Zoom Video Communications, Inc. v. RingCentral, Inc.

Background

Zoom brought claims against RingCentral for breach of contract, alleged violations of the federal Lanham Act, and other claims concerning the parties’ Strategic Alliance Agreement. RingCentral asserted counterclaims against Zoom for breach of contract, violation of California’s Unfair Competition Law, and declaratory relief.

The agreement allowed RingCentral to market, promote, and resell Zoom’s video-meeting technology with RingCentral’s services. It also gave RingCentral licenses to use Zoom’s trademarks. The agreement included an “End of Life” provision allowing RingCentral to defer termination for a transition period, during which the agreement would continue to remain in effect. The opinion text contains blank spaces where the length and end date of that period would appear.

Zoom notified RingCentral that it would not renew the agreement after the then-current term. RingCentral responded that it was exercising its rights under the End of Life provision. RingCentral alleged that Zoom personnel then told customers they would soon lose service through RingCentral. Zoom also disclosed that it had taken technological steps to block RingCentral from selling Zoom’s products to new customers.

Temporary Restraining Order Standard

The court applied the same substantive standard used for a preliminary injunction. RingCentral had to show a likelihood of success on the merits, likely irreparable harm without immediate relief, that the balance of equities favored relief, and that an injunction would serve the public interest. Because RingCentral sought relief without advance notice, the court also applied the requirements of Federal Rule of Civil Procedure 65(b) concerning immediate harm and notice efforts.

Court’s Analysis

The court concluded that RingCentral had shown a strong likelihood of success on its breach-of-contract and declaratory-relief counterclaims. The agreement stated that it would continue through the End of Life period and did not appear to limit RingCentral’s rights or Zoom’s obligations during that period. The court therefore found that RingCentral retained rights, including the right to sell the service to existing, prospective, and new customers, until the end of that period. The court also found that Zoom’s technological steps to disrupt new-customer activation appeared to breach the agreement.

The court found likely irreparable harm because RingCentral could lose prospective customers and goodwill if Zoom blocked new customer activations. It found those losses difficult to measure in money because the affected customers would not receive services that RingCentral was contractually allowed to include in its packages.

The court further found that the balance of equities and the public interest favored RingCentral, noting the public interest in holding private parties to their agreements.

Order

The court granted RingCentral’s ex parte motion for a temporary restraining order pending the hearing on the order to show cause. Zoom, along with its representatives and other listed affiliated or associated persons, was enjoined from blocking activation of RingCentral customers, including by blocking certain application-programming-interface calls, blocking test-account provisioning, or taking other technological steps designed to block, impair, or impede access to the service under the agreement.

The court dispensed with the bond requirement but stated that it could revisit that issue. The temporary restraining order became effective when filed and was to remain in effect until the preliminary-injunction hearing. The court also ordered Zoom to show cause why it should not be preliminarily enjoined and set deadlines for Zoom’s response and the hearing. The opinion does not state the ultimate outcome of the preliminary-injunction hearing.