Monster Energy Appeals to Ninth Circuit Following District Court Denial of Injunction Against ISN

By Nancy Braman
September 5, 2019

“Ultimately, even though public interest favors the granting of a permanent injunction, the court found that Monster failed to demonstrate that it had suffered irreparable harm from ISN’s infringement under the Lanham Act.”

In the most recent development in a case between energy drink brand Monster Energy Company and maker of automotive tools Integrated Supply Network, LLC (ISN), the U.S. District Court for the Central District of California on July 2 denied Monster’s request for a permanent injunction against ISN. Monster appealed on July 3 to the U.S. Court of Appeals for the Ninth Circuit and ISN cross-appealed on July 12.

In 2017, Monster asserted four causes of action in its complaint against ISN: 1) trademark infringement, trade dress infringement, and false designation of origin under 15 U.S.C. § 1125(a); 2) trademark infringement pursuant to 15 U.S.C. § 1114; 3) Unfair Competition under Cal. Bus. & Prof. Code §§ 17200 et seq.; and 4) Unfair Competition under California Common law. After nine days of trial, the jury found for Monster on its infringement claim involving federally registered trademarks including the word “Monster” and its trade dress. In 2018, the jury awarded zero dollars in damages to Monster, but instead awarded $5 million in punitive damages after finding that Monster proved by clear and convincing evidence that ISN acted with malice, oppression, or fraud. The jury did not find that ISN had infringed Monster’s unregistered mark “Monster” or federally registered trademarks that include the word “Beast” and also found that Monster did not prove that ISN’s infringement was willful by a preponderance of the evidence.

Post-Trial Motions

Following the jury verdict, Monster asked the court to increase the compensatory damages award or to order a new trial on damages, and to issue a permanent injunction.

Under 15 U.S.C.§ 1116(a) of the Lanham Act, a district court may grant or deny injunctions to prevent the violation of any right of the registrant of a mark registered in the U.S. Patent and Trademark Office (USPTO), in addition to the prevention of other Lanham Act violations. The decision is only reviewable on appeal for abuse of discretion. Cortez v. Purolator Air Filtration Prod. Co Cortez v. Purolator Air Filtration Prod. Co. also made it clear that injunctive relief is not necessarily mandated under California Business & Professions Code § 17203 when an unfair business practice is shown. Instead, courts are given broad discretion in their ruling.

The district court began by turning to ISN’s response to Monster’s filing of a Motion for Permanent Injunction. ISN filed a Motion to Strike Material Outside the Trial Record, including the following: 1) ISN Senior VP of Marketing Scott Pilkenton’s record of prior criminal convictions; 2) ISN’s product sales by year for its Monster Mobile Product; 3) Excerpts of multiple deposition transcripts; and 4) A video of the 2017 Expo. The court held that even though the materials were not admitted as evidence before the jury at trial, the court may still consider them if included on the parties’ joint exhibit list and are otherwise admissible. The court denied the requests involving product sales and deposition transcripts but granted the first and last request due to errors in the exhibit and non-listing of materials on the joint exhibit list.

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No Irreparable Harm

The court turned next to Monster’s motion for injunctive relief. Citing San Miguel Pure Foods (625 F. App’x at 327), the court found that Monster did not offer evidence demonstrating that ISN’s infringement had actually caused a loss of control over its business reputation leading to irreparable harm and loss of prospective customers. Additionally, the court reasoned that evidence regarding consumer confusion does not necessarily demonstrate irreparable harm. Even where ISN had not ceased infringing activity, Monster still had not proven irreparable harm as required to justify a permanent injunction. In response to Monster’s argument that repeated litigation would cause disruption of its business operations, the court found that no harm had been done to business operations as a result of litigation up to this point. Nor did the court believe that Monster would continue to suffer without an injunction. It argued that Monster had not demonstrated any undue hardship stemming from failure to issue an injunction, as ISN’s infringing products only constitute a small portion of its revenue and therefore do not have a profound impact on Monster’s sales. Ultimately, even though public interest favors the granting of a permanent injunction, Monster failed to demonstrate that it had suffered irreparable harm from ISN’s infringement under the Lanham Act, said the court.

Lastly, under California’s Unfair Competition Law (UCL), claims must be from a party who has suffered injury in fact and lost money or property as a result of unfair competition. The court found that because Monster was awarded $0 in damages from ISN’s infringement and failed to demonstrate that it suffered economic or actual injury, it did not have standing under the UCL.

More to Come

On July 3, Monster appealed the orders and ISN filed a cross-appeal on July 12.

Madel Law, Counsel for ISN, submitted the following comment to IPWatchdog:

“We’re pleased that the court recognized the strength of the jury’s verdict in our favor on damages and denied Monster Energy Company’s motions for increased damages or a new trial on damages and the permanent injunction. MEC sought $15,357,622 in actual damages and $50 million in punitive damages at trial, so to this point, it recovered just 7.7% of the damages it sought with the punitive damages verdict. The clear weight of Supreme Court, Ninth Circuit, and California precedent supports our position that MEC must be awarded any actual damages to sustain a punitive-damages award, and no court has ever upheld a 5,000,000 to 1 punitive-to-nominal or actual damages ratio. We’re confident in our position on appeal.”

Knobbe Martens, counsel for Monster Energy, did not return a request for comment, but last year told IPWatchdog that the true value of a trademark was the right to exclude others from using the mark and, in briefs submitted during the case, argued that monetary harm and irreparable harm were completely disconnected. “There’s nothing which suggests that the jury didn’t think that the mark had value,” Knobbe partner Joseph Re said. “The real value of the mark is the right to exclude, to prevent consumer confusion and to signify source.”

 

The Author

Nancy Braman

Nancy Braman is a freelance legal researcher for IPWatchdog. She is also a U.S. Registered Patent Agent and a 2L at the University of New Hampshire Franklin Pierce School of Law, where she serves as the Communications Director of the UNH Patent Law Forum. Her research background in Molecular and Microbiology brings her to the realm of patent law, and in her spare time, she also works as an Alaska commercial sockeye fisherman.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

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  1. Lost In Norway September 6, 2019 4:11 am

    Thank you for the well written article

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