Smart Study Co., Ltd. v. A Pleasant trip Store

Background

Smart Study Co., Ltd. brought copyright and trademark claims concerning commercial use of the “Baby Shark” name and image. Smart Study alleged that more than 100 individuals, companies, and other business entities sold counterfeit Baby Shark products through Alibaba and AliExpress. The court stated that the defendants were individuals and business entities located in China. Smart Study sought an order preventing the sales while the case continued.

The court issued a temporary restraining order on February 27, 2020, allowing alternative email service and setting deadlines for the preliminary-injunction proceedings. After modifying the order to allow additional time for service and responses, the court stated that all defendants were served on March 16, 2020. No defendant filed an opposition, appeared in the case, or participated in the May 5 hearing. Only Smart Study’s counsel appeared. For purposes of the preliminary-injunction motion, the court adopted the factual allegations in the complaint and supporting papers.

Personal Jurisdiction

The court held that it had personal jurisdiction over the defendants. Under New York’s long-arm statute, the relevant questions were whether the defendants transacted business in New York and whether Smart Study’s claims arose from that business. The court found that Smart Study purchased and received counterfeit Baby Shark products in New York from approximately fourteen defendants. It also held that the other defendants operated highly interactive online storefronts through which New York consumers could purchase the allegedly infringing products.

The court further concluded that exercising jurisdiction was consistent with due process. By marketing and selling products into New York through their online storefronts, the defendants had sufficient minimum contacts with the state. The defendants had not appeared to present any argument that jurisdiction would be unreasonable.

Preliminary Injunction

A preliminary injunction is an order entered before final judgment to prevent likely harm while the litigation proceeds. The court applied the requirements of Federal Rule of Civil Procedure 65(a), including likelihood of success on the merits, likely irreparable harm, the balance of hardships, and the public interest.

The court found irreparable harm because the alleged counterfeit products deprived Smart Study of control over the quality of goods sold under the Baby Shark marks and devalued those marks. It found a likelihood of success on the trademark claims because Smart Study submitted trademark registrations and the alleged counterfeit uses were inherently confusing.

The court also found that Smart Study was likely to succeed on its copyright claim. Smart Study submitted a copyright-registration certificate and images comparing the defendants’ products with Smart Study’s products. The court stated that the products appeared practically identical and that the defendants had access to Smart Study’s work.

The court concluded that the balance of hardships favored Smart Study and that an injunction served the public interest by protecting intellectual-property rights. The opinion also stated that the preliminary-injunction order directed certain financial institutions to freeze the defendants’ accounts and directed websites hosting the defendants’ storefronts to restrict access to them.

Disposition

The court granted Smart Study’s motion for a preliminary injunction. It concluded that Smart Study had shown likely success on both its trademark and copyright claims, likely irreparable harm without an injunction, and no defendant hardship or overriding public interest sufficient to deny relief. The court directed Smart Study to serve a copy of the opinion on the defendants as provided in the preliminary-injunction order.