A quick review of the dockets for a trio of federal district courts in the U.S. reveals a striking trend: A steady stream of complaints is being filed against “the Partnerships and Unincorporated Associations Identified on Schedule A.” These lawsuits – which are being waged by companies ranging from Daimler Truck, Harley-Davidson, Metallica, Inc., and Manchester United to Chanel, Omega, Burberry, and Birkenstock – are commonly referred to as “Schedule A cases” due to the fact that the defendants are identified in a “Schedule A” attached to the complaint, as opposed to in the complaint, itself. And in many instances, the list of defendants is filed under seal, making it so that they do not know (at least initially) that litigation is being waged against them.
The cases then go something like this: “The plaintiff files an ex parte motion for entry of a sealed Temporary Restraining Order (‘TRO’) to enjoin [the defendants from] offering for sale and selling the allegedly infringing products,” Knobbe Martin’s Marko Zoretic and Jack Hendershott write. “Assuming the plaintiff’s motion is granted – which routinely occurs because the defendants are not provided the opportunity to oppose it – the plaintiff then provides the TRO to online marketplaces, which then close the relevant product listings and institute an asset freeze.” And all of this occurs before the defendants learn about the case being waged against them.
This style of enforcement of copyright, patent, and trademark rights is appealing to plaintiffs for a few reasons. For one thing, filing under seal ensures that the nefarious Chinese “counterfeiter” defendants are kept in the dark, which prevents them from destroying relevant documentary evidence and/or hiding or transferring of assets, plaintiffs have argued. At the same time, the mass joinder of defendants that is characteristic of these cases provides benefits from a resource perspective, as it enables plaintiffs to file (and pay the costs associated with) just one complaint as opposed to dozens or even hundreds.
Against this background, the U.S. District Court for the Northern District of Illinois has become the unofficial home of these filings; almost 3,000 “Schedule A” cases have been filed in the N.D. Ill. since 2011. (Chicago is the home of at least one of the law firms that is spearheading such cases, which could explain the venue choice since “these cases usually have no actual connection to the forum states; they are targeted at online selling more broadly,” Sarah Fackrell, a professor at Chicago-Kent College of Law, tells TFL.)
Mounting Criticism from the Court
As a growing number of companies – largely using the same handful of law firms – rely on filings to crackdown on widespread alleged counterfeiting and/or infringement, some N.D. Ill. judges have started to push back. In November, for example, a trio of federal judges in Illinois issued decisions siding with the Schedule A defendants (including in a case waged by Toyota Motor Sales) largely on improper joinder grounds.
> The issue is that the defendants in these cases “typically have no relationship with each other,” Eric Goldman, a professor and the associate dean for research at Santa Clara University School of Law, asserts in his paper, A Sad Scheme of Abusive Intellectual Property Litigation. Instead, the rightsowner “sweeps up an assemblage of alleged infringers in an online marketplace and enumerates them in a complaint … [and] then generically asserts that the defendants are related to each other without providing any factual support.”
These decisions follow from a scathing opinion from N.D. Ill. Judge Steven Seeger in December 2023, in which he denied Zorro Productions’ motion for a temporary restraining order against 310 Schedule A defendants. According to Judge Seeger, the plaintiffs in that case “want to sneak up on the defendants and strike a blow to their counterfeiting operation[s] and do so under the cover of darkness. They want relief without giving the defendants a chance to see what hit them.”
What does this mounting skepticism from judges mean for Schedule A case-filing plaintiffs? As of now, maybe not too much if the enduring flow of Schedule A complaints is anything to go by. “There are still plenty of Schedule A cases in the Northern District of Illinois post-Toyota,” as well as in the Southern District of New York and the Southern District of Florida,” according to Fackrell. And this “makes sense,” she says, as “only a few judges, on a very large bench [in Illinois], are pushing back. So, my guess is that [plaintiffs] will just keep filing until this new strategy gets shot down or something else brings the joinder issue to a head.”
> Fackrell also notes that “in the Toyota case, at least, the plaintiffs’ counsel does not seem to have really great arguments in favor of joinder. So, why appeal and risk a bad Seventh Circuit decision? Instead, they just seem to keep filing and hope the other judges do not join the skeptical group.”
Even if these cases keep coming amid potentially mounting pushback, Fackrell notes that some interesting developments are underway. In the wake of the decision in Toyota, for example, the same attorneys behind that case opted to quickly amend a separate Schedule A case complaint, whittling it down to just one defendant. “I have also seen this ‘quickly amend down to one defendant’ maneuver used even before the judge makes any rulings – at least with one judge” – Judge Steven Seeger – “who seems to be increasingly skeptical of the Schedule A model.”
The Bigger Picture (and Problem?)
The underlying tension that is rising in connection with these cases is not the aggressiveness of the enforcement. And in fact, the logic behind such suits makes a lot of sense (to me, at least) in light of the reality that is brand enforcement in the modern market – which has been complicated by the dynamics (and enduring evolutions) of the third-party marketplace platform model. Goldman asserts that the rightsowners behind these cases “may feel that it is not logistically or financially feasible to pursue merchants individually, which is why they prefer to mass-sue merchants” via Schedule A cases.
However, Goldman also states that “individual lawsuits are exactly what the joinder rules typically require,” he writes, and courts should not be in the business of “manufactur[ing] a workaround to those rules.”
Fackrell concurs, telling TFL that while “online infringement is obviously a very big problem, the issue is how to balance due process with enforcement.” She states that the aforementioned setbacks for the plaintiffs in Schedule A cases do not mean that the plaintiffs could not still sue defendants together “if they are actually working together.” What the plaintiffs “should not be able to do is rewrite the Federal Rules of Civil Procedure for their own convenience,” she says.
“Federal litigation is expensive. Due process is expensive. No one has a constitutional right to cost-effective – let alone profitable – IP enforcement litigation,” per Fackrell. “But everyone has a constitutional right to due process, even if they are counterfeiters.”
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