King Spider LLC v. 884886 CH Store

Background

King Spider LLC manufactures the Sp5der lifestyle streetwear line and other goods. It sued dozens of online merchants over allegedly counterfeit Sp5der products sold through e-commerce platforms, including Alibaba.com. King Spider also sued Alibaba.com Hong Kong Ltd., Alibaba.com Singapore E-Commerce Pte. Ltd., and AliExpress E-Commerce One Pte. Ltd. (the Alibaba Defendants), which own or operate Alibaba.com and related platforms.

The operative Third Amended Complaint asserted two claims against the Alibaba Defendants. The Alibaba Defendants moved under Federal Rule of Civil Procedure 12(b)(6) to dismiss Count S1x, King Spider’s claim for contributory trademark infringement. This type of motion tests whether the complaint alleges enough facts to state a legally plausible claim, while accepting the complaint’s factual allegations as true.

Legal standard and analysis

A contributory trademark-infringement claim requires allegations that the defendant either intentionally induced another party to infringe or continued supplying a product or service to someone the defendant knew, or had reason to know, was infringing. For a service provider, the plaintiff must allege more than general knowledge that the service is being used for infringement, along with sufficient control over the infringing activity.

King Spider argued that the Alibaba Defendants’ control over their platforms supplied the necessary knowledge. Judge Furman rejected that argument, explaining that control does not substitute for the required knowledge of specific infringing activity.

The court found that King Spider’s allegation that the Alibaba Defendants had been made specifically aware of several merchants and their infringing activities was conclusory. King Spider alleged that eight merchants had posted new allegedly infringing listings after the Alibaba Defendants had learned of earlier infringing activity through a temporary restraining order and preliminary injunction. But the court held that awareness of earlier infringement did not plausibly show that the Alibaba Defendants knew those merchants were likely to infringe again or were sufficiently on notice to support an inference of willful blindness.

The court distinguished an earlier related proceeding in which similar allegations were sufficient because that complaint alleged specific awareness of several merchants, continued infringing listings despite that awareness, and postings that the Alibaba Defendants had been told violated their three-strike policy. King Spider did not allege comparable facts showing that the Alibaba Defendants knew particular merchants were repeat or continuing infringers.

Disposition

The court held that the Third Amended Complaint failed to state a claim for contributory trademark infringement. It granted the Alibaba Defendants’ motion to dismiss Count S1x. The court directed the Alibaba Defendants, unless ordered otherwise, to file an answer to the remaining count against them within two weeks of the opinion. The Clerk was directed to terminate the motion at ECF No. 100.