3M Company v. Ugly Juice, LLC dba Good Use

Background

3M sued Ugly Juice, LLC doing business as Good Use; RDGIV Holdings LLC; Grant Carlson; Slava Chupryna; Sabrina Corpus; and Ralph Dewar Gaines. 3M alleged violations of the federal Lanham Act, including trademark counterfeiting, trademark infringement, unfair competition, false designation of origin, trademark dilution, and false advertising, along with California statutory and common-law violations.

3M presented evidence that the defendants offered 3M-branded N95 masks for sale even though they were not authorized 3M distributors, vendors, or representatives. The evidence concerned sales or attempted sales to an elder-care group, a hospital, and several health-care systems. 3M alleged that the masks had known counterfeit lot numbers and inauthentic packaging, and that some buyers believed they were purchasing from 3M or an authorized 3M seller.

3M sought a temporary restraining order and a preliminary injunction. The court previously issued a temporary restraining order and set a hearing. The defendants did not oppose the preliminary-injunction motion. At the May 13 hearing, Ugly Juice, Carlson, Chupryna, and Corpus did not appear. RDGIV Holdings and Gaines appeared, and the parties informed the court that they were working on a resolution concerning the claims against those two defendants.

Legal standard

To obtain a preliminary injunction, a plaintiff generally must show that it is likely to succeed on the merits, likely to suffer irreparable harm without preliminary relief, that the balance of hardships favors it, and that an injunction serves the public interest. The court stated that irreparable harm must be likely, not merely possible, and that harm in a trademark case cannot simply be presumed from likely success.

Likelihood of success

The court found that 3M had shown a likelihood of success on its federal trademark counterfeiting and infringement claims. 3M provided evidence of federally registered 3M marks, which constituted initial evidence that the marks were valid. The court concluded that the defendants used 3M’s marks on the same type of products covered by 3M’s registrations and that counterfeit marks are inherently confusing. It also relied on evidence that at least two health-care facilities were uncertain about the products’ origins.

The court likewise found a likelihood of success on 3M’s federal unfair-competition and false-designation-of-origin claim because the defendants’ use of the 3M marks could make customers believe that the masks came from 3M or were sold with 3M’s authorization. The court found likely success on the federal trademark-dilution claim based on evidence concerning the recognition, advertising, sales, and registrations associated with the 3M marks. It also found likely success on the false-advertising claim because the defendants allegedly led consumers to believe that they were authorized 3M vendors or distributors.

The court found that 3M was also likely to succeed on its California common-law trademark-infringement and unfair-competition claims. It explained that those claims use substantially the same test as the federal claims: whether the public is likely to be deceived or confused.

Irreparable harm

The court found that 3M made a strong showing of likely irreparable harm. It accepted, for purposes of the injunction, that the masks identified as counterfeit were counterfeit, stating that this was the only conclusion permitted by the current factual record. The court reasoned that 3M could not control whether the defendants’ products met 3M’s quality standards, and that monetary damages could not adequately compensate for the loss of that control. It also found that the alleged sales threatened 3M’s goodwill and control over its reputation because customers could associate inauthentic products with 3M.

Balance of hardships and public interest

The court found that the balance of hardships favored 3M. In its view, preventing the defendants from engaging in unlawful activity involving 3M’s brand would not impose a hardship comparable to the harm 3M could suffer without an injunction.

The court also found that an injunction served the public interest by reducing the risk that the public would be confused or deceived about the source and quality of purported 3M products. The court specifically noted the health-care facilities that had purchased some of the masks and the public interest in trustworthy supplies of authentic protective equipment for health-care professionals.

Order

The court GRANTED 3M’s request for a preliminary injunction. During the pendency of the action, the defendants, their agents, representatives, employees, assigns, officers, and persons or entities acting with them were preliminarily enjoined from:

- using, reproducing, promoting, distributing, advertising, or otherwise using the 3M marks or confusingly similar marks; - using those marks as part of any mark, product configuration, or design; - concealing, destroying, transferring, selling, donating, or otherwise disposing of evidence related to the defendants’ manufacture, marketing, sale, or receipt of counterfeit 3M-branded products; - using the 3M marks or confusingly similar wording, names, symbols, devices, or combinations in connection with making, distributing, advertising, promoting, offering for sale, or selling goods or services, including 3M-branded N95 masks; and - engaging in false, misleading, or deceptive conduct concerning 3M or its products, including representing that they were authorized 3M distributors, vendors, agents, representatives, retailers, or licensees.

The order granted preliminary relief and did not state a final determination of liability on the underlying claims.