Interim injunctions as market regulators in IP law

In trademark litigation, an interim injunction is sought at the very first hearing, ostensibly to preserve the status quo until the suit is adjudicated. This is how it is conventionally understood within the courtroom. Yet, in commercial reality, the consequences of such an order extend far beyond procedural preservation.

An interim injunction does not merely protect a right; it determines who may trade, who must pause and who may never enter at all. It decides not only when, but whether a brand will exist in the market. In that sense, interim relief functions as a form of market regulation.

An injunction restraining the use of a mark does not operate in a vacuum. It affects inventory, distribution, investor confidence and consumer recognition. It empowers the plaintiff to keep the market saturated in its favour, often during the most commercially relevant phase of a rival’s life cycle. Long before a court reaches final adjudication, the market has already adjusted. The temporary order comes to define the market.

At first glance, intellectual property and competition law appear to pull in opposite directions. IP confers exclusivity over a trademark. Competition law, by contrast, seeks to dismantle monopolies and prevent abuse of dominant power. Yet, both converge on a shared objective: consumer welfare and dynamic innovation.

What competition law would prevent directly, IP law can achieve indirectly through judicial restraint. Each order is doctrinally justified. Collectively, they perform a market function.

Well-resourced plaintiffs possess two structural advantages: speed and scale. Multinational corporations can institute a volume of suits across jurisdictions, move courts ex parte and sustain litigation over long horizons. Interim injunctions thus become instruments of commercial architecture.

The objective is no longer to win after trial; it is to win the market before trial begins.

Over time, this produces brand dominance without verdicts. Markets are shaped not by final judgments, but by early restraints. What competition law would prohibit in form is achieved in effect by IP practice.

For a start-up, being restrained from using its brand can mean loss of initial investment, dilution of early brand credibility and disruption to the formation of market goodwill. For the plaintiff, an established brand, the same order offers immediate market certainty and consolidation of position. Long before merits are tested, the market has already expelled the newcomer.

The most awaited result is no longer the final decree, but the first hearing. An early injunction can arrest a rival in its infancy, disrupt sales, freeze growth and unsettle confidence.

European courts approach IP enforcement with a clear awareness of its economic effects, treating injunctions not as mechanical consequences of infringement, but as interventions in the market.

Courts routinely ask whether a total product ban is necessary, whether narrower restraint would suffice and whether third-party interests are harmed. This approach is rooted in the European Union's Enforcement Directive (Directive 2004/48), which mandates that remedies be effective, fair and proportionate, and that they avoid creating unnecessary barriers to legitimate trade.

Indian courts, by contrast, rarely ask what an injunction does to the market. The focus remains on the existence of infringement rather than on the consequences of restraint. Questions of economic disruption or competitive distortion rarely form part of the interim adjudication. As a result, injunctions are often granted without examining what the order will do to the market once it leaves the courtroom.

Germany offers a more calibrated model of IP enforcement. German law proceeds from the recognition that IP remedies do not operate in isolation: they protect exclusive rights, but they also reorganise markets. Injunctive relief is, therefore, no longer treated as a purely automatic consequence of infringement. Courts now consider whether relief can be tailored in scope, phased in its operation, or delayed in its execution to avoid disproportionate commercial disruption [Bundesgerichtshof (BGH), Wärmetauscher (Heat Exchanger)]. This approach does not dilute the strength of IP protection. Rather, it reflects an institutional awareness that enforcement itself is an economic act - one that must be exercised with balance.

The United States [eBay Inc v. MercExchange (2006)] and the United Kingdom [American Cyanamid v. Ethicon (1975)] adopt a similar judicial approach. In both systems, an injunction is not an automatic consequence of infringement, but an equitable remedy granted only after careful evaluation. Courts weigh irreparable harm, balance of hardships and public interest. Market disruption is, therefore, treated not as a side effect of enforcement, but as a core consideration in deciding whether and how relief should be granted.

An economically informed approach to injunctions must be grounded in market reality. Interim relief should account for four factors: the impact on the market, the imbalance of harm between parties, the proportionality of the restraint and its effect on competition. Courts should ask not only whether a right appears to be infringed, but also what the order will do to commercial activity.

An economically conscious approach to interim relief allows courts to protect innovation without letting procedural advantage translate into market dominance.

Suvarna Singh is as IP Litigation Associate at United & United.