No Harm, No Foul: Acknowledgement of Irreparable Harm Doesn’t Create Irreparable Harm

It is common for contracts that grant intellectual property licenses or that include confidentiality obligations to include a provision in which the licensee or the user of confidential information acknowledges that breach of its confidentiality or license obligations will cause irreparable harm and that the other party will be entitled to injunctive relief to enforce any breach or threatened breach of the provision. Many an attorney has spent time negotiating the finer points of such acknowledgment provisions. The recent case of Life Technologies Corp. v. AB Sciex Pte. Ltd., No. 11 Civ. 325 (S.D.N.Y.  April 11, 2011) is a reminder that such acknowledgments, while perhaps useful, do not alone establish irreparable harm or entitlement to an injunction.

Life Technologies had granted an exclusive license to AB Sciex to use the mark AB SCIEX in a defined field relating to mass spectrometry instruments and services. Life Technologies alleged that AB Sciex had breached the license and infringed its trademark rights by using the AB Sciex mark on goods and services for which it was not licensed. Life Technologies filed suit and sought a preliminary injunction. In order to obtain the injunction, Life Technologies had to demonstrate irreparable harm. Life Technologies argued, inter alia, that irreparable harm existed because AB Sciex had acknowledged, in the License Agreement, that Life Technologies would be entitled to an injunction to enforce the Agreement.

The court denied Life Technologies an injunction, holding that the acknowledgment in the License Agreement alone did not demonstrate irreparable harm, and finding the plaintiff’s other arguments unpersuasive. In particular, Life Technologies had waited too long to seek the injunction, and the court cited a number of cases suggesting that an unexplained delay in filing suit of more than two months would generally deny the plaintiff an injunction. In this case, nine months had passed between discovery of the alleged violation and the preliminary injunction motion.

This case demonstrates that, while contractual acknowledgments may be a factor in the award of an injunction, they are unlikely to be dispositive or even, in this case, particularly persuasive. It is worth remembering that an injunction is an equitable remedy involving the exercise of the court’s discretion, and a court will understandably require persuasive evidence of irreparable harm. It is difficult to see how a contract provision negotiated by the parties at a time when they do not have knowledge of the actual circumstances of a violation could be particularly persuasive, unless the provision outlines in specific detail the violation of which the plaintiff is concerned, and the later circumstance turns out to match that description.

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