Pandabuy Prevails as Judge Dissolves Preliminary Injunction in Counterfeiting Case

Image: Unsplash

Law

Pandabuy Prevails as Judge Dissolves Preliminary Injunction in Counterfeiting Case

Pandabuy has won the latest round of a lawsuit accusing it of “assist[ing] consumers across the globe in purchasing counterfeit” goods – including those of SP5DER, Off-White, Denim Tears, Palace Skateboards, Loewe, and Rhude – from third party e-commerce websites in ...

January 21, 2025 - By TFL

Pandabuy Prevails as Judge Dissolves Preliminary Injunction in Counterfeiting Case

Image : Unsplash

key points

Pandabuy won the latest round of a lawsuit accusing it of “assisting consumers ... in purchasing counterfeit” goods from third party e-commerce sites in China.

Dissolving a previously issued injunction, the court found that Pandabuy’s actions “do not rise to the level of control or representation required for liability."

By dissolving the injunction, the court highlighted the importance of evaluating platforms’ roles as facilitators – rather than sellers – in counterfeiting cases.

Case Documentation

Pandabuy Prevails as Judge Dissolves Preliminary Injunction in Counterfeiting Case

Pandabuy has won the latest round of a lawsuit accusing it of “assist[ing] consumers across the globe in purchasing counterfeit” goods – including those of SP5DER, Off-White, Denim Tears, Palace Skateboards, Loewe, and Rhude – from third party e-commerce websites in China. In an opinion and order on January 14, the U.S. District Court for the Southern District of New York sided with Pandabuy, dissolving a preliminary injunction that had frozen over $16 million of the company’s assets and restricted its operations. This decision marks a significant development in a case that pits a handful of big-name brands against the Hong Kong-based online shopping company.

A Bit of BackgroundThe plaintiffs filed suit against Pandabuy in April 2024, accusing the company of facilitating the sale of counterfeit goods. They argued that the platform’s operations directly infringe their trademarks and, in one instance, copyrights. Specifically, the plaintiffs alleged that Pandabuy’s business model of linking global consumers to Chinese e-commerce platforms encouraged the sale of fake goods and violated intellectual property laws.

In their complaint, the brands painted Pandabuy as an active participant in the sale of counterfeits, highlighting the company’s role in quality control, product repackaging, and order facilitation. They sought a preliminary injunction to freeze Pandabuy’s assets and prevent further alleged infringement – a request that was initially granted by Judge Jessica G. L. Clarke of the U.S. District Court for the Southern District of New York in July 2024 (following a temporary restraining order issued in June). 

Months after the preliminary injunction was issued, Pandabuy appeared in court to challenge the order, contending, in particular, that it operates more as a passive facilitator than a seller or manufacturer, and thus, the plaintiffs are unlikely to succeed on the merits of their trademark claims.  

A Striking Win for Pandabuy

In a win for Pandabuy, Judge Clarke’s recent ruling emphasizes that Pandabuy’s role does not meet the standard of “use in commerce” required to establish direct trademark infringement under the Lanham Act. “The key distinction between a direct seller who ‘uses’ a trademark under the Lanham Act and a mere facilitator of sales who does not is the degree to which the party represents itself, rather than a third-party vendor, as the seller, or somehow identifies the goods as its own,” Judge Clarke stated, noting that Pandabuy “does neither, and appears to only act as a valet between third-party e-commerce websites and the end user.” 

Clarke stated that “third-party merchants, not Pandabuy, generate, own, and manage any allegedly infringing listings, and Pandabuy ‘indicates to consumers that they are purchasing goods from third-party [merchants].’” As such, Pandabuy’s actions “do not rise to the level of control or representation required for liability,” the court stated, comparing the platform to other facilitators like Printify and Redbubble, which have faced similar suits. 

In other words, central to the court’s decision is Pandabuy’s operational structure. The court found that the platform merely connects consumers to third-party sellers, without directly controlling product listings, owning inventory, or branding the goods. The company’s logistical and warehousing partners were deemed independent entities, further distancing Pandabuy from the direct sale of counterfeit items.

Judge Clarke also dismissed the copyright claim brought by Denim Tears on the basis that the alleged display of its copyrighted imagery on Pandabuy’s platform resembled non-infringing fair use, akin to a search engine returning thumbnails in response to user queries.

A Broader Victory for E-Commerce Intermediaries?

The ruling could set a precedent for how courts view e-commerce intermediaries in counterfeiting cases. By dissolving the preliminary injunction, Judge Clarke highlighted the importance of evaluating platforms’ roles as facilitators – rather than sellers – and the need for plaintiffs to establish clear evidence of active participation in infringement. As such, the court’s decision not only delivers a win for Pandabuy but also signals a growing judicial awareness of the nuances in global e-commerce operations. As the case unfolds, the industry will be watching closely for further developments.

The case is King Spider LLC v. Panda (Hong Kong) Technology Co., Ltd., 1:24-cv-02668 (SDNY).

Updated

January 21, 2025

Following the court’s order on January 14, the plaintiffs filed a notice of interlocutory appeal to the Second Circuit, and on January 15, the plaintiffs filed an application to restore the Preliminary Injunction pending their motion for reconsideration or appeal. The court has since denied the plaintiffs’ application to restore the Preliminary Injunction, and declined to impose a stay of its PI Order “because the relevant factors do not weigh in the plaintiffs’ favor.”

related articles