UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF INDIANA

SOUTH BEND DIVISION

SWAGWAY, LLC, )

)

Plaintiff, )

)

v. ) CAUSE NO. 3:16-CV-567-PPS-MGG

 )

HANGZHOU CHIC INTELLIGENT )

TECHNOLOGY CO., LTD., COKEM )

INTERNATIONAL, LTD., & JANSCO )

MARKETING, INC., )

)

Defendants. )

OPINION AND ORDER

This case involves competitors in the hoverboard industry. As I understand it,

hoverboards are self balancing scooters that are battery powered. The plaintiff,

Swagway, LLC, has filed a Motion for Temporary Restraining Order seeking to enjoin

one of its competitors, Hangzhou Chic Intelligent Technology, Co., Ltd.’s (“Chic” for

short), from disparaging it. [DE 6]. On October 4, 2016, I held a status conference with

all of the parties at which we discussed the status of the case as well as that of a related

case filed previously in the United States District Court for the Northern District of

California. As I indicated at that hearing, and for the reasons discussed below, I am not

inclined to grant a TRO at this juncture. Furthermore, because the parties currently are

litigating a clearly related previously filed case in the Northern District of California

and are presently awaiting that Court’s ruling on Swagway’s motion to transfer that

case to this venue, I am staying this action pending resolution of that motion.
At the heart of this case is a dispute over whether Swagway is practicing Chic’s

patent. But that is not the precise issue being litigated in this action. Rather, Swagway

brought this case against Chic and two secondary distributors of Chic’s products

alleging that the defendants were making false and defamatory comments regarding

Swagway’s products. Specifically, Swagway alleges unfair competition under federal

and state law, tortious interference with business relationships, and defamation. 

Swagway’s allegations arise from a series of communications made by the

defendants to the public, including Swagway’s distributors, retailers, and customers,

regarding Swagway’s alleged infringement of Chic’s United States and Chinese patents. 

These communications include two press releases posted to Chic’s website as well as a

series of cease-and-desist letters sent to retailers of Swagway’s products, alerting them

to the alleged infringement and demanding that the retailers cease the sale of the

infringing products or potentially face legal action for willful infringement. After

Swagway filed this action, Chic removed the two press releases from its website and

replaced them with a revised press release.

In its complaint, Swagway requested, among other things, an order preliminarily

enjoining the defendants from making any alleged false or misleading statements

regarding Swagway, its products, or Chic’s patent rights in the context of Swagway’s

products, as well as damages resulting from the defendants’ misconduct. Swagway

subsequently moved for a temporary restraining order [DE 6] and now requests an

order enjoining Chic from republishing the two original press releases, directing Chic to

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make certain amendments to its new, revised press release, enjoining Chic from

disseminating the same or similarly false statements as those disseminated by the other

two defendants in their roles as secondary distributors of Chic’s products, and enjoining

Chic from disseminating cease-and-desist letters to Swagway retailers or customers. 

[DE 37 at 2.]

A temporary restraining order is “an extraordinary and drastic remedy, one that

should not be granted unless the movant, by a clear showing, carries the burden of

persuasion.” Mazurek v. Armstrong, 520 U.S. 968, 972 (1992) (per curiam). To warrant a

TRO, a plaintiff must demonstrate: (1) a likelihood of success on the merits; (2) no

adequate remedy at law exists; and (3) plaintiff will suffer irreparable harm if the TRO

is not granted. See Incredible Techs., Inc. v. Virtual Techs., Inc., 400 F.3d 1007, 1011 (7th

Cir. 2005). If these elements are satisfied, the Court must then balance the harm to the

plaintiff if the restraining order is denied against the harm to the defendant if the

restraining order is granted. Id. 

Here, Swagway, at a minimum, has failed to meet its burden to demonstrate

irreparable harm. Swagway needs to show that irreparable harm is likely to occur in the

absence of an injunction. See Winter, 555 U.S. at 22. The mere risk of irreparable harm is

not sufficient. Id.; Eaton Corp. v. Appliance Valves Corp., 526 F. Supp. 1172, 1181 (N.D.

Ind. 1981). Swagway argues that there is a well-established presumption in this Circuit

that injuries arising from Lanham Act violations are irreparable, even absent a showing

of business loss. [DE 8 at 26.] Chic counters that Swagway has failed to show that

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Chic’s communications caused irreparable harm and that the presumption of

irreparable harm is no longer appropriate in the wake of the Supreme Court’s decision

in eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006). [DE 22 at 21-25.] The

Seventh Circuit has not addressed the issue of the effect of eBay on the irreparable harm

presumption in Lanham Act cases, nor has this district. As Chic point outs, there is at

least one case in the Northern District of Illinois analyzing eBay and recognizing that it

calls into question the Seventh Circuit’s presumption of irreparable harm in

infringement cases which, like false advertising, also are governed by the Lanham Act,

and that other Circuits no longer apply the presumption and require a showing of

irreparable harm. [Id. at 22-23 (discussing Nat’l Financial Parners Corp. v. Paycom

Software, Inc., No. 14 C 7427, 2015 WL 3633987 (N.D. Ill. June 10, 2015)).] However,

there also are cases in the Northern District of Illinois that have continued to apply the

presumption (although only one acknowledges and discusses eBay). [Id.] Out of an

abundance of caution, I decline to apply a blanket presumption, but rather look at the

specific facts of this case to determine whether Chic is likely to suffer irreparable harm.

Here it appears to me that any losses caused by the defendants’ alleged

communications could be calculated and remedied by monetary damages. Swagway

attempts to frame the issue as loss of goodwill and reputation, but it essentially is

arguing that it will lose business if Chic continues to make its alleged false and

misleading statements, which is a loss compensable with monetary damages. 

Furthermore, Chic already removed from its website the two press releases at issue and

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represented to the Court that it is willing to continue to work with Swagway to amend

the language of the new press release. In addition, CokeM (one of the other defendants)

has stipulated to the preliminary injunction and indicated it doesn’t intend to make

such statements. [DE 30] As for Jansco, the other defendant in the case, it has

represented that it also is willing to discuss a stipulation to the preliminary injunction. 

At this point in the litigation, I just have not seen enough to believe that Chic is likely to

suffer irreparable harm if I do not order a temporary restraining order against the

defendants. 

In addition, at this point, Swagway has not demonstrated the likelihood of

success on the merits. The issue underlying this entire action, and the substance of the

communications that Swagway seeks to enjoin, is whether Swagway illegally is

practicing Chic’s patents and the ramifications of that, which is the issue currently being

litigated by the parties in the Northern District of California, not here. I simply do not

have enough information at this point to determine if the substance of Chic’s alleged

statements are false or misleading and, therefore, cannot say that Swagway is likely to

succeed on the merits and grant it a temporary restraining order.

As I have discussed above, and with the parties at the October 4, 2016 status

conference, prior to Swagway filing this action, Chic filed a patent infringement action

against Swagway in the Northern District of California. See Case No. 3:16-CV-04804-

H.G. (N.D. Cal. 2016). Because I believe that the issue at the heart of this action is

whether or not Swagway is infringing Chic’s patents, I don’t believe that it makes sense

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to, at this time, potentially have parallel litigation here and in the Northern District of

California. The parties have represented to me that Swagway moved to transfer venue

of the Northern District of California action to this district and that Court is holding a

hearing on the motion on November 10, 2016. See Case No. 3:16-CV-04804-H.G. (N.D.

Cal. 2016) (Docket Entry 15). All of the parties seem to agree that it makes sense to

litigate the patent infringement claims and the unfair competition and defamation

claims in the same court, in front of the same judge. Because the judge in the Northern

District of California currently is deciding the issue as to where that should be, I think

that it makes sense to stay this action pending that decision. To the extent that

Swagway argues that it will be further damaged if this case does not proceed, I will

remind it that this is a problem of its own making. It chose to subsequently file an

action in this district asserting claims that are factually intertwined with those brought

in the first-filed Northern District of California action, rather than raising them as

counterclaims in that action. It did so at its own peril and now must await the decision

on its motion in the Northern District of California.

Swagway also has requested that a preliminary injunction be issued. If the judge

in the Northern District of California case decides to transfer that case to this district,

then I promptly will hold a preliminary injunction hearing where the parties can

present evidence and argument. This will provide Swagway another opportunity to

persuade me, based on a more robust record, that an injunction is appropriate. But for

now, this matter will be stayed pending the decision by the judge in the Northern

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District of California. 

CONCLUSION

Accordingly, Swagway’s Motion for Temporary Restraining Order [DE 6] is

DENIED and this case is STAYED pending resolution Swagway’s Motion to Transfer

Venue in Case No. 3:16-CV-04804-H.G. (N.D. Cal. 2016) (Docket Entry 15). 

SO ORDERED.

Entered: October 14, 2016 s/ Philip P. Simon 

 PHILIP P. SIMON, CHIEF JUDGE

UNITED STATES DISTRICT COURT

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