Imagine That IP Law Blog

Online sellers whose primary income results from sales on third party marketplaces must be vigilant in making sure they have notice of lawsuits filed against them or their products. A litigation process referred to as “Schedule A” that is becoming more prevalent has provided patent and brand owners with what can be a potent enforcement tool. These “Schedule A” cases may not put a seller on notice that they have been sued for intellectual property infringement. A temporary restraining order (TRO) could issue against an online marketplace, which could result in an immediate shutdown of online sales.

The “Schedule A” system primarily seeks to target businesses and parties located outside of the United States where there may be hurdles to enforcing IP rights. A recent increase in such “Schedule A” filings means that online sellers must be vigilant. Many of these cases have been filed in the Northern District of Illinois and have involved some larger brand names, such as singer Luke Combs whose legal team filed a “Schedule A” case against hundreds of sellers using his name, image, or likeness on commercial products.

A “Schedule A” process begins when the plaintiff files a complaint in their desired jurisdiction. Unlike typical complaints, the civil cover sheet and complaint in a “Schedule A” case does not name the defendants, but rather names as many as hundreds of defendants in a separate “Schedule A” form that is sealed by the court. The defendants may be identified by a phrase such as “The Partnerships and Unincorporated Associations Identified on Schedule ‘A’.”

As a result, the defendants’ identities are unknown to the public and to the defendants themselves even when an application for a TRO is officially filed with the court. Because the primary target of these cases are overseas defendants, serving the defendants may be difficult.

Usually with such a filing, the plaintiff files an ex parte motion to obtain a sealed TRO. This is a motion where no notice is given to the Defendant until after the fact. While ex parte TROs are often difficult to obtain, such does not appear to be the case in the Northern District of Illinois, which is likely the reason it has become a popular venue for such “Schedule A” cases. Assuming the judge grants the TRO, the plaintiff may then enforce it by contacting the e-commerce platforms that the defendants conduct business on to prevent further infringing activity.

Upon receipt of the TRO, many e-commerce platforms suspend the defendants’ abilities to access their businesses, freeze their ability to make withdrawals, and often prevent the businesses from operating in non-infringing transactions. As mentioned above, this may be the first time a defendant learns it’s been sued. As a consequence, default judgements may be entered against defendants without a chance to properly respond.

The “Schedule A” filing system capitalizes on modern interpretations of the Federal Rules of Civil Procedure that have come to recognize the difficulty in finding or serving parties outside of the United States. For example, Rule 4(f) authorizes service of process to foreign defendants through “alternative means,” which often means email. In addition, Rule 65 authorizes courts to issue TROs without written or oral notice to the adverse party or their counsel.

To prevent surprises from such a “Schedule A” filing and avoid a default judgment, foreign e-commerce businesses should ensure their accounts possess up-to-date contact information. Given the increasing use of email and alternative electronic mediums for service, it is essential business owners routinely check all accounts associated with their companies, including the spam folder, and delete infrequently used ones.

In addition, as many of these cases are specifically targeting foreign entities that do not have a U.S. presence, registering as a business in the United States and having a registered agent for service can minimize the risk of being named in one of these cases altogether. By publicly having an agent that can be served, the alternative methods of service could be challenged.

Furthermore, if you or your business are named as a defendant in a “Schedule A” filing, there are some ways you may utilize the Federal Rules to your advantage. For example, if you are not related to any of the other named defendants, a business could assert misjoinder and seek removal or request the claim against the business be dropped. In any case, it is important that any defendant be prepared to defend itself in court. Defendants who show up and argue against the TRO put themselves in the best defensive position. If you find yourself in receipt of such a claim, you should speak with an experienced intellectual property attorney who can further advise you of your options.