(CN) – A federal judge has ordered a technology company to stop selling wireless products bearing the name of its competitor.
Ubiquiti Newtworks sought a temporary restraining order as it builds a case alleging that its former distributor, Kozumi USA, is selling counterfeit products bearing the Ubiquiti trademark.
Chinese police discovered and put a stop to production of the copycat devices when they raided a manufacturing facility in Hong Kong, but Kozumi is still selling the reproductions already in its possession, according to the complaint.
San Jose, Calif.-based Ubiquiti makes wireless and networking products, some of them under the Airos and AirMax registered trademarks. Its complaint said that Kozumi was able to reproduce the devices using blueprints obtained by a former Ubiquiti employee. Kozumi has allegedly sold enough copycat devices to have affected Ubiquiti’s stock prices.
The complaint says Kozumi has “knowingly, willfully, intentionally and maliciously engaged” in a scheme to “counterfeit Ubiquiti’s products, to deceive the consuming public and to unfairly drive Ubiquiti out of the market using its own reputation and goodwill.”
The lawsuit seeks destruction of counterfeit items, an injunction, and compensatory and punitive damages for counterfeiting, trademark infringement, false designation of origin, violations of the Federal Computer Fraud and Abuse Act, of California’s Comprehensive Computer Data Access and Fraud Act, copyright infringement, unfair competition, business law violations, false advertising, trade libel and tariff violations.
Of the 13 total claims, a San Francisco federal judge considered three trademark counts in the request for a temporary restraining order.
The case is also being tried in an Argentinean court where Ubiquiti says defendants Shao Wei Hsu and his wife Lilia Kung intend to obtain a large portion of the market.
U.S. District Judge Claudia Wilken partly granted the restraining order Wednesday, finding that Ubiquiti showed a likelihood of success on the merits and a significant threat of irreparable injury.
Wilken rejected Ubiquiti’s request to freeze Hsu’s assets, stating that it would be “too harsh a remedy and harmful to defendants’ business.”
But an order enjoining Hsu and Kozumi from selling counterfeit and infringing products will not harm them, the order states.
On the other hand, Kozumi’s continued sale of counterfeit and infringing products would affect Ubiquiti’s goodwill and reputation, undercut sales, and hurt authorized distributors, all of which affect Ubiquiti’s stock price and market capitalization.
Wilken ordered Kozumi to explain why she should not strengthen the temporary restraining order with a preliminary injunction. The court will hear the matter July 5.