By John-Charles Hewitt | Staff Editor

March 20, 2024

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When Nicol Harness returned home from a hospital in Florida after treatment for congestive heart failure, she was surprised by a $250,000 bill. It wasn’t for surgery: it was a judgment for trademark infringement.[1] Along with dozens of other defendants, Harness now owed a fortune to Luke Combs, the country music superstar known for his recent cover of “Fast Car” and other songs like “Beautiful Crazy.” Harness, a mom, designer, and small online merchant, had no idea that her online store could expose her to massive liability.[2] Prior to her unrelated hospitalization, she had designed and sold 18 drink tumblers themed around Combs’s trademarked name and likeness. The lawsuit filed by Combs resulted in a default judgment against each merchant for $250,000 in statutory damages each under 15 U.S.C. § 1117, finding that each product sold was a willful counterfeit.[3]

After a beautifully crazy social media fracas, Combs personally apologized to Harness, promised to stop pursuing the debt, and cut her a check for $11,000.[4] The hundreds of other defendants sued by Combs in similar lawsuits since 2021 presumably still owe him money.[5] Nor is Combs alone in pursuing this type of bulk intellectual property litigation: since 2021, approximately 600,000 merchants may have been sued in similar lawsuits.[6] This is usually called a “Schedule A” case after the exhibit that this type of plaintiff typically attaches listing the sealed names of each defendant.[7] These mass lawsuits typically follow three stages. First, the plaintiff sues a mass of dozens or hundreds of defendants joined together in the same case under seal under Rule 20.[8] Second, the plaintiffs freeze the assets with a temporary restraining order under Rule 65 before they are served with a complaint.[9] Third, because most of the defendants are small merchants or individuals who may struggle to react with the dispatch that federal courts expect, the plaintiff extracts default judgments against any defendants who haven’t settled yet.[10] From the perspective of small merchants like Harness, their assets will be frozen before they have even been served, and they may not come to grips with what has happened until they miss the deadline to file an answer and default.[11]

These abuses of Rule 65 injunctions go against precedent set by Judge Richard Posner, who created a balancing test for the application of this Rule. [12] The test requires a comparison of likely harms to both parties to the plaintiff’s ikelihood of winning at trial.[13] Typical Schedule A practices may also run afoul of the concern expressed by Judge Frank Easterbrook that motions for Rule 65 injunctions in trademark cases must be accompanied by strong showings of success on the merits.[14] Easterbrook’s concerns that trademark plaintiffs could use Rule 65 injunctions under the Lanham Act for abusive, unfair, and anticompetitive practices is relevant to Schedule A cases.[15] Although courts have frequently elided these standards in Schedule A cases, some judges are beginning to demand more detailed showings from plaintiffs.[16] In Schedule A cases involving trademark issues, this means that to properly satisfy the standard set by the statute, plaintiffs need to provide a strong showing of likelihood to succeed on the merits not just with respect to one defendant, but to each defendant.[17] When some defendants challenged these injunctions in Schedule A cases, some courts noticed the flimsiness of some of the arguments supporting injunctions.[18]

Preliminary injunctions are supposed to be an extraordinary form of relief only warranted when permanent harm is highly probable, but they have become a nearly automatic remedy in Schedule A cases.[19] Applying the careful analytical formulae designed by the courts for litigation between a handful of parties would probably be unworkable in Schedule A cases involving dozens or hundreds of defendants.[20] Some districts and many judges have local rules that require that the parties meet and confer before filing for either a temporary restraining order or a preliminary injunction.[21] Notwithstanding the other legal arguments that can be brought to bear against Rule 65 injunctions, courts should also be solicitous to pro se defendants who appear at preliminary injunction hearings.

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[1] Shannon Behnken, Pinellas woman who sold Luke Combs- themed tumblers owes country star $250,000, judge rules, WFLA.com (Dec. 12, 2023, 05:50 pm ET), https://www.wfla.com/8-on-your-side/better-call-behnken/pinellas-woman-who-sold-luke-combs-themed-tumblers-owes-country-star-250000-judge-rules/.

[2] Chris Willman, How Does a Mom Get Slapped With a $250,000 Judgment Over $380 of Homemade Luke Combs Merch? Experts Cite ‘Cottage Industry’ of Mass Counterfeit Suits in Illinois, Variety (Dec. 15, 2023, 3:47 pm PT) https://variety.com/2023/music/news/mass-lawsuits-luke-combs-tumblers-legal-experts-counterfeit-illinois-cottage-industry-1235841650/.

[3] See Default Judgment Order, Luke Combs v. The Partnerships and Unincorporated Associations Identified on Schedule “A”, No. 23-cv-14485 (N. D. Ill. Nov. 15, 2023); 15 U.S.C. § 1117(c)(2).

[4] See Chris Willman, Luke Combs ‘Sick to My Stomach’ to Learn He Won $250K Judgment Against Convalescing Fan Who Made Tumblers; Says He Will Raise Funds for Her, Variety (Dec. 13, 2023, 11:30 am PT) https://variety.com/2023/music/news/luke-combs-dismayed-250k-judgment-lawsuit-fan-homemade-tumblers-1235836617/.

[5] See e.g. Complaint, Luke Combs v. The Partnerships and Unincorporated Associations Identified on Schedule A, No. 21-cv-02007 (N.D. Ill. Apr. 14, 2021); See e.g. Complaint, Luke Combs v. The Partnerships and Unincorporated Associations Identified on Schedule A, No. 21-cv-02246 (N.D. Ill. Apr. 27, 2021); See e.g. Complaint, Luke Combs v. The Partnerships and Unincorporated Associations Identified on Schedule A, No. 21-cv-02373 (N.D. Ill. May. 3, 2021)

[6] Eric Goldman, A SAD New Category of Abusive Intellectual Property Litigation, 123 Colum. L. Rev. Forum 183, 196 (2023).

[7] Id. at 184.

[8] Id.; See Fed. R. Civ. P. 20.

[9] See Goldman supra note 6 at 189; See Fed. R. Civ. P. 65.

[10] See Goldman supra note 6 at 192.

[11] See Fed. R. Civ. P. 8.

[12] Am. Hosp. Supply Corp. v. Hosp. Prod. Ltd., 780 F.2d 589, 593 (7th Cir. 1986) (comparing this formula directly to the formula proposed by J. Learned Hand for negligence cases.).

[13] Id.

[14] See Aug. Storck K.G. v. Nabisco, Inc., 59 F.3d 616, 618–19 (7th Cir. 1995).

[15] See id.

[16] See e.g. Notification of Docket Entry, Hexin Holding Limited v. Parties Identified on Schedule A, No. 24-cv-01460 (N. D. Ill. Feb. 27, 2024) (denying the plaintiff’s TRO motion because it contains no detailed description of how each copyright was allegedly infringed by each defendant along with information about the copyrights underlying the action).

[17] See Aug. Storck K.G. 59 F.3d 616, 618–19 (7th Cir. 1995).

[18] See e.g. Order Responsive to Motion to Dissolve the Preliminary Injunction, Emoji Co. GmbH v. Schedule A, No. 22-cv-2378 (N.D. Ill., Sept. 29, 2023) Judge Tharp stated:

The Court is therefore satisfied that [defendant] has shown that Emoji Company is unlikely to overcome its fair use defense or to prove likelihood of confusion. As a result, Emoji Copmany has not established a strong likelihood of success on the merits of its infringement claim. The order issuing a preliminary injunction and asset restraint against [defendant] is therefore vacated.

[19] See Aug. Storck K.G., 59 F.3d 616, 618–19 (7th Cir. 1995).

[20] See id.

[21] See e.g. C.D. Cal. Loc. R. 7-3 (“[C]ounsel contemplating filing the filing of any motion shall first contact opposing counsel to discuss thoroughly, preferably in person, the substance of the contemplated motion and any potential resolution . . . seven days prior the filing of the motion.”).