Alibaba’s Trademark Win: Cryptocurrency Case Update

Alibaba Prevails in Trademark Case Against Alibabacoin

On Monday, October 22nd, U.S. Locale Judge J. Paul Oetken of the Southern Area of New York entered a feeling and request in a trademark case brought by Chinese web-based business giant Alibaba against a group of companies operating in Dubai and Belarus involved in marketing a cryptocurrency known as AlibabaCoin.

Court’s Ruling

Judge Oetken’s order granted Alibaba’s motion, prohibiting the defendants from using Alibaba’s protected marks in the U.S., including in association with goods and services provided over the Web to U.S. consumers. Another motion filed by Alibaba to compel documents from the defendants was denied as debatable.

Background of the Case

Alibaba initially filed this trademark suit against Alibabacoin Establishment and other defendants in April, alleging that the respondents published materials promoting their cryptocurrency product that impermissibly used Alibaba’s trademarks. Alibaba argued that such use was intended to associate AlibabaCoin with Alibaba in the minds of consumers.

Despite the court initially entering a temporary restraining order barring the defendants’ use of the Alibaba marks, Judge Oetken entered an order denying Alibaba’s motion for a preliminary injunction on April 30th of this year because the court lacked personal jurisdiction over the defendants in the case.

Personal Jurisdiction Issues

In arguing for the injunction, Alibaba contended that the Southern New York federal court had specific personal jurisdiction under N.Y. C.P.L.R. § 302(a)(1) because Alibabacoin operated a highly interactive website accessible to New York residents and contracted with a New York City-based company to host a wallet site.

Judge Oetken ruled that Alibaba failed to establish a reasonable likelihood that the websites were actually used to conduct transactions with New York customers. Moreover, the court found that Alibabacoin’s contract with the NYC-based third-party web-hosting company did not create an articulable nexus for a trademark infringement claim.

Discovery and New Evidence

During discovery, Alibabacoin produced a list of email addresses associated with individuals who have invested in the company’s cryptocurrency. An analysis revealed that at least one email address belonged to “a person who overwhelmingly appears to be a New York resident” involved in three Alibabacoin transactions. The court deemed this new evidence as mitigating the flaw in Alibaba’s specific personal jurisdiction argument.

Legal Arguments and Conclusion

Alibabacoin argued that the transactions did not occur in the U.S. but consisted of changes in record entries made in Belarus’ capital city of Minsk. The court dismissed this argument, emphasizing the location where the buyer initiates the transaction.

In conclusion, Alibaba demonstrated a reasonable likelihood of success on the merits, leading to the issuance of a preliminary injunction. The court found that Alibaba’s registered trademark, protecting exclusive use of the term “Alibaba” in relation to “computer software for use in exchanging information via global computer networks and online from a computer database and the internet,” was likely to cause confusion as the defendants used that term in their online business activities.