Hangzhou Zhaohu Technology Co., Ltd. v. Boer Tech

Background

Hangzhou Zhaohu Technology Co., Ltd. sells headphones marketed as hearing protectors or “muffs” under the registered trademark “PROTEAR.” Boer Tech and Prohear operated internet stores selling competing headphones under the name “PROHEAR.” The opinion states that the PROHEAR trademark was registered in the United States and the European Union to Hangzhou Johnson Tech Co., Ltd., which manufactured the competing products.

Zhaohu sued Boer Tech and Prohear under the Lanham Act, New York General Business Law § 349, and common-law theories of unfair competition and trademark infringement. Zhaohu alleged that the defendants’ products were sold under a confusingly similar mark. It sought a temporary restraining order, or TRO, to immediately shut down the defendants’ internet stores. An emergency judge initially granted an ex parte TRO, meaning without advance notice to the defendants, and Amazon shut down the stores. On July 27, the court vacated that order and scheduled a hearing with notice to the parties.

At the hearing, Zhaohu’s counsel acknowledged that Zhaohu had known for more than a year that Johnson Tech manufactured the products sold through the PROHEAR store and had submitted screenshots of the defendants’ store pages in an earlier trademark proceeding. The court also noted that Zhaohu had not sued Johnson Tech, even though its complaint identified the connection between PROHEAR and Johnson Tech. The opinion further states that Zhaohu had told European trademark authorities that PROTEAR and PROHEAR were not visually or otherwise similar.

TRO standard and trademark analysis

A TRO, like a preliminary injunction, requires the plaintiff to establish four things: a likelihood of success on the merits, irreparable harm without immediate relief, a favorable balance of equities, and consistency with the public interest. The court treated the likelihood of success on the Lanham Act claims under the eight-factor test commonly called the Polaroid factors.

The court found that the strength of Zhaohu’s mark favored the defendants. PROTEAR and PROHEAR both describe products related to hearing or ear protection, making the marks arguably descriptive or, at most, barely suggestive. The record also lacked evidence that consumers associated PROHEAR with Zhaohu. The similarity of the marks favored Zhaohu because the words differed by only one letter, the packaging used similar colors and presentation, and United States and European authorities had found the marks similar.

The proximity of the products also favored Zhaohu because both sides sold similar hearing-protection devices online. The “bridging the gap” factor was not relevant because the parties already competed in the same market. The lack of evidence of actual confusion favored the defendants. The court found that the defendants’ apparent adoption of a similar name and trade dress supported an inference of bad faith and favored Zhaohu. The record contained no evidence that the defendants’ products were inferior, which favored the defendants, while the court found that the sophistication of buyers favored neither side.

After weighing the factors, the court concluded that Zhaohu had not demonstrated a likelihood of success on its trademark claims. Because Zhaohu relied on the same showing for its related New York and common-law claims, the court also concluded that Zhaohu had not shown a likelihood of success on those claims.

Irreparable harm, equities, and public interest

The court found that Zhaohu had not shown irreparable harm. Zhaohu had known about the defendants’ stores and their sales under the PROHEAR name for more than a year but waited to seek injunctive relief. The court viewed that delay as inconsistent with a claim that immediate closure was necessary.

The balance of equities favored the defendants because of what the court described as Zhaohu’s lack of candor when seeking the TRO and in its European trademark proceeding. The court stated that Zhaohu’s knowledge about Johnson Tech and its earlier statements about the similarity of the marks should have been disclosed. The public interest also weighed against emergency relief because the dispute involved competing products sold online by two Chinese corporations.

Rulings and further proceedings

The court denied Zhaohu’s motion for a temporary restraining order. It granted the parties’ request for 60 to 90 days of discovery and set November 4, 2022, as the discovery deadline. It shortened the response period for interrogatories and document requests from 30 days to 15 days, set September 28 as the deadline for expert disclosures and reports, and stated that expert discovery also had to be completed during that period.

The court gave Zhaohu ten business days to add Johnson Tech as a defendant. If Zhaohu did not do so, the court stated that Johnson Tech would have ten days to seek permission to intervene to protect its trademark interests. The court deferred consideration of Johnson Tech’s possible request for damages on the bond issued with the earlier ex parte TRO until the end of the case.