From Everytown for Gun Safety Action Fund v. Defcad, decided today by Judges Pierre Leval, Barrington Parker & Steven Menashi:
Plaintiff-Appellee Everytown for Gun Safety Action Fund … is the "largest gun violence prevention organization in the United States." … The anonymous defendants have uploaded downloadable files for 3-D printing firearms to Defcad.com, Odysee.com, and thegatalog.com. Pertinent to this appeal, the anonymous defendants have uploaded files bearing Everytown's name, which contain instructions for how to 3-D print gun parts and accessories bearing Everytown marks.
On October 22, 2021, Everytown filed suit against Defcad, Inc. … and the anonymous defendants … [alleging]: (1) federal trademark infringement under 15 U.S.C. § 1114; (2) false designation of origin and unfair competition under 15 U.S.C. § 1125(a); (3) trademark infringement and unfair competition under New York common law; and (4) dilution of the Everytown marks under N.Y. Gen. Bus. L. § 360-L. The defendants contend that the use of Everytown's marks was a parody and therefore non-infringing.
That same day, Everytown applied to the district court for expedited discovery to learn the identities of the anonymous defendants, alternative service, and an order to show cause for why a preliminary injunction should not be entered.
On November 5, the district court granted Everytown's application and entered an order to show cause for why a preliminary injunction should not be issued. The district court further ordered that Defcad, Odysee, Inc., Twitter, and "any third-party service provider" shall "provide to Everytown … expedited discovery, including copies of all documents and records in such party's possession or control relating to … the true identities and addresses of Defendants." Defcad [and the anonymous defendants] moved to stay the order, … [arguing that], "[t]he expedited discovery seeks to immediately unmask parties who have a First Amendment right to engage in anonymous speech."
The district court denied the motion for a stay. The district court held that Defcad lacks standing to assert the First Amendment rights of the anonymous defendants and, in the alternative, that the "objection to the discovery order would fail on the merits." According to the district court, "[a]lthough the Supreme Court has acknowledged that the First Amendment provides some protection for anonymous speech, parties may not use the First Amendment to encroach upon the intellectual property rights of others." Holding that "Plaintiff cannot effectively litigate its claims without obtaining the identities of the infringing parties," the district court denied Defcad's motion for a stay.
{Shortly thereafter, the district court approved a stipulation between Everytown and Twitter that provided for more limited disclosures from Twitter than the original order required. The district court approved the stipulation over the objections of the anonymous defendants. Applying the factors laid out in Arista Records, LLC v. Doe 3 (2d Cir. 2010), the district court held that "Everytown has made a prima facie showing of actionable harm" and that "the defendants' expectation of privacy, while a factor, is outweighed in this case by Everytown's need for the information" because "defendants may not use the First Amendment to encroach upon the intellectual property rights of others."}
On December 3, 2021, the anonymous defendants responded to the order to show cause, opposing the preliminary injunction on two principal grounds. First, the anonymous defendants argued that the district court lacked personal jurisdiction [on the grounds that they were unconnected to New York]…. Second, the anonymous defendants argued that their use of the Everytown marks is protected political speech and that it is "unimaginable" that it would cause consumer confusion.
On December 14, the district court entered an order noting that Defcad had not yet complied with the November 5 order. Referring to the defendants' response to the order to show cause, the district court declared that "[t]he discovery sought by Plaintiff—and ordered by this Court—is critical to, inter alia, the issue of personal jurisdiction raised by Defendants." The district court refused to credit the anonymous declarations submitted by the defendants, which the district court described as having "no evidentiary worth." …
Defendants asked the Second Circuit for a stay, and here's what the court decided:
As we understand it, the district court's May 26 order did no more than advise the anonymous defendants that it would not grant their forthcoming motion to dismiss for lack of personal jurisdiction without the anonymous defendants' identities and addresses. Noting that "[t]he Anonymous Defendants will … move to dismiss" on the basis of personal jurisdiction, the district court emphasized that "[t]he identities and addresses of the Anonymous Defendants are critical to resolving the issue of personal jurisdiction."
The basis for that proposition was that, without knowing the identities of the defendants, the plaintiff cannot challenge their anonymous assertions that they have had no contact with New York. Because that is the essential element of their contention that the court lacks personal jurisdiction, the district court provided in its order that "this information will be produced to Plaintiff and the Court by June 3, 2022." The import of the order to the defendants to disclose their identities was to make clear that failure to do so would result in a denial of their anticipated motion to dismiss….
Based on that understanding of the district court's order, we conclude that a stay pending appeal of the May 26 order is unwarranted. "[T]he Supreme Court has upheld the assertion of personal jurisdiction as a sanction for failure to comply with jurisdictional discovery, holding such failures may amount to a legal submission to the jurisdiction of the court, whether voluntary or not."
That is the substance of the district court's order, which informed the anonymous defendants that their motion to dismiss for lack of personal jurisdiction would not succeed if they did not provide their identities and addresses. The defendants have therefore failed to make a "strong showing" that they are "likely to succeed on the merits" of their challenge to the direction in the May 26 order that they must reveal their identities in order to receive consideration of their claim that the district court lacks personal jurisdiction over them.
Additionally, the injury the defendants would suffer from having to reveal their identities is lessened by the fact that, as Everytown acknowledged at oral argument, the stipulated confidentiality agreement permits the anonymous defendants to designate their identifying information as "Highly Confidential." Accordingly, because we interpret the May 26 order's direction to the defendants to reveal their identities as relating solely to the issue of the district court's exercise of personal jurisdiction, their motion to stay that order pending the decision of its appeal is denied….
We recognize, however, that the May 26 order could be read also to adjudicate the defendants' contention that they should be permitted to litigate the merits of the trademark dispute anonymously. The order states that the defendants' "application to proceed anonymously in this action is denied." Even though the order discusses only the jurisdictional issue, this broad language could be understood to mean that the May 26 order also directed the defendants to disclose their identifies for purposes of the merits litigation. If that were the meaning of the order, consideration of that aspect of it would raise different considerations and might call for a different ruling with respect to the stay motion.
{Both parties appear to understand the order this way. The defendants believe that the order denies them leave to proceed anonymously for all purposes in the case and that the order "direct[s] the anonymous parties to identify themselves." Everytown believes that failure to reveal their identities would subject the anonymous defendants to contempt. }
Without knowing whether the May 26 order to disclose was intended to apply also to the conduct of the merits litigation—in the event the district court concluded that it had personal jurisdiction over the defendants—we cannot rule on the stay motion pertaining to that aspect of the order. We therefore remand to the district court … for clarification of whether the May 26 disclosure order was solely for purposes of litigating the defendants' claim of lack of personal jurisdiction or whether it applied also to the litigation of the merits of the trademark claim.
In the meantime, solely with respect to the part of the order that (perhaps) ordered disclosure of identities for purposes of the merits litigation, we continue in effect the administrative stay originally imposed. The plaintiff, when asked, could not identify any harm that would be suffered from such a brief extension of the stay….
Note that I consulted to a small extent on this case, on behalf of defendants. I therefore don't want to offer any opinion on the case, since I wouldn't be able to do so in the objective academic way that our readers generally expect; but the court's decision seemed so interesting that I thought I'd just share this excerpt with our readers without substantive comment.
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