Using “Schedule A” Litigation to Combat Online Trademark Infringement

In today’s digital world, trademark infringement is a significant concern for businesses aiming to protect their brand identity. Accordingly, it is important for businesses to implement a multifaceted online enforcement strategy to protect their intellectual property rights. Among the various legal avenues available to combat counterfeit goods and unauthorized use of trademarks, “Schedule A” lawsuits, which are most often filed in the U.S. District Court for the Northern District of Illinois, have emerged as a powerful tool. As intellectual property attorneys at Clark Hill, we regularly help businesses secure and enforce their IP rights. Here, we will explore what Schedule A trademark infringement litigation entails, how it works, and why it’s essential for companies to understand this avenue for enforcing their legal rights.

What is Schedule A Litigation?

In recent years, the selling of counterfeit goods—an especially nefarious form of trademark infringement—has surged on e-commerce platforms. Counterfeiters exploit these platforms to sell fake products, often at a lower price, which can severely damage the reputation and revenue of legitimate businesses. Many of these counterfeiters set up small anonymous online shops to sell counterfeit products, disappear before they can be held accountable, and then set up another shop under a different identity to continue to sell the counterfeit products elsewhere.

Schedule A litigation refers to a specific type of trademark infringement case that leverages a streamlined process to quickly resolve issues related to counterfeit goods, particularly those sold online by the “hit-and-run” merchants described above. The term “Schedule A” originates from the fact that these lawsuits often contain hundreds of these “hit-and-run” online shops as defendants, which are listed on what’s known as the “Schedule A” to the complaint.

Why Schedule A Litigation?

Filing traditional lawsuits against each online infringer is time-consuming and costly, especially when there may be hundreds or thousands of “hit-and-run” online infringers located all over the world. Schedule A litigation offers a faster, more efficient alternative to address these types of infringers by using a streamlined process where hundreds, or thousands, of online infringers can be included in a single lawsuit.

Why are Most Schedule A Cases Filed in the Northern District of Illinois?

Most Schedule A cases are filed in the U.S. District Court for the Northern District of Illinois (NDIL).  There are several reasons why, but one of the primary reasons is that the NDIL has a broader jurisdictional qualification than many other federal courts, which allows Schedule A cases to reach a broader group of infringers. Specifically, the “minimum contacts” required for the NDIL to assert jurisdiction over the defendant is met if the defendant “reasonably could foresee that its product would be sold in the forum.” Given the size and prevalence of the Chicago area to trade, it can be argued that anyone who sells anything on the internet could foresee that a consumer in the Chicago area might purchase the product.

The Process for Pursuing Schedule A Litigation

1. File a Complaint: The process begins with the trademark owner filing a complaint in a federal court (such as the NDIL). The complaint includes detailed information about the trademark, evidence of infringement, and a list of known and unknown defendants (often referred to as “John Does”). The Schedule A form is used to document these details and is often filed separately under seal.
2. Request an Ex Parte Temporary Restraining Order (TRO): To prevent further damage while the case is being resolved, the trademark owner can request an ex parte TRO against the defendants’ infringement. The TRO, which aims to preserve the status quo, can impose an obligation on the applicable online marketplaces to temporarily halt the sale of counterfeit goods without notifying the defendants in advance.
3. Submit the TRO to the Online Marketplace and Obtain Possible Settlements: Once the court grants the TRO (which it does based on the evidence provided by the plaintiff), the plaintiff can submit the TRO to the online marketplace(s) where the defendants are selling the infringing products. In response, online marketplaces will typically freeze the infringing merchant’s account, including any further sales and any money in the account. Although not guaranteed, the TRO often causes an infringing party to settle its case with the trademark holder so that the infringing party can “unfreeze” its accounts with the online marketplaces.
4. Service of Process: The plaintiff must serve notice to the remaining defendants who have not settled. In Schedule A cases, since defendants are often operators of online stores who may be located internationally, service of process can be challenging.
5. Obtain Default Judgments: Many defendants, even when properly served, will fail to respond in court. In those cases, the plaintiff may obtain a default judgment, which often includes a permanent injunction against the defendants that prohibits them from continuing their infringing activities. Additionally, the court may award damages to the plaintiff, which can include actual damages, statutory damages, and attorneys’ fees.
6. Collect Evidence: For any remaining defendants, both parties engage in the discovery process of exchanging evidence. Discovery in a Schedule A case often includes obtaining information from online marketplaces, payment processors, and shipping carriers to identify the sources and extent of the counterfeit activities.
7. Move for Permanent Injunction and Damages: If the court finds in favor of the plaintiff against the remaining defendants, it may issue a permanent injunction against the defendants, prohibiting them from continuing their infringing activities. Additionally, the court may award damages to the plaintiff, which can include actual damages, statutory damages, and attorneys’ fees.

Benefits and Challenges of Schedule A Litigation

Some of the benefits of Schedule A Litigation include the following:

• Speed and Efficiency: Schedule A cases are designed to allow businesses to address and mitigate the impact of trademark infringement more quickly and less expensively than traditional methods.
• Protection During Litigation: The ability to obtain a TRO helps prevent further damage by halting sales of counterfeit goods while the case proceeds.
• Broader Reach: Schedule A litigation can address infringing activities involving both known and unknown defendants, including international actors who might otherwise evade traditional litigation approaches.

Despite these benefits, Schedule A litigation plaintiffs can face the following challenges:

• Complexity of Service: Serving defendants who operate internationally can be complicated and may require additional legal steps.
• Evidence Gathering: Collecting sufficient evidence to support claims and identify all parties involved can be resource intensive.
• Legal Costs: Despite the streamlined process, Schedule A litigation can still be expensive, especially for smaller businesses.
• Potential for Abuse: Due to the streamlined process and challenges with identifying and serving the infringers, which leads to much of the process being done ex parte, there is a potential for plaintiffs to abuse Schedule A litigation. This risk can be mitigated by working with qualified and ethical counsel.

Conclusion

Schedule A litigation provides a valuable tool for businesses facing the challenge of trademark infringement through the sale of counterfeit goods. By using Schedule A litigation, companies may be able to effectively protect their brands, enforce their IP rights, and mitigate any damages caused by counterfeiters. However, due to the complexities and challenges involved in this type of litigation, companies should consult with experienced IP attorneys to ensure the best possible outcome for their case while safeguarding the integrity and success of their brands.

At Clark Hill, we understand the importance of protecting brands against counterfeiters. Our multidisciplinary team combines deep IP knowledge with industry-specific insight to help companies secure their IP assets. Whether it’s assisting with registration, monitoring for counterfeiters and other unauthorized use, or navigating infringement disputes, we provide proactive legal solutions that align with your goals. If you’re ready to treat your ideas like the assets they are, we’re here to help.

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