Last week was a good week for Enphase.
On Tuesday, the company reported second quarter numbers that provided investors some hope regarding the company’s future stability. Three days later, District Judge Yvonne Gonzalez Rogers of the Northern District of California denied SolarEdge a preliminary injunction against the company. One could hear the sound of champagne corks popping at Enphase headquarters all the way in New York.
Rogers said SolarEdge had failed to meet significant thresholds on any of its three allegations against the microinverter company, which centered around an aggressive advertisement Enphase plans to air at Solar Power International in a month.
SolarEdge asked the court to stop Enphase from showing the video (see below) because it claimed it didn’t show a fair comparison of installation times between the two companies’ products. In addition, SolarEdge included a trademark infringement complaint because Enphase used SolarEdge’s logo in the ad.
The judge first found that SolarEdge had not presented enough evidence to prove its “false advertising” claim. To meet the standard, the company would have had to prove that Enphase used “literally false”. Rogers said the information in the ad, while a stark comparison, did not contain any literally false information.
To the second claim – trademark infringement for using SolarEdge’s logo in the ad – Rogers said the ad does not imply that SolarEdge is endorsing Enphase’s products as the court filing claims. “Plaintiffs have failed to demonstrate that defendant’s use of SolarEdge’s logo for purposes of a comparative advertisement ‘inspire a mistaken belief’ of sponsorship or endorsement by SolarEdge,” Rogers wrote.
Lastly, the judge found SolarEdge’s claim that the ad would cause it irreparable harm to be largely unsubstantiated, specifically citing the testimony of Rachel Prishkolnik, SolarEdge’s general counsel in the case. Though executive testimony can be admitted to prove such harm, Rogers wrote that “the record lacks any evidence to support her conclusions.”
While Rogers’ decision doesn’t eliminate the case – an expedited trial is still to come, though no date has yet been set – the denial of the preliminary injunction indicates the steep hilll SolarEdge has to climb to make its case that the Enphase ad would significantly harm its business.
On Enphase’s side, the ruling allows the company to continue its aggressive attempts to regain its footing in an increasingly crowded market. While the company’s most recent filings with the Securities and Exchange Commission (SEC) have indicated the company might be slowly stabilizing financially, it is still not fully back. After all, even the second quarter numbers showed losses (though they were smaller losses than other recent quarters) even after the company imposed $20 million worth of cuts to its workforce last years and sold off some of its divisions, including its operations and maintenance business. It also found itself threatened with de-listing in late June because of its low stock price.
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