## Facts

- Ty, Inc. sold small, plush, pellet-filled collectible animal toys under the federally registered marks “Beanie Babies” and “The Beanie Babies Collection,” achieving widespread recognition and significant sales.
- The toys shared common features: approximately 8–9 inches long, velboa-type fabric, and a distinctive Ty hang tag.
- The Jones Group, Inc., a NASCAR licensee, began selling “Beanie Racers” in 1998: plush, pellet-filled replicas of NASCAR race cars of similar size and material, marketed with NASCAR-related branding and a separate hang tag.
- Ty sent Jones a cease-and-desist letter asserting that “Beanie Racers” infringed Ty’s trademark rights; Jones continued using the mark.
- Ty sued for trademark infringement, unfair competition, and dilution under federal and state law.
- A magistrate judge in the Northern District of Illinois granted Ty a preliminary injunction barring Jones from selling plush toys under “Beanie Racers” during the litigation and required Ty to post a substantial bond.
- Jones appealed the grant and scope of the preliminary injunction.

## Issues

1. Whether Ty showed a sufficient likelihood of success on the merits for preliminary relief, including protectable rights in “Beanie” and a likelihood of confusion between “Beanie Babies” and “Beanie Racers.”
2. Whether the district court properly applied the Seventh Circuit preliminary-injunction framework, including irreparable harm, inadequacy of legal remedies, and the balance of harms.
3. Whether the injunction’s restriction on Jones’s use of “Beanie” was overbroad.

## Decision

- The Seventh Circuit affirmed the preliminary injunction.
- The court held the district court did not abuse its discretion in finding Ty had a better-than-negligible chance of success on its trademark claims.
- The court upheld findings supporting likely consumer confusion based on similarity of the marks and products and Jones’s awareness of Ty’s mark.
- The court agreed Ty lacked an adequate remedy at law and would suffer irreparable harm absent an injunction.
- The court held the balance of harms and public interest supported interim relief, particularly in light of the bond.
- The court rejected the overbreadth challenge, concluding the injunction appropriately targeted use of “Beanie Racers” for plush toys pending adjudication.

## Legal Principles

- In the Seventh Circuit, a party seeking a preliminary injunction must show some likelihood of success on the merits, no adequate remedy at law, and irreparable harm; the court then balances harms on a sliding scale and considers the public interest.
- At the preliminary-injunction stage in trademark cases, the plaintiff need only show a “better than negligible” chance of success on the merits to proceed to balancing.
- Likelihood of confusion is assessed using multiple factors, including similarity of the marks, similarity of products, concurrent use, consumer care, strength of the mark, actual confusion, and defendant’s intent.
- Strong marketplace recognition and goodwill can support protection of a component term within a composite mark when evidence suggests consumers associate the term with a single source in context.
- Where likelihood of confusion is shown, harm to reputation and loss of control over goodwill may constitute irreparable injury not readily compensable by damages, supporting injunctive relief.
- A bond may mitigate potential wrongful-injunction harm to the enjoined party and may support the equities favoring interim relief.

## Conclusion

The Seventh Circuit upheld preliminary injunctive relief preventing Jones from marketing plush toys as “Beanie Racers,” concluding that Ty showed a better-than-negligible chance of proving likely confusion and irreparable harm, and that the district court reasonably balanced the equities while protecting Jones through a substantial bond.


Ty, Inc. v. Jones Grp., Inc., 237 F.3d 891 (7th Cir. 2001)