When a client’s rights to trademarks, patents, copyrights, or trade secrets are being violated, a court-ordered injunction helps to stop the infringement immediately. But before the injunction can take effect, courts often require something crucial: an injunction bond.
What Is an Injunction Bond?
An injunction bond (also called a temporary restraining order bond or restraining order bond) is a type of court bond required when a party seeks an injunction against another party.
The bond serves as a financial guarantee that if the injunction is later found to have been wrongfully issued, the party who requested it (the plaintiff) will compensate the enjoined party (the defendant) for any damages, costs, or losses caused by the injunction.
The bond must typically be filed before the injunction is issued, and it remains in effect for the duration of the injunction order.
Why Injunction Bonds Are Common in Intellectual Property Cases
IP cases often involve high stakes and urgent situations. When a business’s patent, trademark, copyright, or trade secret is being infringed, immediate harm can occur, including lost profits, market share erosion, reputational damage, and dilution of brand value.
To prevent further damage, plaintiffs frequently seek preliminary injunctions or temporary restraining orders (TROs) to stop the alleged infringing activity while the case is pending.
Because these orders can have serious financial consequences for the defendant (e.g., halting sales, blocking product shipments, or freezing marketing activity), courts require the plaintiff to post an injunction bond as a safeguard.
How Injunction Bonds Work in IP Litigation
Once a preliminary injunction or TRO is requested, the court reviews the motion and decides whether a bond is necessary, and in what amount. The plaintiff (or their attorney on behalf of the client) must secure the injunction bond before the injunction order is issued. The bond amount typically reflects the potential damages that could result if the injunction is deemed wrongful.
If the court later determines the injunction should not have been granted, the defendant can seek compensation through a claim on the bond. Once the injunction expires or the case concludes, the bond is discharged, provided no claim is made against it.
Determining the Bond Amount
There’s no universal formula for calculating an injunction bond amount; it’s up to the court’s discretion.
Courts generally set the bond amount based on factors such as:
- The estimated financial loss the defendant could suffer due to the injunction
- The scope and duration of the injunction
- The size and nature of the defendant’s business
- Potential loss of sales or revenue from the restrained activity
In intellectual property cases, the amounts can be substantial, especially when injunctions restrict commercial operations or product sales. Because the bond amount directly affects how quickly an injunction can be enforced, it’s important for attorneys to be prepared to obtain one as soon as the court issues its order.
What Attorneys Need to Know When Securing an Injunction Bond
- The Plaintiff Is the Principal on the Bond: The party requesting the injunction (plaintiff) is responsible for obtaining and filing the bond. This ensures they can cover damages if the injunction is later overturned.
- The Bond Must Comply with Court Rules: Each court has its own requirements for bond language, format, and filing procedures. Working with an experienced surety agency ensures the bond is compliant and accepted the first time.
- Timing is Important: Because injunctions are often time-sensitive, bonds need to be issued quickly. The sooner you contact a bond agency after the court’s decision, the faster the bond can be filed.
- Premiums Are Based on the Bond Amount: The bond premium is typically a small percentage of the bond amount. The applicant may need to provide financial information or collateral for higher bond amounts.
- The Bond Can Be Released or Modified: Once the injunction is lifted, resolved, or modified, the bond may be canceled or reduced accordingly. Attorneys should notify the bond agency immediately when the court order changes.
Working With the Right Surety Agency
When you need an injunction bond, speed and accuracy are critical. The bond must meet the specific requirements of the issuing court and be filed without delay to avoid holding up your injunction order.
At Patrick J. Thomas Agency, we specialize in court bonds for attorneys and law firms nationwide, including injunction, appeal, replevin, and attachment bonds. Our team works directly with legal professionals to ensure that:
- The bond is written in full compliance with court rules
- The required amount is approved and issued quickly
- All paperwork and filings are completed without delay
If you’re handling an IP case and need an injunction bond, our can help. We provide fast, compliant bond solutions tailored for attorneys and their clients. Contact us today to get started.