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Lack of Advance Notice Vacates District Court’s Orders

ABC CORPORATION I v. PARTNERSHIP AND UNINCORPORATED ASSOCIATIONS

Before Dyk, Taranto, and Stoll.  Appeal from the United States District Court for the Northern District of Illinois.

Summary: Failure to provide advance notice under Federal Rule of Civil Procedure 65(a) leads to vacating of preliminary injunction.

ABC Corporation (“ABC”) asserted four design patents against several business entities selling hoverboards online.  ABC identified the defendants through a Schedule A  (which changed over time) attached to the original and amended complaints.  On November 24, 2020, the district court entered a preliminary injunction against the then named defendants which included Gyroor-US who had not yet been served with process.  On May 24, 2020, the district court granted ABC’s motion to amend the Schedule A to add GaodeshangUS, Fengchi-US, and Urbanmax as defendants bound by the preliminary injunction.  Neither entity had been served with process nor received a Rule 65(a) notice. These entities (collectively, “Defendants”) sought relief from the preliminary injunction, citing inadequate notice under Rule 65(a).  The District Court denied relief and the Defendants appealed.

On appeal, the Federal Circuit vacated the 2020 Preliminary Injunction from its issuance and May 24 Order insofar as it added defendants to the 2020 Preliminary Injunction.  After finding no jurisdictional obstacles, the Court noted that Defendants, before the entry of the 2020 Preliminary Injunction, received no advance notice or opportunity to oppose.  ABC argued that there was advance notice to Gyroor-US when Amazon “froze” Gyroor-US’s accounts.  However, the Court concluded that Amazon’s action did not provide notice of the pendency of a motion for a preliminary injunction.  The Court then turned to the May 24 Order.  ABC argued GaodeshangUS received notice through counsel representing both GaodeshangUS and Gyroor-US based on an electronic notice of ABC’s May 6 motion to amend Schedule A.  The Court found that GaodeshangUS was (1) not a party at the time of the May 24 Order and (2) counsel did not enter an appearance for GaodeshangUS until May 24.  Thus, any notice to counsel did not meet the required notice to GaodeshangUS.  The Court also found that Fengchi-US and Urbanmax were not provided advance notice or an opportunity to oppose the May 24 Order.  The Court therefore vacated the 2020 Preliminary Injunction and May 24 Order for violating Rule 65(a).

Editor: Paul Stewart