Opinion
Civil Action 22-1124
04-29-2022
BESTWAY INFLATABLES & MATERIALS CORP. v. DORTHEA MILLS, ET AL.
MEMORANDUM
R. BARCLAY SURRICK, J.
Presently before the Court is Plaintiff Bestway Inflatables & Material Corp.'s Ex Parte Motion for Temporary Restraining Order, Preliminary Injunction, and Immediate Discovery (ECF No. 2). For the following reasons, Plaintiff's Motion will be granted.
I. FINDINGS OF FACT
This case stems from Defendants' alleged unauthorized use of Plaintiff's trademarks. Plaintiff is a company that manufactures and sells various products, including above-ground pools and portable spas, recreation products, sporting goods, and camping products. (Compl. at ¶ 4, ECF No. 1.) Plaintiff sells its products both online at bestwayusa.com, as well as in large retail stores. (Id. ¶ 15-16.)
On March 16, 2022, a customer contacted Plaintiff to complain about issues with an online order, supposedly between the customer and Plaintiff. (Id. ¶ 18-19.) The customer ordered an air mattress but instead received gloves, and the related shipping information indicated that the package originated from Wuhan, China. (Id. ¶ 18-19; Pl.'s Ex Parte Mot. for Temp. Restraining Or., Prelim. Injunction, and Immediate Discovery, 4 n.2, ECF No. 2.) The customer attempted to purchase the air mattress from Defendants' website, bestwayonsale.com, which the customer mistakenly believed was affiliated with Plaintiff. (Compl. at ¶ 38.) Defendants' website uses identical or near-identical designs, terms, and product images to those featured on Plaintiff's website in order to sell what appear to be legitimate Bestway products. (Id.) Defendants use twenty of Plaintiff's trademarked designs and terms that are registered with the United States Patent and Trademark Office and six of its common law trademarks. (Id. ¶ 18.) It is unknown whether Defendants' customers receive authentic Bestway products. (Id. ¶ 1.) Defendant Lazysize owns the domain name for bestwayonsale.com, and Defendant
Dorothea Mills is the registrant contact, administrative contact, and technical contact for Lazysize. (Id. ¶ 13.) Defendants' purported address is a single-family home in North Wales, Pennsylvania. (Id.; Mot. for Temp. Restraining Ord., 8). Plaintiff does not know any of the identities of the other defendants.
On March 23, 2022, Plaintiff filed a Complaint (ECF No. 1) and an Ex Parte Motion for Temporary Restraining Order, Preliminary Injunction, and Immediate Discovery (ECF No. 2). On March 29, 2022, Plaintiff sent a process server to the North Wales home to serve Defendants Mills and Lazysize. (Summons Returned Unexecuted, ECF No. 3; Summons Returned Unexecuted, ECF No. 4). There, the homeowners answered the door, told the process server that they had lived there for seven years, and informed him that they did not know of Dorothea Mills or Lazysize. Id. The homeowners presented identification confirming that they were not Dorothea Mills.
On April 8, 2022, this Court granted in part and denied in part Plaintiff's Motion. Bestway v. Mills, 22-1124 (April 8, 2022) (ECF No. 5.). A hearing was ordered to occur within fourteen days of that order but was briefly continued as a result of counsel's exposure to an individual with COVID-19. On April 12, 2022, Plaintiff deposited a sum of $999, per this Court's order, as security for the temporary restraining order. The preliminary injunction hearing was held on April 27, 2022. Defendants did not appear, and no counsel has entered an appearance, despite being served both by First Class Mail to the North Wales address and by email.
II. CONCLUSIONS OF LAW
Plaintiff moves to enjoin Defendants from use of their website, which has a domain name that includes Plaintiff's company name and is a convincing imitation of Plaintiff's authentic website. Plaintiff satisfies the elements required for a preliminary injunction. Plaintiff also renews several requests from its Ex Parte Motion for Temporary Restraining Order, Preliminary Injunction, and Immediate Discovery. We will grant Plaintiff's requests that we freeze Defendants' PayPal accounts, order expedited discovery so that they may ascertain Defendants' identities and the scope of their alleged wrongdoing, and permit service by email.
A. Preliminary Injunction
Preliminary injunctive relief is an “extraordinary remedy and should be granted only in limited circumstances.” Kos Pharm., Inc. v. Andrx Corp., 369 F.3d 700, 708 (3d Cir. 2004) (citation omitted). In order to obtain a preliminary injunction, a plaintiff must demonstrate: (1) a likelihood of success on the merits; (2) the probability of irreparable harm if the relief is not granted; (3) that granting injunctive relief will not result in even greater harm to the other party; and (4) that granting relief will be in the public interest. Bieros v. Nicola, 857 F.Supp. 445, 446 (E.D.Pa. 1994) (citing Frank's GMC Truck Ctr., Inc. v. Gen. Motors Corp., 847 F.2d 100, 102 (3d Cir. 1988)); see also Allegheny Energy, Inc. v. DQE, Inc., 171 F.3d 153, 158 (3d Cir. 1999) (setting forth the four elements for demonstrating need for preliminary injunction).
The standard for granting a temporary restraining order under Federal Rule of Civil Procedure 65 is the same as that for issuing a preliminary injunction. Bieros, 857 F.Supp. at 446. We previously issued a temporary restraining order in this matter and apply the same reasoning to the grant of the preliminary injunction. Bestway v. Mills, 22-1124 (April 8, 2022) (ECF No. 5.). As noted above, Defendant did not object to or attend the preliminary injunction hearing. Our conclusions of law, which we hold apply in this case as well, are as follows:
1. Likelihood of Success on the Merits
Plaintiff has alleged four claims, and its filings show that each would likely succeed on the merits. Plaintiff alleges two violations of the Lanham Act: Count I is a trademark infringement claim, in violation of 15 U.S.C. § 1114, and Count II is an unfair competition claim, in violation of 15 U.S.C. § 1125(a). Both claims are measured by identical standards, which require the plaintiff to demonstrate that “(1) it has a valid and legally protectable mark; (2) it owns the mark; and (3) the defendant's use of the mark to identify goods or services causes a likelihood of confusion.” A & H Sportswear, Inc. v. Victoria's Secret Stores, Inc., 237 F.3d 198, 210 (3d Cir. 2000). In order to determine whether a likelihood of confusion exists, courts consider the following factors:
(1) the degree of similarity between the owner's mark and the alleged infringing mark; (2) the strength of the owner's mark; (3) the price of the goods and other factors indicative of the care and attention expected of consumers when making a purchase; (4) the length of time the defendant has used the mark without evidence of actual confusion arising; (5) the intent of the defendant in adopting the mark; (6) the evidence of actual confusion; (7) whether the goods, [even if] not competing, are marketed through the same channels of trade and advertised through the same media; (8) the extent to which the targets of the parties' sales efforts are the same; (9) the relationship of the goods in the minds of consumers because of the similarity of function; (10) other facts suggesting that the consuming public might expect the prior owner to manufacture a product in the defendant's market, or that he is unlikely to expand into that market.Interpace Corp. v. Lapp, Inc., 721 F.2d 460, 463 (3d Cir. 1983) (“the Lapp factors”). The above list of factors is a balancing test, and not all factors must be given equal weight. Kos Pharms., 369 F.3d at 709.
Plaintiff has filed exhibits that show that it has a valid and legally protectable mark over the trademarks at issue and that it owns them. Thus, the only question is whether Defendants' use of the trademarked logos and product names would cause a likelihood of confusion. We are satisfied that it would. Defendants' designs and terms are exact or near-exact copies of Plaintiff's trademarks. Defendants' website's domain name includes Plaintiff's company name, and the website itself uses a similar format, font, and product images. While Plaintiff has only identified one confused customer who assumed that Plaintiff and Defendants were the same entity, we find that Defendants' convincing impersonation of Plaintiff's authentic website and products poses a strong likelihood of confusion. Therefore, Plaintiff will likely succeed on its Lanham Act claims.
Count III alleges a cyberpiracy claim, in violation of 15 U.S.C. § 1125(d). To state a claim of cyberpiracy, Plaintiff must prove that: (1) it owns the mark; (2) Defendants had “a bad faith intent to profit from that mark;” (3) Defendants register, traffic in, or use a domain name that is distinctive and identical or confusingly similar to that mark, is famous and identical or confusingly similar to or dilutive of that mark, or is a trademark, word, or name protected by statute. 15 U.S.C. § 1125. Plaintiff's exhibits prove that it owns the relevant marks. Moreover, there is evidence of Defendants' bad faith: Defendants' domain name contains Plaintiff's trademark but not its own company name, and Defendants have no intellectual property rights in the domain name. See Lingo v. Lingo, 785 F.Supp.2d 443, 453 (D. Del. 2011) (holding that the defendant's action of taking the plaintiff's sign to a sign company and asking to duplicate it was evidence of bad faith). In addition, the domain name, which contains Plaintiff's trademarked company name, is confusingly similar and offers no way for customers to ascertain that the two companies are unrelated. Therefore, it is likely that Plaintiff would succeed on its cyberpiracy claim.
Finally, Count IV alleges federal common law trademark infringement and unfair competition. The elements of these claims are “essentially the same” as the analysis for trademark infringement under the Lanham Act, except that the goods must also have an effect on interstate commerce. Fisons Horticulture, Inc. v. Vigoro Indus., Inc., 30 F.3d 466, 473 (3d Cir. 1994); Flynn v. Health Advoc., Inc., 169 Fed.Appx. 99, 101 n.3 (3d Cir. 2006). Defendants' practices likely affected interstate commerce since Plaintiff provided evidence of one of Defendants' sales, which was shipped from China to the United States. Therefore, it is likely that Plaintiff would succeed on its common law claims.
Because Plaintiff would likely succeed on the merits of each of its claims, it has satisfied the first requirement for obtaining a temporary restraining order.
2. Irreparable Harm
Plaintiff has also shown that irreparable harm will occur if the temporary restraining order is not granted. “Grounds for irreparable injury include loss of control of reputation, loss of trade, and loss of good will, intangible harms for which it is virtually impossible to ascertain the precise economic consequences.” See Kos Pharms., 369 F.3d at 726 (citation omitted). Moreover, the possibility of lower quality or otherwise unusable imitation products can cause irreparable harm to a company's reputation. See Astrazeneca AB v. Dr. Reddy's Lab'ys, Inc., 145 F.Supp.3d 311, 319-20 (D. Del. 2015) (use of similar-looking pills to trademarked version “not only dilutes [Plaintiff's] Marks, but puts at risk [Plaintiff's] reputation in the event of quality or safety issues with [Defendant's] generic.”). Here, the only known example of Defendants' transactions resulted in the customer receiving a completely different product than what was ordered. Therefore, Plaintiff has established irreparable harm would occur if we do not enjoin Defendants' actions.
3. Balance of Equities
The balance of equities considers “the extent to which the defendants will suffer irreparable harm if the [temporary restraining order] is issued.” Opticians Ass'n of Am. v. Indep. Opticians of Am., 920 F.2d 187, 192 (3d Cir. 1990). However, when a defendant intentionally appropriates another party's intellectual property, it “can hardly claim to be harmed, since it brought any and all difficulties occasioned by the issuance of an injunction upon itself.” Id. at 197; see also Kos Pharms, 369 F.3d at 728. The harm to Plaintiff's goodwill and Defendants' lack of meaningful claim of harm-in light of its identical or near-identical copies of Plaintiff's marks-merit finding that the balance of equities weighs in favor of enjoining Defendants.
4. Public Interest
“Public interest can be defined a number of ways, but in a trademark case, it is most often a synonym for the right of the public not to be deceived or confused.” Pappan Enterprises, Inc. v. Hardee's Food Sys., Inc., 143 F.3d 800, 807 (3d Cir. 1998) (quoting Opticians Ass'n, 920 F.2d at 197). Thus, the public interest in not being deceived or confused by Defendants' imposter website weighs in favor of enjoining Defendants.
Because all four factors weigh in favor of granting the temporary restraining order, it will be granted. Defendants and their agents will be enjoined from using Plaintiff's trademarks in connection with the production, sale, importation, offering for sale, or advertising of any products; engaging in any action to pass off non-genuine Bestway products or product offerings as genuine Bestway products; engaging in further actions to interfere with Plaintiff's rights in its marks or in damaging Plaintiff's goodwill or reputation; and continuing to operate bestwayonsale.com and any similar site(s) containing content that infringes on Bestway's trademark rights. Defendants shall immediately and permanently take down any website, including bestwayonsale.com, that contains any unlawful depiction, description, or advertisement of a product that infringes Plaintiff's intellectual property. The current and any subsequent registrar of bestwayonsale.com will immediately lock the domain, remove all existing Domain Name Server (DNS) entries, and prevent the transfer of the domain name until further order of this Court.Id. For the foregoing reasons, the preliminary injunction will be granted.
B. Freezing Defendants' PayPal Accounts
Plaintiff also requests that we freeze Defendants' PayPal accounts to prevent dissipation of assets and ensure that Plaintiff can obtain an equitable accounting of Defendants' profits. “Generally, a federal court has no authority to freeze a defendant's funds to help ensure satisfaction of a judgment should the plaintiff prevail on an underlying legal claim.” Symphony FS Ltd. v. Thompson, No. 18-3904, 2018 WL 6715894, at *8 (E.D. Pa. Dec. 20, 2018). In addition to satisfying the preliminary injunction standard, a plaintiff must also show that “(1) he asserts a cognizable equitable claim, (2) he demonstrates a sufficient nexus between that equitable claim and specific assets of the defendant which are the target of the injunctive relief, and (3) he shows that the requested interim relief is a reasonable measure to preserve the status quo in aid of the ultimate equitable relief claimed.” Id.; see Bradley v. Amazon.com, Inc., No. 17-1587, 2021 WL 5631754, at *2 (E.D. Pa. Dec. 1, 2021). “[S]ome attempt to tailor the scope of the injunction to the likely size of the judgment is necessary, although the determination regarding how precise that tailoring must or can be in any particular case lies within the equitable discretion of the district court.” Hoxworth v. Blinder, Robinson & Co., 903 F.2d 186, 199 (3d Cir. 1990), holding modified by Am. Tel. & Tel. Co. v. Winback & Conserve Program, Inc., 42 F.3d 1421 (3d Cir. 1994) (emphasis in original). Plaintiff asserts that freezing these assets will assist it in determining the scope of the fraud, and that the profits contained within the PayPal account only contain the profits from counterfeit products. Plaintiff also asserts that the statutory damages could amount to $40 million in this case. For these reasons, freezing the PayPal assets is a reasonable measure to preserve the status quo. We will grant Plaintiff's request.
C. Expedited Discovery
Plaintiff also requests expedited discovery to discern the identities of defendants and determine scope of wrongful conduct. According to the Federal Rules of Civil Procedure, “[a] party may not seek discovery from any source before the parties have conferred as required by Rule 26(f), except in a proceeding exempted from initial disclosure under Rule 26(a)(1)(B), or when authorized by these rules, by stipulation, or by court order.” Fed.R.Civ.P. 26(d)(1). When a plaintiff seeks expedited discovery in order to identify unknown defendants, courts examine whether “good cause” exists for the discovery by determining whether the plaintiff has established aprimafacie case for each essential element of its claims. Reybold Grp. of Companies, Inc. v. Does 1-20, 323 F.R.D. 205, 208 (D. Del. 2017). “If the plaintiff has made thisprimafacie showing, then courts have also inquired about whether the plaintiff has demonstrated: (1) that it has no other way to identify the alleged wrongdoers, aside from obtaining the discovery at issue; or (2) that expedited discovery is necessary because evidence identifying the defendants may be otherwise destroyed (e.g., as a result of routine deletion by third party ISPs).” Id. (citing Vision Films, Inc. v. John Does 1-24, No. 12-1746, 2013 WL 1163988, at *3-4 (D. Del. Mar. 20, 2013)). As analyzed in Section A, Plaintiff can establish a prima facie case of each claim asserted. At the preliminary injunction hearing, Plaintiff showed that it had no other way of obtaining the identities of the Defendants-the people that resided at the North Wales address provided identification to Plaintiff's agent to prove that they were not Defendant Mills; the residents had never heard of Mills or Bestway; they had lived at the home for seven years; Defendants have been unresponsive to email communication; and Plaintiff suggests, based on the origination location of Defendant's shipment to the deceived customer, that Defendants may actually reside in China. Plaintiff argued at the preliminary injunction hearing that the best possible method of determining Defendants' identities would be to contact the ISP owner of Defendants' imitation website. This is reasonable. Therefore, we will grant Plaintiff's request for expedited discovery.
D. Service via E-mail
Plaintiff requests that it be permitted to serve Defendants by e-mail. Fed.R.Civ.P. 4(e) states that a person may be served in a judicial district of the United States by “following state law for serving a summons in an action brought in courts of general jurisdiction in the state where the district court is located or where service is made.” Pennsylvania law states that when service cannot be made, “the plaintiff may move the court for a special order directing the method of service.” Pa. R. C. P. 430; see Power Corp. of Canada v. Power Fin., No. 09-0510, 2009 WL 982750, at *1 (M.D. Pa. Apr. 13, 2009) (applying Rule 430 to service by email). In order to obtain permission to serve a defendant by alternate service, a plaintiff must show that “1) the plaintiff has made a good faith effort to locate the defendant, 2) the plaintiff has made practical efforts to serve the defendant under the circumstances, and 3) the proposed alternative is reasonably calculated to provide the defendant with notice of the proceedings against them.” Delaware Valley Aesthetics, PLLC v. Doe, No. 20-0456, 2021 WL 5906152, at *1 (E.D. Pa. Dec. 14, 2021). As noted above, the people that resided at the North Wales address had no connection with this case; Defendants have been unresponsive to email communication; and Defendants' only known shipment originated in China. Plaintiff's attempt to serve Defendants via process server was ineffective, and service by mail to a stranger's address would be similarly futile. The only possible means of communication available to Plaintiff is via the email addresses that Defendants provided on their website. Under these circumstances, service by email is appropriate.
IV. CONCLUSION
For the foregoing reasons, Plaintiff's Ex Parte Motion for Temporary Restraining Order, Preliminary Injunction, and Immediate Discovery is granted. An appropriate Order follows.
BY THE COURT: