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Case of the Day: H-D Michigan LLC v. Hellenic Duty Free Shops S.A.

George Washington
The Father Of His Country—happy Presidents' Day from Letters Blogatory!
We return today to the case of the day from September 27, 2011, H-D Michigan, LLC v. Hellenic Duty Free Shops S.A. The claim was for breach of a trademark licensing agreement, and the issue back in September was whether the court could extend a temporary restraining order beyond the normally applicable time limit until the Greek defendant was served with process under the Hague Service Convention. I followed up with a post on that issue in October.

In today’s case of the day, the parties have gotten past the preliminaries. DFS, the Greek defendant, was served with process, and the judge extended the temporary restraining order and ultimately issued a preliminary injunction.

Shortly before the hearing on the motion for a preliminary injunction, DFS brought a parallel action in Greece. According to the declaration Harley-Davidson (the plaintiff) filed with the Wisconsin court, DFS filed a petition for an injunction with the First Instance Court of Athens seeking to enjoin Harley Davidson from “obstructing DFS’s distribution and sale” of the goods in question in the case and from “stating that DFS is not an authorized Harley-Davidson licensee”. The Athens court scheduled a hearing and required DFS to summon Harley-Davidson five days before the hearing. The court went ahead with the hearing, even though Harley Davidson did not appear and later denied having had any notice of the hearing. DFS, on the other hand, asserted (without proof) that the notice had been served “by cable.” The Greek court issued the equivalent of a temporary restraining order, which was to be effective until March 2012, when a full hearing would be held. (Sidebar: this raises a really interesting point. Was service “by cable” proper under the Hague Convention? If in fact Harley-Davidson was not served, did the Greek court have jurisdiction to enter its order? I don’t propose to answer those questions, other than to point out that in a sense what goes around comes around—remember that Harley-Davidson had successfully, and correctly in my view, argued that the US court had jurisdiction to enter preliminary injunctive relief even before service of process on a foreign defendant).

Abraham Lincoln
The Great Emancipator
Not surprisingly, Harley-Davidson sought an anti-suit injunction. The judge found that DFS had not provided notice of the Greek proceedings to Harley-Davidson and that DFS had not provided notice of the US proceedings to the Greek court. The judge held that the threshold questions were whether the foreign case involved the same parties and whether the US proceedings would be dispositive of the foreign proceedings. Following Seventh Circuit precedent, he went on to apply the “liberal” approach, under which the question is whether “letting the two suits proceed would be gratuitously duplicative, or as the cases sometimes say, ‘vexatious and oppressive.'” If so, then an injunction should issue unless the opposing party can show that an injunction would “actually harm” US foreign relations. (Other circuits adopt the “conservative” approach, under which comity concerns have more weight and an injunction can issue “only in the most compelling circumstances”).

The judge found that an injunction was warranted. The key factor was that parties’ licensing agreement had a choice of court clause selecting the Wisconsin courts for resolution of disputes. But the judge also found that DFS had brought the Greek action in bad faith, since it failed to inform the Greek court about the US proceedings and thus deprived the Greek court of the ability to hold a meaningful hearing. DFS failed to show that an anti-suit injunction would have any effect on US relations with Greece. Indeed, the case for an injunction was so strong that the judge found that it would be warranted even under the more conservative approach used in other circuits, since the injunction was necessary to protect the court’s jurisdiction and to foil DFS’s “blatant attempt … to relitigate issues.”

Photo credits: The Athenaeum and Encyclopedia Britannica

Case of the Day: Metso Minerals Industries v. Johnson Crushers International

The case of the day is Metso Minerals Industries, Inc. v. Johnson Crushers International, Inc. (E.D. Wis. 2011). Metso Minerals (France) S.A. brought an action against Johnson Crushers seeking a declaration that it did not infringe Johnson’s patent for an adjustment mechanism for a rock crusher. Johnson counterclaimed for infringement. Metso refused to produce documents requested in discovery on the grounds that production would violate the French blocking statute, and Johnson moved to compel. The judge granted the motion, rejecting the argument that discovery had to proceed under the Hague Evidence Convention. The judge noted that Metso had failed to point to French interests that could, under Aérospatiale, be sufficient to require resort to the Convention. The opinion doesn’t dwell on the point, but I would add that Metso was the plaintiff, and a plaintiff, who choses a US forum and invokes the judicial power of the United States, should be prepared to follow US procedures. (That’s a little bit of sermonizing, but it strikes me as a matter of basic procedural fairness). If the judge had considered the issue, I think it would have been necessary to consider whether the fact that Metco was seeking only a declaration should matter. It’s not uncommon for companies that expect to be sued for patent infringement to seek declaratory judgments, and Metso could have argued that in substance, it was a defendant, and the fact that it sued first should be not be counted against it in the Aérospatiale analysis. I find this unpersuasive. The decision to rush into court first rather than waiting to be sued is a tactical decision about choice of forum, the benefit of having your name in front of the “versus”, etc. Plainitffs should simply factor this issue into their tactical calculus.

Case of the Day: H-D Michigan, LLC v. Hellenic Duty Free Shops S.A.

The case of the day is H-D Michigan, LLC v. Hellenic Duty Free Shops S.A. (E.D. Wis. 2011). HD-Michigan and Harley-Davidson Motor Co. sued Hellenic for breach of a trademark licensing agreement. The court issued a temporary restraining order effective for fourteen days, which enjoined Hellenic from using Harley-Davidson’s trademarks. In the case of the day, Harley-Davidson asked the judge to extend the order until it could effect service of process on Hellenic in Greece under the Hague Service Convention.

On the one hand, Rule 65(b)(2) provides:

[A temporary restraining] order expires at the time after entry—not to exceed 14 days—that the court sets, unless before that time the court, for good cause, extends it for a like period or the adverse party consents to a longer extension.

“A like period,” as the court noted, is generally held to mean a second fourteen days.

On the other hand, since the TRO is meant to prevent irreparable harm, it would seem intolerable if the plaintiff were to lose the protection of the injunction because of the time it takes to serve process abroad.

The judge solved this problem by citing some cases where the courts had granted extensions of a TRO beyond the time contemplated in the rule. I think the better answer is the answer I suggested in the post on 3M Co. v. Christian Investments LLC, the case of the day from September 7. The court should simply hold a hearing on a preliminary injunction. Although 3M is a case to the contrary, I think the court has jurisdiction to enter a preliminary injunction even before the defendant has been served with process, as long as the defendant receives sufficient notice and an opportunity to be heard to satisfy the Due Process Clause. I think that this approach would do less violence to the rules than the approach in today’s case, which more or less ignores the plain language of Rule 65(b).