ALLSTAR MARKETING GROUP, LLC v. ALLSTAR_PLACE

Background

Allstar Marketing Group, LLC sued 48 merchants operating on eBay and sought a preliminary injunction under Federal Rule of Civil Procedure 65. Allstar alleged that the merchants offered and sold counterfeit or infringing versions of its Happy Nappers products. The court had previously entered a temporary restraining order, held a show-cause hearing, and held a further hearing on the proposed preliminary injunction. No defendants appeared at either hearing.

Merits of the Requested Injunction

The court found that Allstar was likely to prevail on its copyright and trademark claims. Allstar submitted copyright and trademark registration certificates and evidence, including a sworn declaration, supporting its allegations that the defendants used Happy Nappers works and marks without authorization and offered counterfeit products.

For copyright infringement, the court explained that a plaintiff must show ownership of a valid copyright and unauthorized copying. For trademark counterfeiting or infringement, a plaintiff must show a valid protected mark and a likelihood that consumers will be confused about the source or sponsorship of the goods. The court concluded that Allstar’s registrations established ownership and that the complaint, declarations, and exhibits established the other required elements.

The court also found likely irreparable harm because infringement could cause Allstar to lose control over its trademarks’ reputation. It found that the balance of hardships favored Allstar, so long as the injunction was limited to preventing sales of counterfeit products, and that the public interest favored preventing consumers from being deceived about the source and quality of goods.

Scope of the Injunction

Allstar proposed restraining third-party service providers such as eBay from providing any services to the defendants’ user accounts and merchant storefronts during the litigation. The court found that this proposal would prevent the defendants from selling not only infringing products but also unrelated, non-infringing products. The court stated that an injunction must be narrowly tailored to the specific legal violations and must not unnecessarily burden lawful activity.

Allstar acknowledged that it did not have evidence showing that the storefronts were primarily used to sell counterfeit or infringing products. It also did not know what other products the defendants offered or have financial evidence showing that most of the defendants’ business or profits came from infringing sales. The court further found that Allstar’s concern that defendants might relist infringing products was speculative on this record. Evidence indicated that eBay could warn sellers not to relist the products and terminate sellers who did so.

The court also noted that closing the existing storefronts would not necessarily prevent defendants from opening new accounts or storefronts. The defendants’ failure to appear did not justify broader relief than the court would find appropriate if the defendants had contested the application.

Disposition

The court granted Allstar Marketing Group’s application for a preliminary injunction but modified the proposed injunction so that third-party service providers would not be restrained from serving the defendants’ accounts and storefronts for non-infringing listings. To the extent Allstar sought an order closing the accounts and storefronts regardless of the products being sold, the court denied that request without prejudice. The court directed Allstar to submit an amended proposed preliminary injunction by October 15, 2021. Judge Lewis J. Liman signed the order.