Otter Products, LLC v. 4PX Express USA Inc.

Background

Otter Products alleged that it owns federally registered trademarks for its personal-electronics cases. It alleged that 4PX, described in the complaint as a United States company of a China-based parent, imported, stored, distributed, and shipped merchandise bearing counterfeit versions or infringements of those trademarks.

Otter Products alleged that it notified 4PX about the alleged counterfeiting in 2021. United States Customs later seized 180 counterfeit products imported by 4PX. After Otter Products voluntarily dismissed an earlier action involving the same alleged conduct, it alleged that it discovered another suspicious eBay listing in September 2023. An agent purchased a cellphone case from the seller, and Otter Products alleged that the case was counterfeit. The return address was 4PX’s address, and 4PX confirmed that it had shipped the product. Otter Products further alleged that 4PX knew about additional sellers using its services to distribute counterfeit products and continued shipping for them.

Motion to dismiss

4PX moved under Federal Rule of Civil Procedure 12(b)(6), which permits dismissal when a complaint does not state a legally sufficient claim. 4PX argued that a shipper cannot be directly liable under the federal trademark law unless it also sold the counterfeit goods or intended to sell them. It also argued that Otter Products had not adequately alleged the knowledge required for contributory trademark liability, which can apply when a party knowingly continues supplying services to someone engaged in infringement.

4PX separately argued that Otter Products’ claim under the Tariff Act was duplicative of its trademark claims because the claims were not legally distinct.

Court’s analysis

The court concluded that Otter Products adequately pleaded its first four claims under the Lanham Act, the federal trademark statute. The court stated that a transporter may be directly liable when transportation is shown and the transporter intends to sell, advertise, or distribute the goods. It also explained that contributory liability may arise when a party intentionally induces infringement or continues supplying a person it knows, or has reason to know, is infringing.

The court found that Otter Products alleged more than that 4PX was an unwitting shipper. The allegations included 4PX’s notice of the alleged illegal activity, the straw purchase, additional sellers using 4PX’s distribution services, 4PX’s confirmation that it shipped the purchased counterfeit product, and its alleged continued provision of services. The court said these allegations were sufficient at the pleading stage. It noted that 4PX’s arguments were more appropriate for summary judgment, when the court would assess whether evidence established the claims’ elements.

The court also rejected 4PX’s argument that the Tariff Act claim duplicated the Lanham Act claims. It distinguished the claims as pleaded: the Tariff Act claim concerned the international importation of counterfeit products into the United States, while the Lanham Act claims concerned distribution and use of Otter Products’ marks in commerce. The court therefore could not conclude as a matter of law at that stage that the claims were duplicative.

Disposition

Judge Philip M. Halpern denied 4PX’s motion to dismiss the First through Fourth Claims for Relief and denied the motion to dismiss the Fifth Claim for Relief. The conclusion of the order states that 4PX’s motion to dismiss was denied. 4PX was directed to file an answer to the First Amended Complaint within five days of the order. The court also stated that a telephone conference concerning 4PX’s anticipated summary-judgment motion would proceed on April 17, 2025.