Pre-Opinion Settlement Disclosed after Publication of Opinion Requires Vacation of Opinion and Dismissal for Mootness

On June 29, the Ninth Circuit reversed a preliminary injunction order that prohibited National Beverage Corporation “from selling or marketing its line of ‘Freek’ energy drinks in their current containers or containers confusingly similar to” the trade dress of plaintiff Hansen Beverage Company’s “Monster” energy drink. 

The decision gathered significant attention from blogs in the Ninth Circuit.  Seattle Trademark Lawyer and IP Law Observer gave rather objective analyses.  California Appellate Report and Appealing in Nevada were more opinionated about the result, appearing to come down on opposite sides.  (Readers curious to see the packaging of the products can see the appendix to the opinion or, better yet, see the sharp color pictures at the Appealing in Nevada post.)

On July 11, National Beverage issued a press release about the case, in which it trumpeted the Ninth Circuit’s reversal of a preliminary injunction that “‘stopped’ the most dynamic product launch over the past several decades!”

So, this seems pretty significant . . . but it appears the court’s effort was for naught. Hansen’s moved just 4 days later (from what I can make out from the docket on PACER) to vacate the opinion. It seems that the parties had settled the case three weeks prior to the court’s filing of its opinion, and the settlement made permanent the injunction that was the subject of the appeal.  Thus, in an August 17, 2007 order, the Ninth Circuit vacates its opinion because it lacked jurisdiction.

Our mandate has not yet issued. It has now been made known to us that, on June 8, 2007, the parties had executed a settlement agreement that, among other things, stipulated that the preliminary injunction that was the subject of the appeal was made permanent.  As a consequence, there was no longer a controversy between the parties over the preliminary injunction at the time we issued our opinion, and the case was moot.

We lacked jurisdiction to decide a moot case. [Citation.]  We accordingly VACATE our opinion and decision of June 29, 2007, and DISMISS this appeal. [Citation.]

From what I can make out of the PACER docket, National Beverage not only opposed Hansen’s motion to vacate but also filed a motion of its own. Though filed under seal, this excerpt from an August 17, 2007 entry in the PACER case summary discloses something about the nature of the motion:

The motion of National “To Preserve This Court’s Jurisdiction and to Quash Order of District Court” is DENIED. The appeal of a preliminary injunction does not deprive the district court of jurisdiction to enter a permanent injunction.

This is certainly an odd situation. This excerpt makes you wonder whether National Beverage entered into the settlement with the intent that the injunction provision would be unenforceable. Also, I’ve tried to figure out why Hansen didn’t move to dismiss the appeal before the opinion was published. Any ideas?