FEDERAL DISTRICT COURT GRANTS PRELIMINARY INJUNCTION ON CLAIM OF REVERSE PASSING OFF
DJ Direct, Inc. v. Margaliot, et al.
512 F. Supp. 3d 396 (S.D.N.Y. 2021)
In this case, Stern & Schurin’s client sold a popular branded karaoke machine, primarily through ecommerce channels such as Amazon.com. One of the defendants, was an employee of the client whose responsibilities included sourcing the machines from the client’s overseas supplier. After the client had a dispute with its supplier, the defendants started purchasing the same karaoke machines from the client’s supplier. The defendants simply relabeled the machines with a new trademark.
On behalf of its client, Stern & Schurin sued the Defendants in the United States District Court for the Eastern District of New York, and at the same time sought a preliminary injunction.
In its lawsuit, Stern & Schurin asserted a complex form of trademark infringement known as “reverse passing off.” This type of claim arises when “A sells B’s product under A’s name.” Accordingly, there is no confusion resulting from the use of an identical or confusingly similar trademark. Instead, a claim of “reverse passing off” requires the plaintiff to prove that (1) the product originated with the plaintiff; (2) that the origin of the product was falsely designated by the defendant; (3) that consumers are likely to be confused; and (4) that the plaintiff was harmed. The Defendants aggressively contested each element of the claim.
After consideration of the parties’ briefs and after hearing oral argument, U.S. District Court Judge Margo K. Brodie agreed with Stern & Schurin that its client had established a likelihood of success on the merits of the reverse passing off claim. Judge Brodie further agreed with Stern & Schurin that its client would suffer irreparable harm if the defendants were not immediately enjoined from selling their products. On that basis Judge Brodie granted the preliminary injunction.