SDNY Judge Grants 3M Preliminary Injunction Against N95 Mask Price Gouger
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  • SDNY Judge Grants 3M Preliminary Injunction Against N95 Mask Price Gouger
     
    05/12/2020
    On May 4, 2020, U.S. District Judge Loretta A. Preska of the U.S. District Court for the Southern District of New York issued an order granting plaintiff 3M’s application for a preliminary injunction against defendant Performance Supply, LLC under Federal Rule of Civil Procedure 65(a).

    The court explained that Performance Supply is not an authorized distributor, vendor, agent, or representative of 3M.  Nevertheless, Performance Supply falsely held itself out as authorized to solicit orders for N95 respirators on 3M’s behalf, and it used 3M’s distinctive red letter logo, as well as 3M’s slogan (“3M Science. Applied to Life”) to perpetuate its deception.  Specifically, Performance Supply sent a formal quote to New York City’s Office of Citywide Procurement, offering to sell the city seven million of 3M’s N95 respirators at a 500% markup, though the city never completed the order.

    The court found that 3M demonstrated it is likely to suffer irreparable harm absent an injunction.  Specifically, the court noted that 3M cannot control the quality of the products Performance Supply is purporting to sell on 3M’s behalf, and that 3M would suffer immeasurable harm to its reputation by being associated with price gouging of respirators during the COVID-19 pandemic.  The court also found that the balance of harms decidedly favored 3M, as Performance Supply “cannot be heard to complain about having to refrain from engaging in trademark infringement, unfair competition, and price-gouging.”

    Given 3M’s incontestable federal trademark registrations, Performance Supply’s apparent infringement thereof, and the likelihood that Performance Supply’s conduct will confuse customers (such as New York City) about the source of the N95 respirators, the court found that 3M demonstrated a likelihood of success on the merits of its claims.  These claims include trademark infringement, unfair competition, false association, false endorsement, and false designation of origin under the Lanham Act.

    Another factor upon which the court based its decision was the public interest.  The court explained that the public has a strong interest in avoiding confusion about the source and quality of goods and services, which is particularly true of personal protective equipment during the COVID-19 pandemic.  Indeed, citizens, health care professionals, and government procurement officials are relying heavily on N95 respirators to contain the virus spread, and these customers deserve assurance that they are getting the quality product they associate with the 3M brand.

    The court’s order granting a preliminary injunction supersedes the temporary restraining order the court issued on April 24, 2020.  The preliminary injunction applies during the pendency of the action and prohibits Performance Supply from engaging in any false, misleading, or deceptive conduct (including representing itself as affiliated with 3M or authorized to sell its products).  The injunction also prohibits Performance Supply from falsely representing that 3M has increased the price(s) of its N95 respirators and from offering to sell any of 3M’s products at a price or in a manner that would violate New York General Business Law § 369-R (price gouging).  3M has ten similar lawsuits pending against unauthorized resellers of its products.
    CATEGORY: Gouging

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