PER CURIAM:
Defendants-appellants John Tollenaere and Precision Lift, Inc. (collectively "Precision") appeal from the district court's grant of a preliminary injunction against them in an action for copyright infringement by plaintiff-appellee Flexible Lifeline Systems, Inc. ("Flexible"). The district court found that Flexible was likely to succeed in its infringement suit, and granted the injunction relying on long-standing precedent of this circuit that presumes irreparable harm in a copyright infringement case upon a showing of likelihood of success on the merits. Precision appeals, claiming that such a presumption runs afoul of two recent Supreme Court decisions, eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 126 S.Ct. 1837, 164 L.Ed.2d 641 (2006) and Winter v. Natural Resources Defense Council, Inc., 555 U.S. 7, 129 S.Ct. 365, 172 L.Ed.2d 249 (2008). We agree, and therefore vacate the injunction and remand.
John Tollenaere formed Precision in the 1990s to market a helicopter rescue lift product he had patented. In or around 2000, Precision expanded its business to include sales of aircraft maintenance stands and platforms for fixed- and rotorwing aircraft.
West Coast allowed Precision to use the technical drawings of the stands manufactured by West Coast in order for Precision to market the stands, but West Coast always claimed ownership of the drawings.
In July of 2008, Precision and West Coast entered into a joint venture to compete for a United States Air Force contract to manufacture and sell maintenance stands for C-130 Hercules aircraft. Under this arrangement, West Coast was responsible for designing and manufacturing the stands, and Precision was responsible for submitting the bid to the government and handling the bid process. Rather than a single maintenance stand, the government requested bids for a wraparound maintenance platform comprised of several stands for use during extensive aircraft inspections.
West Coast included provisions to protect its ownership of intellectual property in the Joint Venture Agreement ("JVA"). First, the JVA expressly provides that each party acknowledges the need to disclose its confidential and proprietary information to the other for the purposes of the venture. Second, the JVA contains an agreement that each party will not disclose the confidential and proprietary information of the other party to anyone else, except to the government, and even then only as necessary to complete their duties in performing the venture. Third, the JVA expressly requires each party to promptly return the other party's confidential and proprietary information upon termination of the venture or at the request of the other party.
The parties dispute Precision's role in the actual design of the maintenance platforms
Flexible disagrees, countering that Precision did not contribute to the design and could not have done so because it employed no engineers and did not have manufacturing or design capabilities. West Coast, on the other hand, employed an engineer and two draftsmen, and Flexible contends that West Coast alone designed the maintenance stands and created the drawings at issue here. Moreover, the JVA specified that West Coast was responsible for all engineering, technical design work, and manufacturing, while Precision was responsible for completing the bid proposal and dealing with the government during the bid process.
In July 2008, Precision submitted the initial proposal for the Air Force C-130 platform, which, as required, included the initial drawings. These drawings had to be submitted for evaluation and revisions prior to submitting the final bid. Thereafter, Precision communicated with the Air Force regarding the proposal and West Coast continued its design work on the stands, which included making revisions to the design and technical drawings.
In 2009, West Coast encountered significant financial problems. Unable to continue operating on its own, West Coast sold the majority of its assets, including much of its intellectual property, to Flexible. In particular, the purchase agreement specified that "ALL drawings, details, production schedules, etc. for design, construction and installation of maintenance platforms for aircraft and land vehicles" were included in the purchase. After the purchase, Flexible continued what had been West Coast's work on the final C-130 drawings and forwarded them to the Air Force in December 2009. Meanwhile, Precision asked Flexible to discuss formalizing their continuing business relationship in light of Flexible's purchase of West Coast's assets.
On January 27, 2010, Flexible responded to Precision's requests to formalize their business relationship by advising Precision that Flexible was not interested in continuing a joint venture. Flexible presented Precision with alternate proposals, including one by which Precision would become a sales agent for Flexible's products. Rather than proceed with either of Flexible's proposals, Precision found another joint venture partner to take West Coast's place in the C-130 maintenance stand bid proposal. Precision joined with Carbis, one of Flexible's competitors, and submitted a final bid for the project totaling over $61 million. Flexible did not submit a bid of its own for the proposal. The Air Force eventually awarded the contract to another competitor at a contract price approximately $9.5 million higher than Precision's bid, likely due to the dispute between Precision and Flexible as to the ownership of the drawings. Precision protested the award, but the Air Force ultimately denied the protest.
In the meantime, Flexible filed applications to register the drawings it had purchased from West Coast, and the Copyright Office granted the registrations effective June 23, 2010. Flexible then filed its complaint and an application for injunctive relief to enjoin Precision from using Flexible's intellectual property on the C-130 bid. The district court denied the motion for a temporary restraining order, but set a hearing on
The district court issued findings of fact and conclusions of law in granting Flexible's injunction application. It found that the C-130 drawings at issue were created by West Coast employees, and that West Coast gave Precision the drawings to use for the C-130 contract proposal. The court also found that: (1) the joint venture agreement required Precision to return all of West Coast's proprietary information upon the termination of the agreement; (2) Flexible was likely to show that Precision reproduced and used Flexible's drawings without permission or license; and (3) Precision had distributed copies of Flexible's drawings without permission or license. However, the court noted that Flexible "elicited no proof suggesting that it entered competing bids with contracts that Precision Lift, Inc. procured through the use of Flexible Lifeline Systems, Inc.'s platform drawings." On the other hand, it observed that "[i]f a preliminary injunction is issued, Precision Lift, Inc. may lose existing or potential contracts."
The district court's conclusions of law included the following: (1) Flexible is likely to prove its drawings are copyrightable; (2) West Coast was the sole author and creator of the drawings; (3) Flexible had valid copyrights in the drawings; and (4) Flexible was likely to succeed on the merits of its copyright infringement claim. The district court did not make a finding on whether Flexible would be irreparably harmed absent an injunction, but concluded that "[b]ecause Flexible Lifeline Systems, Inc. has shown a likelihood of success on the merits, Flexible Lifeline Systems, Inc. is presumed to be irreparably harmed." The district court did not analyze the issue of irreparable harm, but based on our precedent concluded "[w]hen a plaintiff is likely to succeed on the merits of a copyright infringement claim, irreparable harm is presumed. Elvis Presley Enterprises, Inc. v. Passport Video, 349 F.3d 622, 627 (9th Cir.2003)."
The court also found a "public ... interest in the efficient and economical performance of contracts," but because of the additional money the government would have to pay on the C-130 contract, the public interest would not be served by preventing Precision from using the drawings for that contract. The court concluded that Flexible was entitled to a preliminary injunction against Precision for the immediate return of all intellectual property Precision had received from West Coast, which was now owned by Flexible, and prohibited Precision from using such intellectual property other than in connection with the bid proposal on the Air Force C-130 contract. Precision timely appealed the issuance of the preliminary injunction. We have jurisdiction pursuant to 28 U.S.C. § 1292(a)(1).
A district court's decision regarding preliminary injunctive relief is
The Copyright Act provides that a court "may ... grant temporary and final injunctions on such terms as it may deem reasonable to prevent or restrain infringement of a copyright." 17 U.S.C. § 502(a). Thus, injunctive relief to prevent copyright infringement is available as an equitable remedy in the court's discretion. In order to obtain preliminary injunctive relief, a plaintiff "must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest." Marlyn Nutraceuticals, Inc. v. Mucos Pharma GmbH & Co., 571 F.3d 873, 877 (9th Cir.2009) (quoting Winter, 555 U.S. 7, 129 S.Ct. 365, 374 (2008)). This is commonly referred to as the "four-factor test." See, e.g., Sierra Forest Legacy v. Rey, 577 F.3d 1015, 1021 (9th Cir. 2009). Although Precision also argues that the district court erred in finding Flexible demonstrated a likelihood of success on the merits, the primary issue in this appeal is whether the district court used an erroneous legal standard by presuming irreparable harm in issuing injunctive relief.
We have long held that irreparable harm can be presumed in a copyright infringement case upon a showing of a likelihood of success on the merits by the copyright owner. Apple Computer, Inc. v. Formula Intern. Inc., 725 F.2d 521, 525 (9th Cir. 1984); see also Triad Sys. Corp. v. Se. Exp. Co., 64 F.3d 1330, 1335 (9th Cir.1995) (noting the general requirement of showing irreparable harm, but stating "[i]n a copyright infringement action, however, the rules are somewhat different. A showing of a reasonable likelihood of success on the merits raises a presumption of irreparable harm.").
Based on our precedent, the district court granted the preliminary injunction after finding a likelihood of success on the merits, without inquiring into whether Flexible would actually suffer any irreparable harm absent relief. Instead, the district court relied solely on the presumption of irreparable harm, citing our 2003 decision Elvis Presley, 349 F.3d 622. Precision objects, arguing that this circuit's standard, as expressed in Elvis Presley
In eBay, the Supreme Court reviewed a request for a permanent injunction after a jury found eBay had infringed MercExchange's patent. The district court refused to issue an injunction notwithstanding the infringement, finding "that a `plaintiff's willingness to license its patents' and its `lack of commercial activity in practicing the patents' would be sufficient to establish that the patent holder would not suffer irreparable harm." eBay, 547 U.S. at 393, 126 S.Ct. 1837 (quoting MercExchange, L.L.C. v. eBay, Inc., 275 F.Supp.2d 695, 712 (E.D.Va.2003)). The Federal Circuit reversed the district court, "applying its `general rule that courts will issue permanent injunctions against patent infringement absent exceptional circumstances.'" Id. at 391 (quoting MercExchange, L.L.C. v. eBay, Inc., 401 F.3d 1323, 1339 (Fed.Cir.2005)).
The Supreme Court stated that the district court's "categorical rule" regarding irreparable harm "cannot be squared with the principles of equity adopted by Congress." eBay, 547 U.S. at 393, 126 S.Ct. 1837. However, by applying a "general rule," the Federal Circuit had "departed in the opposite direction [as the district court] from the four-factor test." Id. The Court explained that "[j]ust as the district court erred in its categorical denial of injunctive relief, the Court of Appeals erred in its categorical grant of such relief." Id. at 394, 126 S.Ct. 1837. The Court was very clear that even where infringement had been proven, a plaintiff may not be granted injunctive relief until he satisfies the four-factor test, which includes demonstrating irreparable injury. Id. (holding that because "neither court below correctly applied the traditional four-factor framework that governs the award of injunctive relief, we vacate the judgement of the Court of Appeals, so that the District Court may apply that framework in the first instance.")
Flexible tries to distinguish eBay on the grounds that eBay involved patent infringement, not copyright infringement, and argues that the presumption remains valid for a copyright infringement case. However, the Court's reasoning in eBay cannot be so narrowly read. The Court based its conclusions on principles of equity, citing the Patent Act's authorization to grant an injunction "in accordance with the principles of equity." Id. at 392, 126 S.Ct. 1837. The Court made clear that these principles apply equally to copyright infringement by discussing the Copyright Act and drawing parallels between patent and copyright protection throughout its analysis. It explained that its "approach is consistent with our treatment
Nor does the fact that eBay concerned a permanent injunction rather than a preliminary injunction sufficiently distinguish the cases to result in a different outcome. The Supreme Court has been more than clear on this point:
Amoco Prod. Co. v. Gambell, 480 U.S. 531, 546 n. 12, 107 S.Ct. 1396, 94 L.Ed.2d 542 (1987). Indeed, the eBay Court relied on a preliminary injunction case in reaching its holding. 547 U.S. at 391, 126 S.Ct. 1837 (citing Amoco, 480 U.S. at 542, 107 S.Ct. 1396). Thus, we conclude that eBay applies with equal force to preliminary injunction cases as it does to permanent injunction cases.
If we harbored any doubts about the applicability of eBay in the preliminary injunction context, they have been dispelled by the Supreme Court's decision in Winter. In Winter, the Supreme Court reaffirmed the equitable nature of the four-factor framework and applied it to a case involving a preliminary injunction. The district court had issued an injunction restricting the U.S. Navy's ability to conduct war readiness exercises off the coast of Southern California, and the Ninth Circuit affirmed. Natural Res. Def. Council, Inc. v. Winter, 518 F.3d 658, 697 (9th Cir.2008). We held that the district court need only find a possibility of irreparable harm to issue an injunction and rejected the Navy's argument that any claim of irreparable injury was merely speculative. Id.
The Supreme Court reversed, holding that "the Ninth Circuit's `possibility' standard is too lenient." Winter, 555 U.S. at 22, 129 S.Ct. 365. The Court explained that its "frequently reiterated standard requires plaintiffs seeking preliminary relief to demonstrate that irreparable injury is likely in the absence of an injunction." Id. (emphasis original). The Court clarified that "[i]ssuing a preliminary injunction based only on a possibility of irreparable harm is inconsistent with our characterization of injunctive relief as an extraordinary remedy that may only be awarded upon a clear showing that the plaintiff is entitled to such relief." Id. Thus, Winter reaffirms the principles relied
Id. at 24, 129 S.Ct. 365 (quotation marks and citations omitted) (emphasis added). If our past standard, which required a plaintiff to demonstrate at least a possibility of irreparable harm, is "too lenient," then surely a standard which presumes irreparable harm without requiring any showing at all is also "too lenient."
Flexible contends that the presumption of irreparable harm in a copyright infringement preliminary injunction case survives the Supreme Court's opinions in eBay and Winter. Flexible's primary argument for the continued viability of the presumption is that this Circuit reaffirmed the presumption of irreparable harm in Marlyn, in which we reviewed a preliminary injunction issued in an analogous trademark infringement case. There we quoted the proper four-factor test in Winter and affirmed after stating "[t]he district court properly considered each of these factors." Marlyn, 571 F.3d at 877. The district court there, like the district court here, rested on a presumption of irreparable harm rather than finding that such harm was likely. Id. Flexible contends that our affirmation of the district court in Marlyn is an affirmation of the continuing vitality of the presumption of irreparable harm in intellectual property infringement cases.
We do not agree. Marlyn contains no analysis concerning the use of the presumption of irreparable harm post-Winter. In fact, there is no indication that the parties briefed the issue of whether our long-standing presumption of harm survived after eBay or Winter. The entire discussion of irreparable harm in Marlyn reads:
Id. The panel's summary treatment of the presumption without consideration of the effect of eBay and Winter does not bind this panel or constitute an affirmation of the presumption's continued vitality. "[S]tatements made in passing, without analysis, are not binding precedent." Thacker v. FCC (In re Magnacom Wireless, LLC), 503 F.3d 984, 993-94 (9th Cir. 2007).
Flexible also cites Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127 (9th Cir.2011) as supporting the continued use of the presumption of irreparable harm in an environmental case once a likelihood of success on the merits is demonstrated. Alliance for the Wild Rockies does not so hold. To the contrary, we stated that although the Supreme Court has noted "`[e]nvironmental injury, by its nature, can seldom be adequately remedied by money damages and is often permanent or at
Another panel of this circuit very recently addressed an argument nearly identical to the one Flexible is now making. See Perfect 10, Inc. v. Google, Inc., 653 F.3d 976, 2011 WL 3320297 (9th Cir. Aug. 3, 2011). Perfect 10 argued that the district court erred in finding it had not demonstrated irreparable harm because, having shown a likelihood of success on the merits of its copyright infringement case, it was entitled to a presumption of irreparable harm. Id. at *2. The panel in Perfect 10 rejected the argument, concluding, as we do, that such a presumption does not survive eBay and Winter. Id. at *4. The minor differences between this case and Perfect 10 — here the district court relied on the presumption of harm while in Perfect 10 the court found that Perfect 10 failed to establish irreparable harm and the panel subsequently refused to rely on the presumption — are not enough to compel different results.
We conclude that presuming irreparable harm in a copyright infringement case is inconsistent with, and disapproved by, the Supreme Court's opinions in eBay and Winter. Id. at *4. Thus, our long-standing precedent finding a plaintiff entitled to a presumption of irreparable harm on a showing of likelihood of success on the merits in a copyright infringement case, as stated in Elvis Presley and relied on by the district court, has been effectively overruled. In other words, "Elvis has left the building."
Our sister circuits agree with our holding. The Second Circuit faced exactly the same question just a year ago, and came to the same answer we do today. See Salinger v. Colting, 607 F.3d 68 (2d Cir.2010). The Second Circuit, like the Ninth, had a long-standing history of presuming irreparable harm upon the showing of a likelihood of success on the merits in a copyright
The Second Circuit reversed, holding that after eBay and Winter such a presumption was no longer permitted. Id. at 77. Salinger undertook a detailed examination of both eBay and Winter, and their applicability to preliminary injunctions in copyright infringement actions, and concluded "nothing in the text or the logic of eBay suggests that its rule is limited to patent cases. On the contrary, eBay strongly indicates that the traditional principles of equity it employed are the presumptive standard for injunctions in any context." Id. at 77-78. The Second Circuit recognized, as we have, that the Supreme Court "expressly relied upon copyright cases in reaching its conclusion" in eBay. Id. at 78.
The Second Circuit also had no trouble applying these principles to preliminary injunctions, reasoning:
Id. at 78-79. Thus, the Second Circuit agrees with us that a presumption of irreparable harm is no longer permitted in issuing an injunction; a plaintiff must show a likelihood of harm.
The Fourth Circuit has also held that a plaintiff is no longer "entitled" to an injunction on the showing of infringement, and applied eBay in requiring all four factors of the four-factor test be shown. Christopher Phelps & Assocs., LLC v. Galloway, 492 F.3d 532, 543 (4th Cir.2007). Similarly, the First Circuit has also applied eBay to a copyright infringement injunction.
The leading treatises are in accord with our reading of the effect eBay and Winter have had on the plaintiff's burden in copyright infringement injunction cases. Before eBay, Nimmer on Copyright was routinely cited as supporting the presumption. See Apple Computer, Inc. v. Franklin Computer Corp., 714 F.2d at 1254 (citing 3 Nimmer on Copyright § 14.06[A], at 14-50, 14-51 & n.16 (collecting authorities)). Nimmer has now seen the light, and recognizes that even in the context of preliminary injunctions in a copyright infringement claim, "[t]he Supreme Court's decision in eBay caused a new day to dawn.... No longer applicable is the presumption
The district court, albeit reasonably in light of our precedent, relied solely on the presumption of irreparable harm to issue its injunction. Applying our reading of eBay and Winter to this case, reliance on a presumption of irreparable harm was error. Perfect 10, 2011 WL 3320297, *4 (refusing to rely on presumption of irreparable harm because such a presumption "is clearly irreconcilable with the reasoning of the Court's decision in eBay") (internal quotation marks and citation omitted). Flexible must demonstrate a likelihood of irreparable harm in order to obtain injunctive relief.
Flexible asks us to affirm the district court notwithstanding the error because, in its view, the record clearly demonstrates that it is likely to suffer irreparable harm absent the requested injunction. However, the district court made no factual findings that would support a likelihood of irreparable harm. In fact, its only finding that touches the issue weighs against such a determination. The court found that "[Flexible] elicited no proof suggesting that it entered competing bids with contracts that [Precision] procured through the use of [Flexible's] platform drawings."
While we do not suggest that this finding establishes a lack of irreparable harm, we believe it counsels against our undertaking a searching review of an incomplete record to make the required factual findings in the first instance. Flexible did not argue in its briefs below that it was likely to suffer irreparable harm; it relied solely on its entitlement to a presumption of irreparable harm. Nor do its briefs on appeal set forth sufficient facts demonstrating irreparable harm to compel us to find in its favor.
Precision also contends that the district court abused its discretion in concluding, as a matter of law, that Flexible was likely
The preliminary injunction issued against Precision is