ALLSTAR MARKETING GROUP, LLC v. AFACAI

Background

Allstar Marketing Group, LLC sought a preliminary injunction against defendants that allegedly sold infringing products through Wish, an online platform operated by ContextLogic d/b/a Wish. Allstar asserted claims for infringement of its federally registered “SOCKET SHELF” trademark, counterfeiting, false designation of origin, passing off, unfair competition, copyright infringement, and related state and common-law claims.

The court had previously extended a temporary restraining order, subject to exceptions in an earlier order. At the November 16, 2020 hearing, Allstar and Wish appeared. The remaining 120 defendants did not appear or oppose the temporary restraining order, although the opinion states they had been served by October 20, 2020.

Court’s Analysis

A preliminary injunction is temporary court-ordered relief issued before a final judgment. The court explained that the moving party generally must show irreparable harm and either a likelihood of success on the merits or sufficiently serious questions for litigation, along with hardships favoring the moving party. The moving party must also show that the injunction serves the public interest.

Based on the information before it, which no defendant had challenged, the court found that Allstar had demonstrated a high likelihood of success. The court noted Allstar’s identification of numerous potentially infringing products and the absence of any defendant contesting liability.

The main issue at the hearing was the scope of the injunction rather than the likelihood of success. Allstar sought a complete shutdown of defendants’ Wish storefronts and a full freeze of defendants’ assets held on Wish. The court found those measures warranted, at least during the preliminary stages of the case. It cited the risk that defendants could replace an identified infringing listing with another listing and noted approximately 150 additional listings identified through search protocols agreed upon by Allstar and Wish. The court also found the asset freeze appropriate, at least temporarily, to preserve Allstar’s requested accounting of profits.

Order and Continuing Review

The court stated that it would grant, in a separately docketed order, the preliminary injunction proposed by Allstar on November 12, 2020, subject to clarifications and amendments. The court confirmed that Wish’s required accountings need cover the specifically identified allegedly infringing products, including products identified in the complaint or through the agreed search protocols.

The court continued to question whether a complete storefront shutdown and asset freeze might burden lawful activity over a long period. It noted Wish’s representation that the defendants’ storefronts accounted for more than $49 million in sales, most of which was not tied to allegedly infringing products. The court also noted that Allstar had not sued Wish, which was not a party to the action at that point.

The court ordered Allstar and Wish to make additional submissions by November 23, 2020, addressing cited cases and arguments about the proper scope of relief. It directed Allstar to provide further information by November 25 about the approximately 150 additional allegedly infringing products, including the infringement criteria, the defendant associated with each product, whether each product was sold, and its listed price. Allstar and/or Wish were also directed to provide information about the funds frozen in each defendant’s Wish account. The court stated that it would reassess the injunction’s scope after reviewing these submissions.

Disposition

The court concluded that a preliminary injunction was merited and stated that it would enter the injunction by separate order, to remain in effect until further order of the court.