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A party seeking a preliminary injunction in the Second Circuit must show: (1) irreparable harm in the absence of the injunction and (2) either (a) a likelihood of success on the merits or (b) sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly in the movant's favor. Because, however, an exclusive licensee can sue for copyright infringement, 17 U.S.C.S. § 501(b), and because a prima facie case of copyright infringement gives rise to a presumption of irreparable harm, the requirement of proof of irreparable harm can in such a case effectively be met by proof of a likelihood of success on the merits.
Appellant Random House, Inc. sought a preliminary injunction to enjoin appellee Rosetta Books LLC from continuing to sell as "ebooks" certain novels whose authors had granted appellant the exclusive right to publish, print, and sell their copyrighted works "in book form." According to appellant, an "ebook" was simply a form of a book, and was therefore within the coverage of its licenses. The district court denied the motion, concluding that the appellant did not establish the likelihood of its success on the merits. Appellant challenged the decision, arguing that the district court abused its discretion.
Did the district court abuse its discretion when it denied appellant’s motion for preliminary injunction?
On appeal, the court affirmed and held that the district court did not abuse its discretion in the preliminary way it resolved the mixed questions of law and fact. Determining whether the licenses at issue extended to ebooks depended on fact-finding regarding the "evolving" technical processes and uses of an ebook and the reasonable expectations of the contracting parties. The court found that the balance of hardships tipped in the appellee's favor because the appellant feared harm to its goodwill and the appellee faced the prospect of being put out of business by a preliminary injunction. The appellant could recover money damages for any lost sales if it ultimately prevailed.