IP Law Daily, TRADEMARK—S.D. Cal.: Samsung entitled to four-month extension of asset-freezing TRO, (Jan 30, 2014)

By Mark Engstrom, J.D.

The federal district court in El Centro, California, has granted a request by two Samsung Group subsidiaries (“Samsung”) to extend a temporary restraining order that froze the local assets of two Chinese companies that allegedly infringed Samsung’s trademarks (Samsung Electronic Co., Ltd. v. Early Bird Savings, January 27, 2014, Benitez, R.). Because Samsung had demonstrated a good faith effort to properly serve the defendants under the Hague Convention, a process that was likely to take, by Samsung’s estimates, four to five months, the court granted Samsung’s motion to delay a preliminary injunction hearing and to extend the existing temporary restraining order (TRO) until May 26, 2014.

The court noted that the short duration of a typical TRO (14 days, extendable to 28) ensured that extraordinary relief would not long persist without a full hearing. In this case, however, special circumstances existed.

According to the court, if a TRO could not remain in effect until a foreign defendant was served under the Hague Convention, “Rule 65 would be inoperable against foreign defendants.” Given the length of time that it could take to serve foreign defendants, placing a 28-day maximum on TROs in those circumstances would “effectively defeat injunctive relief” because defendants could simply wait for the TRO to dissolve. That result appeared to be an unintended consequence of a strict reading of Rule 65. In this case, if Samsung’s TRO could not be extended, the defendants would be rewarded for evading proper service, a result that would undermine the authority of the courts.

The court concluded that the interests of justice required an extension of Samsung’s TRO. The court would not allow the defendants in this case to evade an injunction by refusing service of process until the normal deadline for TROs had expired, especially because: (1) the defendants could have already received actual notice of Samsung’s lawsuit and (2) Samsung had been making a good faith effort to formally serve the defendants.

Dissolution of the TRO was particularly improper in this case, the court explained, because dissolution would defeat the TRO’s purpose. The court would not be able to award equitable relief because the defendants would be able to remove their assets from the court’s jurisdiction. According to the court, Samsung showed that the likelihood of those actions by the defendants was substantial enough to justify a continuing order to freeze their assets.

After carefully reviewing Samsung’s filing, the court concluded that the findings that justified the existing TRO were still valid and were sufficient to justify an extension until such time that the court was able to hear arguments on a preliminary injunction. More specifically, the court concluded that Samsung had showed that: (1) success on the merits of its trademark claims was likely; (2) irreparable harm was likely absent preliminary injunctive relief; (3) a balancing of the harms favored the maintenance of the TRO; and (4) the TRO was in the public’s interest.

For those reasons, the court granted Samsung’s motion to delay the scheduled hearing on a preliminary injunction and to extend the TRO until May 26, 2014. Samsung was ordered to notify the court as soon as possible after the defendants had been served, but in no case later than the one court day after learning that service was successful.

Because the court would not consider a motion for a preliminary injunction without providing the defendants an opportunity to respond, Samsung’s motion for a preliminary injunction was denied without prejudice. Samsung was ordered to refile its preliminary injunction motion within two days of receiving notice that the defendants had been served.

The case is No. 13-CV-3105-BEN (DHB).

Attorneys: Richard J. Nelson (Sideman & Bancroft LLP) for Samsung Electronics Co., Ltd and Samsung Telecommunications America, LLC.

Companies: Samsung Electronic Co., Ltd.; Samsung Telecommunications America, LLC; Early Bird Savings; Shenzhen Okeler Science & Technology Co., Ltd.

Cases: Trademark CaliforniaNews