By Brian Craig, J.D.
The federal district court granted a temporary injunction ordering the USPTO to cancel fraudulently obtained trademark registrations filed by a Chinese company.
Concluding that a Chinese company fraudulently obtained trademark registrations of NIGHT OWL marks owned by Florida-based home security equipment company Night Owl SP, LLC, the federal district court in Fort Myers, Florida, has granted a preliminary injunction ordering the USPTO to cancel the Chinese company’s registrations. The court found that the Chinese company’s past relationship with the Florida company and packaging established that the declarations by the president for the Chinese company were fraudulent, warranting the unusual cancellation of marks with a preliminary injunction (Night Owl SP, LLC v. Dongguan Auhua Electronics Co., Ltd., April 10, 2019, Magnuson, P.).
Night Owl is a Florida company that sells home security equipment under the registered NIGHT OWL trademark. Defendant Dongguan Auhua Electronics Co., Ltd., is a Chinese company that supplied Night Owl with component products from 2012 to 2017. Night Owl accused the Chinese company and its president of selling counterfeit products bearing the NIGHT OWL mark and its design marks. Auhua had registered several of Night Owl’s design marks in China, and Night Owl was contesting the Chinese registrations. The USPTO approved Auhua’s trademark registration applications. Night Owl filed a renewed motion for a temporary restraining order and preliminary injunction.
Likelihood of success. The court first found that Night Owl was likely to prevail on its trademark infringement, counterfeiting, and civil infringement counts, as Night Owl showed by clear and convincing evidence that the Chinese company’s use of the marks was likely to cause confusion. The strength of the NIGHT OWL mark, use of identical or nearly identical marks, overlapping sales and advertising channels, and the Chinese company’s intent based on the former relationship all favored a finding of likelihood of confusion. The court found that the Chinese company intended to "free-ride" on Night Owl’s goodwill.
Irreparable injury. The court next found that Night Owl was likely to suffer from irreparable injury without an injunction. Preliminary injunctions are common in trademark actions because legal remedies are ordinarily inadequate for consumer confusion and reputational damages. As Night Owl showed a strong likelihood of confusion, Night Owl was likely to suffer damage to its reputation and goodwill.
Balance of hardships/public interest. The court also found that the balance of hardships and public interest factors strongly favored granting the injunction. The public had an interest in not being misled about the source of trademarks products.
Scope of injunction. The court granted the temporary restraining order and temporary injunction ordering the USPTO to cancel the three fraudulently-obtained registrations.While cancellation is unusual in a preliminary injunction, the court recognized that the circumstances that led to the request were also unusual. The court found that the Chinese company’s past relationship with Night Owl and the its use of Night Owl packaging established that the declarations by the officer for the Chinese company were fraudulent. The court also issued an injunction to prohibit the Chinese company, or any of its representatives, from manufacturing, selling, or using the Night Owl word or design marks.
This case is No. 2:19-cv-109-Ftm-38UAM.
Attorneys: John Guaragna (DLA Piper LLP) for Night Owl SP, LLC.
Companies: Night Owl SP, LLC; Dongguan Auhua Electronics Co., Ltd.
MainStory: TopStory Trademark FloridaNews
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