ZURU Inc. v. Individuals

Background

ZURU alleged claims for federal trademark counterfeiting and infringement, false designation of origin, common-law unfair competition, and common-law trademark infringement. ZURU alleged that defendants operated seller stores on AliExpress.com and Amazon.com using seller identification names listed on Schedule A, and that those stores advertised, offered, or sold products bearing counterfeit, infringing, reproduced, or confusingly similar versions of ZURU’s federally registered Bunch O Balloons marks.

ZURU stated that it was the exclusive U.S. licensee of the relevant trademark rights from ZURU (Singapore) PTE, Ltd. The application was supported by declarations and exhibits, including evidence from online purchases and visual inspections of products that ZURU determined were non-genuine and unauthorized. The opinion states that this factual background was taken from ZURU’s complaint, application, declarations, and exhibits, and that the allegations were assumed true solely for deciding the request for emergency relief.

Legal standard

A temporary restraining order is short-term emergency relief intended to preserve the existing situation and prevent irreparable harm until the court can hold a hearing. The court said ZURU had to show a substantial likelihood of success on the merits, likely irreparable injury without relief, a balance of harms favoring relief, and that the public interest supported the order. For relief without advance notice, Federal Rule of Civil Procedure 65 also required specific facts showing immediate and irreparable harm before defendants could be heard and a written certification concerning notice.

Ruling

The court granted ZURU’s motion and entered a temporary restraining order. The court found that ZURU had shown a strong probability of proving at trial that consumers would likely be confused by defendants’ use of the marks and that the allegedly infringing products were copies bearing copies of ZURU’s marks. The court also found likely immediate and irreparable injury, including possible lost sales and harm to ZURU’s reputation and goodwill.

The order restrained defendants and covered persons from manufacturing, importing, advertising, promoting, offering for sale, selling, distributing, or transferring products bearing the Bunch O Balloons marks or confusingly similar marks, other than products manufactured or distributed by ZURU. It also prohibited concealment or disposal of related products, evidence, assets, and financial accounts. The order specifically required defendants to discontinue use of the marks in their relevant AliExpress and Amazon listings and related online materials, while stating that it did not apply to their entire e-commerce stores.

The order barred transfer of ownership of the seller identification names, required preservation and attempted retrieval of related computer files, and restrained certain funds held in or associated with financial accounts connected to the seller stores. After notice, financial institutions, payment processors, banks, and marketplace platforms identified in the order were directed to identify related accounts, restrain the funds, divert them to a court holding account, and provide specified account, transaction, sales, and defendant-identification information to ZURU’s counsel. The order allowed an affected defendant or account holder to ask the court to modify the asset restraint.

The temporary restraining order was to remain in effect until the preliminary-injunction hearing, set for May 10, 2023, unless the court or the parties changed that timing as permitted by the order. Defendants were given an opportunity to challenge the order at the hearing. ZURU was required to post a $5,000 bond as security for damages that defendants might be entitled to if the restraint were wrongful. The opinion does not decide whether ZURU ultimately proved its trademark claims or whether a preliminary injunction should issue.