Nextdoor, Inc. v. Abhyanker

Background

Nextdoor brought the underlying lawsuit over the parties’ dispute about who could use the Nextdoor mark. Nextdoor asserted claims including trademark infringement and declaratory relief, while Raj Abhyanker asserted counterclaims including trade-secret misappropriation and trademark infringement. The parties settled in December 2014. Before the settlement, Abhyanker’s counterclaims had been dismissed by stipulation, and the court had granted Nextdoor summary judgment on its trademark-infringement claim. The final judgment stated that the court would retain jurisdiction to enforce the judgment and the parties’ agreements.

After the court denied Abhyanker’s motion for relief from his settlement obligations, Abhyanker asserted that Nextdoor had breached the agreement and that he was therefore no longer bound by it. He did not ask this court to decide whether Nextdoor had materially breached the agreement. Instead, he or an affiliated entity initiated several patent, trademark, and other proceedings against Nextdoor. Nextdoor then moved for immediate interim relief and to enforce the settlement.

Jurisdiction

The court held that it had jurisdiction to consider Nextdoor’s motion even though Abhyanker had appealed the earlier order denying him relief from the settlement. The court also rejected Abhyanker’s argument that Nextdoor had to bring its request in a related case. Because the judgment in this case retained jurisdiction to enforce the settlement, the court concluded that this case was the proper vehicle for deciding whether Abhyanker’s filings violated the agreement.

Immediate Interim Relief

The parties agreed that Nextdoor was effectively seeking a temporary restraining order or preliminary injunction. The court therefore applied the usual four-factor test: likelihood of success, irreparable harm, the balance of hardships, and the public interest.

The court found irreparable harm because, without immediate relief, Nextdoor would continue facing conduct that could damage its name, goodwill, and reputation, as well as multiple lawsuits and proceedings. The court also found that monetary damages would not adequately replace the harm from the alleged injury to goodwill or from having to respond to repeated litigation.

On likelihood of success, the court focused on whether any breach by Nextdoor was material. The parties agreed that Abhyanker would be released from his settlement obligations only if Nextdoor’s breach was material. Applying the six factors from Sackett v. Spindler, the court found that the factors favored Nextdoor: Abhyanker had received substantial settlement benefits, there was no indication that he had suffered actual harm, Nextdoor had substantially performed, and the evidence did not show that Nextdoor had materially breached. The court stated that Nextdoor’s likelihood of success was “all but guaranteed.”

The court further found that Abhyanker would suffer no hardship from maintaining the status quo because he remained obligated to comply with the settlement. It concluded that the balance of hardships and the public interest favored relief.

Relief Ordered

The court granted Nextdoor’s motion for immediate interim relief. The order required Abhyanker, his agents, employees, attorneys, and others acting with notice of the order to:

The court also stayed proceedings in this case and in three identified related cases pending further order.

Motion to Enforce the Settlement

The court explained that its analysis supported enforcement because the evidence showed that Nextdoor had not materially breached the settlement. It rejected Abhyanker’s arguments that he lacked enough time to respond, that discovery was necessary, and that he was entitled to a jury trial on material breach. The court stated that materiality, although usually a factual question, could be decided as a matter of law when the evidence was clear and reasonable minds could not disagree.

Nevertheless, the court did not grant Nextdoor’s motion to enforce the settlement outright. Because Abhyanker’s appeal remained pending, the court deferred ruling on that motion until the Ninth Circuit resolved the appeal. The court stated that the interim relief provided sufficient protection while the appeal was pending.