In April of this year, a Dubai based firm called Alibabacoin Foundation (ABBC) was sued by Alibaba Group (Alibaba), China's retail giant, for trademark infringement, false advertising, false designation of origin and trademark dilution. Alibaba alleged that ABBC was using its trademark term "Alibaba" to raise 3.5 million in cryptocurrencies called Alibabcoins by having this term be displayed on its websites, wallet websites, apps etc. Such unauthorized use of the trademark was causing consumer confusion, such that the consumers would believe that the two were affiliated.
Initially, Alibaba successfully obtained a temporary restraining order against ABBC's use of the mark "Alibaba". However, on April 30th, 2018, the District Court (S.D.N.Y.) dissolved the order and denied Alibaba's request for a preliminary injunction against ABBC's use of the "Alibaba" mark.
For preliminary injunction, a plaintiff must essentially demonstrate that: (i) its case has merits to warrant further litigation, (ii) there has been injury, (iii) the monetary compensation is insufficient recourse for the injury caused, (iv) if the preliminary injunction is granted, who would have greater hardship (Plaintiff/Defendant), and last, (v) would the granting of this preliminary injunction be a disservice to the public. (For more on case law see Opinion)
For District Courts to be able to consider preliminary injunctions, it must first be established that the Court has personal jurisdiction. Accordingly and in its defense, ABBC sought to establish that the Court had no subject matter or personal jurisdiction and that the matter would fail on its merits.
Per the appropriately applicable Act, the Lanham Act, the Court has subject matter jurisdiction. To establish subject matter jurisdiction, Alibaba successfully established that ABBC displayed its trademark on its websites etc. In its defense, however, ABBC was not so successful in explaining why its initial coin offerings should not be considered "sale in commerce."
ABBC did prevail on the question of personal jurisdiction.
Alibaba attempted to establish that the Court had "specific personal jurisdiction" under Section 302(a)(1) of New York’s long-arm statute as ABBC's website would be considered "interactive." However, Alibaba failed to provide "sufficient proof of commercial activity to justify a preliminary injunction" given the lack of evidence of even a "single sale of Alibabacoins" that might have occurred in New York. The existence of a Wallet Website run by DigitalOcean LLC, a company headquartered in NYC and contracted by ABBC, did not rise to the level of an "articulatable nexus" i.e. the evident connection between the Company's action and the alleged trademark infringement. The connection was merely "coincidental" and no evidence was provided to demonstrate that the Company was actively involved in administering this website in question. Furthermore, Alibaba's allegation, that ABBC had presence in New York given the anticipated listings of the Alibabacoins on the New York Exchange, did not amount to the level of presence required for this Court to have jurisdiction. The Court deferred to the Securities Exchange Act indicating that the listing of securities are encouraged without the the party being subject to NY Law, and that such listings only established US wide contact, not specific state contact that would fall within the purview of this Court under New York Law. Lastly, Alibaba failed to demonstrate that consumers were actually confused by viewing the mark on the ABBC website or that Alibaba suffered economic tort. Unfortunately, Alibaba has repeatedly disassociated itself with this genus of goods i.e., cryptocurrencies, and was unable to demonstrate "specific, non-speculative harm."
Initially, Alibaba successfully obtained a temporary restraining order against ABBC's use of the mark "Alibaba". However, on April 30th, 2018, the District Court (S.D.N.Y.) dissolved the order and denied Alibaba's request for a preliminary injunction against ABBC's use of the "Alibaba" mark.
For preliminary injunction, a plaintiff must essentially demonstrate that: (i) its case has merits to warrant further litigation, (ii) there has been injury, (iii) the monetary compensation is insufficient recourse for the injury caused, (iv) if the preliminary injunction is granted, who would have greater hardship (Plaintiff/Defendant), and last, (v) would the granting of this preliminary injunction be a disservice to the public. (For more on case law see Opinion)
For District Courts to be able to consider preliminary injunctions, it must first be established that the Court has personal jurisdiction. Accordingly and in its defense, ABBC sought to establish that the Court had no subject matter or personal jurisdiction and that the matter would fail on its merits.
Per the appropriately applicable Act, the Lanham Act, the Court has subject matter jurisdiction. To establish subject matter jurisdiction, Alibaba successfully established that ABBC displayed its trademark on its websites etc. In its defense, however, ABBC was not so successful in explaining why its initial coin offerings should not be considered "sale in commerce."
ABBC did prevail on the question of personal jurisdiction.
Alibaba attempted to establish that the Court had "specific personal jurisdiction" under Section 302(a)(1) of New York’s long-arm statute as ABBC's website would be considered "interactive." However, Alibaba failed to provide "sufficient proof of commercial activity to justify a preliminary injunction" given the lack of evidence of even a "single sale of Alibabacoins" that might have occurred in New York. The existence of a Wallet Website run by DigitalOcean LLC, a company headquartered in NYC and contracted by ABBC, did not rise to the level of an "articulatable nexus" i.e. the evident connection between the Company's action and the alleged trademark infringement. The connection was merely "coincidental" and no evidence was provided to demonstrate that the Company was actively involved in administering this website in question. Furthermore, Alibaba's allegation, that ABBC had presence in New York given the anticipated listings of the Alibabacoins on the New York Exchange, did not amount to the level of presence required for this Court to have jurisdiction. The Court deferred to the Securities Exchange Act indicating that the listing of securities are encouraged without the the party being subject to NY Law, and that such listings only established US wide contact, not specific state contact that would fall within the purview of this Court under New York Law. Lastly, Alibaba failed to demonstrate that consumers were actually confused by viewing the mark on the ABBC website or that Alibaba suffered economic tort. Unfortunately, Alibaba has repeatedly disassociated itself with this genus of goods i.e., cryptocurrencies, and was unable to demonstrate "specific, non-speculative harm."
