Kelly Toys Holdings LLC. v. 19885566 Store
- Jesse Furman
- 1:22-cv-09384
- U.S. District Court · Southern District of New York
- 4
In Kelly Toys v. 19885566 Store, Judge Furman denied Alibaba’s clarification request and required it to stop promoting infringing Squishmallow products.
Alibaba must stop advertising and promoting infringing Squishmallow products on defendants’ storefronts, including through qualifying keyword searches, while defendants’ storefronts and Kelly Toys’ enforcement interests are also affected.
What happened
In Kelly Toys Holdings, LLC v. 19885566 Store, the court considered Alibaba’s request to clarify an earlier order involving counterfeit Squishmallow products sold through defendants’ storefronts. An earlier order had partly paused Alibaba’s obligations, but still prohibited it from promoting infringing products.
Alibaba argued that it could not easily identify and stop promoting listings it did not know were infringing, unless it blocked advertising for all listings. Kelly Toys argued that Alibaba already knew there were no legitimate Squishmallows for sale on its platforms or in China, so it could identify counterfeit listings without individual notice.
Judge Furman denied Alibaba’s clarification request. He required Alibaba to stop advertising and promoting infringing Squishmallow products on defendants’ storefronts even without advance notice from Kelly Toys, while stating that Alibaba would not be further penalized for an occasional missed listing if it used reasonable diligence and made a good-faith effort to comply. He also explained that Alibaba must disable keyword searches that lead to defendants’ infringing products.
The detailed version
- Kelly Toys Holdings LLC. v. 19885566 Store · No. 1:22-cv-09384
- Jesse Furman
- July 31, 2023
Background
The court had previously entered an order concerning counterfeit Squishmallow products and later granted in part and denied in part Alibaba’s request to stay that order. The stay covered the requirement that Alibaba prevent defendants from listing or relisting counterfeit Squishmallows, but it did not cover the prohibition on promoting those products.
Alibaba then asked the court to clarify the stay order. Alibaba said it could prevent promotional advertisements and emails for listings that Kelly Toys identified as infringing, but lacked an easy way to stop promotions for listings it did not know were infringing. Alibaba argued that the only way to prevent those promotions would be to bar defendants from advertising any listings. Kelly Toys responded that Alibaba knew there were no legitimate Squishmallows for sale on Alibaba platforms or anywhere in China, and therefore could identify products using the Squishmallow marks or works as counterfeit.
Court’s Analysis
The court largely agreed with Kelly Toys. It said Alibaba had had sufficient opportunities to make its argument earlier, including during the contempt proceedings and its stay motion. The court also concluded that Alibaba had notice of Kelly Toys’ protected trademarks and copyrights and of the absence of authentic Squishmallows on its platforms. At a minimum, Alibaba could identify listings using “Squishmallows” or close variations such as “Squishmallowing” or “Squish Mallow.”
The court further found that Alibaba had the technical ability to manually block listings on defendants’ storefronts from being advertised or promoted. Alibaba therefore did not need to stop promotions for every listing or take down defendants’ entire storefronts. The court characterized Alibaba’s clarification request as a late request to narrow the earlier orders granting injunctive relief, meaning court-ordered restrictions intended to prevent ongoing harm.
Ruling
The court denied Alibaba’s request for clarification. It required Alibaba to stop advertising and promoting infringing Squishmallow products on defendants’ storefronts, whether or not Kelly Toys had first notified Alibaba about a particular listing. The court stated that Alibaba would not be further penalized if it used reasonable diligence and made a good-faith effort to comply but an infringing product escaped detection because of human error or a failure to recognize the infringement.
The court also clarified that “keyword searches on Alibaba” referred to searches that could lead users to defendants’ infringing products. Alibaba was required to disable those searches to avoid unlawfully promoting counterfeit products.
Read the full 4-page opinion on CourtListener, the free public archive maintained by the Free Law Project.