A SAD scheme (where SAD stands for Schedule "A" Defendant) is a form of intellectual property enforcement in the United States. SAD schemes often target online merchants outside the U.S., particularly those in China.[1][2][3] This scheme, frequently used by trademark owners, involves intellectual property rightsowners filing a lawsuit against multiple online merchants using a sealed complaint that does not publicly identify the defendants. The rightsowners then seek an ex-partetemporary restraining order (TRO) directing the online marketplaces to freeze the defendants' accounts and funds.[4][5][6] This entire process occurs without the defendants’ knowledge, denying them the opportunity to present their side of the story. The marketplace account freeze often pressures defendants into settling with the rightsowner quickly, rather than engaging in an expensive legal battle.[7]
A SAD scheme provides rightsowners with a low-cost option to mass-enforce their intellectual property against large groups of online merchants, particularly those outside the U.S.[4][8] However, this tactic is controversial, as it is highly error-prone[4] and can have significant and long-term adverse consequences for innocent merchants.[7] Moreover, it exploits gaps in the legal system's efforts to ensure due process, raising questions about its fairness and effectiveness.[4][9]
^Burstein, Sarah (January 28, 2024). "The Counterfeit Sham". Harvard Law Review. 138. Archived from the original on 18 March 2024. Retrieved 18 March 2024.