US TRO freezes for 72 hours, Shenzhen sellers prioritize funds or links for protection
Which of the money and links in the account should I protect first? The answer is: save money first, but the action needs to be split into two legs. The temporary restriction order freezes the receiving account, and once the money is transferred, it is basically impossible to recover it; The link can still be appealed for restoration even if it is taken down. The highest priority within 72 hours is to prevent fund transfers and temporarily suspend link removal in a way that does not anger the plaintiff. Two lines run parallel, but resources are tilted towards the funding side. Below, we will explain in chronological order.
1、 Freezing and removal are two separate things, don't confuse them
Many Shenzhen sellers, when they receive a temporary restriction order for the first time, think that freezing their account means they have lost money. No. The validity period of a temporary restraining order is usually 14 days, and the court may extend it for another 14 days upon the plaintiff's application. What really transfers the money is the subsequent preliminary injunction and the execution procedure after the final judgment. This means that there is a window period between freezing and transferring funds. Cross border payment platforms and Amazon store funds are generally frozen after receiving a court order, but will not be directly transferred during the temporary restraining order stage. This difference determines the order of response: first prevent the temporary restriction order from being converted into a preliminary ban, and then discuss the link.
2、 The action list within 72 hours must not be in a disorderly order
First, take a screenshot and save the account freeze notification, platform email, and court documents (if any). Next, investigate who the plaintiff is, what the case number is, and which court - in the United States, such cases are mostly concentrated in the Northern District Court of Illinois. And one thing to note: do not directly contact the plaintiff's lawyer using the store registration email. Many customers may rush to send an email explanation when encountering it for the first time, and the result may be used as evidence of infringement by the other party. Finally, contact a qualified lawyer in the United States to assess whether to respond to the lawsuit or reach a settlement.
The most valuable action within 72 hours is to let the lawyer judge whether the case is worth responding to. The amount of American lawyer hours required for litigation is in the tens of thousands of dollars, and the settlement amount for small frozen cases is often linked to the frozen amount, and the two are not decisions of the same magnitude. Make this judgment first, then there won't be any confusion later.
3、 The response deadline is only 21 days, which can be extended but requires investment
After receiving a temporary restraining order, the defendant's deadline for responding to a preliminary injunction motion is usually 21 days after receiving notice, in accordance with the provisions of the Federal Rules of Civil Procedure regarding temporary restraining orders and preliminary injunctions. An extension can be applied for, but the court may not approve it, and the extension application itself requires the investment of lawyer hours. General advice: If a settlement is decided, do not delay the deadline for response. If delayed, the plaintiff will directly apply for a preliminary injunction, which will increase the risk of fund transfer. If a decision is made to respond to the lawsuit, a memorandum opposing the preliminary injunction must be submitted within 21 days. This time point is much more urgent than removing the link - after the link is removed, you can appeal through the platform, and there is basically no room for maneuver in transferring funds.
IV. Link Takedown Can Actually Wait
After receiving a court order, platforms such as Amazon and eBay will remove the accused links. But the processing logic of the platform is different from that of the court: the platform usually only conducts formal review, and if you submit a non infringement statement or authorization certificate through the appeal channel, you have a chance to recover. And removing the link does not mean destroying the inventory, the goods in the FBA warehouse are still there. So from a priority perspective, the link comes second. The premise is that the store has not been simultaneously judged as fraudulent or repeatedly infringing by the platform, in which case the space for appeal and recovery will be much smaller.
5、 How to negotiate a settlement? The lower the amount, the better
There are fixed routines for settlement negotiations in such cases. The plaintiff's lawyer usually quotes based on the frozen amount, with the first round quote being higher. The final transaction percentage depends on the type of infringement (trademark, copyright, patent), sales record, and whether it is intentional. If the plaintiff holds a federally registered trademark in a trademark case, the negotiation space is relatively small; If a copyright case involves images or patterns, it depends on whether your use constitutes fair use.
When negotiating a settlement, the payment rhythm and the time for unfreezing should be included in the settlement agreement, and payment should not be made first before unfreezing. It is generally recommended to specify in the agreement that the plaintiff shall submit a withdrawal or unfreezing application to the court within several working days after receiving the payment. This clause is more important than the settlement amount itself.
6、 Response or settlement, see three numbers
First, let's take a look at the frozen amount. For small amounts, responding to lawsuits is usually uneconomical. Looking at the store's historical sales and future expectations, if this store is the main source of revenue, it is worth investing in litigation. Finally, let's take a look at the litigation history of the plaintiffs: Some plaintiffs are seeking to protect their rights in bulk, with the same law firm suing hundreds of sellers in the same court. This type of case has high settlement efficiency and predictable amounts, and the settlement amount for bulk cases is often lower than that for individually sued cases. Specific strategies should be judged based on the facts of the case.
Seven, prevention is much cheaper than response.
The root cause of such bans is usually intellectual property infringement. In terms of trademarks, the validity period for registered trademarks in the United States is 10 years, but a usage statement needs to be submitted in the 5th to 6th year, and a renewal statement needs to be submitted in the 9th to 10th year. Many sellers only focus on whether they have registered, ignoring the freedom to conduct searches when selecting products. In terms of copyright, although registration with the US Copyright Office is not a prerequisite for filing a lawsuit, one can claim statutory compensation after registration. Each work has a statutory limit, which is also why plaintiffs like to use copyright cases to initiate injunctions.
The EU and UK markets also have similar temporary ban mechanisms, which sellers who operate long sites should consider together. Spending time searching during the product selection stage is much cheaper than dealing with it afterwards.
8. After the account is unfrozen, there are still loose ends to deal with.
After a settlement or withdrawal of the lawsuit, the court will issue an order to lift the freeze, but the platform's execution takes time, usually three to ten working days. Don't rush to withdraw all your funds during this period, some platforms may keep them for an observation period. Additionally, if the same plaintiff has other cases against you in other courts, the unfreezing may only be temporary. It is recommended to conduct a comprehensive intellectual property investigation after thawing and keep records of the handling of high-risk links. The territoriality of foreign-related intellectual property cases is strong, and an injunction from a US court will not automatically affect your account in the EU, but the plaintiff may apply for an injunction separately at the EU Intellectual Property Office or local courts.
This article is compiled by Guangdong Zhiming Law Firm and is only for general legal information sharing. It does not constitute legal opinions on specific cases. There are differences in court procedures and platform policies among different states in the United States, and the outcome of individual cases depends on specific facts and the jurisdiction of the court. It is recommended to consult a lawyer with US practicing qualifications before taking action.
Frequently Asked Questions
After a U.S. TRO freeze, will the money be directly transferred away?
No. A TRO is a temporary restraining order, usually valid for 14 days, and the court may extend it by 14 days. Fund transfers generally occur after a preliminary injunction or final judgment. There is a window between the freeze and the transfer, and within 72 hours priority should be given to preventing the TRO from being converted into a preliminary injunction.
After receiving a TRO, how long do you have to respond to the court?
The deadline to respond to a motion for a preliminary injunction is usually 21 days after notice is received, under Rule 65 of the Federal Rules of Civil Procedure. An extension may be requested, but the court may not necessarily grant it, and the extension itself generates attorney fees. Sellers who have decided to settle should not stubbornly delay on the deadline.
What is the typical settlement amount in a TRO case?
The plaintiff's first-round offer is commonly 70%-80% of the frozen amount, and final settlements are mostly 30%-50%. The specifics depend on the type of infringement, sales records, and whether it was willful. In trademark cases with federal registration, there is less room for negotiation, and settlement amounts in mass enforcement cases are usually lower than in individually filed cases.
Can a listing be restored after it has been taken down?
You can try. Platforms usually handle TROs through a formal review, and sellers may have a chance to restore the Listing by submitting a non-infringement statement or proof of authorization through the appeal channel. But if the store is also found to have committed fraud or repeated infringement, the success rate of the appeal will be significantly lower.
What clauses must be clearly written in a settlement agreement?
It must clearly state within how many business days after the plaintiff receives payment it will submit an application to the court to withdraw the case or lift the freeze. This timing clause is more important than the settlement amount itself. Do not accept an agreement that requires payment first and unfreezing later with no time constraint.
