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Balance of the harms disfavors injunction where movant does not show irreparable harm

Balance of the harms disfavors injunction where movant does not show irreparable harm

LEGO v. ZURU is a nonprecedential case decided on January 15, 2020, on appeal from the District of Connecticut. Plaintiff LEGO filed a complaint against defendant ZURU for copyright, trademark, and patent infringement and obtained a temporary restraining order. After a hearing, the court granted LEGO’s motion for a preliminary injunction and set the bond amount at $25,000. ZURU appealed.

The Federal Circuit affirmed the preliminary injunction as to some claims of copyright infringement, vacated the preliminary injunction as to other claims of copyright infringement, and vacated the preliminary injunction as to design patent infringement,

The Federal Circuit vacated the preliminary injunction regarding design patent infringement. “[B]ecause every stated rationale for the district court’s finding is either incorrect or unsupported,…the district court abused its discretion in finding that LEGO would likely suffer irreparable harm absent a preliminary injunction.” LEGO’s argument “that absent an injunction, LEGO would effectively be forced into a compulsory license” was “circular…because the result of not being enjoined necessarily entails allowing the alleged infringer to continue selling their accused products in every case.” LEGO’s argument that it “would suffer a loss of goodwill and brand equity because the accused” products are of inferior quality was unsupported by the record. The district court’s finding that “LEGO has shown that the patent infringement will lead to LEGO losing market share” was also unsupported by the record.

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“[T]he district court abused its discretion in finding that the balance of the equities… favors LEGO” because “the district court incorrectly found that LEGO would be irreparably harmed absent an injunction.” “ZURU’s own inability to show harm does not prevent [the Federal Circuit] from finding that LEGO, as the party seeking a preliminary injunction, failed to demonstrate that the balance of the hardships analysis favors them.” The Federal Circuit thus vacated the preliminary injunction.

The district court did not abuse its discretion in setting bond at $25,000.