I.M. Wilson, Inc. v. Grichko, CIVIL ACTION NO. 18-5194

I.M. WILSON, INC., Plaintiff v. OTVETSTVENNOSTYOU "GRICHKO" et al., Defendants

CIVIL ACTION NO. 18-5194

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA

OCTOBER 18, 2019

MEMORANDUM

PRATTER, J.

INTRODUCTION

Plaintiff I.M. Wilson, Inc. filed this trademark infringement action against Defendants OOO Grichko, Nicolay Grishko, and Grishko S.R.O.,¹ the Russian and Czech entities that manufacture and sell ballet shoes under the name GRISHKO. I.M. Wilson owns four GRISHKO trademarks in the United States and the defendants own the trademark GRISHKO everywhere else in the world. The Court granted I.M. Wilson preliminary injunctive relief enjoining the defendants from selling GRISHKO-branded products in the United States. The defendants now seek an encore: for the Court to reconsider² its July 25, 2019 decision to grant I.M. Wilson a preliminaryinjunction.³ For the reasons that follow, the Court will vacate its decision to grant I.M. Wilson preliminary injunctive relief.

I. Factual and Procedural Background

After considering numerous rounds of briefing, several days of hearings, post-hearing submissions, and two prior motions to supplement the record, the Court's memorandum granting preliminary injunctive relief set forth extensive findings of fact and conclusions of law. In their motion for reconsideration, the defendants challenge only the Court's irreparable harm analysis. Accordingly, the relevant facts and procedural history concerning the Court's finding that I.M. Wilson would likely suffer irreparable harm are summarized below.

For decades, I.M. Wilson was the defendants' exclusive distributor in the United States. In 2016, the defendants terminated the exclusive licensing agreement under which the parties were operating, and the exclusivity of the relationship officially came to an end in March 2018. Around that time, the defendants began selling products directly to U.S. consumers through the website grishkoshop.com,⁴ which increased their sales activities around the holidays. This prompted I.M.Wilson to move for a preliminary injunction on December 4, 2018 to prevent the defendants from infringing on the U.S. GRISHKO trademarks.

In its memorandum, the Court acknowledged that "monetary damages very likely would have sufficed" to remedy the irreparable harm alleged after the preliminary injunction record initially closed. Mem. at ¶ 90 (Doc. No. 66).⁵ I.M. Wilson merely presented limited evidence that consumers believed it was operating grishkoshop.com and undercutting retailers' prices. Id. at ¶ 56. It also presented testimony that I.M. Wilson's store in New York received only a few phone calls from consumers with inquiries related to grishkoshop.com. Id. at ¶ 55. The Court found that this testimony presented, at best, some evidence that the defendants' entrance into the market may have resulted in a loss of control of reputation, loss of trade, or loss of goodwill for I.M. Wilson. Id. at ¶ 90. However, the Court was convinced that a preliminary injunction became necessary after Mr. Grishko sent two decision-altering communications to I.M. Wilson's retailers. Id.

On March 28, 2019, I.M. Wilson initially communicated to its retailers that it was "facing an interruption in service at the factory, which in turn leads to longer delivery times for out shipments." Grishko Decl. (Doc. No. 56-1, Ex. B).⁶ In response, the defendants emailed I.M. Wilson's retailers a letter from Mr. Grishko on May 20, 2019. The letter stated that I.M. Wilson "has made unfounded threats of retaliation against retailers who purchase products through anyone other than [I.M. Wilson]." Pl.'s Mot. to Supp., Ex. A (Doc. No. 54-1). The letter further stated that I.M. Wilson had limited inventory and that Grishko Russia would no longer be providing I.M.Wilson with genuine GRISHKO products. Id. In closing, the letter stated, "we are confident that the Court ruling will be issued within the coming days and that it will be in our favor. Once the Court has denied [I.M. Wilson's] request, we look forward to supplying you with the full range of authentic Grishko brand products." Id.

Afterwards, the defendants emailed I.M. Wilson's retailers a letter from Mr. Grishko on June 17, 2019. In this letter, Mr. Grishko stated that the defendants were no longer supplying I.M. Wilson with their shoes, that I.M. Wilson was distributing shoes and attempting to pass off shoes as the defendants' own, and then provided retailers with a photographic guide of how to identify the defendants' products. Gili Decl. (Doc. No. 60-2, Ex. B). Mr. Grishko further stated, "We have also heard rumors that [I.M. Wilson] has threatened to sue retailers who don't purchase through [I.M. Wilson]." Id.

Focusing on the defendants' statements that I.M. Wilson will sue any retailer should they purchase GRISHKO products from any other supplier, the Court found it "difficult to see how it is possible for a communication such as this not to harm I.M. Wilson's reputation and goodwill." Mem. at ¶ 94 (Doc. No. 66) (emphasis in original). Based entirely on Mr. Grishko's communications, the Court found that I.M. Wilson had sufficiently demonstrated a likelihood of irreparable harm warranting preliminary injunctive relief. Id. at ¶ 94-95. The Court accordingly enjoined the defendants from selling GRISHKO-branded products in the United States.

II. Legal Standard

"The purpose of a motion for reconsideration is to correct manifest errors of law or fact or to present newly discovered evidence." Harsco Corp. v. Zlotnicki, 779 F.2d 906, 909 (3d Cir. 1985), cert. denied, 476 U.S. 1171 (1986) (internal citations omitted). A proper motion for reconsideration must rely on one of three grounds: "(1) an intervening change in controlling law;(2) the availability of new evidence; or (3) the need to correct clear error of law or prevent manifest injustice." Lazaridis v. Wehmer, 591 F.3d 666, 669 (3d Cir. 2010); see also Max's Seafood Café, by Lou-Ann, Inc., v. Quinteros, 176 F.3d 669, 677 (3d Cir. 1999). A finding of "clear error" requires a "definite and firm conviction that a mistake has been committed." United States v. Jasin, 292 F. Supp. 2d 670, 676 (E.D. Pa. 2003) (quoting Easley v. Cromartie, 532 U.S. 234, 242 (2001)). "Because federal courts have a strong interest in finality of judgments, motions for reconsideration should be granted sparingly." Continental Casualty Co. v. Diversified Indus., Inc., 884 F. Supp. 937, 943 (E.D. Pa. 1995) (citation omitted). Finally, a motion for reconsideration should not raise additional arguments that the movant "could have made but neglected to make prior to judgment." Holsworth v. Berg, No. 05-1116, 2005 WL 1799409, at *3 (E.D. Pa. Jul. 26, 2005) (quoting Jasin, 292 F. Supp. 2d at 677).⁷

III. Discussion

A thorough description and analysis of the parties' initial arguments in this dispute regarding the grant of preliminary injunctive relief can be found in the Court's previous memorandum. For present purposes, then, the Court will focus on the arguments asserted by the parties concerning the motion for reconsideration. The defendants argue that the preliminary injunction should be altered, amended, or vacated because the Court incorrectly analyzed the irreparable harm prong of the preliminary injunction analysis.

The "extraordinary remedy" of preliminary injunctive relief "should be granted only in limited circumstances." Ferring Pharm., Inc. v. Watson Pharm., Inc., 765 F.3d 205, 210 (3d Cir. 2014) (quoting Novartis Consumer Health, Inc. v. Johnson & Johnson-Merck Consumer Pharm. Co., 290 F.3d 578, 586 (3d Cir. 2002)). In ruling on a request for a preliminary injunction, a district court is required to examine the following four factors before granting preliminary injunctive relief: (1) the plaintiff's likelihood of success on the merits; (2) whether the plaintiff will suffer irreparable harm if relief is not granted; (3) the balance of equities; and (4) the public interest. Groupe SEB USA, Inc. v. Euro-Pro Operating LLC, 774 F.3d 192, 197 (3d Cir. 2014); Opticians Ass'n of America v. Independent Opticians of America, 920 F.2d 187, 191-92 (3d Cir. 1990). The movant must "meet the threshold for the first two 'most critical' factors," and if "these gateway factors are met, a court then considers the remaining two factors and determines in its sound discretion if all four factors, taken together, balance in favor of granting the requested preliminary relief." Reilly v. City of Harrisburg, 858 F.3d 173, 179 (3d Cir. 2017), as amended (June 26, 2017).

"The irreparable harm requirement is met if a plaintiff demonstrates a significant risk that he or she will experience harm that cannot adequately be compensated after the fact by monetary damages." Adams v. Freedom Forge Corp., 204 F.3d 475, 484-85 (3d Cir. 2000). Courts "may award preliminary injunctive relief upon a clear showing of a likelihood of irreparable harm." Groupe SEB USA, 774 F.3d at 204 (internal quotation marks omitted). In coming to this conclusion, the Court is allowed to draw "fair inferences from facts in the record." Id. at 205. The "availability of money damages for an injury typically will preclude a finding of irreparable harm." Reilly, 858 F.3d at 179 n.4.

A "party seeking a preliminary injunction in a Lanham Act case is not entitled to a presumption of irreparable harm but rather is required to demonstrate that she is likely to suffer irreparable harm if an injunction is not granted." Ferring Pharm., Inc., 765 F.3d at 217; Groupe SEB USA, 774 F.3d at 203. "Grounds for irreparable injury include loss of control of reputation, loss of trade, and loss of goodwill," and "can also be based upon the possibility of confusion." Pappan Enters., Inc. v. Hardee's Food Systems, Inc, 143 F.3d 800, 805 (3d Cir. 1998) (citing Opticians Ass'n, 920 F.2d at 195-96).

Although the defendants presented numerous arguments in their briefing and during oral argument, only one merits discussion here. The...