrate a likelihood of success on the merits, the Court denied injunctive relief. 78 By contrast, the preliminary injunction issued against J & J does not require that it abandon its entire brand name. 14 The preliminary injunction also does not require J & J to abandon its product name forever; it only requires that the company cease shipping the MNTS product under that name until the end of litigation on the merits. If the District Court rules for J & J on the merits, shipping the MNTS product currently in inventory may continue. Like the District Court, we are not persuaded by J & J's assertion that it would be unable to relaunch the product under the MNTS name after a short period of time. See discussion supra n. 4. Moreover, the injunction does not prohibit J & J from shipping the product currently in inventory under a different name, label, and advertising that is not literally false and/or misleading, such as Maximum Strength Mylanta. Finally, we observe that, unlike the plaintiff in Genovese, Novartis has demonstrated a likelihood of success on the merits. As other circuit courts have observed, [t]he more likely the plaintiff is to win, the less heavily need the balance of harms weigh in his favor. NLRB v. Electro-Voice, Inc., 83 F.3d 1559, 1568 (7th Cir.1996); accord Abbott Labs. v. Mead Johnson & Co., 971 F.2d 6, 12 (7th Cir.1992). We therefore agree that the balance of harms weighs in favor of granting the preliminary injunction. 79 Finally, we find no error in the District Court's finding that the public interest favors issuing the injunction. 129 F.Supp.2d at 369. We agree with those district courts that have found that [t]here is a strong public interest in the prevention of misleading advertisements, and this interest is particularly strong where over-the-counter drugs are concerned. American Home Prods. Corp. v. Johnson & Johnson, 654 F.Supp. 568, 590 (S.D.N.Y.1987) (citing Upjohn Co. v. American Home Prods. Corp., 598 F.Supp. 550, 557 (S.D.N.Y.1984)); accord Church & Dwight, 873 F.Supp. at 912; W.L. Gore & Assoc., Inc. v. Totes, Inc., 788 F.Supp. 800, 814 (D.Del.1992). Moreover, we believe that where the plaintiff has demonstrated a likelihood of success on the merits, the public interest leans even more toward granting the injunction. 80 All told, the District Court did not clearly err when it found that Novartis would suffer irreparable harm if the injunction were not issued, and the equities, including the balance of harms and the public interest, weigh in favor of granting the preliminary injunction. Because we are also affirming the District Court's finding that Novartis will likely be able to succeed on the merits of its Lanham Act claim, we find no abuse of discretion in the Court's decision to grant a preliminary injunction pending the outcome of a trial on the merits. 81