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Better Packages, Inc. v. Zheng

May 17, 2006

BETTER PACKAGES, INC. PLAINTIFF,
v.
ALAN Y. ZHENG, ET AL.,



The opinion of the court was delivered by: Bongiovanni, United States Magistrate Judge

OPINION AND ORDER

This matter comes before the Court upon a Motion by Plaintiff, Better Packages, Inc. (hereinafter "Plaintiff") for Expedited Discovery, Docket Entry #20. Defendants, McDonald Company Machines, McDonald Company, Inc., Shipping System & Supplies, Inc., John F. McDonald, Mary McDonald, Brian McDonald, John E. DuRose (individually and under the trade name BP Sales and Service) and Ronald Goldsmith (individually and doing business as Central Parts or R.G. Packaging) (hereinafter "Defendants"), oppose the Motion. For the reasons stated below, Plaintiff's Motion is DENIED.

I. Procedural History

Plaintiff commenced this action by Complaint filed on September 7, 2005. Plaintiff's Complaint alleges: Count I - Infringement of Plaintiff's trademarks in violation of 15 U.S.C.A. §1114 and violations of the Court's prior Orders and the stipulations of the parties; Count II -appropriation of Plaintiff's name, reputation and goodwill and a violation of N.J.S.A. 56:4-1; Count III - false representations in violation of 15 U.S.C.A. §1125(a) and dilution of Plaintiff's trademark in violation of 15 U.S.C.A §1125(c) and N.J.S.A. 56:3-13.20; violation of the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1, et.seq.; violation of the New Jersey Trafficking or Attempting to Traffic in Counterfeit Marks Law, N.J.S.A. 56:3-13.16; interference with Plaintiff's economic advantage with its existing customers and users; unprivileged imitation and passing off; and civil conspiracy. Defendants filed their Answer to Plaintiff's Complaint with Counterclaim on October 25, 2005.

On February 17, 2006, Plaintiff filed a Motion for Expedited Discovery in anticipation of filing a Motion for Preliminary Injunction. Plaintiff filed the Motion for Preliminary Injunction on February 21, 2006.

II. Factual Background

The parties have a long and contemptuous history. Prior to the commencement of this present action, Plaintiff obtained a Temporary Restraining Order on October 17, 1994 enjoining John F. McDonald Company and other parties, including Defendant Zheng, from manufacturing, soliciting, advertising, promoting, merchandising, selling, distributing, servicing or otherwise imitating or passing off Durapak models 9500 or 9300, the model machine allegedly in violation of Plaintiff's trademark. A Preliminary Injunction Order was entered by this Court on November 9, 1994. The preliminary injunction enjoined McDonald from removing any equipment from any warehouse or storage facility. On April 22, 1998, as part of Defendant McDonald's bankruptcy proceedings, John F. McDonald Company and Shipping System and Supplies Inc. stipulated to be bound by the prior preliminary injunction and a permanent injunction entered against Defendant Zheng on April 24, 1995.

Plaintiff alleges that Defendants began manufacturing and arranging for the production of a new line of equipment under the "Phoenix" model name in 1995. Plaintiff admits that at the time the Phoenix models did not appear similar to any of Plaintiff's machines. However, in May 2004, Plaintiff discovered that Defendants, Sinacom China and/or Sinacom North America, allegedly began to manufacture a Better Packages' model machine under a Phoenix model name for McDonald. Sinacom's production of the Phoenix model is the basis for this present action.

Plaintiff is seeking leave to conduct expedited discovery in preparation for a hearing on its Motion for Preliminary Injunction. Plaintiff argues that the requested discovery is narrowly tailored to address only those issues likely to be raised in a hearing on the preliminary injunction and the requested discovery is necessary in order for Plaintiff to adequately prepare for a preliminary injunction hearing. Defendants oppose Plaintiff's Motion and argue that the requested discovery is overly broad and extends beyond any information that may be required for a preliminary injunction hearing.

III. Legal Standard

Federal Rule of Civil Procedure 26 provides the courts with very broad discretion in the management of the discovery process. See Fed. R. Civ. P. 26. A party may not seek discovery from any source before the parties have conferred as required by Rule 26(f). Fed. R. Civ. P. 26(f). However, the court, upon motion, for the convenience of the parties and witnesses and in the interest of justice, may grant leave to conduct discovery prior to a conference amongst the parties. Fed. R. Civ. P. 26(d).

Unlike most other discovery provisions within the Federal Rules, these provisions contain little guidance regarding the granting of expedited discovery. Courts have generally employed one of two standards for determining the appropriateness of expedited discovery. The first is the more formal analysis outlined in Notaro v. Koch, 95 F.R.D. 403 (S.D.N.Y. 1982). The Notaro standard is very similar to a preliminary injunction analysis and looks more closely at the merits of the requests. The second is the reasonableness standard, which requires the party seeking the discovery to prove that the requests are reasonable under the circumstances. Entertainment Technology, Corp. v. Walt Disney Imagineering, No. 03-3546, 2003 WL 22519440 at *3 (E.D.Pa. October 2, 2003); Gucci America, Inc. v. Daffy's, Inc., No. 00-4463, WL 1720738 (D.N.J. Nov. 14, 2000); Philadelphia Newspaper Corp. v. Gannett Satellite Information Network, Inc., No. 98-CV-27821, WL 404820 (E.D.Pa. July 15, 1998).

A. Notaro Standard

Under the Notaro standard the moving party must demonstrate "(1) irreparable injury, (2) some probability of success on the merits, (3) some connection between the expedited discovery and the avoidance of irreparable injury, and (4) some evidence that the injury that will result without expedited discovery looms greater than the injury that the defendant will suffer if the expedited relief is granted." Notaro, 95 F.R.D. at 405. The court reasoned that such stringent standards are appropriate to protect defendants at such an early stage of the litigation. Id. In Gucci America, Inc. v. Daffy's Inc., 2000 WL 1720738, the Court applied the Notaro standard in denying a request for expedited discovery because the request had a substantive element to it. Id. at *6. The Court believed that Gucci intended to use the information sought through discovery to root out certain Gucci distributors improperly selling their handbags or "knock-off" handbags to defendant at discounted prices. Id. at *5-6. The Court also noted ...


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