Court Opinion

ID: 168593
Source: CourtListenerOpinion
Date Created: 2010-08-14 16:41:47+00
Date Added: 2024-06-11T09:15:13.613849
License: Public Domain

F I L E D
                                                               United States Court of Appeals
                                                                       Tenth Circuit
                      UNITED STATES CO URT O F APPEALS
                                                                     January 8, 2007
                             FO R TH E TENTH CIRCUIT               Elisabeth A. Shumaker
                                                                       Clerk of Court

    LORILLARD TOBACCO
    COM PA NY, a Delaware corporation,

              Plaintiff-Appellant,
                                                         No. 06-1115
     v.                                           (D.C. No. 06-cv-225-LTB)
                                                          (D . Colo.)
    ISA AC G. ENGIDA, doing business as
    I and G Liquors,

              Defendant-Appellee.

                             OR D ER AND JUDGM ENT *

Before HO LM ES, M cKA Y, and BROR BY, Circuit Judges.

          Representatives of Lorillard Tobacco Company, the manufacturer of

Newport® cigarettes, acquired two packages of counterfeit Newport® cigarettes

from I and G Liquors, defendant Isaac G. Engida’s business. Lorillard filed a

complaint against I and G for violations of the Lanham Act, 15 U.S.C. §§ 1114

*
       After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist the determination of
this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is
therefore ordered submitted without oral argument. This order and judgment is
not binding precedent, except under the doctrines of law of the case, res judicata,
and collateral estoppel. It may be cited, however, for its persuasive value
consistent w ith Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
and 1125, and sought an ex parte seizure order and a temporary restraining order

(TRO). The district court granted Lorillard’s requests. Upon executing the

seizure order, however, Lorillard’s representatives found no N ewport® cigarettes,

either genuine or counterfeit, on I and G’s premises. In addition to about twenty

packages of non-Lorillard-brand cigarettes, the search did yield some records

showing I and G may have purchased some cigarettes from an unknown source.

At a hearing on February 24, 2006, the district court held that Lorillard had not

made a sufficient showing for continued injunctive relief and dissolved the TRO.

Lorillard appeals.

                                    Jurisdiction

      I and G contends that this court does not have jurisdiction because the

district court never actually denied Lorillard a preliminary injunction. Instead,

I and G argues, the district court only dissolved the TRO it previously had

entered. This court may hear an interlocutory appeal of the denial of preliminary

injunctive relief, but it generally does not have jurisdiction over an interlocutory

appeal of the dissolution of a TRO. See 28 U.S.C. § 1292(a)(1); Office of Pers.

M gmt. v. Am. Fed’n of Gov’t Employees, 473 U.S. 1301, 1303-05 (1985); Duvall

v. Keating, 162 F.3d 1058, 1062 (10th Cir. 1998).

      Having reviewed the record, we find that during the February 24 hearing,

the district court not only dissolved the TRO, but also denied preliminary

injunctive relief. See Aplt. App. at 107 (district court stating to Lorillard, “you’re

                                         -2-
asking for a preliminary injunction at this point”); 108 (district court stating, “you

want me to continue this extraordinary relief by way of a preliminary

injunction”); 109 (district court stating that Lorillard had shown cause why a

preliminary injunction should not be entered); id. (district court stating, “I’m not

going to place the imprimatur of the federal government and the United States

judiciary on a preliminary injunction, and I’m going to dissolve the temporary

restraining order.”). W hether the district court’s comments are construed as an

express denial of Lorillard’s motion for preliminary injunctive relief or as having

the “practical effect” of denying injunctive relief, we find that we have

jurisdiction over this interlocutory appeal under 28 U.S.C. § 1292(a)(1). See

Forest G uardians v. Babbitt, 174 F.3d 1178, 1184-85 (10th Cir. 1999).

                                       Analysis

      W e review the district court’s denial of a preliminary injunction for abuse

of discretion. Davis v. M ineta, 302 F.3d 1104, 1110-11 (10th Cir. 2002). “A

district court abuses its discretion where it comm its a legal error or relies on

clearly erroneous factual findings, or where there is no rational basis in the

evidence for its ruling.” Id. at 1111 (internal citation omitted). “W hen reviewing

for an abuse of discretion, the district court’s decision is overturned only if it is

arbitrary, capricious, whimsical, or manifestly unreasonable.” Pac. Frontier v.

Pleasant Grove City, 414 F.3d 1221, 1231 (10th Cir. 2005) (quotation omitted).

                                          -3-
      Under the Lanham Act, a court may grant an injunction “according to the

principles of equity and upon such terms as the court may deem reasonable.”

15 U.S.C. § 1116(a). A party seeking injunctive relief must establish four factors:

      (1) it will suffer irreparable harm if the injunction is not granted,
      (2) its threatened injury outweighs the harm caused to the opposing
      party as a result of the injunction, (3) the injunction is not adverse to
      the public interest, and (4) it has a substantial likelihood of success
      on the merits of the case.

Dominion Video Satellite, Inc. v. Echostar Satellite Corp., 356 F.3d 1256, 1260

(10th Cir. 2004). “[B]ecause a preliminary injunction is an extraordinary remedy,

the right to relief must be clear and unequivocal.” Id. at 1261 (quotation

omitted).

      It appears the district court doubted the strength of Lorillard’s case and did

not believe that Lorillard showed it would suffer irreparable harm in the absence

of an injunction. See Aplt. App. at 106 (noting that the origin of one of the

cigarette packages was in question, so the dispute came down to perhaps one

package of cigarettes); id. at 107 (Lorillard’s counsel stating his understanding

that M r. Engida indicated he had no intention of selling cigarettes, and the court

responding, “[i]f he has no intention of selling cigarettes, why do I need

continued injunctive relief?”); id. at 108 (court stating, “w hat you’re after, and it

was pretty apparent at the outset, is you want to utilize M r. Engida on the basis of

two packages of cigarettes as the bottom of the food chain”); id. at 109 (“I need

                                           -4-
something more substantial than two packages of cigarettes for a TRO – I granted

the TRO anticipating that this raid under the auspices of the M arshals Service,

United States M arshals Service, would find substantial or at least significant

evidence that this man, M r. Engida, is in violation of the Lanham Act.”); id. at

112 (court stating, “I think plaintiff’s counsel better consider seriously continuing

this case. Perhaps you ought to find a better small fish.”). It also appears the

district court was concerned that the harm a preliminary injunction would cause I

and G outw eighed any harm to Lorillard in the absence of an injunction. See id.

at 108 (court stating, “H e’s a businessman, small business.”); id. (court stating,

“w here a marshal under order of this Court virtually conducts a raid on this man’s

business, and you find nothing, except some questions about a paper trail, and on

this you want me to continue this extraordinary relief . . . ?”); id. at 109 (court

stating, “[t]he most reasonable inference that I can make, and I don’t even really

need to hear from M r. Enigda, is that he happened to accidentally come into

possession in his business of two packages of – purported trademark violations of

two packages of cigarettes. And you want to bring the full force and authority of

the U nited States government and the federal judicial system down on this man’s

head. I’m not going to do it.”).

      In light of the record before it, the district court did not abuse its discretion

in denying Lorillard preliminary injunctive relief. “In defining the contours of

irreparable harm, case law indicates that the injury must be both certain and great,

                                           -5-
and that it must not be merely serious or substantial.” Dominion Video Satellite,

356 F.3d at 1262 (quotation omitted). The record does not necessarily establish

that Lorillard would suffer certain and great harm in the absence of an injunction.

Unlike the Sixth Circuit case on which Lorillard relies, see Lorillard Tobacco Co.

v. Amouri’s Grand Foods, Inc., 453 F.3d 377, 379 (6th Cir. 2006), the raid on I

and G’s premises did not reveal any evidence of additional counterfeit Newport®

cigarettes, undermining the likelihood of future injury to Lorillard.

      Lorillard argues that a prima facie case of trademark infringement

establishes irreparable harm, per se. This court has stated, “[i]rreparable injury is

frequently presumed where a trademark is wrongfully appropriated by another.”

SCFC ILC, Inc. v. Visa USA, Inc., 936 F.2d 1096, 1100-01 (10th Cir. 1991),

overruled on other grounds by O Centro Espirita Beneficiente Uniao Do Vegetal

v. Ashcroft, 389 F.3d 973, 975 (10th Cir. 2004) (en banc). In response, I and G

contends that the Supreme Court recently disapproved the use of categorical rules

in connection with injunctive relief in intellectual property actions. See eBay,

Inc. v. M ercExchange, L.L.C., 126 S. Ct. 1837, 1840-41 (2006).

      Notably, the Sixth Circuit did not discuss eBay in awarding relief in

Amouri’s Grand Foods. We need not consider how eBay may apply in this

context, however, because in any event Lorillard has not shown that any harm

Lorillard would suffer in the absence of an injunction outweighed the potential

harm to I and G if an injunction were granted. As stated above, the raid did not

                                          -6-
indicate a substantial likelihood that I and G had or would sell any additional

counterfeit Newport® cigarettes. Lorillard argues I and G would not be harmed

from being barred from selling counterfeit cigarettes, since doing so is illegal

anyway. As I and G points out, however, the counterfeit packages are so similar

to genuine packages that an injunction would probably require it to stop selling

any Newport® cigarettes while the suit was pending, for fear that it would

inadvertently violate the injunction. Further, the district court did not clearly err

in taking account of I and G’s status as a small business. All of these factors

indicate that an injunction would weigh much more heavily on I and G than the

lack of one would affect Lorillard.

      Under the circumstances, the district court’s decision to deny preliminary

injunctive relief was not arbitrary, capricious, whimsical, or manifestly

unreasonable. Thus, the district court did not abuse its discretion, and the

judgm ent of the district court is AFFIRMED.

                                                      Entered for the Court

                                                      W ade Brorby
                                                      Circuit Judge

                                          -7-