Nike, Inc. v. www.perfectkicks.me

Background

Nike, Inc. and Converse, Inc. sued Zheqian Liu and numerous other defendants, alleging unlawful use of their trademarks and sales of counterfeit products through interactive websites to consumers in New York and elsewhere. The court had entered a temporary restraining order and then a preliminary injunction, later amending the injunction to add defendants. The injunction restrained Liu’s bank accounts.

Liu moved to dissolve the injunction as it applied to her, arguing that the court lacked personal jurisdiction—the court’s legal authority over a particular defendant. Liu said she had allowed another person to use her email address for payment, but denied knowing about or participating in the alleged infringement.

Personal-Jurisdiction Defense

The court first rejected Nike and Converse’s argument that Liu had waived or forfeited her personal-jurisdiction defense. Under the federal rules, a defendant generally must raise that defense in an initial motion or responsive pleading. The court found that Liu had not previously filed either one, and that her limited participation—including appearing through counsel, engaging mainly in settlement discussions, seeking an extension, and filing this motion—did not give the plaintiffs a reasonable expectation that she would defend the case on its merits.

New York Long-Arm Statute

The court treated Liu’s motion to dissolve the injunction as functionally equivalent to a motion to dismiss for lack of personal jurisdiction. Because the plaintiffs had conducted discovery, they had to provide factual support for a preliminary showing that jurisdiction existed.

The court relied on New York Civil Practice Law and Rules § 302(a)(1), which permits jurisdiction over a nonresident who transacts business in New York when the claim is sufficiently connected to that business. The court found that Nike and Converse presented evidence connecting Liu to alleged counterfeit sales, including:

- Liu’s receipt of approximately $5,000 for access to her email address; - use of that address as a payment identifier for the brandairjordan.ru website, which allegedly sold counterfeit products; - the connection between the address and Liu’s personal PayPal account; - more than $400,000 in transactions through financial accounts involving U.S. consumers, including New York consumers; and - shared accounts and payment activity connected to co-defendant Bing Luo and other named co-defendants.

Although the evidence did not establish a direct causal link between Liu’s actions and every trademark claim, the court found it sufficiently connected to the claims and supported an inference that Liu knew about and assisted the alleged infringing activity. The court therefore found a sufficient preliminary showing of jurisdiction under § 302(a)(1) and did not decide whether § 302(a)(3) also applied.

Constitutional Due Process

The court separately concluded that exercising jurisdiction over Liu was consistent with constitutional due process. It found sufficient “minimum contacts” between Liu and New York based on the totality of her connections, including providing the email address used in the alleged counterfeit-sales operation and financial links to transactions involving New York consumers.

The court also found that exercising jurisdiction was reasonable. Although Liu would face some burden from litigation in New York, the court considered New York’s interest in addressing alleged infringement affecting its businesses and consumers, as well as the plaintiffs’ interest in obtaining relief. The court found that the remaining fairness factors did not weigh for or against Liu.

Disposition

The court held that Nike and Converse made a sufficient preliminary showing that personal jurisdiction existed under New York law and the Constitution. Judge Sidney H. Stein denied Liu’s motion to dissolve the preliminary injunction.