By Phil Carrillo and Shan Wen
Litigators know that seeking a preliminary injunction is no easy task. The burden on the moving party to show likelihood of success, irreparable harm absent the injunction, balance of the equities, and public interest considerations are not always easy to satisfy. This burden is elevated when a party seeks a mandatory injunction, where a party seeks relief beyond preserving the status quo, rather than a prohibitive injunction, which essentially seeks to preserve the status quo while the litigation is pending. The analysis in Can-Am illustrates that defining the status quo is not always easy, and that a party seeking to extend an agreement beyond its expiration through a preliminary injunction is unlikely to succeed.
Factual Background
This dispute concerns the alleged improper termination and non-renewal of Can-Am’s right to operate a Sinclair gas station and convenience store under the franchise system sold by Defendant Sinclair Oil LLC (“Sinclair”). In 2015, Sinclair held a trademark license agreement with Defendant Glovis America, Inc. (“Glovis”) that expired in December 2024. Glovis in turn entered into a sublicense agreement (“STSA”) with Can-Am to operate a Sinclair-branded fuel station. Under this agreement, Can-Am was allowed to use Sinclair trademarks, receive fuel supply, and credit card processing support.
The relationship between Can-Am and the two defendants eventually deteriorated. Can-Am alleged that in July 2023, reports circulated that Sinclair planned to assume direct control of fuel distribution operations in Washington, and that Glovis sought to exit the fuel distribution business. Can-Am alleged that Sinclair and Glovis conspired to cut out Can-Am out by improperly assigning the sublicense to another supplier, Fuel Break, without Can-Am’s consent. Can-Am then stopped receiving fuel and credit card payments from Sinclair and was told to sign a new agreement with Fuel Break under less favorable term.
Despite Can-Am’s refusal to accept these new terms, Sinclair and Glovis allegedly took steps to terminate Can-Am’s sublicense rights. The parties exchanged accusations that the other party breached the underlying agreements and violated relevant laws.
Eventually, in February 2024, Sinclair issued a revocation of Glovis’s license, citing noncompliance by several Sinclair-branded stations under Glovis, including Can-Am’s, with the terms of the license agreement. In response, in February 2024, Glovis terminated Can-Am’s sublicense on the same basis and demanded that Can-Am debrand its fuel station. Glovis noted that the sublicense agreement was subject to termination if Glovis lost its right to grant the use of Sinclair’s trademarks. Glovis noted that although its license agreement with Sinclair did not expire until December 2024, Glovis was terminating Can-Am’s license agreement effective immediately based on Sinclair’s termination of Glovis’ agreement.
In May 2024, Glovis also issued a notice of non-renewal of its agreement with Can-Am, which was set to expire in December 2024. Upon the expiration of the STSA in December 2024, Sinclair demanded that Can-Am remove all Sinclair branding from its station. Can-Am refused, contending that the termination was invalid and that it continued to hold rights under the agreement. Can-Am continued to operate its location using the Sinclair brand.
Procedural History
Can-Am filed suit against Sinclair and Glovis asserting claims for breach of contract, statutory violations, including alleged violations of the Washington Franchise Investment Protection Act (“FIPA”), Washington Consumer Protection Act (“CPA”), Petroleum Marketing Practices Act (“PMPA”), and Washington Gasoline Dealer Bill of Rights (“GDBR”). Can-Am also asserted, in the alternative, claims against Sinclair for tortious interference.
In January 2025, Can-Am filed a motion for preliminary injunction enjoining the termination and notice of non-renewal to allow Can-Am to operate a Sinclair gas station.
In response, Sinclair filed a counterclaim asserting claims under the Lanham Act and CPA, and filed a motion for preliminary injunction seeking to enjoin Can-Am from using its trademarks.
Notably, after Can-Am filed its motion for preliminary injunction, the court ruled on Sinclair and Glovis’ motions to dismiss, dismissing Can-Am’s PMPA and GDBR claims against both defendants, its claims under the CPA for violation of FIPA against Glovis, and one of its claims for tortious interference against Sinclair. The court’s ruling on Can-Am’s motion for preliminary injunction focused on the claims that survived the motion to dismiss—namely, the claims brought under FIPA and CRA.
Court’s Analysis
Can-Am’s Motion for Preliminary Injunction
To obtain a preliminary injunction, Can-Am must show (1) a likelihood of success on the merits, (2) that it would suffer irreparable harm in the absence of relief, (3) that the balance of equities tipped in its favor, and (4) that an injunction would be in the public interest.
Under FIPA, a franchisor may not terminate a franchise agreement prior to the expiration of its term without good cause, which includes the franchisee’s failure to comply with the agreement following notice of default and a reasonable opportunity to cure. The court held that even assuming Sinclair had good cause to terminate the agreement, it failed to provide Can-Am an opportunity to cure when it unilaterally terminated its sublicense agreement with Can-Am through Glovis, raising serious questions on the merits.
Despite this, the court went on to deny Can-Am’s request for injunctive relief due to subsequent intervening events. In its motion, Can-Am defined “status quo” as the state of affairs prior to the termination of the STSA. Such a definition would have allowed Can-Am to continue using Sinclair’s trademark and to exercise other contractual rights. However, the court emphasized that the STSA had an expiration date of December 2024, which had already passed. Further, FIPA does not confer an automatic right to renew a franchise agreement. As a result, granting Can-Am’s requested relief would effectively extend the term of an expired agreement—relief that goes beyond maintaining the status quo.
Looking at the nature of the injunctive request, the court noted that, despite its characterization, the relief Can-Am sought was not a prohibitive injunction that preserved the status quo. Instead, its requested a mandatory injunction that provides preliminary relief well beyond maintaining the status quo, as it would compel the extension of contractual rights no longer in force. Although Can-Am raised a serious question on the merits, the court denied Can-Am’s motion for failing to meet the heightened standard of a mandatory injunction. Further, the court found that Can-Am did not suffer irreparable harm as the improper termination can be remedied through monetary damages.
Sinclair’s Motion for Preliminary Injunction
The court granted Sinclair’s motion for a preliminary injunction. It found that Sinclair had demonstrated a likelihood of success on the merits of its trademark infringement claim. The court emphasized that denying the motion would allow Can-Am to continue using Sinclair’s trademarks during the pendency of the litigation, effectively affording Can-Am the very relief it was seeking—continued use of the marks—despite the alleged infringement.
Additionally, the court found that Sinclair is entitled to the rebuttable presumption of irreparable harm on its trademark claims because it has shown likelihood of success.
The court further determined that the balance of equities favored Sinclair. It reasoned that while any harm to Can-Am could be compensated by monetary damages, allowing continued use of the trademarks would amount to a judicial endorsement of ongoing infringement.
Finally, the court found that the public interest supported granting the injunction. It noted the importance of protecting trademark rights and upholding the terms of the STSA, which the court interpreted as having expired, thereby terminating Can-Am’s contractual right to use Sinclair’s marks.
Key Takeaways
Can-Am illustrates several important considerations when seeking preliminary injunctive relief. Most notably, the timing of the case can define the “status quo” in a way that is outcome-determinative. When the underlying agreement has expired, a request to maintain pre-termination conditions may be viewed as a mandatory injunction—subject to a higher legal standard requiring a clear showing that the facts and law favor the moving party. This distinction can be critical. Litigators must be especially mindful of the expiration date of franchise agreements and whether the applicable state franchise law provides for automatic renewal. In the absence of such provisions, courts may be reluctant to issue relief that effectively extends expired contractual rights under the guise of preserving the status quo.
Please note that an appeal of this decision was filed on May 15, 2025.