by Traverse Legal, reviewed by Enrico Schaefer - July 9, 2026 - Business Law, Copyright Infringement on the Internet, Trademark Infringement
If a marketplace or payment processor froze your account and funds with little or no explanation, and you have since found a court order or a law firm’s name attached to it, you are likely a defendant in a Schedule A trademark case. This guide explains what that means, what your real exposure is, and what to do now.
A Schedule A lawsuit is a trademark or design-patent case in which one rights holder sues many online sellers at once, listing the sellers on a sealed exhibit called “Schedule A” instead of naming them in the public complaint. The plaintiff asks the court, before any seller is notified, to freeze the sellers’ marketplace accounts and payment-processor funds. Sellers usually learn about the case only after the money is already frozen.
Academics call this the “SAD Scheme,” short for Schedule A Defendants. The model is built for volume: one filing can name dozens or hundreds of sellers, most of them overseas, and it is designed to produce fast settlements and default judgments rather than trials.
Because the plaintiff obtained an ex parte temporary restraining order (TRO). “Ex parte” means the court entered it after hearing only from the plaintiff, without notice to you. A typical Schedule A TRO directs marketplaces such as Amazon, eBay, Etsy, Walmart, Temu, and AliExpress, and processors such as PayPal and Stripe, to freeze the seller’s account and hold the funds in place.
The freeze is meant to preserve money the plaintiff might recover later. The problem is that these freezes are routinely far larger than any sale of the accused product could justify. Courts have frozen entire account balances, sometimes hundreds of thousands or millions of dollars, over a handful of sales or even a single unit. That disproportion is not just unfair; it is a legal weakness in the plaintiff’s position, and it is one of the strongest levers a seller has.
This is where the fear starts, because the numbers in the complaint are enormous. Under the Lanham Act, 15 U.S.C. § 1117(c), a trademark owner can elect “statutory damages” instead of proving actual losses. The ranges are:
Plaintiffs almost always plead willfulness and wave the $2,000,000 figure, because it makes a frozen account look like a bargain by comparison. But that ceiling is a maximum tied to willful conduct, not an automatic award, and courts increasingly refuse to rubber-stamp it.
The gap between the demand and reality can be large. In Shenzhen Huajie Technology Co. v. Shenzhen Leyibei Technology Co. (7th Cir. 2026), the plaintiff asked for $2,000,000 in statutory damages plus $100,000 for cybersquatting. The trial court awarded the $1,000 statutory minimum on each claim, and the Seventh Circuit affirmed even though the appeal was unopposed, holding that a plaintiff “must support a request for damages with evidence and argument” and that entry of default does not end the inquiry. In Dyson Technology Ltd. v. David 7 Store (7th Cir. 2025), the trial court likewise awarded $1,000 per defaulting seller against a much larger demand. And in a 2025 Northern District of Illinois case, a court cut a $100,000-per-defendant request to $1,000, holding that statutory damages “must bear relation to actual damages.”
None of this means awards are always small. Sellers who ignore the case and default can face judgments of $25,000, $150,000, or the full $2,000,000, particularly where the plaintiff puts on evidence and the seller says nothing. The point is narrower and more useful: the headline number is a negotiating anchor, not a prediction, and a seller who shows up with facts changes the math.
The difference between a $200,000 ceiling and a $2,000,000 ceiling is willfulness. On a default, courts usually treat willfulness as admitted, which is one more reason not to default. When a seller participates, the facts that cut against willfulness matter:
Voluntary removal before notice is a genuinely strong fact. A seller who pulled the product during an ordinary catalog review, before the lawsuit ever surfaced, does not look like the deliberate counterfeiter the statute was written to punish. If that describes you, preserve the proof: dated screenshots, store change logs, internal correspondence, anything timestamped.
A frozen account is the plaintiff’s main source of leverage, so narrowing it is often the fastest route to relief. The legal footing here favors sellers more than most realize.
Under the Supreme Court’s decision in Grupo Mexicano de Desarrollo, S.A. v. Alliance Bond Fund, Inc., 527 U.S. 308 (1999), a federal court generally cannot freeze a defendant’s assets just to secure a possible future money judgment. A freeze in a trademark case can be justified to preserve an equitable accounting of the infringer’s profits, but if so, it should be limited to the profits attributable to the accused sales, not the seller’s entire balance.
Courts have acted on this. In Klipsch Group, Inc. v. Big Box Store Ltd., a roughly $2 million freeze was reduced to no more than about $20,000 once the seller showed its relevant sales were under $10,000. In 2025, a Middle District of Tennessee court cut a freeze from more than $4 million to just under $900,000. Many Schedule A TROs contain their own release valve: language providing that if a seller shows the restrained funds are not attributable to sales of the accused product, the court will modify the restraint. That sentence is a built-in path to argue the freeze down to something proportionate, and it is also settlement leverage, because a plaintiff would usually rather release excess funds in a deal than litigate a modification motion it may lose.
Often the jurisdiction and service are weaker than the plaintiff’s confident filing suggests, especially for sellers based in China, Hong Kong, or the EU.
Personal jurisdiction. Plaintiffs argue that any interactive store shipping into the forum state has “targeted” it. Some courts agree that even a single test purchase supports jurisdiction; others require more. There is a real split among the federal circuits, and courts are increasingly demanding a defendant-specific showing rather than accepting boilerplate that lumps every seller together.
Service by email. Schedule A plaintiffs routinely serve foreign sellers by email and web publication. In Smart Study Co. v. Shenzhenshixindajixieyouxiangongsi (2d Cir. 2025), the Second Circuit held that the Hague Service Convention is the exclusive method of service where it applies, that China’s objection to Article 10 forecloses email service, and that a court cannot authorize email service on a China-based defendant whose physical address is known. The same question is on appeal in other circuits now. For a foreign seller with a known address served only by email, this is a live defense.
These arguments generally require appearing in the case to raise them formally, which is a larger commitment. But their existence makes continued litigation costly and uncertain for the plaintiff, which is exactly why they carry weight in settlement.
Judges have started pushing back hard on the Schedule A model. In Eicher Motors Ltd. v. Schedule A Defendants (N.D. Ill. 2025), the court concluded that the Schedule A mechanism “should no longer be perpetuated in its present form,” criticizing the routine grant of injunctive relief without adversarial testing, the wholesale sealing of court records, the freezing of assets before any judgment, and the mass joinder of unrelated defendants. Other judges have rejected the “acting in concert” theory used to justify suing hundreds of sellers together, have questioned jurisdiction, and have sanctioned plaintiffs for overreach.
This does not mean the cases are going away. Many judges still grant this relief routinely, and plaintiffs are simply migrating to more receptive courts. But the trend gives a represented seller more to work with than at any point since these cases began.
Traverse, Attorneys and Advisors represents online sellers, not brand-enforcement plaintiffs, in Schedule A trademark and counterfeiting actions. We have handled these matters for foreign and domestic e-commerce sellers across the major marketplaces and payment platforms, and we work them the way the economics demand: settlement-first, proportionate to the actual sales at issue, and structured to get frozen funds released and the claims dismissed without the cost of full-blown litigation wherever that path is open.
To give one representative example, stated generally to protect client confidentiality: we recently represented a foreign e-commerce seller whose shared payment-processor account was frozen for roughly a quarter of a million dollars under a Schedule A TRO. We appeared as settlement counsel only, without filing a formal court appearance, negotiated a resolution built on the seller’s limited U.S. sales and its voluntary removal of the product, and obtained release of the frozen funds. It was the second Schedule A matter we resolved for that client on the same model.
If your marketplace or payment account has been frozen, or you have been named in a Schedule A case, the most valuable thing you can do is talk to counsel who defends sellers in these matters before the response deadline runs or the freeze hardens into a preliminary injunction.
Enrico Schaefer
Traverse, Attorneys and Advisors
enrico.schaefer@traverselegal.com
www.traverselegal.com
This article is general information about a developing area of law, not legal advice, and does not create an attorney-client relationship. Outcomes in Schedule A cases are highly specific to the facts, the marks, the sales at issue, and the judge assigned. Nothing here is a promise or prediction about the result in any particular matter.
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As a founding partner of Traverse Legal, PLC, he has more than thirty years of experience as an attorney for both established companies and emerging start-ups. His extensive experience includes navigating technology law matters and complex litigation throughout the United States.
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This page has been written, edited, and reviewed by a team of legal writers following our comprehensive editorial guidelines. This page was approved by attorney Enrico Schaefer, who has more than 20 years of legal experience as a practicing Business, IP, and Technology Law litigation attorney.
