Delay Leads to Denial of Request for Injunctive Relief in New Jersey Lawsuit
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), PPT, a slot machine developer, sued competitor Gimme Games and former PPT executives who started Gimme Games, for misappropriation, unfair competition, and patent infringement. More particularly, PPT alleges in the pending lawsuit that Gimme Games creates slot machine games with the same look and feel as PPT’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 PPT received its patent on May 27, 2014. PPT 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 PPT’s application for injunctive relief, the court referenced two delays by PPT. First, the court noted that PPT 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 PPT’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 PPT 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 PPT 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.