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Retailer Permitted to Sell Existing Inventory after Preliminary Injunction Issued against Manufacturer

After the plaintiff Cordelia Lighting, Inc. (“Cordelia”) obtained a preliminary injunction against Zhejiang Yankon Grp. (“Yankon”), Cordelia sought to add certain retailers to the injunction. Cordelia owns U.S. Patent No. 8,474,204 (“the ‘204 Patent”), which is entitled “Recessed LED Lighting Fixture” and describes a fixture designed to hold an LED light bulb. Cordelia alleged that Yankon infringed the ‘204 Patent by making and selling a product called the “Utilitec Pro LED Recessed Retrofit Downlight” Yankon sells these products to Lowe’s Companies, Inc. and Lowe’s Home Centers, LLC (“Lowe’s”).

In its effort to add Lowe’s to the injunction, Cordelia argued that Cordelia first argued that Lowe’s should be enjoined because it is in “active concert or participation” with Yankon. The district court explained that “[s]ignificant to the analysis here, ‘[a]ctions that aid and abet in violating the injunction must occur after the injunction is imposed for the purposes of Rule 65(d)(2)(C).’ Blockowicz v. Williams, 630 F.3d 563, 568 (7th Cir. 2010). It is undisputed that Yankon manufactures the Accused Products in China and then sells them to Lowe’s, freight on board, in China. (See Declaration of Stephen Lobbin, Doc. No. 107-1, Ex. E (Deposition of Kevin Zhao at 36:15¬37:2).) In other words, once Yankon sells a unit of product to Lowe’s, Yankon receives payment and no longer has any involvement with the end sales of the products to consumers. The Injunction Order prevents Yankon from making, selling, or importing the Accused Products. (Injunction Order at 14.) To be properly subject to the Injunction Order, Lowe’s would have to aid or abet, or be a privy to, Yankon taking such actions. But, Lowe’s fulfills neither requirement; it is hoping to sell off its own accumulated inventory of the Accused Products. Lowe’s has already purchased this inventory, and is not continuing to purchase Accused Products from Yankon (which would clearly constitute a violation of the Injunction Order).

Cordelia also contended that Lowe’s should be bound by the injunction by a “judicial admission.” The district court rejected this position as well. “As stated previously, after the Court ordered Yankon to submit its profit calculations in order to determine the proper bond, Cordelia’s Response also included Lowe’s profit calculations. (Response at 1.) The Court set bond at an amount that encompassed Lowe’s calculations. (Bond Order at 1.) Cordelia argues that Lowe’s judicially admitted it was subject to the Injunction Order by submitting its profits and stating in the Response that “Lowe’s will also be subject to the Court’s preliminary injunction and losses stemming from the injunction.” (Application at 8.) Lowe’s decision to submit its profits (and thereby significantly increase the bond) rather than request a clarification of the Injunction Order does suggest gamesmanship; nevertheless, the Court finds that Lowe’s statements in the Response should not act as a judicial admission, as the Injunction Order’s wording did create ambiguity as to which parties were enjoined.5 In short, Lowe’s was not making an affirmative factual assertion, but rather stating its interpretation of the Court’s order. Accordingly, the Court finds that Lowe’s did not judicially admit that it was bound by the Injunction Order.”

As a result, the district court denied the motion to modify the preliminary injunction to add Lowe’s.

Cordelia Lighting, Inc. v. Zhejang Yankon Grp., Case No. EDCV 14-881 JGB (SPx) (C.D. Cal. June 2, 2015)

The authors of are patent trial lawyers at Jeffer Mangels Butler & Mitchell LLP. For more information about this case, contact Stan Gibson at 310.201.3548 or