What is a TRO in Business? Online Sellers and Temporary Restraining Orders

Have you ever heard of a Temporary Restraining Order (TRO)? If your business deals with various kinds of intellectual property, then you probably have! A TRO is a legal document put forth by a judge prior to trial. It stops a certain action for a set amount of time. We regularly post about trademark, copyright, and patent infringement cases on our site. This is one of the main instances where a temporary restraining order is issued. 

When approved by a judge, a TRO stops Defendants from further infringement on a Plaintiff’s intellectual property. The temporary nature of the restraining order refers to the amount of time between the issuance of the TRO and a preliminary junction. For example, if evidence of trademark infringement is submitted to a federal court, that court can process a request to take an immediate action based on that evidence. And that’s when the TRO goes into effect. 

The truth is, lawsuits over intellectual property can take a lot of time and resources. For this reason, Plaintiffs often want immediate relief. For a judge to issue a TRO, specific criteria must be met in terms of the evidence and allegations. Regarding intellectual property lawsuits… The court usually needs to see evidence that there will be a likelihood of further damage to the Plaintiff. Which might be irreparable without an expedited remedy (such as a restraining order). 

E-Commerce Stores, Federal Infringement Lawsuits | What is a TRO in Business?

Online sellers use major platforms like Amazon, eBay, AliExpress, Alibaba, Walmart, Wish.com, Etsy, DHgate, and/or Temu. They are often the targets of temporary restraining orders. In a federal trademark, copyright, or patent infringement case, the Plaintiff files a lawsuit against sellers. Frequently, the Defendants are named in a Schedule A lawsuit. This means many sellers are accused of infringement at the same time. The allegations of unlawful conduct made by the Plaintiff against the Defendants are usually very similar.

Major brands file Schedule A lawsuits to counteract what they believe is widespread counterfeiting of their products. The brands often claim online sellers are working together to infringe on intellectual property. Allegations include: 

• The identification of e-commerce stores that offer counterfeit products on multiple online marketplace platforms, using seller aliases. 
• The deception of unsuspecting consumers by using unauthorized intellectual property (trademarks, copyrights). That is, within the content, text, or meta tags of e-commerce stores. Sellers do so to manipulate search engine rankings in favor of the unauthorized sellers. 
• The omission of the intellectual property allegedly infringed on in the title of products so as to evade enforcement. 
• The communication between the Defendants in a given case on a constant basis, using chat rooms and websites to share tactics for how to successfully counterfeit products and infringe on intellectual property without being detected. 
• Online sellers design their e-commerce stores to appear as authorized sellers of trademark/copyright protected products, so as to grab consumers and fool them into buying counterfeit goods. 

How a TRO Can Impact an Online Business | Claims of Intellectual Property Infringement

The above is just a selection of the type of claims brands make against online sellers in federal intellectual property lawsuits. Regardless, because Plaintiffs submit these allegations with supporting evidence to the judge, it gives them the power to request a temporary restraining order (TRO) at the beginning of the process until the time of the preliminary junction. And what does that mean for the online sellers who are named as Defendants in these cases? In short, the sellers’ account(s) will be frozen and they won’t be able to access the money in their accounts. 

A temporary restraining order in a federal intellectual property lawsuit prevents sellers from touching the money they earned from selling the Plaintiff’s products. The TRO may also impact the sellers’ ability to access money earned from the sale of other branded products. This is no small matter! An online selling business can be put at risk of bankruptcy due to a temporary restraining order. Sellers need as much cash flow and resources as possible to operate. When they are barred from accessing their money, sometimes hundreds of thousands of dollars, that can really put sellers in a precarious position. 

What to Do When You are Hit With a TRO?

So what do sellers do when they are hit with a TRO due to allegations of infringement and counterfeiting? In some instances, the Defendants accept a settlement offer made by the Plaintiff. This isn’t typically the most favorable option for how to proceed, though, because these settlements often leave the online seller with only 60% of their money – no matter if the allegations are true or false. If that settlement is accepted, the remaining amount of the money frozen by the restraining order is awarded to the Plaintiff. 

What else can online sellers do when they’re subjected to the severe impact of a temporary restraining order? Seek legal counsel! An intellectual property attorney can help online sellers affected by TROs in several ways. First, it’s possible that a lawyer can prove to the court that you didn’t actually engage in the infringement as alleged. Second, an attorney can come up with a legal resolution and/or settlement strategy that gives you the power to keep more of your money than if you worked directly with the Plaintiff suing you. And, a lawyer can essentially guide you through how to navigate the process of responding to every part of the lawsuit as it unfolds so that ultimately you make it out the other side with your business and finances intact! 

Stockman & Poropat, PLLC | Intellectual Property Attorneys Who Can Help!

Has your online business been affected by a temporary restraining order? Contact our team at Stockman & Poropat, PLLC today! We offer a free consultation. Once we understand your situation, we can develop a legal solution that works best for you and your business.

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