Schaefflers Technologies AG & Co. v. Individuals

Background

Schaeffler Technologies AG & Co., KG applied without advance notice for a temporary restraining order, a preliminary injunction, a temporary restraint on assets, expedited discovery, and an order requiring the defendants to explain why a preliminary injunction should not issue. The application concerned Schaeffler’s registered FAG and INA trademarks for bearings and related products.

The order described the defendants as China-based entities operating eBay storefronts that offered bearings to customers in the United States, including customers in the Southern District of New York. The court stated that the defendants were not authorized distributors or resellers of Schaeffler’s products and had never been authorized to use the trademarks. Based on Schaeffler’s investigation and purchases from the defendants, the court found that the defendants had been marketing and selling counterfeit bearing products using the trademarks.

Court’s Findings

For a temporary restraining order, the court applied the requirements that the applicant show a substantial likelihood of success, likely irreparable harm before the opposing party can be heard, a balance of harms favoring relief, and that relief would serve the public interest. The court also applied the rule allowing an order without notice when specific facts show immediate and irreparable harm before the opposing party can respond and the applicant’s attorney certifies efforts to provide notice and why notice should not be required.

The court stated that the supporting declarations, presumed true for purposes of the motion, established Schaeffler’s ownership of multiple valid and existing United States trademark registrations. It found that Schaeffler was likely to prevail at trial on trademark infringement, false designation of origin, and unfair competition claims because the defendants were offering unauthorized counterfeit products under the registered marks.

The court also found likely immediate and irreparable injury to Schaeffler’s business, reputation, and goodwill. It accepted Schaeffler’s concerns that the defendants might conceal or dispose of counterfeit products, records, and proceeds; shut down existing eBay seller aliases; or create new aliases to continue the alleged conduct. The court concluded that the potential harm to the defendants from being prevented from continuing the alleged activities was outweighed by the potential harm to Schaeffler, and that the public interest favored protecting consumers from being deceived by counterfeit products.

Order

The court granted Schaeffler’s application. Until the scheduled return date, the defendants were temporarily enjoined from using the FAG or INA marks or imitations of them in connection with bearings or related products; passing off non-genuine products as genuine; causing consumers to believe that such products were authorized or connected with Schaeffler; further infringing the marks; moving or disposing of covered inventory; destroying or concealing relevant records; modifying or disposing of identified seller aliases and online storefronts; or knowingly helping others engage in those activities.

Within five days after receiving the order, eBay was directed to disable identified seller aliases and storefronts, stop providing related services, stop displaying associated advertising, prevent links to the storefronts from appearing in search results, and take specified steps concerning the defendants’ assets and records. Payment providers and other identified financial institutions were directed to locate the defendants’ accounts and assets, including cryptocurrency, and restrain transfers or disposal of those assets until further order.

The court ordered expedited discovery from the financial institutions concerning the defendants’ identifying information, account numbers and balances, additional aliases and storefronts, and financial accounts. It authorized service of the order and related papers by eBay communications, email addresses, or other communication links supplied by eBay or the financial institutions. The Clerk was directed to issue one summons covering all defendants identified in Schedule A.

Schaeffler was required to deposit $5,000 as security for damages that could result from a wrongful restraint. Schedule A was ordered sealed. Any defendant subject to the order could appear and seek to dissolve or modify it on two days’ notice, or on shorter notice set by the court. The order scheduled a hearing for April 17, 2024, and stated that the temporary restraining order without notice would remain effective for 14 days unless extended by further order.

Nature of the Ruling

This was an emergency preliminary-relief order, not a final determination of trademark liability. The court made likelihood findings for purposes of the temporary restraining order and scheduled further proceedings on the preliminary-injunction request.