Chanel, Inc. v. Lin

Background

Chanel, Inc. alleged that the defendants were involved in Manhattan counterfeiting operations that distributed, offered for sale, or sold cheaply made products bearing Chanel’s trademarks. The court found that Chanel owned valid federal trademark registrations and common-law rights in its marks and trade name, and that the marks were famous and widely recognized.

The opinion stated that a January 12, 2023 seizure in a related action uncovered thousands of counterfeit items, including 185 bags and laminated sales sheets bearing Chanel marks. The court stated that defendants Guo L. Huang, Xingyun Hu, Fei Y. Lu, Xiaoliu Wang, Yu Hou Qu, Yongchan Zhang, and Cai Qin Xie were present at that seizure and were believed to be involved in the trafficking, offering for sale, or sale of counterfeit products. The court also stated that Xiaole Lin, Shun Miao Ding, Xiaowei Gao, and Ming Li were believed to be involved based on prior investigations.

Court’s analysis

For a temporary restraining order or preliminary injunction, the court applied the requirements that the plaintiff show a likelihood of success on the merits, likely irreparable harm without an injunction, a favorable balance of hardships, and consistency with the public interest.

The court found that Chanel was likely to succeed on its federal trademark-infringement and counterfeiting claims because it owned trademark registrations and the defendants were using identical or substantially indistinguishable copies of Chanel’s marks. The court said consumer confusion was nearly certain. It applied the same analysis to Chanel’s federal false-designation and unfair-competition claims, and stated that bad faith was presumed. The court also found that Chanel was likely to succeed on its federal and New York trademark-dilution claims because the marks were famous and the alleged counterfeit use was likely to cause dilution by blurring or tarnishment.

The court found likely irreparable harm, concluded that the balance of hardships favored Chanel, and determined that the public interest favored an injunction because it would prevent confusion, deception, and mistake. It also found good cause for expedited discovery concerning the scope of the alleged infringements, the sources and locations of counterfeit products, other participants, distribution and sales, profits, and financial accounts.

Orders

The court entered an ex parte temporary restraining order pending the specified hearing or another date set by the court. It temporarily restrained the defendants, their related entities and representatives, and people acting with them from using Chanel’s marks in connection with counterfeit goods; selling or passing off non-genuine products as Chanel products; trafficking, manufacturing, importing, exporting, distributing, advertising, promoting, offering for sale, or selling counterfeit products and related materials; infringing or copying Chanel’s marks and related materials; making false descriptions of goods as Chanel goods; diluting Chanel’s marks; destroying or failing to preserve relevant counterfeit goods and records; and assisting others in those acts.

The order also temporarily prohibited the defendants and covered persons from transferring, withdrawing, or disposing of money or other assets in accounts associated with the defendants. Financial institutions receiving notice were ordered to locate connected accounts and temporarily restrain transfers or dispositions from those accounts. A defendant or affected third party could, after two business days’ written notice, move to dissolve or modify the order upon a proper showing.

The court ordered the defendants to appear and show cause why a preliminary injunction should not issue. The opinion also set deadlines for service, defendants’ answering papers, and Chanel’s reply papers, and warned that failure to appear could result in imposition of a preliminary injunction. The court authorized Chanel to serve expedited document requests and interrogatories, requiring responses within fourteen days, and required depositions within seven days after notice. It required preservation of relevant documents, electronically stored information, and tangible things. Chanel was ordered to post a $5,000 bond. The opinion does not state that the preliminary injunction was ultimately granted.