Jiangsu Huari Webbing Leather Co., Ltd. v. Joes Identified in Schedule A

Background

Jiangsu Huari Webbing Leather Co., Ltd. owned U.S. Patent No. 11,478,673, covering a design for an outdoor hanging exercise product. It sued 163 defendants for allegedly selling infringing products on Amazon and other online platforms. The court issued an ex parte temporary restraining order, or TRO, that restricted sales for fourteen days, required Amazon to freeze defendants’ accounts and related assets, and required Jiangsu Huari to post a $20,000 bond.

Hyponix Brands, Ltd. and NinjaSafe LLC appeared and opposed extending the TRO. The court allowed the TRO to expire and later found that Jiangsu Huari had not shown good cause to extend it. Jiangsu Huari then voluntarily dismissed its claims against all defendants without prejudice. Hyponix and NinjaSafe sought damages against the bond, sanctions—including dismissal with prejudice—and attorney’s fees.

Damages Under the TRO Bond

Federal Rule of Civil Procedure 65(c) permits recovery from an injunction bond for costs and damages caused by a restraint that was wrongful. The court held that Hyponix and NinjaSafe were wrongfully restrained. It relied on their prompt challenges to the TRO, the evidence that their products lacked elements of the patent’s claim, Jiangsu Huari’s dismissal of the claims, and the court’s findings at the April 17, 2023 hearing. The court stated that a full trial or final decision on patent infringement was not required in these circumstances.

The court found that the TRO proximately caused recoverable damages, meaning damages sufficiently caused by the restraint. For Hyponix, the court awarded $3,682.28 for lost profits and labor costs. It rejected Hyponix’s additional claim for lost enterprise value as too speculative. For NinjaSafe, the court awarded $14,641.51, consisting of $10,641.51 in lost profits and $4,000 in labor costs. The court did not award NinjaSafe’s larger claimed lost-sales amount or its separate accumulated loss.

Sanctions

The defendants sought sanctions against Jiangsu Huari and its counsel under the court’s inherent authority and 28 U.S.C. § 1927. The court discussed concerns about the plaintiff’s investigation of alleged infringement, its representations about locating defendants, the timing and pattern of dismissals, disclosure of the TRO to platforms other than Amazon, and failure to provide Hyponix with certain sealed litigation materials.

Nevertheless, the court denied the sanctions motions. It found that Jiangsu Huari held a valid patent, that its claim was colorable against at least some parties, and that it voluntarily dismissed the case at an early stage before defendants responded to the amended complaint. The court also noted that Hyponix and NinjaSafe were made whole for their bond-covered losses. Because sanctions were denied, the court did not decide the defendants’ arguments about whether dismissal with prejudice could be used as a sanction.

Patent Attorney’s Fees

The defendants also sought attorney’s fees under 35 U.S.C. § 285, which permits fees in exceptional patent-infringement cases for a prevailing party. The court denied those motions. Jiangsu Huari’s voluntary dismissal without prejudice did not materially change the parties’ legal relationship and did not make Hyponix or NinjaSafe prevailing parties. The court therefore denied the defendants’ motions for attorney’s fees under Section 285.

Disposition

The court granted the defendants’ motions to recover damages against the TRO bond, awarding Hyponix $3,682.28 and NinjaSafe $14,641.51. It denied the defendants’ motions for sanctions and denied their motions for attorney’s fees under 35 U.S.C. § 285.