Cease and desist: SolarEdge heads to court to stop Enphase ads

Well, this could make Solar Power International awkward.

As the market for module-level power electronics heats up, the battle will now be joined in a California courtroom as SolarEdge is trying to stop Enphase from airing what it calls “false and misleading advertising and its infringement of SolarEdge’s legally protected and federally registered trademarks” in a video promoting Enphase’s Energized AC Module vs String+Optimizers.

Unlike so many other court cases, the questions in this case are fairly easy to understand. At issue, according to SolarEdge’s court filing, is whether the video (see below) depicts a fair comparison of installation times between the two companies’ products and whether Enphase has the right to use SolarEdge’s trademarked logo in the spot.

The video depicts a solar installer putting in a system on a residential roof and purports to show that using the new Enphase-powered module cuts installation times in half over installing a SolarEdge power optimizer. By nature, if true, using Enphase’s would save installers time and labor costs.

SolarEdge says the comparison isn’t a real comparison (the “false and misleading advertising” part of the lawsuit). In its filings, the company writes (emphasis in the original):

A fair comparison would test systems that both employ embedded products: Enphase’s embedded microinverters and SolarEdge’s embedded power optimizers. The Time-Lapse Video, however, unfairly compares Enphase’s embedded microinverters with SolarEdge’s non-embedded power optimizers.

Enphase’s advertising campaign is thus literally false, because the test relied on does not and cannot establish that a PV system using Enphase’s product installs twice as quickly as optimizer-based PV systems as a class.

This is the real issue of the case. The trademark use issue is at best a minor issue, one that Enphase legitimately argues in its response is something that has happened in a multitude of other cases, all of which have been found in favor of the defendants.

In addition, the court rejected SolarEdge’s request for an immediate TRO, saying the company had “wholly failed to establish the likelihood of immediate irreparable harm.”

But SolarEdge’s contention that the video could lead to a “diversion of sales from SolarEdge to Enphase, injury to SolarEdge’s reputation, and loss of goodwill associated with SolarEdge’s marks, brand, and products” convinced the court to schedule at Aug. 4 hearing to determine if the company could get a preliminary injunction against Enphase that would force them to pull the advertising campaign until the full case can be heard in court.

The Enphase ads reflect a newly aggressive attitude by the beleaguered microinverter manufacturer. For years, the company that used to rule the microinverter market has struggled financially. Enphase’s quarterly reports have showed persistent losses, even after the company imposed $20 million worth of cuts to its workforce last years. Enphase has also sold off some of its divisions, including its operations and maintenance business.

Its first quarter of 2017, Enphase showed losses increasing again after narrowing in the fourth quarter of 2016. It also found itself threatened with de-listing in late June because of its low stock price.