King Spider LLC v. Panda Technology Co., Ltd.

Background

The plaintiffs are creators of luxury brands involving men’s and women’s apparel, accessories, bags, jewelry, and other goods. They alleged trademark protections for their brands, and Denim Tears also alleged copyright protection. King Spider initially obtained an emergency temporary restraining order. The court later entered a preliminary injunction without the defendant appearing or opposing the application. That injunction barred Panda (Hong Kong) Technology Co., Ltd., doing business as Pandabuy, from selling the plaintiffs’ counterfeit products and froze more than $16 million in assets that the plaintiffs had located.

Pandabuy later moved to modify or dissolve the preliminary injunction. On January 14, 2025, the court dissolved it after concluding that the plaintiffs were not likely to succeed on their direct infringement claims. The plaintiffs appealed that order to the Second Circuit and then applied to restore the preliminary injunction while seeking reconsideration or a stay pending appeal. At the January 17 argument, Pandabuy’s counsel represented that more than $1.3 million remained frozen in the relevant account.

Plaintiffs’ request

The plaintiffs relied on Federal Rule of Civil Procedure 62(d) and asked the court to stay the dissolution order and restore the preliminary injunction, including its injunctive relief. A stay temporarily suspends the effect of an order. The court considered whether the plaintiffs showed: a strong likelihood of success on appeal, irreparable harm without a stay, substantial injury to other interested parties if a stay issued, and that the public interest favored a stay.

Court’s analysis

The court concluded that the factors did not favor a stay. First, the plaintiffs repeated arguments that the court had already rejected and did not show a likelihood of success on their infringement claims. The plaintiffs also lacked evidence that Pandabuy had agreements to promote the plaintiffs’ specific products.

Second, the plaintiffs did not establish irreparable harm. They asserted that Pandabuy might deplete or move its funds, but supplied no support for the assertion that the funds would be moved. The court also explained that possible monetary harm generally is not irreparable harm unless the plaintiffs show that Pandabuy is insolvent or is about to become insolvent, which they did not do.

Third, the court found that continuing the asset freeze could injure Pandabuy and other third parties. According to Pandabuy, a large portion of the frozen funds belonged to customers. The court also noted that the original freeze was broader than the amount associated with U.S. sales of the plaintiffs’ products, and that even the remaining $1.3 million likely exceeded the amount specifically connected to those products. The court recognized the public interest in preventing trademark deception and protecting copyrights but found that this interest did not outweigh the other factors.

The court additionally stated that the pending appeal limited its authority. Because the plaintiffs had filed a non-frivolous appeal, the Second Circuit had jurisdiction to decide whether the preliminary injunction was properly dissolved. The district court could restore the injunction only to the extent necessary to maintain the status quo while the appeal was pending. The court concluded that fully restoring the injunction, or restoring it after reconsideration, would eliminate the dispute before the Second Circuit.

Ruling

The court DENIED the plaintiffs’ motion and request for a stay pending appeal. Judge Jessica G. L. Clarke nevertheless temporarily STAYED the effect of the dissolution order for fourteen days, limited to the remaining amount frozen in the Pandabuy account and the injunctive relief concerning the plaintiffs’ products. The temporary stay was imposed solely to allow the plaintiffs to apply to the Second Circuit for a stay under Federal Rule of Appellate Procedure 8.