Alibaba Group hampered by jurisdiction in trademark infringement suit

Alibaba Group hampered by jurisdiction in trademark infringement suit

Trademark law grants the user of a trademark the exclusive right to brand products with that trademark.  A trademark can be a symbol word of phrase which consumers associate with the producer of a product.  When someone other than the trademark owner uses the trademark to brand goods in a way which causes consumer confusion, that is considered trademark infringement.  A trademark owner can sue to stop the infringement with an injunction and to get monetary damages for infringement which has occurred.

In a prior blog post we discussed the trademark infringement lawsuit filed by Alibaba Group against Alibabacoin.  Alibaba Group Holding Limited v. Alibabacoin Foundation et al, 1:18-cv-02897 (S.D.N.Y 2018).  Alibaba Group is a famous e-commerce website based in the People’s Republic of China.  Alibabacoin is a company that specializes in cryptocurrency.  Alibaba Group claims that Alibabacoin is causing consumer confusion and damaging the Alibaba trademark.  Alibaba Group filed its lawsuit on April 2, 2018.  The lawsuit requested an injunction and monetary damages.

There are three key time periods in an injunction.  A temporary restraining order can be requested and granted when a lawsuit is first filed, but a temporary restraining order is only enforceable for the short period of time until the defendant can respond.  A preliminary injunction can be requested to extend the injunction during the during of the lawsuit. A permanent injunction can be granted after the court reaches a verdict and would stop the defendant from engaging in future behavior.  If a defendant violates an injunction the defendant can be found in contempt of court and additional penalties may be imposed.

When Alibaba Group filed their lawsuit on April 2nd, there were granted a temporary restraining order against Alibabacoin.  Alibabacoin responded to the lawsuit and claimed that the United States District Court of Southern District of New York could not hear the case because the court did not have personal jurisdiction over Alibabacoin.  Essentially Alibabacoin claimed that the court could not hear the case because the court does not have the authority over Alibabacoin.

Personal jurisdiction is a fundamental aspect of law in the United States.  If a court does not have personal jurisdiction over a defendant than it cannot exert authority over the defendant.  To be granted a preliminary injunction a plaintiff must show that a there is a reasonable probability that the court has personal jurisdiction over the defendant.  This is a higher than normal standard.

On April 30th Alibaba Group’s motion for a preliminary injunction was denied, without prejudice to renewal upon an adequate showing of personal jurisdiction.  This means that the court does not believe the plaintiff has provided sufficient evidence that the court is allowed to issue a preliminary injunction against the defendant.  The denial of the preliminary injunction is not based on the merits of the case, the court hasn’t reviewed the facts of the case yet.  Because the motion was denied without prejudice Alibaba Group is allowed to make the motion again, but it will have to provide more evidence to demonstrate that the United States District Court of Southern District of New York has personal jurisdiction over Alibabacoin.  In the meantime, Alibabacoin has moved to have the case dismissed entirely for lack of personal jurisdiction.

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