Forbes IP Limited v. Media Business Generators, S.A. de C.V.

Background

Forbes IP (HK) Limited and Media Business Generators, S.A. de C.V. entered into a license agreement allowing Media Business Generators to use Forbes intellectual property for foreign-language editions of Forbes magazine in several countries. The agreement was governed by New York law. It required negotiation followed by mediation and, if necessary, binding arbitration in New York. It also barred court proceedings concerning covered disputes except proceedings to enforce the mediation or arbitration provisions or an arbitration award. Separately, it allowed Forbes to seek temporary or permanent injunctive relief to prevent use of Forbes editorial materials or trademarks contrary to the agreement.

The agreement identified the New York State Supreme Court in New York County and the U.S. District Court for the Southern District of New York as the courts for legal proceedings arising from or connected with the agreement. Media Business Generators sought to renew the agreement, but Forbes rejected the proposed business plan and stated that it would not renew the agreement when it expired on December 31, 2023. Media Business Generators then petitioned a Mexico City court for a preliminary injunction before arbitration. That court issued an injunction requiring the agreement to remain in effect, requiring both parties to perform their contractual obligations, and restricting Forbes from taking certain actions involving the agreement and third parties.

Forbes asked the Southern District of New York for a preliminary injunction requiring Media Business Generators to withdraw the Mexican injunction and related injunctions and to stop enforcing them. Forbes and Media Business Generators also filed competing motions to seal documents.

Jurisdiction and injunction analysis

The court found that Media Business Generators had actual notice of Forbes’s preliminary-injunction motion because it filed an opposition. Formal service under the ordinary service rule was therefore not required for the court to consider the motion.

The court also found subject-matter jurisdiction under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. The parties agreed that an arbitrator should decide whether their dispute was arbitrable. The court stated that even if the dispute ultimately was not arbitrated, the parties would first enter arbitration to determine the proper forum. It therefore concluded that Forbes’s request to stop the Mexican injunction was relief supporting arbitration. The court did not decide whether Forbes’s position that termination eliminated Media Business Generators’ rights under the dispute-resolution provision was correct; it said that issue belonged in arbitration.

The court applied the test for an injunction blocking parallel litigation in a foreign court. It found that the two threshold requirements were met because the parties were the same in both proceedings and a ruling by the New York court that the Mexican injunction violated the agreement would resolve the Mexican proceeding. The court then found that the relevant discretionary factors favored Forbes. In particular, it relied on the strong policy favoring enforcement of forum-selection clauses, the fact that the Mexican injunction had been obtained without first giving Forbes an opportunity to respond, the agreement’s designation of New York courts, and the additional inconvenience and expense Forbes would face if required to challenge the injunction in Mexico.

The court also found that Forbes satisfied the requirements for preliminary injunctive relief. It concluded that Forbes faced irreparable harm because allowing litigation in a different forum would deprive Forbes of the benefit of its forum-selection agreement. The court further found that Forbes was likely to succeed in showing that Media Business Generators breached the forum-selection clause by seeking the Mexican injunction, and that the balance of equities and public interest favored enforcement of that clause.

Sealing motions

The court held that the documents supporting the preliminary-injunction motion were judicial documents subject to a strong presumption of public access. It nevertheless found that confidential business information, including royalty and pricing information, licensing terms, and business strategies, justified sealing or redacting some material.

The court ordered that portions of the agreement concerning renewal, dispute resolution, and forum selection could not be sealed, along with corresponding portions of Media Business Generators’ opposition. Forbes was directed to file a properly redacted version of the agreement, and Media Business Generators was directed to file an unredacted version of its opposition. Media Business Generators could not redact the July 14, 2023 letter, but could keep the proposed 2024–2028 business plan under seal. The court also directed Forbes to publicly file several documents that had been filed under seal even though no motion sought to keep them sealed.

Disposition

The court granted Forbes’s motion for a preliminary injunction. It ordered Media Business Generators to withdraw the Mexico City injunction and any related injunction issued by a Mexican court that purported to prevent Forbes from moving forward with termination of the agreement, including making necessary filings and ratifying the withdrawal if requested by the Mexico City court. Media Business Generators was also ordered to refrain from enforcing the Mexican injunction while it remained in effect.

The court granted in part and denied in part Forbes’s motion to seal, and granted in part and denied in part Media Business Generators’ motion to seal. It directed the parties to publicly file documents conforming to the sealing rulings by April 30, 2024.