Loeb & Loeb is pleased to announce that the U.S. District Court for the Northern District of Illinois granted its second motion for preliminary injunction and its motion for contempt of that injunction in favor of clients, Hangzhou Chic Intelligent Technology (Chic), a leading Chinese technology company, and Unicorn Global (Unicorn), Chic’s U.S. exclusive distributor, in design patent infringement over two-wheeled personal transport devices commonly called “hoverboards.”
This case began as a “Whack-A-Mole” patent infringement lawsuit against foreign online merchants who use the anonymity of online marketplaces to sell infringing hoverboard products. These online merchants do not have physical presence in the U.S.; some merely rent warehouses for storing inventory and use shell companies or suspicious entities to hide their true identities or affiliations. Furthermore, these online merchants also take advantage of the unique product identifiers to make enforcement actions difficult.
This second preliminary injunction resulted from these online merchants playing a “Catch Me If You Can” game with U.S. courts. These merchants would create a shop to sell infringing products for a short period of time, and then shut down only to start the same process again with a new shop. In other instances, one online merchant with one name would receive an order from a consumer, but a different online merchant with another name would ship the ordered product.
In this latest ruling in October 2021, the Northern District of Illinois Court clearly saw through these nefarious under-the-table dealings. The court not only found that these online merchants are related, but that the merchants also work together to violate the previously-entered preliminary injunction. Moreover, the court also found the defendants are in contempt for violating the preliminary injunction by continuing to sell or offering to sell infringing products. Specifically, the court ordered:
- Gyroor-US and the seven other defendants to submit by October 21, 2021, an account of all infringing product sales that have occurred since entry of the preliminary injunction on November 24, 2020. At a minimum, the district court expects the defendants’ summary to show the sales identified in the plaintiffs’ motion. Upon review of the account, the court will order Gyroor-US and the seven other defendants to escrow all revenues from these sales with the court clerk. Failure to submit this accounting will result in a sanction of $1,000 per day for which the eight defendants will be jointly and severally liable.
- Gyroor-US and the seven other defendants to submit to the district court by October 21, 2021, statements of their Amazon accounts showing the reasons for the deductions that the plaintiffs have identified. Failure to submit these statements will result in an order that the eight defendants pay the plaintiffs about $180,000.00 that has been deducted from the accounts, an amount for which the eight defendants will be jointly and severally liable.
- The defendants to pay the plaintiffs reasonable attorney’s fees and costs associated with this motion.
The Loeb team representing Chic and Unicorn in the matter is led by Patent Litigation partner Adam Kelly and senior counsel Arthur Yuan, and Litigation associate Marwa Abdelaziz.
