3M secures restraining order in face mask price-gouging suit
3M has convinced a US judge to grant a restraining order against a New Jersey company it has accused of infringing the 3M trademarks by reselling N95 masks at “grossly inflated” prices amid the COVID-19 pandemic.
On Friday, April 24, District Judge Loretta Preska of the US District Court for the Southern District of New York granted the restraining order against Performance Supply, and ordered the company to explain why a longer-term injunction shouldn’t be issued.
3M sued Performance Supply on April 10, accusing the New Jersey company of using the 3M trademarks and other tactics to convince buyers to purchase the masks.
“The demand for 3M-branded respirators has grown exponentially in response to the pandemic, and 3M has been committed to seeking to meet this demand while keeping its respirators priced fairly. 3M has not increased the prices that it charges for 3M respirators as a result of the COVID-19 outbreak,” said the multinational’s lawsuit.
Performance Supply allegedly sent a formal quote to New York City’s office of citywide procurement, offering to sell millions of 3M-brand N95 respirator masks at a grossly inflated aggregate price of approximately $45 million, 500%-600% above 3M’s list price.
To deceive New York officials into believing that it was an authorised distributor, Performance Supply reproduced the 3M marks throughout the quote, attached technical specification sheets that prominently featured the trademarks and referred to 3M’s headquarters, according to the claim.
3M claimed that the price-gouging further strains the limited resources available to combat COVID-19, and that such conduct “justifiably has caused public outrage”, causing imminent and irreparable harm to 3M’s brand.
The suit added: “Unfortunately, any number of wrongdoers seek to exploit the current public health emergency and prey on innocent parties through a variety of scams involving 3M N95 respirators and other products in high demand.”
Last week, 3M filed an emergency motion, asking the court to put in place an emergency restraining order and a preliminary injunction.
In the motion, 3M claimed: “What is more, no amount of money could repair the damage to 3M’s brand and reputation if it is associated with deviating from its superior quality standards or the crime of price-gouging at the expense of healthcare workers and other first responders during COVID-19.”
Just hours later, Preska granted the motion in its entirety. In addition to ordering Performance Supply to explain by April 30 why a longer-term injunction shouldn’t be issued, Preska ordered the company to appear in court on May 4.
3M’s pandemic response
In response to the COVID- 19 outbreak and surge in need for N95 respirators, 3M has doubled its global output rate to nearly 100 million respirators per month. It expects to produce around 50 million respirators per month in the US by June 2020.
As part of its anti-counterfeiting efforts, the company is working with law enforcement authorities around the world, including the US attorney general, state attorneys general and local authorities. It has also created a “3M COVID-19 Fraud hotline” for the US and Canada that end-users and purchasers can call for information to help detect fraud and avoid counterfeit products.
Courtney Enloe, 3M vice president and associate general counsel, litigation, praised the "excellent work" by the company's legal counsel, Mayer Brown, and said she hoped the temporary relief would become permanent.
“3M will continue to take direct legal action where appropriate, while supporting federal and state government authorities as they work to prevent price gouging and other improper business practices related to COVID-19,” she added.
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