Marcelo Burlon S.r.l. v. ailei fashion

Background

Marcelo Burlon S.R.L. brought a trademark-infringement action under the federal Lanham Act against 145 online merchants. Marcelo Burlon alleged that the merchants manufactured, marketed, and sold counterfeit Marcelo Burlon products on Wish, an e-commerce platform operated by ContextLogic Inc., doing business as Wish.

The court first issued a temporary restraining order requiring Wish to freeze the defendants’ user accounts and merchant storefronts and to provide expedited discovery about the defendants’ activities on Wish. The court later issued a preliminary injunction with similar requirements, including additional discovery. Wish moved to intervene so it could oppose the relief directed at it. Marcelo Burlon opposed intervention and did not agree to amend the proposed preliminary injunction.

By the time of the opinion, Marcelo Burlon had voluntarily dismissed 45 of the 145 defendants. None of the defendants had appeared or responded to the complaint. The opinion states that it was unclear whether any of the 100 remaining defendants were still selling on Wish.

Legal standard

Under Federal Rule of Civil Procedure 24(a)(2), intervention as a matter of right requires a timely motion, an interest in the action, a showing that the interest may be impaired by the action’s disposition, and a showing that existing parties do not adequately protect that interest. The interest must be direct, substantial, and legally protectable. The court noted that a person or entity may also seek permissive intervention when it has a claim or defense sharing a common question of law or fact with the main action, but it did not need to decide whether permissive intervention was appropriate.

Court’s analysis

The court found that Wish’s motion was timely because it was filed six days after the temporary restraining order. It rejected Marcelo Burlon’s argument that Wish lacked standing to intervene, explaining that Wish was not seeking relief beyond the injunction’s scope; it was seeking to limit the obligations imposed on it by that injunction.

The court found that Wish had a legally protectable interest in the action. Wish argued that freezing accounts and shutting down storefronts could jeopardize commissions from non-infringing products sold by the defendants. Marcelo Burlon’s opposition stated that Wish received a 15 percent cut of each sale and collected seller fees for promoting products. The court concluded that Wish’s commissions were an interest relating to the property or transaction involved in the action.

The court also accepted Wish’s argument that the injunction could impose substantial operational burdens. Wish asserted that it would have to manually search thousands of products and estimated that the process would require at least 81 hours of employee time. The court reasoned that Wish could challenge burdens imposed directly by an injunction and would be bound by any injunction entered in the case.

The court rejected Marcelo Burlon’s argument that Wish’s interests could not be impaired because any injunction would be legally correct. Whether the defendants’ sales violated the Lanham Act was a merits question, and the court stated that this question should not be used to deny intervention when the injunction could impair Wish’s interests.

Finally, the court found that Wish’s interests were not adequately protected by the defendants. Wish’s sales commissions and concerns about burdensome discovery belonged to Wish, not the defendants, and none of the defendants had appeared in the case. The court therefore concluded that Wish satisfied all four requirements for intervention as a matter of right.

Disposition

The court granted Wish’s motion to intervene. It declined to modify the preliminary injunction at that time because 45 defendants had been dismissed, it was unclear whether the remaining defendants were still selling on Wish, and Marcelo Burlon and Wish had later reached an agreement about a search protocol in a related case. The court directed Marcelo Burlon and Wish to meet and confer again and to file a status update within 21 days stating whether additional judicial relief was needed or whether the case could be closed. The court stated that it might dismiss the case for failure to prosecute if Marcelo Burlon did not file the status update within that period.