N. Atl. Operating Co., Inc. v. Hot Box Deals
N. Atl. Operating Co., Inc. v. Hot Box Deals
2018 WL 2184006 (E.D. Mich. 2018)
January 19, 2018
Parker, Linda V., United States District Judge
Summary
The court granted North Atlantic's Ex Parte Motion for a temporary restraining order, including an asset restraining order, expedited discovery order, and order permitting service by alternative means. This order required Third Party Providers to freeze all access of each and every Defendant to any and all of their accounts associated with the unauthorized trade in ZIG-ZAG® cigarette paper products. Additionally, the court ordered expedited discovery, requiring the Restrained Parties and Third Party Providers to produce to North Atlantic all documents and records in their possession or control relating to the identities and addresses of the Restrained Parties, and the locations and identities of the relevant Defendant's operations. This included ESI such as the marks of U.S. Registration Nos., the work of the federal copyright registration, and the distinctive design elements of the ZIG-ZAG® Orange packaging.
NORTH ATLANTIC OPERATING COMPANY, INC., et al., Plaintiffs,
v.
HOT BOX DEALS, et al., Defendants
v.
HOT BOX DEALS, et al., Defendants
Civil Action No. 18-10134
United States District Court, E.D. Michigan, Southern Division
Filed January 19, 2018
Counsel
Marcella Ballard, Victoria R. Danta, Venable LLP, New York, NY, Brian D. Wassom, Warner Norcross & Judd LLP, Southfield, MI, Lyndsay S. Ott, Warner Norcross & Judd LLP, Clinton Township, MI, for Plaintiffs.Parker, Linda V., United States District Judge
OPINION AND ORDER GRANTING PLAINTIFFS' EMERGENCY EX PARTE MOTION FOR TEMPORARY RESTRAINING ORDER
*1 Upon the emergency ex parte motion of Plaintiff North Atlantic Operating Company, Inc. and National Tobacco Company, L.P. (together, “North Atlantic”) for a temporary restraining order, including an asset restraining order; expedited discovery order; and order permitting service by alternative means (the “Ex Parte Motion”), and upon consideration of North Atlantic's Complaint, Memorandum of Law in Support of Plaintiff's Ex Parte Motion, the Declarations in support thereof (and exhibits attached thereto), and the entire record of this proceeding, and good cause having been shown, this Court GRANTS the Ex Parte Motion in its entirety. The Court further finds that issuing this order ex parte, without notice to Defendants, pursuant to Federal Rule of Civil Procedure 65(b) and L.R. 65.1, is appropriate because North Atlantic has presented specific facts in its Memorandum of Law, and supporting Declarations of Victoria Danta, John Hood and Steve Gnadinger that North Atlantic will suffer immediate and irreparable injury, loss, or damage before Defendants could be heard in opposition. Specifically, without an ex parte order, Defendants could, and likely would, change, destroy, or delete their existing online marketplace accounts, and the records contained therein, and would move or otherwise dispose of remaining inventories of counterfeit goods and assets from their financial accounts, including their PayPal accounts, stemming from the sale or other unauthorized distribution of such goods.
By issuing the following ex parte order, Defendants' records and assets will be preserved in their accounts; Defendants will be prevented from vanishing or changing their online identities; and evidence needed to prove North Atlantic's case will be available for trial. As other courts have recognized, proceedings against those, like Defendants, who deliberately traffic in counterfeit goods are often useless if notice is given to the adverse party.
WHEREFORE, this Court enters the following Order:
TEMPORARY RESTRAINING ORDER
Defendants and their principals, agents, directors, members, servants, employees, successors, and assigns, and all other persons in active concert or participation with them (collectively, the “Restrained Parties”) shall, upon service in the manner described below or actual notice of this Order be immediately temporarily restrained from:
1. Manufacturing, making, buying, purchasing, importing, shipping, delivering, advertising, marketing, promoting, offering to sell, selling, or otherwise distributing or disposing of, in any manner, any counterfeit or infringing ZIG-ZAG® brand cigarette paper products, including but not limited to ZIG-ZAG® 1 ¼ Size French Orange (“ZIG-ZAG® Orange”), or any cigarette paper products bearing:
a. Infringing or counterfeit versions of the ZIG-ZAG® Trademarks[1], the NAOC® Trademarks[2], the NAOC© Copyright[3], and/or the ZIG-ZAG® Orange Trade Dress[4], which appear alone or in combination on all cartons and booklets of ZIG-ZAG® Orange cigarette paper products distributed by North Atlantic in the United States; or
*2 b. The false statement that such products are “Distributed by North Atlantic Operating Company, Inc.” or otherwise under the control or supervision of North Atlantic, when they are not;
2. Manufacturing, making, buying, purchasing, importing, shipping, delivering, advertising, marketing, promoting, offering to sell, selling, or otherwise distributing or disposing of, in any manner, any purported North Atlantic products that are not actually produced, imported, or distributed under North Atlantic's control or supervision, or approved for sale in the United States by North Atlantic in connection with the ZIG-ZAG® Trademarks, the NAOC® Trademarks, the NAOC© Copyright, or the ZIG-ZAG® Orange Trade Dress;
3. Committing acts calculated to cause purchasers to believe that counterfeit or infringing ZIG-ZAG® cigarette paper products, including counterfeit ZIG-ZAG® Orange, originate with North Atlantic when they do not;
4. In any way infringing or damaging the ZIG-ZAG® or NAOC® Trademarks, the NAOC© Copyright, or the ZIG-ZAG® Orange Trade Dress, or the value or goodwill associated therewith;
5. Otherwise unfairly competing with North Atlantic;
6. Attempting, causing, or assisting in any of the above-described acts, including but not limited to, enabling others in the above-described acts or passing on information to allow them to do so;
7. Destroying, altering, deleting, or otherwise disposing of any documents, records, or electronically stored information concerning the manufacturing, making, buying, purchasing, importing, shipping, delivering, advertising, marketing, promoting, offering to sell, selling, or other distribution or disposal of any product that has been, or is intended to be, sold in packaging containing, displaying, or bearing the ZIG-ZAG® or NAOC® Trademarks, the NAOC© Copyright, or the ZIG-ZAG® Orange Trade Dress;
8. Forming or causing to be formed any corporation or other entity that engages in the above-described acts;
9. Accessing, using, linking to, transferring, selling, exercising control over, or otherwise owning the eBay seller accounts, Amazon seller accounts, or Bonanza seller accounts shown in Attachment 1, or any other online marketplace, e-commerce, or merchant account that is, or could be, the means by which Defendants manufacture, make, buy, purchase, import, ship, deliver, advertise, market, promote, offer to sell, sell, or otherwise distribute or dispose of, in any manner, any counterfeit or infringing ZIG-ZAG® Orange products;
10. Accessing, using, linking to, transferring, selling, exercising control over, or otherwise owning the PayPal accounts associated with the names and e-mail addresses shown in Attachment 1, or any other online payment processing or financial account that is, or could be, the means by which Defendants manufacture, make, buy, purchase, import, ship, deliver, advertise, market, promote, offer to sell, sell, or otherwise distribute or dispose of, in any manner, any counterfeit or infringing ZIG-ZAG® Orange products; and
11. Accessing, transferring, or disposing of any assets, subject to any Defendant's provision of an accounting of assets over $1,000 and uncontradicted, documentary proof that such particular assets are not proceeds of such Defendant's counterfeiting activities.
*3 12. Moving, altering, destroying, or otherwise disposing of any documents, records, communications, or electronic data within Defendants' possession, custody, or control, including any of Defendants' eBay, Bonanza, LetGo, PayPal, or other online marketplace, e-commerce, merchant, or payment processing accounts, in any way relating to: Defendants' manufacturing, making, buying, purchasing, importing, shipping, delivering, advertising, marketing, promoting, offering to sell, selling, or other distribution or disposal of any ZIG-ZAG® Orange products (counterfeit or genuine); Defendants' online storefronts; or Defendants' assets and operations, or relating in any way to any reproduction, counterfeit, copy, or colorable imitation of the ZIG-ZAG® Trademarks, the NAOC® Trademarks, the NAOC© Copyright, or the ZIG-ZAG® Orange Trade Dress;
13.Accessing any online accounts used in the manufacturing, making, buying, purchasing, importing, shipping, delivering, advertising, marketing, promoting, offering to sell, selling, or other distribution or disposal of any ZIG-ZAG® brand cigarette paper products (whether counterfeit or genuine), including but not limited to accounts on eBay, Bonanza, LetGo, PayPal, and any other online marketplace, e-commerce, merchant, payment processing, or financial account associated with any of the named Defendants; and
14.Accessing any accounts used in the transfer of money or electronic currency in connection with the purchase, sale, or other distribution of counterfeit ZIG-ZAG® cigarette paper products, including but not limited to any and all PayPal, Venmo, Western Union, bank, or third-party payment processing service provider accounts associated with any of the named Defendants.
Upon service as provided for in this Order, the Restrained Parties shall be deemed to have actual notice of the issuance and terms of the Temporary Restraining Order, and any act by any of the Restrained Parties in violation of any of the terms of the Temporary Restraining Order may be considered and prosecuted as contempt of Court.
IT IS FURTHER ORDERED, that the Restrained Parties shall immediately turn over to North Atlantic, or any person or entity designated by them, all counterfeit or suspect ZIG-ZAG® Orange cigarette paper products, or any products bearing counterfeit or infringing versions of the ZIG-ZAG® or NAOC® Trademarks, the NAOC© Copyright, the ZIG-ZAG® Orange Trade Dress, or the false statement that such products are “Distributed by North Atlantic Operating Company, Inc.”, in their possession, custody, or control.
IT IS FURTHER ORDERED, that within twenty-four (24) hours of service in the manner described below or actual notice of this Order, any party in privity with or providing services to Defendants, or in connection with any Defendant's online marketplace, e-commerce, merchant, payment processing, or related financial accounts, including but not limited to eBay, Bonanza, LetGo, Amazon, DHGate, Facebook Inc., internet service providers, web hosts, sponsored search engine or ad word providers, PayPal, Venmo, Alibaba, DHPay, Western Union, banks, and other payment processing service providers (collectively, “Third Party Providers”), shall:
*4 A. Freeze all access of each and every Defendant to any and all of their accounts associated with the unauthorized trade in ZIG-ZAG® cigarette paper products (see Attachment 1), by temporarily disabling these accounts (and other accounts known to be owned or operated by Defendants) and making them inactive, inaccessible to Defendants, and non-transferable pending further order from this Court;
B. Disable and cease displaying any advertisements used by or associated with Defendants, or any of them, in connection with the sale of counterfeit or infringing ZIG-ZAG® cigarette paper products; and
C. Take all steps necessary to prevent links to Defendants' accounts, including the accounts identified in Attachment 1, from displaying in search results, including but not limited to removing links to these accounts from any search index.
IT IS FURTHER ORDERED, that Defendants and any Restrained Party who has actual notice of this Order shall be temporarily restrained and enjoined from transferring or disposing of any money or other of Defendants' assets obtained from the unauthorized sale of counterfeit or infringing ZIG-ZAG® brand cigarette paper products until further order of this Court.
IT IS FURTHER ORDERED, that Third Party Providers, specifically including but not limited to PayPal, DHPay, banks, payment processors, and other financial institutions who receive actual notice of this Order, shall immediately locate all accounts and funds owned or operated by, or otherwise associated with, Defendants (or any of them), and each of their merchant accounts or websites, including but not limited to any PayPal or DHPay accounts connected to the names listed in Attachment 1 hereto, and that such accounts be frozen, disabled, restrained, and enjoined from transferring or disposing of any money or other of Defendants' assets, without prior approval of the Court, except as to a Defendant that files with the Court and serves upon Plaintiffs' counsel:
1. An accounting of any and all of such Defendant's assets located in the United States having a value of one thousand dollars ($1,000) or more, and the location and identity thereof; and
2. Uncontradicted documentary proof accepted by North Atlantic (such acceptance will not be unreasonably withheld) that particular assets are not proceeds of such Defendant's counterfeiting activities, in which case those particular assets shall be released to such Defendant.
IT IS FURTHER ORDERED, that upon three (3) business days' written notice to the Court and North Atlantic's counsel, any Defendant may, upon proper showing, appear and move for the dissolution or modification of the provisions of this Order concerning the restriction upon transfer of Defendants' assets.
EXPEDITED DISCOVERY
IT IS FURTHER ORDERED THAT, within five (5) days of service in the manner described below or actual notice of this Order, the Restrained Parties shall each produce to North Atlantic (via legal counsel) expedited discovery, namely, a completed, signed, and sworn document in the form attached as Attachment 2. This requirement of the Restrained Parties and Plaintiff's right to conduct expedited discovery shall not expire and remains in full force and effect until further Order of this Court.
IT IS FURTHER ORDERED, that within five (5) days of service in the manner described below or actual notice of this Order, the Third Party Providers shall produce to North Atlantic (via legal counsel) expedited discovery, namely, copies of all documents and records in such person's or entity's possession or control relating to:
*5 1. The identities and addresses of the Restrained Parties, and the locations and identities of the relevant Defendant's operations, including without limitation identifying information associated with any Defendant's eBay, Amazon, Bonanza, PayPal accounts, DHGate accounts, and any and all other online marketplace, e-commerce, merchant, or payment processing accounts, and related financial accounts;
2. Any and all known Internet websites on which Defendants trade in ZIG-ZAG® cigarette paper products (whether counterfeit or genuine);
3. Any and all known domain names registered by Defendants (or any of them);
4. Any and all financial accounts owned or controlled by the Restrained Parties, including such accounts residing with or under the control of any banks, savings and loan associations, merchant account providers, payment processors and providers, credit card associations, or other financial institutions that receive or process payments or hold assets on any Defendant's behalf, including without limitation PayPal or Western Union, Money Gram International, Visa, MasterCard, Discover, Venmo, or American Express.
ALTERNATIVE SERVICE
IT IS FURTHER ORDERED, that good cause having been shown, North Atlantic may serve upon all Defendants, Third Party Providers, and necessary third parties the documents initiating this matter, including the Complaint, Summons(es), Ex Parte Motion and supporting papers (including Declarations), Motion to Seal and Order thereon, North Atlantic's corporate disclosure statements, and the Order herein, by e-mail or other electronic means, and/or by overnight courier, when practicable, to the degree necessary to ensure and effectuate service.
IT IS FURTHER ORDERED, that North Atlantic post an undertaking within five (5) business days of the entry of this Order with the Clerk of the Court in the form of a bond, cash, or check in the sum of $10,000.00, as security for the payment of such costs and damages as may be incurred or suffered by any party as a result of a wrongful restraint hereunder.
IT IS FURTHER ORDERED that the Temporary Restraining Order shall remain in effect until the date set for hearing on the preliminary injunction.
IT IS FURTHER ORDERED, that service of the Summons(es), Complaint, this Temporary Restraining Order, and copies of the papers in support thereof, be made on Defendants within ten (10) days of the undersigned date.
IT IS FURTHER ORDERED, that all papers submitted in this action shall be filed with the Clerk of Court under seal, and shall remain filed under seal until further order of this Court.
SO ORDERED.
Attachment 1
Attachment 2
Footnotes
Defined as the marks of U.S. Registration Nos. 610,530 (ZIG-ZAG (stylized)); 1,127,946 (ZIG-ZAG (Word Mark)); 2,169,540 (Smoking Man Design (Circle Border)); 2,169,549 (Smoking Man Design (No Border)).
Defined as the marks of U.S. Registration Nos. 2,664,694 and 2,664,695 (NORTH ATLANTIC OPERATING COMPANY INC. and Gear Design); and 2,610,473 and 2,635,446 (NORTH ATLANTIC OPERATING COMPANY (Word Mark)).
Defined as the work of the federal copyright registration for the visual material/computer graphic titled “North Atlantic Operating Company, Inc.” (VAu 464-855).
Defined as the distinctive design elements comprising the overall look and feel of ZIG-ZAG® Orange packaging (booklets and cartons), including at least the following: (1) ZIG-ZAG® and NAOC® Trademarks, (2) NAOC© Copyright, (3) gold-fill lettering and design elements, (4) French phrases such as “Qualite Superieure” and “Braunstein Freres France,” and (5) the express statements that the products are “Made in France” or “Imported French”, or “Distributed by North Atlantic Operating Company, Inc.”