Future Motion, Inc. v. Herbert et.al.

Background

Future Motion, Inc. creates and sells the ONEWHEEL, described in the opinion as a self-balancing electric vehicle. Its dealer agreements impose restrictions on pricing, advertising, and other dealer activities. The agreements also require dealers to sell the products from brick-and-mortar stores; Future Motion prohibits online sales because of safety concerns involving the products’ high-density lithium-ion batteries.

Stephen Herbert, doing business as “Tactical Sky,” signed a dealer agreement with Future Motion in 2017. Future Motion alleged that he sold its products on Amazon through the “AuthenticDirect” storefront and used that storefront to disguise the online sales. The company alleged that the sales violated the dealer agreement and the Lanham Act. The opinion states that Future Motion alleged Herbert controlled Tactical Sky and AuthenticDirect, and the court treated those parties the same for purposes of the temporary restraining order.

Request for immediate relief

Future Motion filed an ex parte motion for a temporary restraining order and asked for an order requiring Herbert to explain why the court should not issue a preliminary injunction continuing the temporary relief. The court applied the same general standard used for a preliminary injunction: the plaintiff must show likely success on the merits, likely irreparable harm without preliminary relief, that the balance of equities favors relief, and that an injunction serves the public interest. For a temporary restraining order, the court stated that the plaintiff must show a significant threat of irreparable injury—harm that cannot adequately be repaired through money damages.

Court’s analysis

The court concluded that Future Motion had not met that burden. Future Motion argued that the online sales caused loss of its exclusive trademark rights, consumer confusion about product quality, damage to its position as the only authorized online seller, and harm to its goodwill and reputation. It also argued that customers might receive products without Future Motion warranties or products stored and shipped in conditions that could cause battery explosions and injuries.

The court said it was unclear what “immeasurable damage” or market-share harm Future Motion meant. According to the court, Future Motion had acknowledged that Herbert lawfully purchased the products from it, so Future Motion had received payment and had not lost money or market share from Herbert’s online store in the way the company claimed. The court characterized the alleged contract-related injuries as harms that could be remedied with economic damages. It also noted that Future Motion controlled distribution and could stop supplying Herbert with products.

The court further found that Future Motion offered no evidence that the lithium-ion batteries were actually failing or exploding. It held that speculation did not establish a significant threat of irreparable injury. The court also found that goodwill and reputational harm could be measured and remedied through economic damages, absent evidence showing otherwise.

Disposition

Judge Edward J. Davila DENIED Future Motion’s ex parte motion for a temporary restraining order. The opinion’s stated basis was Future Motion’s failure to show a significant threat of irreparable harm. The order did not grant the requested temporary relief.