3M Company v. Fung

Background

3M Company alleged that unidentified individuals or entities were using online commerce platforms to sell counterfeit 3M-branded personal protective equipment, including N95 respirators, at inflated prices. According to 3M, the defendants used 3M’s registered trademarks without authorization to benefit from the reputation associated with those marks. 3M also alleged that the counterfeit products could endanger the public because they might not meet the quality associated with 3M’s products.

3M asserted claims under the Lanham Act for trademark infringement and counterfeiting, unfair competition and false designation of origin, trademark dilution, and related state-law claims. It asked for a temporary restraining order, a temporary restraint on the defendants’ assets, and permission to obtain limited expedited discovery to identify the defendants.

Temporary Restraining Order

The court applied the four-factor test used for temporary restraining orders and preliminary injunctions: likely irreparable harm, the balance of harms, the likelihood of success, and the public interest. The court found that all four factors favored 3M.

The court found that 3M showed likely irreparable harm to its goodwill and reputation. It also found that stopping alleged trademark counterfeiting would not impose a sufficient hardship on the defendants to outweigh that harm. On likelihood of success, the court found that 3M had provided enough evidence at this stage to establish a reasonable probability that the defendants were using colorable imitations of 3M’s registered marks in connection with sales and that the use was likely to confuse consumers. The court found that this showing was sufficient for the temporary restraining order and did not analyze the likelihood of success on 3M’s other claims. The court also found that the public interest favored protecting consumers from allegedly infringing products, particularly because the products allegedly posed a public-health risk.

The court therefore granted 3M’s motion for a temporary restraining order. The order prohibits the defendants, their agents, and persons acting with them from using 3M’s marks or confusingly similar marks in connection with unauthorized goods, including 3M-branded N95 respirators. It also prohibits passing off counterfeit goods as genuine 3M products; concealing, transferring, or disposing of counterfeit inventory; destroying or transferring related records and evidence; creating new entities or accounts to evade the order; and canceling or deleting the identified seller identities or eBay storefronts while the case remains pending. The order remains in effect until further order of the court.

Asset Restraint

The court granted 3M’s motion to temporarily restrain the defendants’ assets. The defendants and persons acting with them are temporarily prohibited from transferring, disposing of, or concealing funds obtained from selling products bearing 3M trademarks. After receiving notice of the order, PayPal, eBay, and other payment processors used by the defendants must freeze associated payment accounts and may not transfer funds from those accounts to the defendants until further order of the court.

Expedited Discovery

The court granted 3M’s motion for limited expedited discovery. Expedited discovery is information exchange allowed before the parties’ usual initial discovery conference. The court found good cause because alleged infringement might be continuing, the requested information could assist 3M’s anticipated preliminary-injunction request, and 3M likely could not identify the defendants without information from them or third parties.

3M may immediately serve interrogatories and document requests seeking information about additional counterfeit 3M products and additional online seller identities. The defendants must respond within 14 days after service. 3M may also immediately issue subpoenas under Federal Rule of Civil Procedure 45 to eBay, PayPal, other payment processors, and relevant third parties for information identifying the defendants, their accounts and storefronts, payment methods, account balances, associated bank information, and sales and listing histories. Information obtained through this expedited discovery may be used only to protect 3M’s rights in the lawsuit and to support its anticipated preliminary-injunction motion.

Bond and Further Proceedings

The court ruled that 3M was not required to post a security bond. The parties were ordered to discuss a hearing date and briefing schedule for a preliminary-injunction motion and to update the court within 30 days of the order. Judge Susan Richard Nelson granted the motion for a temporary restraining order, the motion to temporarily restrain defendants’ assets, and the motion for limited expedited discovery.