Intellectual Property – Trademark Infringement – Attorneys – Civil Practice – Preliminary Injunction – Appeals – Stay Motions – Arbitration

Because the court’s preliminary injunction does not impede the defendant-attorney’s ability to practice law—it only prohibits him from infringing on his father’s firm’s trademarks—the injunction does not implicate South Carolina Rule of Professional Conduct 5.6.

The court grants plaintiff’s motion to amend the preliminary injunction and denies defendants’ motions to stay (1) enforcement of the injunction pending appeal and (2) arbitration.

Background

The plaintiff-law firm, founded by George Sink, Sr., owns various trademarks based on the name George Sink (the GEORGE SINK marks). Plaintiff alleges that defendant George Sink, Jr., practiced law for a time with his father’s firm and signed a confidentially and non-solicitation agreement (the Agreement). According to plaintiff, Sink Jr. then left plaintiff, founded the defendant limited liability companies, and began infringing the GEORGE SINK marks in advertising his new legal practice.

Pursuant to the Agreement, plaintiff has initiated arbitration proceedings and filed this action for a preliminary injunction during the pendency of the arbitration proceedings. This court granted plaintiff’s motion for a preliminary injunction. Defendants appealed and now request a stay of the injunction pending their appeal.

Bond

In debating plaintiff’s motion for a preliminary injunction, neither party raised the issue of a bond. Nevertheless, this court’s failure to address the bond issue was error.

Although defendants have appealed the preliminary injunction, this court retains jurisdiction to proceed as to matters in aid of the appeal. The court does so in order to secure the rights of defendants.

Contrary to defendants’ arguments, the preliminary injunction does not preclude defendant Sink Jr. from practicing law or advertising his legal services. The injunction only enjoins Sink Jr. from infringing uses of the GEORGE SINK mark.

Because Sink Jr. can still practice law and advertise his legal services without infringing on plaintiff’s mark, the court does not find any potential harm from the injunction to be severe. The court modifies its preliminary injunction to require plaintiff to post a $500 bond for the security of defendants’ rights.

Motion to Stay

Defendants’ arguments in favor of a stay pending appeal fail to show a likelihood of success on the merits of their appeal. Most of defendants’ arguments are repeats of their arguments against the issuance of a preliminary injunction, and the court continues to reject those arguments.

While it is true that plaintiff promoted Sink Jr. as a lawyer working for plaintiff using his given name, plaintiff never acquiesced to his use of the GEORGE SINK marks to promote his own independent legal services.

Defendants contend that their appeal will be successful because plaintiff’s ‘500 mark “is the product of fraud upon the USPTO and must be cancelled.” The court disagrees.

First, defendants did not make this argument to the court during preliminary injunction proceedings. As such, they have waived their right to make the argument before the Fourth Circuit.

Moreover, plaintiff has consistently maintained its position that defendants have no right to use the ‘500 mark. An alleged agreement between plaintiff and Sink Jr. that the latter transfer the rights to use his name to the former, even if proven, would do nothing to show that plaintiff acted fraudulently in connection with its registration application and subsequent request to amend pursuant to 15 U.S.C. § 1057(h).

Defendants also argue that plaintiff’s marketing and advertising efforts have given secondary meaning to George Sink, Sr., the human being, rather than Sink P.A., the law firm. This distinction is unconvincing for two reasons.

First, plaintiff’s registration of both marks at issue with the USPTO establishes a prima facie showing that the mark is suggestive, and thus a showing of secondary meaning is not required. Defendants have not presented any evidence that rebuts this prima facie showing. Secondly, the plaintiff’s marks clearly satisfy the Fourth Circuit’s test for secondary meaning.

Finally, defendants argue that the court erred in finding that the injunction was prohibitory rather than mandatory. The court disagrees.

Prohibitory preliminary injunctions aim to maintain the status quo and prevent irreparable harm while a lawsuit remains pending. The status quo to be preserved by a preliminary injunction, however, is not the circumstances existing at the moment the lawsuit or injunction request was actually filed, but the last uncontested status between the parties which preceded the controversy.

There was no controversy until George Jr. used the GEORGE SINK mark in commerce. The status quo of this case is the time prior to defendants’ use of the mark in commerce.

The current injunction, then, upholds rather than disturbs the status quo. Thus, the injunction is prohibitory.

Defendants have also failed to present any compelling evidence of irreparable harm caused by the preliminary injunction.

The publicity surrounding this controversy—which purportedly harms Sink Jr.’s reputation—arose because of the controversy itself, not because of the injunction. In fact, defendants have not even argued that a stay would alleviate any of the harms they have suffered as a result of this controversy.

However, the injury that would result from defendants’ use of plaintiff’s marks is thoroughly outlined in the injunction order.

Finally, a stay would not be in the public interest.

The injunction order determined that defendants’ use of the mark clearly results in a likelihood of consumer confusion.

Defendants argue that the preliminary injunction is contrary to the public interest because it restricts Sink Jr.’s ability to practice law in violation of South Carolina Rule of Professional Conduct 5.6. This rule, however, is entirely irrelevant to this case.

The rule applies to contracts between private parties that restrict a lawyer’s ability to practice law. It does not apply to court orders, and it is certainly not violated by the court’s preliminary injunction.

At best, Rule 5.6 reflects a public policy against cumbersome non-compete agreements between lawyers. It has nothing to say about the public policy of an injunction that restricts a lawyer’s ability to commit trademark infringement.

Moreover, the injunction does not impede Sink Jr.’s ability to practice law. Lawyers are not immune from intellectual property law because it restrains the manner in which they may advertise and market their services.

Sink Jr., like other businesspeople, may not reap the profits of goodwill cultivated by others. His status as an attorney does not change this core concept of trademark law.

The court declines to stay its preliminary injunction.

Motion to Stay Arbitration

Defendants also seek to stay arbitration pursuant to S.C. Code Ann. § 15-48-20(b) because the LLC defendants did not agree to arbitrate. However, the statute clearly anticipates litigation between a party compelling arbitration and a party resisting it. Here, there is no indication that the LLC defendants have resisted arbitration. In any event, the issue of whether plaintiff and the LLC defendants agreed to arbitrate is not properly before the court.

Defendants also contend that a Fourth Circuit reversal of this court’s denial of defendants’ motion to dismiss would bar arbitration through the doctrine of res judicata. Defendants are incorrect.

The preliminary injunction’s life ends upon the final decision of the arbitrator. Dismissal of plaintiff’s complaint would have no effect on the merits of plaintiff’s claim or the permanent injunction it seeks, which are within the sole purview of the arbitrator.  Therefore, the possibility that the court’s issuance of temporary injunctive relief will be overturned on appeal would not invoke the doctrine of res judicata and would not affect arbitration of the merits of this action.

Motions granted in part and denied in part.

George Sink, P.A. Injury Lawyers v. George Sink II Law Firm, LLC (Lawyers Weekly No. 002-062-19, 31 pp.) (David Norton, J.) 2:19-cv-01206. Allan Riley Holmes, Cheryl Ledbetter, John Mark Wilson, Kathryn Cole, Minar Kim and Trudy Hartzog Robertson for plaintiff; Jason Scott Luck and Laura Robinson for defendants. D.S.C.