SAD Scheme Copyright Plaintiff Must Compensate Defendants–Shenzhen Langmi v. Schedule A Defendants

Shenzhen Langmi Technology is a Chinese-based vendor of cosmetics and hair products. It claims that the defendants used its copyrights as part of their products. Initially, it sued 36 defendants, but eventually it reduced that to just eight defendants. The plaintiff got a TRO and posted a $10k bond.

However, the defendants challenged the copyright registrations, saying they incorporated third-party works. The plaintiff claimed it had the copyright owner’s permission to include those images in its works [though I didn’t see any indication that it was an exclusive license required to enforce them…? this was unclear], but the defendants claimed that the plaintiff’s evidence and timeline didn’t cohere. The court initially sided with the plaintiff, but the plaintiff later voluntarily dismissed the case entirely.

The defendants sought damages out of the bond supporting the TRO. The court says “Langmi does not dispute that Defendants were wrongfully enjoined or restrained, nor does it identify any reasons for requiring Langmi not to pay in this case,” which seems pretty dispositive.

Nevertheless, the court becomes a stickler about the defendants’ arguments on various procedural grounds, so the judge makes a series of judgment calls against the defendant and concludes that the plaintiff did not litigate in bad faith. As a result, the court limits the defendants to the $10k bond–even though the defendants showed $47k of lost profits while the TRO was in effect. Raising more procedural objections, the court also rejected the defendants’ requests for attorneys’ fees due to the plaintiff’s litigation misconduct. I imagine the defendants could request a 505 attorneys’ fee shift, but I’m skeptical this judge would grant that either given its discretionary nature.

This case highlights some common aspects of SAD Scheme cases:

• Although the SAD Scheme is pitched as a tool against Chinese defendants, increasingly we are seeing Chinese plaintiffs embrace the SAD Scheme. I guess the Chinese are learning all of the wrong lessons about how the US legal system works.
• This court set too low a bond. I’m not aware of scientific guidance about how courts should set appropriate bond levels, so this could be an area that would benefit from more academic rigor. But because the court didn’t properly structure the bond initially, it left the defendants with uncompensated damages.
• SAD Scheme plaintiffs often back down when defendants fight back. The plaintiff dropped from 36 to 8 defendants, and then, when challenged further, the plaintiff dropped the case entirely. This plaintiff pliability is often a sign that the plaintiff assumed they would get away with doing inadequate homework (as this defendant did, getting the TRO initially) because judges won’t spot all of the holes in the plaintiffs’ cases.
• Judges all too often hold defendants to stricter procedural standards than they hold plaintiffs. It seems like SAD Scheme plaintiffs can say whatever they want to get a TRO and some judges shrug their shoulders about the multitudinous corner-cutting along the way. But when defendants ask a judge to hold the SAD Scheme plaintiff accountable, all of the sudden the rule of law barrier reappers and judges repeatedly make all inferences against the defendants.

All told, the plaintiff got a TRO it almost certainly didn’t deserve, caused tens of thousands of dollars of damages to the defendants, and is only liable for paying out of its inadequate bond. Grr.

Case Citation: Shenzhen Langmi Technology Co., Ltd. v. Schedule A Defendants, 2026 WL 569072 (N.D. Ill. Feb. 26, 2026)

BONUS: In a non-precedential opinion, the Seventh Circuit rejects SAD Scheme personal jurisdiction merely based on the defendant’s product being available in Illinois, without the plaintiff doing a test buy or providing other evidence of the defendant’s sales in Illinois:

In the context of Schedule A litigation, the defendant’s operation of an online store accessible in the forum state, combined with sales in the forum state, has been found sufficient to subject that defendant to personal jurisdiction….

there’s no evidence in the record of Illinois purchases. The evidence upon which the district court relied shows only that it was possible to order the defendants’ products and have them shipped to Illinois, not that such sales took place. Those records consist of screenshots of Walmart’s website showing the checkout page with the infringing product, a Chicago shipping address, and the estimated total, but not a completed purchase….

Therefore, the district court clearly erred in finding that the defendants sold products to Illinois customers. Nor was that error harmless. Without those sales, the court’s basis for personal jurisdiction is merely that the defendants operated a website accessible in the United States. And, as we explained in Curry, more is required to establish personal jurisdiction

Liu v. Monthly, No. 25-2074 (7th Cir. March 9, 2026)