Intellectual Property: Injunction entered in patent infringement suit

Where a company was likely to prevail on its claim that defendants were infringing its patents, and showed that it would be irreparably harmed without injunctive relief, the court ordered enjoined the transfer of any monies held by the defendants’ accounts at Amazon.com, Temu.com and Walmart.com.

Background

Tan Grow Inc. sued numerous defendants for patent infringement. Defendants are individuals and companies who allegedly reside in China and have no other assets in this jurisdiction aside from the monies in their webstore accounts.

The same day it filed this lawsuit, plaintiff requested that this court issue a temporary restraining order, or TRO, freezing the assets of defendants’ Amazon.com, Temu.com and Walmart.com accounts, enjoining the transfer of any monies held in defendants’ accounts. This court issued a TRO on Oct. 31, 2024.

On Dec. 4, 2024, plaintiff filed a status report stating that, out of the 30 defendants, 25 had been served. Of that group, the claims against six defendants were resolved and dismissed, two defendants signed settlement agreements and an additional six defendants are in active ongoing discussions with plaintiff. The rest were non-responsive.

Plaintiff certifies that defendants were provided with notice of the motion for preliminary injunction via e-mail; however, none appeared for the Dec. 4, 2024, hearing on the motion.

Jurisdiction

Personal jurisdiction is appropriate over defendants because they purposefully targeted their business activities towards consumers in Virginia. This action stems from the defendants selling counterfeit products online and shipping them to buyers in the United States, including residents of Virginia. The court has subject-matter jurisdiction because the claims arise under federal law.

Irreparable harm

First, defendants offer counterfeit copies of plaintiff’s products, which irreparably harms plaintiff by damaging plaintiff’s reputation, causing loss of future sales, and resulting in loss of exclusivity. Additionally, without the requested relief, defendants may transfer funds from Amazon.com, Temu.com or Walmart.com to a provider beyond this court’s jurisdictional reach, thereby depriving plaintiff of the ability to obtain monetary relief for its injuries.

Furthermore, where the moving party clearly establishes a likelihood of success on the merits in a patent case, the prospect of irreparable harm is often presumed. As discussed herein, there is a strong likelihood that plaintiff will succeed on the merits of its claims. This factor therefore favors granting the preliminary injunction.

Harm to defendants

Defendants are unlikely to suffer any cognizable harm from the preliminary injunction, as they will merely be prevented from profiting from past counterfeiting and infringement and from moving their funds beyond the reach of this court. This factor thus weighs in favor of granting the preliminary injunction.

Likelihood of success

Plaintiff is similarly likely to succeed on the merits of its patent infringement claims. Plaintiff is the exclusive owner of three patents-in-suit that protect its foldable dog bathtub and wash station products. Plaintiffs further alleges that defendants “directly infringed, and continue to infringe” one or more of the patents-in-suit by “making, using, testing, selling, offering for sale and/or importing in the United States” counterfeit versions of the products.

Plaintiff has also attached to its complaint photos of the counterfeit products that demonstrate their similarity to plaintiff’s products. Each of the counterfeit products include “all of the claimed elements of at least one claim of at least one of the patents-in-suit.” Further, upon review of the record currently before it, the court presently cannot identify validity challenges that the infringed claims will not be able to withstand.

Public interest

The court cannot identify any critical public interest that would be adversely affected by a preliminary injunction continuing to freeze defendants’ assets within their Amazon.com, Temu.com and Walmart.com accounts. Moreover, the Fourth Circuit has recognized a “public interest in making [] infringing misconduct unprofitable.” Accordingly, this factor therefore also counsels in favor of granting the preliminary injunction.

Bond

Courts “may issue a preliminary injunction . . . only if the movant gives security in an amount that the court considers proper to pay the costs and damages sustained by any party found to have been wrongfully enjoined or restrained.” A district court has discretion to set the bond amount where it deems proper, but “it is not free to disregard the bond requirement altogether.” The previously posted bond of $50,000 shall therefore remain posted.

Plaintiff’s motion for preliminary injunction granted.

Tan Grow Inc. v. Unincorporated Associations, Case No. 1:24-cv-1855, Dec. 4, 2024. EDVA at Alexandria (Alston). VLW 024-3-645. 8 pp.