United States District Court, W.D. Washington, Seattle
TEMPORARY RESTRAINING ORDER TO SHOW CAUSE
RICHARD A. JONES, District Judge.
This matter comes before the court on the ex parte motion of Plaintiff Microsoft Corporation for a temporary restraining order ("TRO"). Dkt. # 2. For the reasons stated herein, the court GRANTS the motion, although it does not award all of the relief Microsoft requests. Part III of this order includes a TRO that will take effect, as to each Defendant, as soon as Microsoft effects service of this order upon that Defendant. Unless the court orders otherwise, that TRO will convert to a preliminary injunction 14 days after Microsoft serves this order, and that conversion will be effective without the necessity of additional service upon any Defendant.
The court orders that each Defendant must, within 14 days of service of this order on that Defendant, show cause why the court should not convert the TRO into a preliminary injunction. Unless Defendant a timely shows cause and the court issues an order terminating the TRO, the TRO will convert to a preliminary injunction 14 days after Microsoft serves this order, and that conversion will be effective without the necessity of additional service upon any Defendant.
II. BACKGROUND & ANALYSIS
The "standard for issuing a temporary restraining order is essentially the same as that for issuing a preliminary injunction." Beaty v. Brewer, No. 11-9907, 2011 U.S.App. LEXIS 11391, at *8 (9th Cir. May 25, 2011). The primary difference is that a court can issue a TRO without notice to the adverse party in certain circumstances. Fed.R.Civ.P. 65(b)(1)(A). Putting aside concerns about notice to the non-moving party, the court may issue a TRO where a party establishes (1) a likelihood of success on the merits, (2) that it is likely to suffer irreparable harm in the absence of preliminary relief, (3) that the balance of hardships tips in its favor, and (4) that the public interest favors an injunction. Winter v. Natural Resources Defense Council, Inc., 555 U.S. 7, 20 (2008). A party can also satisfy the first and third elements of the test by raising serious questions going to the merits of its case and showing that the balance of hardships tips sharply in its favor. Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1134-35 (9th Cir. 2011). In cases where clear irreparable harm would result and there are serious questions going to the merits, a court may issue provisional relief for the purpose of permitting it to consider the merits of the dispute on a reasonable timetable. Id. at 1134. Small v. Avanti Health Sys., LLC, 661 F.3d 1180, 1187 (9th Cir. 2011) (noting that it appears settled that Winter did not "change the requisite showing for any individual factor [in the Ninth Circuit's preliminary injunction analysis] other than irreparable harm").
A. Likelihood of Success on the Merits
The evidence that Microsoft has submitted in support of its motion convinces the court that it is highly likely to prove that Defendants are engaging in a conspiracy to resell Microsoft's software in violation of the Copyright Act and the Lanham Act. The Defendants are three Canadian residents (Mark Valentine, Cody Jery Allan Altizer, and Robert Romero), one Canadian Corporation (Premier Selling Technologies, Inc., or "PST"), and a host of alter egos. Their conspiracy, reduced to its essence, is as follows:
1) Since April 2014, PST has been registered as a Microsoft authorized education reseller. That registration allows it to sell Microsoft software products to educational users at reduced prices.
2) PST, acting through Defendants, has created fictitious sales to fictitious educational users, thereby obtaining many "product keys" from Microsoft. A product key is a lengthy code that allows a person using it to download software from Microsoft over the internet.
3) Using a network of websites (including premiersellingtechnologies.org, amazingtechdeals.net, softwaresupplysource.com, and advantageittech.com), Defendants advertise Microsoft software at "wholesale discounts." When a customer purchases this "discounted" software, Defendants supply the customer with a product key it obtained as described above. Defendants pocket the profits.
4) Defendants have none of the indicia of a legitimate business enterprise. The business address in Toronto that PST provided to Microsoft is a vacant building. Microsoft has been unable to locate PST anywhere. The websites that Defendants use to sell Microsoft's products are registered to fictitious entities or via services that obscure the identity of the person or entity operating the website.
PST has created more than 260 fictitious educational sales agreements. The product keys Defendants have obtained as a result of those fictitious sales have been used on at least 20, 000 devices in about 60 countries to download Microsoft software. Microsoft estimates that it has lost almost $8 million in sales revenue as a result.
Microsoft has demonstrated that it has registered copyrights for the software Defendants have illegally sold, and the Microsoft trademarks that Defendants have used in ...