Mattel Inc. v. The Entities Doing Business as Goodmenow at the URL Goodmenow.com

Background

Mattel brought claims for trademark infringement, counterfeiting, and copyright infringement against operators of several websites. Mattel alleged that the defendants sold and depicted “Day of the Dead” dolls bearing Mattel’s Barbie trademark.

On December 30, 2020, the court issued an order to show cause that included a temporary attachment of defendants’ PayPal accounts and a temporary restraining order. After the order was served on PayPal, more than $5 million in defendants’ funds across eleven accounts was attached. The court later amended the attachment to $2.8 million.

In an earlier ruling, the court vacated the temporary attachment after defendants provided assurances that judgments entered in the United States would be enforced and given full effect in Hong Kong. The court nevertheless continued injunctive relief, modifying it so that it restrained only assets connected to a possible award of defendants’ profits.

Motion and Legal Standard

The opinion addresses damages, attorney’s fees, and costs under New York Civil Practice Law and Rules § 6212(e). That provision can make a plaintiff liable for losses and reasonable attorney’s fees caused by an attachment if the defendant obtains judgment or it is finally decided that the plaintiff was not entitled to the attachment.

The court explained that the provision is intended to deter attachments lacking a valid legal basis. It concluded that this was not such a case. In the earlier ruling, the court had found that Mattel met the statutory requirements for an attachment: it had a cause of action, was likely to succeed on the merits, the defendants were nondomiciliary entities residing outside the state, and Mattel’s claim exceeded any known counterclaim.

Court’s Analysis

The court stated that vacating the attachment was a discretionary decision made only after defendants supplied additional information about whether an attachment was needed to secure enforcement of a judgment. When Mattel filed the lawsuit, it knew little about the defendants beyond their operation of foreign websites selling Mattel’s trademarked merchandise. Mattel did not know whether defendants would appear, whether they had meaningful assets, where those assets were located, or whether the relevant jurisdiction would enforce a judgment from an American court. Mattel also did not know how much money PayPal held for defendants.

The court found that Mattel had not misled the court to obtain the initial order and had not acted in bad faith or without a legal basis. It also found that the temporary attachment had no practical effect because PayPal had independently restricted defendants’ accounts based on its own review and risk analysis. Separately, the temporary restraining order prevented defendants from transferring, withdrawing, or accepting funds from their PayPal accounts, regardless of the attachment.

The court further stated that defendants’ claimed damages were not supported by the circumstances, including defendants’ delay in appearing, their failure to identify the successful argument in seeking to vacate the attachment, and their agreement to a 20-day briefing schedule that did not show an urgent need to access all attached funds.

Disposition

The court denied defendants’ motion. It stated that an award of damages, attorney’s fees, or costs would be unreasonable in these circumstances.

Ambiguity in the Opinion

The opinion says that Mattel requested appointment of a special master to award damages, fees, and costs, but it then refers to “defendants’ request” and concludes that “defendants’ motion” is denied. This summary follows the opinion’s final ruling and treats the denied motion as defendants’ request for damages, attorney’s fees, and costs.