A recent decision from the United States District Court for the District of New Jersey highlights the perils of delay before applying for injunctive relief. In PTT, LLC v. Gimme Games, et al. No. 13-7161 (JLL/JAD), PTT, a slot machine developer, sued competitor Gimme Games and former PTT executives who started Gimme Games, for misappropriation, unfair competition, and patent infringement. More particularly, PTT alleges in the pending lawsuit that Gimme Games creates slot machine games with the same look and feel as PTT’s games, especially with respect to “oversize symbols.”
The original complaint was filed on November 26, 2013, with the patent infringement claim filed by amended complaint soon after PTT received its patent on May 27, 2014. PTT thereafter applied for a temporary restraining order on August 21, 2014, approximately one week after it discovered that the defendants maintained a Facebook page promoting the defendants’ games with oversized symbols.
In denying PTT’s application for injunctive relief, the court referenced two delays by PTT. First, the court noted that PTT waited two months after becoming aware of the defendants’ alleged breach in September 2013 before filing its lawsuit in November 2013. The court also noted the delay of about 11 months before PTT’s application for injunctive relief in August 2014. The court cited its prior decision of Ultimate Trading Corp. v. Daus, where it had previously held a five month delay in seeking a preliminary injunction was too substantial to then make a showing of irreparable harm. Even putting aside the delay in seeking the injunctive relief, the court concluded that PTT could not substantiate any allegations of “currently existing immediate harm” to justify the injunctive relief it was requesting.
The court’s decision should not surprise those familiar with the exigency standards and requirements generally applicable to injunctive relief applications. However, the court’s closing comments in PTT drive home the importance of acting quickly, even where there is only a threat of a breach. The court noted the “function of preliminary injunctive relief is to preserve the status quo pending a determination of the action on the merits … The status quo to be preserved is that state of affairs existing immediately before the filing of the litigation, the last uncontested status which preceded the pending controversy.” The district court judge suggested that to grant the injunctive relief requested after competitive activity was afoot, would not preserve the status quo but completely change it, and that “the prelitigation status quo would best be preserved by permitting the parties to remain in the state of free competition in the marketplace.”
Under certain circumstances, injunctive relief could and should be granted even after competitive activities have commenced, to prevent further solicitation and other unlawful activity beyond the date of the application. Still, employers should be aware that some judges in other circumstances might not grant injunctive relief once competitive activities are no longer a threat but a reality. The more important message here, however, is that employers should be mindful of the adverse risks an unexplained delay will present to an application for equitable relief.
As a follow up to the above post, after the court denied PTT’s application for injunctive relief, the defendants moved to dismiss the amended complaint alleging, among other things, that PTT failed to plausibly allege the existence of a trade secret and its wrongful taking by the defendants, that PTT failed to allege a secondary meaning and that the products features are functional and not protectable, and that PTT had altered its alleged trade secret. The court rejected these arguments and denied the defendants’ motion as premature (although the court dismissed the induced infringement claim without prejudice and with leave for PTT to amend within 30 days). The court looked to the pleadings standards of the Federal Rules of Civil Procedure, and held that during discovery, PTT will be required to provide, with precision, “a description of the trade secrets at issue that is sufficient to (a) put the defendant on notice of the nature of plaintiff’s claims and (b) enable the defendant to determine the relevancy of any requested discovery concerning its trade secrets.”