Fifth Circuit Permits Ex Parte Counterfeiter Powerslam

I don’t usually write about trademark law, but there was an interesting opinion out of the Fifth Circuit yesterday that caught my eye. Earlier this year, World Wrestling Entertainment (“WWE”) put on its WrestleMania XXX event at the Superdome in New Orleans, Louisiana. Between ticket and merchandise sales, these events bring big money. Anticipating the inevitable counterfeiting that would take place, WWE turned to the federal district court in New Orleans for preemptive relief. Led by attorney Ray Areaux—Areaux was my professor for trademark and unfair competition law—WWE filed an ex parte motion seeking (1) a temporary restraining order, (2) an order authorizing the seizure of counterfeit goods, and (3) an order to show cause why a preliminary injunction should not issue against the unnamed defendants.

In its memorandum of law in support of the motion, WWE stressed that the order should issue ex parte as “notice to a defendant could result in no relief for the plaintiff because counterfeiters often destroy or hide the counterfeit merchandise.”1 WWE argued that it had complied with all of the requirements of Section 1116(d) of Title 15, which provides that “the court may, upon ex parte application, grant an order . . . providing for the seizure of goods and counterfeit marks . . . .” WWE urged the court to make the injunctive relief applicable nationwide, as it planned to host live events in other cities through March of 2015. The requested relief was limited in both time (to within a fourteen-day period) and scope (to within a five-mile radius of the events).

Despite having been granted such ex parte relief several times in the past, District Judge Ginger Berrigan of the Eastern District of Louisiana denied WWE’s motion.2 Judge Berrigan held that WWE had failed to adequately describe the defendants:

The problem with Plaintiff’s request is apparent once one recalls that the order it requests is not directed against a single named, identified, or even described person—all the defendants are John Does, and Plaintiff provides no particular information about the identity of any of them. At best, Plaintiff defines Defendants almost tautologically: Defendants are anyone who would be a proper defendant within broad geographic and temporal limits. Yet without knowing who (not even necessarily a name, but some information about) “the person against whom seizure would be ordered,” the Court cannot possibly evaluate the above requirements, and certainly not based on “specific facts.” Yet all Plaintiff has provided the Court by way of description is, in essence, “Some unidentified people we think might sell merchandise we think is counterfeit around WWE events across the nation during the next year.”

In Judge Berrigan’s opinion, WWE’s proposed order “puts the cart before the horse” as “[t]he Court may ‘not grant an application’ under Section 1116(d) ‘unless’ requirements dependent on the identity of Defendants are satisfied.” She thought it “impermissible bootstrapping” to permit WWE “to use a seizure order to develop the facts necessary to satisfy the statutory prerequisites to issue a seizure order.” Despite acknowledging that these “fly-by-night operators” cause “real harm” to WWE, Judge Berrigan was concerned that WWE’s proposed order “runs afoul not just of statutory text, but potentially of limits on the very power of the Court such as ripeness, due process, and personal jurisdiction.” As such, she chose not to exercise her discretion to enter the requested order.

Recognizing the importance and novelty of the legal issues presented, however, Judge Berrigan certified her opinion for interlocutory appeal:

As the Court indicated above, it is sympathetic to Plaintiff’s dilemma—how can Plaintiff, and many in Plaintiff’s situation, such as the NFL, NBA, NASCAR, and touring musicians, gather the “specific facts” necessary for relief when the kind of bootlegger it confronts is a moving target? Moreover, a number of district courts have provided relief (albeit without reasons) similar to that which gives the Court pause here. The Court is therefore of the opinion that the issues discussed in this order “involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation.” 28 U.S.C. § 1292(b).

The Court is hopeful that the Court of Appeals for the Fifth Circuit will accept this certification given the prominent role that New Orleans (and other cities in the Fifth Circuit, though the Court must confess a partiality to New Orleans) plays in hosting events where the kind of bootlegging Plaintiff alleges occurs. Additionally, other courts have noted that cases such as this rarely proceed to final judgment because the alleged bootleggers do not appear . . . . Accordingly, interlocutory certification is perhaps the only method available for Courts of Appeals to provide guidance (which the Court has not been able to find in any circuit) on the kind of relief Plaintiff requests.

The day after Judge Berrigan issued her opinion denying WWE’s motion, WWE filed a motion and memorandum for reconsideration. The day after that, Judge Berrigan denied the new motion,3 again citing the plaintiff’s inability to adequately describe the defendants:

There is no doubt that, as Plaintiff explains, Congress intended to expand the remedies available to trademark holders confronting counterfeiters by providing them a mechanism to obtain ex parte seizure orders. But the ability to obtain a seizure order without notice is not the same as the ability to obtain a seizure order without identifying the “person” against whom it is directed.

On interlocutory appeal to the Fifth Circuit, WWE’s luck changed. In a per curiam opinion released yesterday,4 a panel comprised of Circuit Judges Higginbotham, Jones, and Higginson—Judge Higginson was my evidence professor before being nominated to the Fifth Circuit by President Obama—vacated Judge Berrigan’s opinion denying WWE’s motion for ex parte relief. This marks the first time, to my knowledge, this issue has been reached by a federal appellate court. The Fifth Circuit disagreed with Judge Berrigan’s assessment:

The district court’s granular focus on the “identity” of unnamed Defendants misinterpreted the statutory requirement and its application here. The district court is correct that ex parte seizure orders should not be granted at will, and it commendably gave the requirements careful attention. It is the case that the Act constrains the issuance of such orders with certain procedural protections for the persons against whom they are issued. The district court concluded that it could not, ex ante, identify the persons against whom orders would issue as required by section 1116(d), an appropriate concern but one not present on the specific facts here.

The district court’s concern overlooks a predicate established in this case: WWE does not license third parties to sell merchandise at live events. Rather, it makes its own merchandise sales directly. The resulting confined universe of authorized sellers of WWE merchandise necessarily “identifies” any non-WWE seller as a counterfeiter. WWE cannot know in advance the specific identities of counterfeiters who will present themselves at any given event, but it does know that any non-affiliated seller at or near an event is almost certainly a counterfeiter.

In this case, therefore, the “person[s] against whom seizure would be ordered” are readily identifiable as any non-affiliated person purporting to sell WWE merchandise at or near a live WWE event. Provided that observation of unauthorized sales themselves is sufficient to identify a counterfeiter, as in this case, we see no reason why the district court cannot evaluate the requirements for ex parte seizure and temporary restraining orders to issue. We conclude from the record that WWE has met its burden under section 1116(d), and that the orders sought here should issue.

The Fifth Circuit found that, at least on the facts of this case, it was a simple matter to identify counterfeiters: Anyone not affiliated with WWE selling goods at an event “is almost certainly” an infringer because WWE doesn’t “license third parties to sell merchandise at live events.” In a footnote, the Fifth Circuit brushed aside the impact on legitimate resellers: “WWE can readily identify the unauthorized designs of counterfeit merchandise, and the Act’s wrongful seizure provisions would entitle the harmed reseller to a cause of action for any damages.” The Fifth Circuit remanded the case to the district court, where it “is free to modify the proposed order or to draft its own order as it sees fit, consistent with the ex parte seizure provision of the Act and with this opinion.” Presumably, Judge Berrigan will now grant WWE’s requested relief, and it can powerslam counterfeiters at its live events as they continue through March of next year.

Follow me on Twitter: @devlinhartline

© 2014 Devlin Hartline. Licensed under the Law Theories Public License 1.0.

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  1. See, e.g., Senate-House Joint Explanatory Statement on Trademark Counterfeiting Legislation, 130 Cong. Rec. H12076, at 12080 (Oct. 10, 1984) (“The purpose of the ex parte seizure provision is to provide victims of trademark counterfeiting with a means of ensuring that the courts are able to exercise their jurisdiction effectively in counterfeiting cases. Testimony before both the House and Senate Judiciary Committees established that many of those who deal in counterfeits make it a practice to destroy or transfer counterfeit merchandise when a day in court is on the horizon. The ex parte seizure procedure is intended to thwart this bad faith tactic, while ensuring ample procedural protections for persons against whom such orders are issued.”). 
  2. See World Wrestling Entm’t, Inc. v. Doe, Case No. 14-cv-00688, 2014 U.S. Dist. LEXIS 45326 (E.D. La. Apr. 1, 2014). 
  3. See World Wrestling Entm’t, Inc. v. Does, Case No. 14-cv-00688, 2014 U.S. Dist. LEXIS 48754 (E.D. La. Apr. 3, 2014). 
  4. See World Wrestling Entm’t v. Unidentified Parties, Case No. 14-30489, 2014 U.S. App. LEXIS 21001 (5th Cir. Nov. 4, 2014).