Small Packages: Ex Parte Property Seizures under Rule 65
Sometimes intellectual property infringement cases present a dilemma: if relief is sought and the opposing party given notice, the property in dispute may disappear. Courts must balance preserving the evidence against respondent’s right to due process.
By Jeff Alden
Tension between competing interests and perspectives is the hallmark of an adversarial system; this is only natural. The need to exclude evidence obtained in violation of an individual’s constitutional rights competes with the need for proof. A shortened statute of limitations may offer some measure of certainty to potential defendants while at the same time making it harder, if not impossible, for a plaintiff to bring her case. Arguably a proposed cap on tort damages will eliminate remedies in many cases because the potential for recovery will no longer cover the cost of making the case. On both the macro and micro levels, tensions in the law abound. Indeed it’s not too much of a stretch to say that tension is the very heart of the law.
Certain tensions balance principles or assumptions about people and the law that are particularly well-founded. Such is the situation that exists in intellectual property disputes where giving notice to the adverse party would render further prosecution of the action fruitless. In these cases there remains a tension between the common sense intuition that an individual dealing in small and easily transportable articles will probably conceal them if given notice that they are about to be taken away, and the court’s duty to prevent against an unconstitutional seizure.
Seeking “No-Notice” Relief
The provisions of federal Rule 65(b) are applicable to this relatively narrow but important band of cases involving copyrights, trademarks and trade secrets, in which ex parte relief is often essential if the case is not to become an exercise in futility.1 But Rule 65(b) with its companion requirements “is no mere extract from a manual of procedural practice. It is a page from the book of liberty”2 and obtaining no-notice relief in such cases is hardly a foolproof process.
Under Rule 65(b) a temporary restraining order may be granted without notice only if (1) it clearly appears from specific facts shown by affidavit or verified complaint that immediate and irreparable injury will result to the applicant before the adverse party or its attorney can be heard in opposition; and (2) the applicant’s attorney certifies to the court in writing the reasons supporting his claim that notice should not be required.3 While the applicant must also make the case for preliminary injunctive relief based upon irreparable injury and a balance of the equities,4 the immediate and irreparable harm to which Rule 65(b) speaks is the harm that will follow if notice is given to the adverse party prior to the hearing on the restraining order itself
As one commentator explained:
But just because the law sets forth a procedure for obtaining ex parte relief in situations where the property in dispute must be preserved, the advocate should not presume such relief will be available in her case, even if it seems highly likely the property in question will disappear following notice. The court in American Can Co. v. Mansukhani put it this way:
While it may seem self-evident to the advocate that the property at issue will disappear, that assumption standing alone will probably not be enough to convince the court to do away with the defendant’s 5th Amendment right to due process.7
Because they usually involve the potential for removal or destruction of disputed property, cases involving impoundment under the copyright and trademark laws8 provide a good place to study the kind of proof the court may require to dispense with notice prior to a hearing on whether the adverse party’s property should be taken. While infringement cases have often repeated a policy in favor of ex parte relief,9 and both the copyright and trademark statutes have provisions that authorize impoundment,10 the law in this area has frequently turned on interpretations of Rule 65 when it comes to the issue of whether actual notice should be given to the adverse party.11
For many years the Rules of Practice for Copyright Cases of the United States Supreme Court, adopted under Section 25 of the 1909 Copyright Act, outlined a mandatory procedure whereby a writ directing the federal marshal to seize and hold infringing articles—and the means used to produce them—could be obtained ex parte merely by filing an affidavit and bond with the clerk of court and obtaining the court’s approval of the bond.12
When 17 U.S.C. §503(a) of the Copyright Act was enacted in 1976, giving courts the latitude to order impoundment as soon as suit is filed, there arose an inconsistency between the discretionary nature of §503(a) and the mandatory nature of the antiquated Copyright Rules of Practice. Confronted by this discrepancy, and by the more contemporary requirements of due process,13 courts in copyright seizure cases naturally began to gravitate toward the preliminary injunction standards of Rule 65 of the Federal Rules of Civil Procedure which require the courts to undertake a balancing act in arriving at their decisions.14
In 2001 the outdated Copyright Rules were abrogated by order of the Supreme Court and Federal Rule 65 was amended to include a new subdivision, Rule 65(f), covering copyright impoundment proceedings. With respect to the no-notice seizure issue,15 the practical result of placing copyright impoundment proceedings under the auspices of Rule 65 was to directly bring into play Rule 65(b), providing that a temporary restraining order may be granted without written or oral notice to the adverse party only if the applicant can clearly demonstrate by specific facts that immediate and irreparable injury will result if notice is given before the adverse party can be heard. The reporter’s notes to Rule 65(f) make it clear that ex parte copyright impoundment may be ordered under Rule 65(b) only if the applicant makes a strong showing of the reasons why notice is likely to defeat effective relief.16
Making the Necessary Showing
Indicative of the court’s reluctance to grant ex parte relief is Paramount Pictures Corp. vs. Jane Doe 1 and Twentieth Century Fox Film Corp. vs. Jane Doe 2, 821 F. Supp. 82 (E.D.N.Y. 1993), in which the plaintiffs unsuccessfully sought ex parte seizure orders in companion copyright infringement cases involving videocassettes. The court held that even where it has been established that the property to be seized is of a type that can be readily concealed, disposed of, or destroyed the plaintiff nonetheless must allege specific facts based on actual knowledge supporting its right to seize the property without notice. The Paramount court rejected as conclusory the plaintiffs’ argument that, because allegedly infringing videocassettes are small, lightweight and easily hidden or destroyed, film pirates will destroy or conceal them if apprised of a pending infringement action. In so holding the Paramount court held that the plaintiffs’ theory was “not backed up by any specifics about either the defendants in these actions or others.”17
Of course the problem for the applicant seeking ex parte relief in these types of cases is that she more than likely has no past experience with a particular adverse party from which to prove that he’ll destroy the evidence if given notice of a hearing. Matter of Vuitton et Fils, 606 F.2d 1 (2d Cir. 1979), which involved trademark issues, implicitly recognized this problem while paving a way for the kinds of showings that support ex parte relief in infringement cases.
The Vuitton case presented the classic situation where notice will in all likelihood result in the destruction of evidence. Vuitton, a maker of expensive handbags which were being counterfeited and sold to retailers in the New York area, had no direct proof that Dame Belt & Bag Co., if given notice, would conceal its allegedly counterfeit merchandise. Vuitton had however sought injunctive relief in 84 earlier actions against other defendants trying to stop the counterfeiting problem. Based on these earlier actions, Vuitton had learned there was a tightly knit community of counterfeiters, such that when one of them heard he was being targeted for impoundment, he would immediately transfer his inventory to another seller unknown to Vuitton. Nonetheless the trial court denied Vuitton’s application for ex parte relief against Dame Belt & Bag, stating that the court considered such requests “vexatious.”
In reversing the lower court, the 2nd Circuit Court of Appeals held that, by showing its prior experience with similarly situated counterfeiters who’d been identified and were about to be enjoined, Vuitton “demonstrated sufficiently why notice should not be required in a case such as this one.”18 Vuitton has come to stand for the proposition that even though the applicant may be unable to meet the steep hurdle of proving a particular adverse party will abscond with the evidence when given notice, if the characteristics of that party match those of other defendants who have done so, the court should consider proof of the similarity between them sufficient to meet the threshold for ex parte impoundment in infringement cases.19
The evolving interpretation of the standard for ex parte relief under Rule 65(b) in infringement cases, while recognizing the necessity of overcoming constitutional obstacles, presents an analytical model for the advocate who must show that the adverse party in possession of disputed property should not be notified this time.
2 Id. at 325.
3 F.R.C.P. 65(b); see also M.R.C.P 65.01.
4 In addition to arguing that notice will render the case fruitless, the practitioner must also make out the underlying case for preliminary injunctive relief in order to prevail under Rule 65. Matter of Vuitton et Fils, 606 F.2d 1 (2d Cir. 1979), at 5. See also Dataphase Systems, Inc. vs. CL Systems, Inc., 640 F.2d 109 (8th Cir. 1981).
5 “Developments in the Law—Injunctions,” 78 Harvard Law Review 994, at 1060 (1965), as quoted in Wright, Miller and Kane, Federal Practice and Procedure: Civil 2d, Section 2951, at 257 (St. Paul 1995).
6 American Can Co. vs. Mansukhani, supra n. 1, at 324; quoting Granny Goose Foods, Inc. vs. Teamsters, 415 U.S. 423 at 438-39 (1974).
7 It should be noted Rule 65(b) contains procedural safeguards. See, e.g., Rule 65(b) (2)-(4). See also Rule 65(c); Mitchell vs. W.T. Grant Co., 416 U.S. 600 (1974); Sniadach vs. Family Finance Corp., 395 U.S. 337 (1969).
8 17 U.S.C. §503(a); 15 U.S.C. §1116(d).
9 See, e.g., Time Warner Entertainment Co. vs. Does Nos. 1-2, 876 F.Supp.407, at 410 (E.D.N.Y. 1994); American Can Co. vs. Mansukhani, supra n. 1, at 325.
10 15 U.S.C. §1116(d) explicitly authorizes ex parte impoundment.
11 Matter of Vuitton et Fils, supra n. 4, at 2; Paramount Pictures Corp. vs. Doe, 821 F.Supp. 82, at 88 (E.D.N.Y. 1993).
12 See Copyright Rules of Practice, Rules 1 through 13, which prior to their abrogation in 2001 were set forth following the annotations to 17 U.S.C. §501.
13 See Religious Technology Center vs. Netcom On-Line Communications Servs., Inc., 923 F.Supp. 1231, 1260-1265 (N.D. Cal. 1995); Paramount Pictures Corp. vs. Doe, supra n. 11; WPOW, Inc. vs. MRLJ Enterprises, 584 F.Supp. 132 (D.D.C. 1984).
14 See Columbia Pictures, Inc. vs. Jasso, 927 F.Supp. 1075 (N.D. Ill. 1996), at 1076, (procedures for impoundment governed by Copyright Rules of Practice; nevertheless, standard to be applied in determining propriety of impoundment application identical to that applied in actions for preliminary injunctive relief).
15 No-notice procedures are specifically authorized in trademark infringement cases under 15 U.S.C. §1116(d).
16 Citing Matter of Vuitton et Fils, supra n. 4, at 4-5; Vuitton vs. White, 945 F.2d 569 (3rd Cir. 1991).
17 Paramount Pictures, supra n. 11, at 89. Cf. Time Warner Entertainment Co., supra n. 9, at 414; American Can Company, supra n. 1, at 323; First Technology Safety Systems, Inc., 11 F.3d 641, at 651 (6th Cir. 1993).
18 Vuitton, supra n. 4, at 4.
19 See, e.g., First Technology Systems, supra note 17, at 651; Century Home Entertainment Inc. v. Laser Beat, 859 F.Supp. 636, at 638-39 (E.D.N.Y. 1994), Paramount Pictures, supra n. 11, at 89.
F. (JEFF) ALDEN
JOHN F. (JEFF) ALDENis a Minneapolis lawyer whose practice focuses on problems encountered by small businesses. Over the years he has litigated many copyright impoundment actions.