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Judge Gonzalez Grants Preliminary Injunction to Accused Infringer For "What Appears to Be a Fraudulent Claim to a Patent"

On December 18, 2022, Judge Gonzalez (E.D.N.Y.) granted-in-part and denied-in-part Plaintiff Sound Around Inc.'s motion for entry of a preliminary injunction against Defendants Shenzhen Keenray Innovations Ltd., Danxia Wu, and Weng Feng Peng (a/k/a Fenson Peng) pursuant to Federal Rule of Civil Procedure 65. The case involves allegations of infringement of U.S. Patent No. D952,810 (the "'810 Patent") which lists Wu as the inventor and is assigned to Keenray.

Plaintiff Sound Around imports and sells electronic products, including the towel warmers that are the subject of the lawsuit, on its own website and through Walmart, Amazon, and eBay. In early 2021, Plaintiff purchased a towel warmer from Dongguan Goldenhot Plastic & Hardware Products Co., Ltd. ("Goldenhot") and began selling it. In August 2020, Goldenhot sold the same towel warmer to Defendant Keenray. In November 2020, Wu, a principal of Keenray, filed a patent application that allegedly covered the towel warmer that it purchased from Goldenhot. The application became the '810 Patent and was assigned to Keenray without Goldenhot's knowledge. In a declaration filed in connection with the '810 Patent, Wu declared that she was the sole inventor of the subject towel warmer. In September 2022, Keenray contacted Amazon and demanded that Amazon delist the towel warmer that was alleged to be covered by the ’810 Patent.

Plaintiff filed this action against Defendants seeking a declaratory judgment that it is not infringing the '810 Patent and asserting claims of: (i) unfair competition and (ii) tortious interference with existing and potential business relationships. Plaintiff moved for a preliminary injunction seeking that Defendants: (i) rescind their allegations of infringement against Plaintiff, and take the necessary steps to ensure that Amazon restores the towel warmer on its website as soon as possible, and (ii) refrain from filing or otherwise communicating any allegations of infringement by Plaintiff to any third party for the duration of the instant action relative to the subject towel warmer. Prior to the hearing, Amazon restored the listing for the subject tower warmer, rendering Plaintiff’s first request moot.

As to Plaintiff's second request, the Court applied the common four-factor standard for a preliminary injunction. As to irreparable harm, the Court found that Defendants' accusations of patent infringement could irreparably harm Plaintiff's standing with retailers and put it at risk of losing the ability to sell its products through such retailers, impacting its sales and revenue. As to likelihood of success on the merits, the Court found that Plaintiff had sufficiently demonstrated that Goldenhot invented the subject towel warmer, that Wu's declaration is likely fraudulent, and that Defendants' complaint to Amazon that Plaintiff is infringing the '810 Patent is therefore inaccurate. The Court additionally found that Plaintiff was likely to prevail on its tortious interference claim because, inter alia, “Defendants allegedly defrauded the U.S. Patent Office in securing approval of the 810 Patent and used that patent dishonestly…” The Court found that Defendant would be unable to demonstrate any hardship given the evidence of irreparable harm to Plaintiff and the likelihood of success of its claims. Finally, as to the public interest, the Court found that the public interest is served by granting an injunction against what appears to be a fraudulent claim to a patent. Accordingly, the Court granted the motion for preliminary injunction in relevant part.

Case: Sound Around Inc. v. Shenzhen Keenray Innovations Ltd., et al., No. 22-CV-06943 (HG), Dkt. No. 23 (S.D.N.Y. Dec 18, 2022)