ZURU Inc. v. Individuals

Background

ZURU Inc. alleged that it created and sells a water-balloon product known as “Bunch O Balloons” and owns or exclusively licenses rights to federally registered marks associated with that product, including the “BoB Marks.” ZURU alleged that the defendants operated seller stores on Amazon.com, Walmart.com, and Etsy.com under seller identification names listed on Schedule “A.” According to ZURU, those stores advertised, offered for sale, or sold unauthorized products bearing counterfeit, infringing, or confusingly similar versions of the BoB Marks.

ZURU’s complaint asserted federal trademark counterfeiting and infringement, false designation of origin, common-law unfair competition, and common-law trademark infringement. ZURU filed an application for a temporary restraining order, preliminary injunction, and an order restraining the transfer of assets. The application sought emergency relief before the defendants were heard.

Court’s analysis

The court applied the four-part standard for a temporary restraining order: likelihood of success on the merits, irreparable injury without relief, balance of harms, and the public interest. For emergency relief without notice, the court also required specific facts showing that immediate and irreparable harm would occur before the defendants could respond, along with certification concerning notice.

Based on ZURU’s complaint, application, declarations, and exhibits, the court concluded that ZURU had a strong probability of proving at trial that consumers would likely be confused by the defendants’ alleged use of counterfeit or similar marks and that ZURU would likely suffer immediate and irreparable injury without relief. The court also found that the potential harm to the defendants from restricting trade in allegedly counterfeit goods was outweighed by the potential harm to ZURU and that the public interest favored protecting ZURU’s trademark interests and consumers from counterfeit goods. The court further found good reason to believe that assets could be hidden or transferred beyond the court’s jurisdiction.

Order

The court granted ZURU’s motion and entered a temporary restraining order. Until further order, the defendants and persons acting with notice of the order are barred from manufacturing, importing, advertising, promoting, offering for sale, selling, distributing, or transferring products bearing or using the BoB Marks, or confusingly similar marks, other than products manufactured or distributed by ZURU.

The order also bars concealment, destruction, sale, transfer, or other disposal of allegedly counterfeit products, related evidence, and assets or financial accounts covered by the order. The defendants must immediately stop using the BoB Marks in specified listings and related website material on Amazon, Walmart, and Etsy, must not transfer ownership of the listed seller accounts, and must preserve related computer files.

After receiving notice, the defendants and specified financial institutions, payment processors, banks, and marketplace platforms must identify related financial accounts, restrain and divert covered funds to a court holding account, and provide ZURU’s counsel with specified account, transaction, sales, and identity information. Restrained funds may not be transferred without the court’s express authorization, although an affected defendant or account holder may ask the court to modify the asset restraint.

The order requires ZURU to post a $5,000 bond. It states that the temporary restraining order remains effective until the preliminary-injunction hearing or a later date set by the court or agreed to by the parties. The order set a preliminary-injunction hearing for March 15, 2023, and provided for electronic or other court-approved notice to the defendants.