ABC Corporation I v. The Partnership and Unincorporated Associations Identified on Schedule "A"

CourtDistrict Court, N.D. Illinois
DecidedJuly 2, 2024
Docket1:20-cv-04806
StatusUnknown

This text of ABC Corporation I v. The Partnership and Unincorporated Associations Identified on Schedule "A" (ABC Corporation I v. The Partnership and Unincorporated Associations Identified on Schedule "A") is published on Counsel Stack Legal Research, covering District Court, N.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
ABC Corporation I v. The Partnership and Unincorporated Associations Identified on Schedule "A", (N.D. Ill. 2024).

Opinion

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION HANGZHOU CHIC INTELLIGENT TECHNOLOGY CO. and UNICORN GLOBAL, INC., No. 20 C 4806

Plaintiffs, Judge Thomas M. Durkin

v.

THE PARTNERSHIPS AND UNINCORPORATED ASSOCIATIONS IDENTIFIED ON SCHEDULE A,

Defendants.

MEMORANDUM OPINION AND ORDER Presently before the Court are motions for damages, fees and costs, and an appeal bond by Gyroor-US, Gyroor, Urbanmax, Gaodeshang-US, Fengchi-US, Gyroshoes, Jiangyou-US, HGSM, and Shenzhen Yanjingmaoyi Co., Ltd. (“Defendants”), and Plaintiffs’ related motion to return the bond required when the Court entered the preliminary injunctions. For the following reasons, the Court grants in part and denies in part Defendants’ motions [696, 706, 709] and denies Plaintiffs’ motion [653]. Background In August 2020, Plaintiffs brought this suit alleging that the defendants’ “hoverboard” products infringed on Plaintiffs’ design patents. The Court entered a preliminary injunction to enjoin the defendants, including Gyroor-US and Jiangyou- US, from further sale of the allegedly infringing products on November 24, 2020, which was modified on December 23, 2020. R. 113, 147. Plaintiffs thereafter amended the complaint to add defendants Gyroor, Urbanmax, Fengchi-US, HGSM, Gaodeshang-US, and Gyroshoes. R. 227, 253. The Court subsequently granted a

second preliminary injunction on October 13, 2021. R. 456. To secure the injunctions, Plaintiffs posted a bond in the amount of $156,000 on October 2, 2020 and a bond in the amount of $94,000 on August 26, 2021. R. 42, 360. Notwithstanding the injunctions, Gyroor-US, Gyroor, Urbanmax, Fengchi-US, HGSM, Gaodeshang-US, Jiangyou-US, and Gyroshoes continued selling allegedly infringing products through “Gyroor”-associated Amazon storefronts. The Court held these defendants in

contempt for the violations on October 6, 2021. R. 444. Third-party respondent Shenzhen Yanjingmaoyi Co., Ltd. (“Yanjin-US”) moved to vacate the preliminary injunction on May 16, 2022. R. 535. The Court held that Yanjin-US’s inclusion in the October 2021 injunction order was an error, dissolved the injunction as to Yanjin-US, and deferred ruling on the issue of damages. R. 558. Shortly thereafter, the Court granted defendant Jiangyou-US’s motion to dismiss for lack of personal jurisdiction. R. 561.

The injunctions otherwise remained in effect until the Federal Circuit vacated them on October 28, 2022. See ABC Corp. I v. P’ship & Unincorporated Associations Identified on Schedule “A”, 51 F.4th 1365 (Fed. Cir. 2022) (R. 590); ABC Corp. I v. P’ship & Unincorporated Associations Identified on Schedule “A”, 52 F.4th 934 (Fed. Cir. 2022) (R. 587). Following these rulings, Plaintiffs filed a renewed motion for injunctive relief, which the Court denied after a hearing. R. 592, 619, 626. On January 12, 2024, the Court granted summary judgment for Gyroor-US, Gyroor, Urbanmax, Gaodeshang-US, Fengchi-US, Gyroshoes, and HGSM. R. 686. Plaintiffs appealed, R. 691, but four motions remain pending before this Court: (1)

Plaintiffs’ motion for the release of the bond paid in connection with the prior preliminary injunctions (R. 653); (2) Defendants’ motion for damages for the issuance of the preliminary injunctions (R. 696); (3) Defendants’ motion for attorneys’ fees and costs (R. 709); and (4) Defendants’ motion for an appeal bond (R. 706).1 Discussion I. Motion for Damages Defendants seek damages for the vacated injunctions. In this Circuit, “a

prevailing defendant is entitled to damages on the injunction bond unless there is a good reason for not requiring the plaintiff to pay in a particular case.” Coyne-Delany Co., Inc. v. Capital Dev. Bd. of State of Ill., 717 F.2d 385, 391 (7th Cir. 1983). Here, Defendants are indisputably the “prevailing” parties. Thus, the Court is guided by the “implicit presumption” in favor of awarding injunction damages and factors such as “the resources of the parties, the defendant’s effort or lack thereof to mitigate his

damages, and the outcome of the underlying suit.” Id. Plaintiffs nonetheless argue there is “good reason” for not making them pay. First, they say that Defendants were not “wrongfully enjoined or restrained,” as required to recover damages on the bond. Fed. R. Civ. P. 65(c) (allowing courts to

1 There is some dispute about the classification of certain parties bringing the latter three motions as “defendants” versus “third-party respondents.” For ease of reference in this opinion, the Court refers to the parties collectively as “Defendants.” 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”). Plaintiffs contend that just because

the Federal Circuit vacated the injunctions does not mean Defendants were “wrongfully enjoined.” The Court does not see the distinction Plaintiffs seek to draw. The Federal Circuit ruled that the preliminary injunctions entered by this Court should not have been entered. See generally R. 587, 590. That is another way of saying Defendants were wrongfully enjoined. Next Plaintiffs argue there is “good reason” for denying injunction damages

because Defendants did not comply with the injunctions. To be sure, Defendants (except Yanjin-US) sold allegedly infringing products while they were subject to injunctions, and the Court thus held them in contempt. R. 444. Yet Defendants were still wrongfully enjoined, and Plaintiffs cite no authority for the proposition that such noncompliance precludes damages altogether. Instead, those sales bear on the amount of damages that Defendants are entitled to. “Established doctrine has it that the damages payable to a person injured by

an erroneously issued injunction cannot exceed the amount of the bond.” Roche Diagnostics Corp. v. Med. Automation Sys., Inc., 646 F.3d 424, 428 (7th Cir. 2011) (citations omitted). But Defendants are not automatically entitled to the amount of the bond; they still have to prove the amount of their damages. See Mead Johnson & Co. v. Abbott Labs., 201 F.3d 883, 888 (7th Cir. 2000). While damages on the injunction bond need not be proved “to a mathematical certainty,” it also cannot be speculative. Triumph v. Ward, No. 11 C 7927, 2011 WL 6754044, at *5 (N.D. Ill. Dec. 22, 2011) (citations omitted). Here, Defendants have offered sufficient proof of at least $250,000 in damages.

They claim $5,256,242 in lost profits and prejudgment interest for the time the injunctions were in effect: Gyroor-US: $2,742,508; Gyroor: $824,866; Urbanmax: $81,429; Gaodeshang-US: $18,071; Fengchi-US: $461,068; Gyroshoes: $355,698; HGSM: $92,036; Jiangyou-US: $646,017; Yanjin-US: $34,539. Defendants’ expert Stacy Kinsel, a Certified Public Accountant and Certified Fraud Examiner, arrived at these values by projecting monthly sales using historical sales data from Amazon

for the months preceding the injunctions, deducting expenses, and adding prejudgment interest accrued to the date judgment was entered in their favor or they were dismissed. It does not appear that Kinsel deducted the profits from the sales Defendants made in violation of the injunctions. See R. 473, 699.

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ABC Corporation I v. The Partnership and Unincorporated Associations Identified on Schedule "A", Counsel Stack Legal Research, https://law.counselstack.com/opinion/abc-corporation-i-v-the-partnership-and-unincorporated-associations-ilnd-2024.