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Nextracker, Inc. v. Array Technologies, Inc.

United States District Court, N.D. California

November 22, 2017

NEXTRACKER, INC., Plaintiff,
v.
ARRAY TECHNOLOGIES, INC., Defendant.

          ORDER RE TRO APPLICATION RE: DKT. NO. 10

          JAMES DONATO UNITED STATES DISTRICT JUDGE

         On the record before the Court, plaintiff's application for a temporary restraining order is DENIED. The Court will set an expedited preliminary injunction hearing as a next step.

         Plaintiff NEXTracker, Inc. (“NX”) and Defendant Array Technologies, Inc. (“ATI”) are competing suppliers of solar tracking devices. Dkt. No. 1-1 ¶ 4. Solar trackers “adjust the positioning of solar panels . . . to increase the efficiency of their solar power capture.” Dkt. No. 1-1 ¶ 1. In September 2017, TUV Rheinland PTL, LLC (“TUV”), which appears to be a nongovernmental testing and assessment organization, issued a report comparing the operational costs of two different solar tracking architectures. Dkt. No. 10 at 2. The TUV report concluded that “Architecture 1” __ a tracker “driven by a single motor linked by a rotating driveline to multiple tracker rows” __ is associated with lower lifetime operational costs than “Architecture 2” __ “a system where each row operates as a self-contained unit with . . . dedicated tracker system components.” Dkt. No. 7-3 at 12, 97. The report makes other comments that portray the Architecture 2 device less favorably than the Architecture 1 product. Although the report does not use brand names for the products it discusses, NX says that “Architecture 1” is ATI's technology and that “Architecture 2” shows an NX product.

         The TUV report appears to have ignited a firestorm of debate and protest between NX and ATI. In an apparent response to communications from NX, TUV retracted the report on October 25, 2017. Dkt. No. 1-1 ¶ 26. NX alleges that ATI has widely disseminated the report both before and after the retraction through a variety of channels including media ad buys, industry newsletters, trade events, and social media platforms like YouTube, Twitter and Facebook. See, e.g., id. ¶ 29. The event precipitating the TRO application is NX's understanding that ATI plans to make the report a “centerpiece” during a November 29 webinar with PV Magazine that will be “well-attended, both locally and globally.” Dkt. No. 8 at 1.

         NX filed a complaint in California Superior Court alleging that ATI has used the TUV report to make false and misleading statements that disparage NX systems. Dkt. No. 1-1. It brings claims for trade libel, defamation, unfair competition and false advertising under California state law, intentional interference with contractual relations, and international interference with prospective economic relations. No federal claims are alleged. The complaint was removed to this Court without objection on diversity grounds. NX filed a noticed TRO application seeking an order to block ATI from using the TUV report at the November 29 event. Dkt. No. 8. ATI opposes the request. Dkt. No. 10.[1]

         DISCUSSION

         I. Legal Standard

         A temporary restraining order enjoins conduct pending a hearing on a preliminary injunction. See Fed. R. Civ. P. 65(b). When “notice of a motion for a temporary restraining order is given to the adverse party, the same legal standard as a motion for a preliminary injunction applies.” Fang v. Merrill Lynch, Pierce, Fenner & Smith, Inc., No. 16-CV-06071-JD, 2016 WL 9275454, at *1 (N.D. Cal. Nov. 10, 2016), aff'd, 694 F. App'x 561 (9th Cir. 2017).

         Injunctive relief is “an extraordinary remedy never awarded as of right.” Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 24 (2008). “A plaintiff seeking a preliminary injunction must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest.” Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1131 (9th Cir. 2011) (quoting Winter, 555 U.S. at 20). Alternatively, a preliminary injunction may issue where “serious questions going to the merits were raised and the balance of hardships tips sharply in plaintiff's favor, ” if the plaintiff “also shows that there is a likelihood of irreparable injury and that the injunction is in the public interest.” Id. at 1135. This reflects our circuit's “sliding scale” approach, in which “the elements of the preliminary injunction test are balanced, so that a stronger showing of one element may offset a weaker showing of another.” Id.; see also Arc of California v. Douglas, 757 F.3d 975, 983 (9th Cir. 2014). In all cases, as an “irreducible minimum, ” the party seeking an injunction “must demonstrate a fair chance of success on the merits, or questions serious enough to require litigation.” Pimentel v. Dreyfus, 670 F.3d 1096, 1105-06 (9th Cir. 2012) (internal quotation and citation omitted).

         II. Likelihood of success on the merits

         On the record before the Court, NX has not shown a likelihood of success on the merits or a serious litigation question. NX's application for a TRO rests on its false advertising, trade libel, and defamation claims, which all require a showing of statements that are false or misleading to a reasonable consumer. See, e.g., Chapman v. Skype Inc., 220 Cal.App.4th 217, 226 (2013) (UCL); Atl. Mut. Ins. Co. v. J. Lamb, Inc., 100 Cal.App.4th 1017, 1035 (2002) (trade libel).

         NX has not demonstrated that a false or misleading statement can be found here. As NX concedes, the TUV report does not mention NX or its products by name. Dkt. No. 1-1 ¶ 16. The TUV report discusses only two types of generic systems that it calls “Architecture 1” and “Architecture 2, ” and in ATI's own marketing materials, ATI has continued to discuss the report in those same generic terms. See, e.g., Dkt. No. 7-20 at 2 (the report “examined the two most common types of tracker architectures” and “Architecture 1” is “the type of system Array Technologies manufactures”); Dkt. No. 7-5 at ECF p.3 (ATI's tracker “less likely to experience catastrophic failure during wind events than single-row competitors that rely on stow”); Dkt. No. 7-10 (discussing “benefits of Array's tracking technology over the competing architecture”). ATI represents that “numerous other manufacturers in the industry . . . sell solar tracker products that also utilize ‘Architecture 2.'” Dkt. No. 10 at 5. NX does not argue otherwise.

         Nevertheless, NX argues that readers of the report will infer that it is really about NX systems in particular, rather than “Architecture 2” systems in general. It believes that because the report features photographs of the “Architecture 2” device with NX's “signature gold-colored paint” and “distinctive curve-shaped tube.” Dkt. No. 1-1 ¶ 16. The gold component matches NX's gold logo, and the curved piping along with the gold component “have been prominently displayed together in NEXTracker advertising.” Dkt. No. 7-2 at 5-6. ATI agrees that the report contains photographs of an NX product. Dkt. No. 10 at 5.

         That may all be true but it does not tip the likelihood of success in NX's favor. NX argues that the TUV report is false and misleading in two ways. First, the system described as “Architecture 2” is a three-year-old NX design, whereas the system described as “Architecture 1” is ATI's latest tracker. Dkt. No. 8 at 5; Dkt. No. 7-17 at ECF p.4. According to NX, this is misleading because consumers will incorrectly assume that the report compares the newest ATI tracker with the newest NX tracker. Dkt. No. 8 at 10. Second, NX argues that the report mischaracterizes NX systems: for example, contrary to the report, their “slew gears do not require re-greasing, ” ...


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