Restoration Hardware v. Sichuan Wei Li Tian Xia Network Technology Co.

Background

The plaintiffs, collectively referred to as RH, filed a copyright-infringement lawsuit in May 2022. The court had already issued temporary restraining orders and preliminary injunctions addressing the defendants’ alleged use of copyrighted works and trademarks. Those orders included locking website domain names and freezing certain financial accounts. The court later expanded the injunction after receiving evidence that some defendants had disobeyed its orders and created new websites. Although the defendants were served by email, they did not appear at the preliminary-injunction hearings or oppose the requested relief.

RH sought leave to file a Second Amended Complaint adding 21 alleged infringers discovered through investigation after the lawsuit began. RH also asked to file that proposed complaint under seal and to expand the preliminary injunction against the Rain & Light defendants to cover a new website, rainandlighting.com.

Motion to Amend

Federal Rule of Civil Procedure 15 generally permits amendment of a pleading, unless factors such as undue delay, bad faith, prejudice, or futility weigh against amendment. The court found that RH’s delay resulted from a good-faith post-lawsuit investigation and that amendment would not prejudice the existing opposing parties because they had not appeared. Those considerations favored amendment under Rule 15.

The proposed amendment also had to satisfy Federal Rule of Civil Procedure 20, which governs permissive joinder of defendants. That rule allows defendants to be joined in one case when the claims arise from the same transaction, occurrence, or series of transactions or occurrences, and when the case presents at least one common legal or factual question.

The court found that the First Amended Complaint alleged a direct relationship among its defendant groups: RH alleged that the Yiosi defendants supplied other defendants with infringing products. The proposed Second Amended Complaint, however, did not allege a connection among the 21 additional alleged infringers or between those parties and the existing defendants. The court concluded that the proposed complaint supplied no common or cooperative conduct beyond similar alleged violations involving similar protected works.

RH asked the court to follow a decision that treated separate online counterfeiting acts as one occurrence because they formed a collective attack, or “swarm.” The court rejected that reasoning. It found that without allegations of cooperative or otherwise common conduct, there was no workable limit separating a coordinated group from defendants who merely committed similar violations independently. The court also emphasized that defendants should be able to present individualized defenses, particularly when the plaintiff seeks injunctive relief. Different defendants could raise different issues involving infringement, damages, intent, timing, conduct, and discovery.

The court therefore denied without prejudice RH’s motion for leave to amend. It stated that RH could move again if it discovered additional facts supporting joinder or supplied another valid basis for amendment under Rule 15.

Motion to Seal

The court explained that judicial records are generally presumed to be open to the public. Because a complaint forms the foundation of a lawsuit, a party seeking to seal it must show compelling reasons that outweigh the public’s interest in access. The court found that RH met that standard at this stage. RH represented that public filing could allow the proposed defendants to transfer funds and domain names beyond the court’s jurisdiction while RH sought temporary injunctive relief.

The court therefore granted RH’s motion to seal Docket Number 60-3, the proposed Second Amended Complaint attached to the amendment motion.

Motion to Expand the Preliminary Injunction

The court had previously authorized the registry Verisign to disable the Rain & Light defendants’ websites rainandlight.com and rainandlights.com. RH submitted evidence that Rain & Light had created rainandlighting.com, a nearly identical website that also used RH’s copyrighted photographs and trademarks.

Consistent with its earlier order, the court granted RH’s request to expand the preliminary injunction to cover rainandlighting.com. It ordered the registrar eName Technologies Co. Ltd. and the registry Verisign, Inc. to disable that domain name while the case remained pending or until further order. The order also stated that Rain & Light could move to modify it.

Disposition

Judge Jacquelyn Corley’s order disposed of Docket Nos. 59, 60, and 61 as follows: the motion to amend was denied without prejudice; the motion to file Docket Number 60-3 under seal was granted; and the motion to expand the preliminary-injunction relief was granted.