Weifang Tengyi Jewelry Trading Co. Ltd v. The Partnerships and Unincorporated Associations Identified on Schedule "A"

CourtDistrict Court, N.D. Illinois
DecidedMarch 14, 2019
Docket1:18-cv-04651
StatusUnknown

This text of Weifang Tengyi Jewelry Trading Co. Ltd v. The Partnerships and Unincorporated Associations Identified on Schedule "A" (Weifang Tengyi Jewelry Trading Co. Ltd v. The Partnerships 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
Weifang Tengyi Jewelry Trading Co. Ltd v. The Partnerships and Unincorporated Associations Identified on Schedule "A", (N.D. Ill. 2019).

Opinion

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION

WEIFANG TENGYI JEWELRY TRADING CO. LTD., ) ) Plaintiff/Counter-Defendant, ) 18 C 4651 ) vs. ) Judge Gary Feinerman ) INTUII LLC and JENS SORENSEN, ) ) Defendants/Counter-Plaintiffs. ) MEMORANDUM OPINION AND ORDER Weifang Tengyi Jewelry Trading Co. Ltd. sued dozens of defendants under the Lanham Act, 15 U.S.C. § 1051 et seq., and the Illinois Uniform Deceptive Trade Practices Act (“IUDTPA”), 815 ILCS § 510/1 et seq., Doc. 1, and quickly obtained an ex parte temporary restraining order (“TRO”) against them all, Doc. 16. Two defendants, Intuii LLC and its manager/owner Jens Sorensen (together, “Intuii”)—who have since brought counterclaims and are now the sole remaining defendants—moved to lift the TRO and recover for the financial harm caused by the TRO. Doc. 30. The court lifted the TRO as to Intuii and entered and continued its motion for damages. Doc. 44. Weifang then moved to vacate both the order lifting the TRO and a second order, Doc. 45, denying its motion for a preliminary injunction. Doc. 71. The court denies Intuii’s motion for damages and Weifang’s motion to vacate. Background Weifang sells jewelry under its registered ULOVEIDO trademark. Doc. 1 at ¶¶ 3, 7. Weifang’s complaint alleged that Defendants were selling counterfeit ULOVEIDO goods and sought damages and injunctive relief. Id. at ¶¶ 1-41, pp. 12-14. The complaint was replete with references to counterfeiting. Its introduction began: “This action has been filed by Plaintiff to combat online counterfeiters.” Id. at ¶ 3. The next paragraph alleged: “The Defendants create numerous Defendant Internet Stores and design them to appear to be selling genuine Plaintiff products, while selling inferior imitations of Plaintiff’s products.” Id. at ¶ 4. The complaint sought to establish that Defendants were properly joined under Civil Rule 20(a) by noting the

“similarities of the counterfeit products offered for sale” and by alleging that Defendants “go[] to great lengths to conceal … the full scope and interworking of their illegal counterfeiting operation” and that their products “were manufactured by and come from a common source.” Id. at ¶¶ 4, 22. Some form of the word “counterfeit” appeared forty-two times in the complaint. Id. at ¶¶ 2, 3, 4, 7, 17, 18, 19, 21, 22, 23, 24, 25, 26, 28, 30, 31, 33, 35, 36, 37, 39, pp. 12-13. Reinforcing the theme, the complaint referred to Defendants’ “wrongful reproduction” of ULOVEIDO products, id. at ¶ 33; twice accused Defendants of selling “imitation” ULOVEIDO products, id. at ¶ 4 (“inferior imitations”), ¶ 28 (“counterfeit imitations”); and repeatedly contrasted Defendants’ products with “genuine” ULOVEIDO products, id. at ¶¶ 4, 12, 19, 20,

39, p. 13. The complaint also alleged that Defendants were located in China and other foreign countries. Id. at ¶ 17 (“Defendants are individuals and business entities who, upon information and belief, reside in the People’s Republic of China or other foreign jurisdictions.”). Shortly after filing the complaint, Weifang moved ex parte for a sealed TRO. Docs. 11- 12. Weifang’s supporting brief charged: “As alleged in the Complaint, defendants are selling counterfeit products under Plaintiff’s federally registered ULOVEIDO trademark.” Doc. 13 at 2. Weifang’s brief consistently referenced counterfeiting in explaining why an ex parte TRO should issue. It noted that “[c]ourts have recognized that civil actions against counterfeiters present special challenges that justify proceeding on an ex parte basis.” Id. at 4. In arguing that it would likely succeed on the merits, Weifang observed that the Seventh Circuit has established a “presumption of a likelihood of confusion” where a defendant “produces counterfeit goods in an apparent attempt to capitalize upon the popularity of, and demand for, another’s product.” Id. at 7 (quoting Microsoft Corp v. Rechanik, 249 F. App’x 476, 479 (7th Cir. 2007) (affirming

summary judgment in a counterfeiting case)). In arguing that the balance of equities favored a TRO, Weifang asserted that “Defendants have been profiting from the sale of Counterfeit ULOVEIDO Products.” Id. at 10. Weifang’s brief used some form of the word “counterfeit” twenty-one times. Id. at 2, 4, 5, 6, 7, 8, 10, 11, 13. Echoing the complaint, Weifang’s brief asserted that Defendants were located abroad: “[C]onsidering the covert nature of offshore infringing activities and the vital need to establish an economic disincentive for infringement, this Court and others in this judicial district have regularly issued [ex parte TROs].” Id. at 2 (emphasis added). Weifang’s brief concluded: Defendants’ counterfeiting operations are irreparably harming Plaintiff’s business, its famous ULOVEIDO brand, and consumers. Without entry of the requested relief, Defendants’ sale of Counterfeit ULOVEIDO Products will continue to lead prospective purchasers and others to believe that Defendants’ Counterfeit ULOVEIDO Products have been manufactured by or emanate from Plaintiff, when in fact, they have not. Id. at 13-14. Weifang attached to its TRO motion a declaration from Teng Guangyao, its founder, owner, and general manager. Doc. 10. Teng averred that ULOVEIDO’s success had “resulted in significant counterfeiting by individuals and entities who … sell cheap imitation counterfeits of ULOVEIDO products.” Id. at ¶ 10. Teng further averred that he had determined that Defendants’ products were counterfeit due in part to “the price at which the Counterfeit Products were offered for sale.” Id. at ¶ 12. Teng expressed concern that “[p]rospective consumers who see inferior Counterfeit Products … may mistakenly believe such goods to be genuine and may consequently develop a poor impression of ULOVEIDO products.” Id. at ¶ 23. Teng used some form of the word “counterfeit” twenty-five times. Id. at ¶¶ 10, 11, 12, 13, 14, 16, 17, 18, 19, 22, 23, 24, 25. He also claimed to have undertaken or supervised “an investigation which has established” that Defendants sold “Counterfeit Products from foreign countries such as China to

consumers in the United States.” Id. at ¶ 11. Weifang’s complaint and TRO papers painted a portrait of foreign entities who manufactured cheap, fake, imitation ULOVEIDO products and misrepresented them to the market as genuine ULOVEIDO products manufactured by Weifang. Based on Weifang’s submissions, the court granted its motion and entered its proposed TRO. Docs. 15-16. After the TRO was unsealed, Doc. 24, Intuii moved to lift it and for damages. Doc. 30. Sorensen (as noted, Intuii’s owner and manager) submitted a declaration averring that Intuii was not a foreign counterfeiter, but rather a California-based business that engaged in what the parties have called “drop shipping.” Doc. 33. According to Sorensen, Intuii identifies goods that other online businesses are offering for low prices and, without first acquiring the goods,

advertises them on Intuii’s online store at a slightly higher price. Id. at ¶ 4. When a customer orders a good from Intuii, Intuii buys the good from the other online business and instructs that business to send the good to the buyer, earning a profit from the difference between Intuii’s price and the other online business’s price. Ibid.; see generally Howard Hess Dental Labs. Inc. v. Dentsply Int’l, Inc., 424 F.3d 363, 367 (3d Cir. 2005) (“Drop shipping occurs when a dealer does not have certain [products] in stock or cannot fulfill a [customer’s] order for some other reason and asks [a manufacturer] to ship the [products] directly to a [customer]. When [products] are drop shipped, the dealer never has physical custody of them, but it does bill the [customer] for the [products], collect payments from the [customer], and pay [the manufacturer].”); Shane Matherne Enters., Inc. v.

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Weifang Tengyi Jewelry Trading Co. Ltd v. The Partnerships and Unincorporated Associations Identified on Schedule "A", Counsel Stack Legal Research, https://law.counselstack.com/opinion/weifang-tengyi-jewelry-trading-co-ltd-v-the-partnerships-and-ilnd-2019.