U.G.A. Nutraceuticals, S.r.l. v. McMahon

Filing 15

ORDER Denying 9 Motion for Preliminary Injunction. Signed by Judge Cathy Ann Bencivengo on 4/28/2017. (jjg)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 U.G.A. NUTRACEUTICALS, S.r.l., Case No.: 17-CV-427-CAB-MDD Plaintiff, 12 13 v. ORDER DENYING MOTION FOR PRELIMINARY INJUNCTION 14 DAVID MCMAHON d/b/a SOLANA HEALTH, [Doc. No. 9] 15 Defendant. 16 17 18 19 20 This matter is before the Court on a motion for preliminary injunction filed by 21 Plaintiff U.G.A. Nutraceuticals, S.r.l. (“U.G.A.”). The motion has been fully briefed, and 22 the Court deems it suitable for submission without oral argument. For the following 23 reasons, the motion is denied. 24 I. Background 25 U.G.A. markets and sells a fish oil product called “Omegor Vitality.” In 2010, 26 U.G.A. hired Defendant David McMahon d/b/a Solana Health (“McMahon”) to be its 27 exclusive United States distributor of Omegor Vitality. Pursuant to this distribution 28 agreement, U.G.A. would manufacture Omegor Vitality in gel capsules contained in foil 1 17-CV-427-CAB-MDD 1 blister packs, and then export the foil blister packs to McMahon. McMahon would use 2 artwork provided by U.G.A. to print the outer box packaging and then place the foil blister 3 packs received from U.G.A. into the box for marketing and resale. The outer box 4 packaging identified the product as Omegor Vitality manufactured by U.G.A. 5 At some point, McMahon began marketing his own fish oil supplement called 6 Omega TG-3. According to U.G.A., McMahon infringed the Omegor Vitality trademark 7 by placing foil-blister packs with Omega TG-3 into Omegor Vitality boxes and selling 8 them. 9 infringement under the Lanham Act, 15 U.S.C. § 1125(a); (2) false advertising under the 10 Lanham Act; (3) false advertising under California Business and Professions Code §17500; 11 and (4) unfair competition under California Business and Professions Code §17200. The complaint, filed on March 3, 2017, asserts four claims: (1) trademark 12 On March 29, 2017, U.G.A. filed the instant motion for a preliminary injunction. 13 Although U.G.A. argues that the alleged infringement is on-going, U.G.A.’s motion papers 14 contain little additional evidence of the extent or timing of the infringement alleged in the 15 complaint. However, U.G.A.’s chairman, Gentian Selimi, submitted declarations that on 16 January 26, 2017, he ordered Omegor Vitality from a third party retailer’s website that sold 17 products obtained from McMahon, and that when he received the product, it contained 18 Omegor TG-3 foil blister packs. Selimi’s declarations also state, without any documentary 19 support, that McMahon “shows images on his website of Omegor Vitality outer 20 packaging,” and that after filing this lawsuit, McMahon “is in fact still purporting to sell 21 Plaintiff’s OMEGOR VITALITY product.” [Doc. No. 9-2 at ¶¶ 11, 30.] 22 In his response to the motion and his answer to the complaint, McMahon does not 23 dispute that in 2016 he sold some boxes with the Omegor Vitality label on the outside and 24 Omega TG-3 fish oil pills in foil blister packs inside, but asserts that he did so mistakenly. 25 He submitted a declaration that his last shipment with these mislabeled boxes was made on 26 August 16, 2016, to the third party retailer from whom Mr. Selimi had purchased 27 mislabeled pack. He also states that this mistake stopped happening and could not happen 28 again because in September 2016 Omega TG-3 stopped being packaged in foil blister packs 2 17-CV-427-CAB-MDD 1 and has been sold only in bottles since then. He also states that this customer had the only 2 listing he could find trying to sell the misbranded packages and that the customer removed 3 the listing on March 19, 2017 and returned the four remaining boxes on March 20, 2017. 4 McMahon’s declaration also states that the only presence of the Omegor name on 5 websites with which he is affiliated is a legacy website that has not been edited or managed 6 since 2013 and has had zero traffic since then. He also said that there were no public 7 listings for Omegor products on his current sales website, but admitted that he discovered 8 that using the search function on the site, a customer could access “private” pages with old 9 product listings. However, no customer has made an order using those private pages and 10 McMahon would be unable to fill such an order anyway because he does not carry fish oil 11 in the packaging described on those pages. He declared that he was unaware that these old 12 product listings were able to be found by the public and deleted them on March 18, 2017. 13 Finally, McMahon’s declaration states: “I have not, I do not, and will not in the 14 future, intentionally sell or advertise fish oil capsules as PLAINTIFF’s product, Omegor 15 Vitality fish oil capsules.” [Doc. No. 13-1 at ¶ 16.] 16 II. 17 “A preliminary injunction is an extraordinary remedy never awarded as of right. Analysis “A preliminary 18 Winter v. Natural Res. Def. Council, Inc., 555 U.S. 9, 24 (2008). 19 injunction, of course, is not a preliminary adjudication on the merits but rather a device for 20 preserving the status quo and preventing the irreparable loss of rights before judgment.” 21 Sierra On-Line, Inc. v. Phoenix Software, Inc., 739 F.2d 1415, 1422 (9th Cir. 1984). Thus, 22 injunctive relief may only be granted upon a showing of “irreparable injury and the 23 inadequacy of legal remedies.” Weinberger v. Romero-Barcelo, 456 U.S. 305, 312 (1982); 24 Stanley v. Univ. of So. Calif., 13 F.3d 1313, 1320 (9th Cir. 1994). For party to prevail on 25 a motion for preliminary injunction, therefore, it must demonstrate that: “(1) it is likely to 26 succeed on the merits of its claim, (2) it is likely to suffer irreparable harm in the absence 27 of preliminary relief, (3) the balance of hardships tips in its favor, and (4) a preliminary 28 3 17-CV-427-CAB-MDD 1 injunction is in the public interest.” Int’l Franchise Ass’n, Inc. v. City of Seattle, 803 F.3d 2 389, 399 (9th Cir. 2015) (citing Winter, 555 U.S. at 20). 3 The only real dispute here concerns the second requirement: whether U.G.A. is 4 likely to suffer irreparable harm in the absence of a preliminary injunction. McMahon 5 argues that there is no such possibility because the alleged infringement was the result of a 6 mistake that stopped in mid-2016. U.G.A. argues that McMahon’s voluntary cessation is 7 inadequate because he could begin infringing again. Based on the record, the Court is not 8 persuaded that there is any reasonable likelihood of future infringement, so an injunction 9 is not warranted. 10 U.G.A. relies on cases finding that voluntary cessation does not moot a preliminary 11 injunction, but these cases are distinguishable. Federal Trade Commission v. Affordable 12 Media, 179 F.3d 1228 (9th Cir. 1999), involved the FTC’s efforts to recover money the 13 defendants bilked out of investors in a Ponzi scheme and then hid in a Cook Islands trust 14 expressly to place the assets beyond the jurisdiction of United States Courts. 15 preliminary injunction issued by the district court required the defendants to repatriate 16 these assets. The defendants argued that their cessation of the Ponzi scheme mooted the 17 need for injunctive relief. 18 cessation of sales has no bearing on the need to repatriate the assets they have secreted off 19 to the Cook Islands.” Id. at 1237. Sierra On-Line, Inc., 739 F.2d 1415, meanwhile 20 involved the use of disputed term, which the defendant easily could have resumed at any 21 time. The The Ninth Circuit, however, noted that “the Andersons’ 22 Here, unlike these other cases, Defendant did not cease the alleged infringing 23 behavior because he was caught or in response to the lawsuit. Rather, the last mislabeled 24 package, which is the only basis for U.G.A.’s claims, was sold by McMahon in August 25 2016, more than six months before the lawsuit was filed. Although the consequences of 26 the infringement may have been ongoing through the filing of this lawsuit because the 27 mislabeled packages were still available for purchase from third parties, there is no 28 evidence that McMahon had continued to engage in the allegedly infringing behavior. 4 17-CV-427-CAB-MDD 1 A preliminary injunction is meant to preserve the status quo. The status quo at the 2 time this litigation was filed is that McMahon was not selling Omegor Vitality fish oil or 3 selling Omega TG-3 fish oil in Omegor Vitality packaging. 4 McMahon’s declaration, which is not contradicted by any evidence from U.G.A., this had 5 been the status quo for several months.1 Further, the evidence indicates that McMahon 6 could not alter this status quo by resuming the specific infringement alleged in the 7 complaint because Omega TG-3 is not packaged in foil blister packs anymore. 8 Accordingly, because the facts before the Court indicate that “subsequent events [have] 9 made it absolutely clear that the allegedly wrongful behavior cannot reasonably be 10 expected to recur.” Affordable Media, 179 F.3d at 1238 (quoting Norman–Bloodsaw v. 11 Lawrence Berkeley Laboratory, 135 F.3d 1260, 1274 (9th Cir.1998)). Moreover, based on 12 III. 13 In light of McMahon’s: (1) acknowledgment that he did sell Omega TG-3 in Omegor 14 Vitality boxes as alleged in the complaint; (2) representation that the alleged infringing 15 activity was the result of a mistake and that his last sales of the mislabeled products 16 occurred more than six months before the complaint was filed; and (3) declaration that he 17 cannot and will not engage in the same acts of infringement in the future, none of which 18 are contradicted by any evidence from U.G.A., a preliminary injunction is not currently 19 necessary to preserve the status quo or to protect U.G.A. from future irreparable harm. 20 Accordingly, U.G.A.’s motion is DENIED WITHOUT PREJUDICE. 21 discovers any evidence that McMahon has continued to sell Omega TG-3 in Omegor 22 Vitality packaging, it may renew its motion for a preliminary injunction. If McMahon has Conclusion If U.G.A. 23 24 25 26 27 28 1 The unsupported website allegations in the Selimi Declaration are of little consequence to the instant motion. The only alleged infringement at issue in this lawsuit is the selling of Omega TG-3 fish oil blister packs in Omegor Vitality boxes. Whether the Omegor trademark appeared on any websites affiliated with McMahon is irrelevant to U.G.A.’s claims. There is no claim that McMahon is selling Omegor Vitality products without authorization. Nor is there any evidence that any of these webpages were openly available to the public and would allow for the purchase of any Omega TG-3 fish oil blister packs in Omegor Vitality boxes. 5 17-CV-427-CAB-MDD 1 misled the Court in connection with his opposition to the instant motion, he will be subject 2 to sanctions in addition to an injunction. 3 4 It is SO ORDERED. Dated: April 28, 2017 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6 17-CV-427-CAB-MDD

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