Health Science Distributors, Co. v. Usher-Sparks et al

Filing 92

ORDER denying 87 Motion to dismiss. Signed by Judge Gregory A. Presnell on 1/10/2012. (NWH)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
ORLANDO DIVISION
HEALTH SCIENCE DISTRIBUTORS,
CO.,

-vs-

Case No. 6:10-cv-1797-Orl-31KRS

ROBERT USHER-SPARKS; TREVOR
TAYLOR; WELLSPRINGS TRADING,
LTD; WELLSPRINGS LTD; and SARATI
INTERNATIONAL, INC.,
Defendants.
______________________________________

ORDER
This cause comes before the Court on a motion to dismiss (Doc. 87) filed by Defendant Sarati
International, Inc. (“Sarati”); and the response (Doc. 89) filed by Plaintiff Health Science Distributors,
Co. (“Health Science”).
I. Background
The following facts are alleged in the Second Amended Complaint and are taken as true for
the purpose of ruling on the motion to dismiss. Health Science manufactures, distributes, and sells
“progesterone creme products” under the trademark “Serenity.” From 1996 to 2007, Defendant
Wellsprings Ltd. (“Wellsprings”) was the authorized distributor of Serenity products in the United
Kingdom. When the business relationship ended in March 2007 however, Wellsprings continued to
sell products with the Serenity label without the knowledge or consent of Health Science. Wellsprings
engaged the services of Sarati to “manufacture, distribute, promote, offer for sale and sell”

progesterone cream bearing the Serenity mark. Defendant Sarati is a “private label manufacturer” that
was contracted by Health Science in the past to manufacture the Serenity product. Accordingly, at the
time it began producing “Serenity” labeled products for Wellsprings, it was aware that Heath Science
in fact owned the trademark.
Plaintiff filed suit on December 2, 2010 asserting claims of (1) trademark infringement under
15 U.S.C. § 1125(a); (2) infringement of a registered Florida trademark under Fla. Stat. §495.131; (3)
common law unfair competition; and (4) cybersquatting in violtion of 15 U.S.C. § 1125(d). Sarati now
moves to dismiss each claim pursuant to FED. R. CIV. P. 12(b)(6).
II. Standard
In ruling on a motion to dismiss, the Court must view the complaint in the light most favorable
to the Plaintiff, see, e.g., Jackson v. Okaloosa County, Fla., 21 F.3d 1531, 1534 (11th Cir. 1994), and
must limit its consideration to the pleadings and any exhibits attached thereto. FED. R. CIV. P. 10(c);
see also GSW, Inc. v. Long County, Ga., 999 F.2d 1508, 1510 (11th Cir. 1993). The Court will
liberally construe the complaint’s allegations in the Plaintiff’s favor. Jenkins v. McKeithen, 395 U.S.
411,421 (1969). However, “conclusory allegations, unwarranted factual deductions or legal
conclusions masquerading as facts will not prevent dismissal.” Davila v. Delta Air Lines, Inc., 326
F.3d 1183, 1185 (11th Cir. 2003).
In reviewing a complaint on a motion to dismiss under Federal Rule of Civil Procedure
12(b)(6), “courts must be mindful that the Federal Rules require only that the complaint contain ‘a
short and plain statement of the claim showing that the pleader is entitled to relief.’ ” U.S. v. Baxter
Intern., Inc., 345 F.3d 866, 880 (11th Cir. 2003) (citing FED. R. CIV. P. 8(a)). This is a liberal pleading
requirement, one that does not require a plaintiff to plead with particularity every element of a cause
-2-

of action. Roe v. Aware Woman Ctr.for Choice, Inc., 253 F.3d 678, 683 (11th Cir. 2001). However,
a plaintiff’s obligation to provide the grounds for his or her entitlement to relief requires more than
labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do. Bell
Atlantic Corp. v. Twombly, 550 U.S. 544, 554-555 (2007). The complaint’s factual allegations “must
be enough to raise a right to relief above the speculative level,” Id. at 555, and cross “the line from
conceivable to plausible.” Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 1950-1951 (2009).
III. Analysis
Sarati moves to dismiss each claim on the basis that it “merely manufactures the progesterone
cream product at issue and applies labels supplied by Wellsprings.” (Doc. 87 at 4).1 This, it argues,
does not constitute ‘use in commerce’ as required to establish each claim for relief.2 Id.
In order for a mark to be “use[d] in commerce” the mark must be “placed in any manner on
the goods or their containers or the displays associated therewith or on the tags or labels affixed
thereto.” See 15 U.S.C. § 1127. If such an unauthorized “use” is shown by the plaintiff, the first prong
of a trademark infringement action has been satisfied. Optimum Techs. Inc. v. Henkel Consumer

1

Sarati appears to misunderstand the purpose of a motion to dismiss. For example, in support
of its assertion that Plaintiff’s claims “are simply not true,” Sarati cites a “declaration” of its president
and attaches the Manufacturing Agreement between it and Wellsprings. (Doc. 87 at 6). Although both
documents are attached to the motion to dismiss, they are not attached or mentioned in the Second
Amended Complaint.
The purpose of a motion to dismiss under Rule 12(b)(6) is not to contest the veracity of a
plaintiff’s claims. See supra, Part II. Further, because the Court must limit its consideration to the
pleadings and any exhibits attached thereto, it declines to consider Sarati’s proffered evidence. FED.
R. CIV. P. 10(c); see also GSW, Inc. v. Long County, Ga., 999 F.2d 1508, 1510 (11th Cir. 1993).
2

Sarati contends that each cause of action asserted in the Second Amended Complaint requires
as an element that a defendant “use” the trademark in question. (See Doc. 87 at 2, n.1) (citing Petmed
Express, Inc. v. Medpets.com, Inc., 336 F. Supp. 2d 1213, 1218 (S.D. Fla. 2004).
-3-

Adhesives, Inc., 496 F.3d 1231 (11th Cir. 2007); see also 15 U.S.C. § 1114(1)(a); Burger King Corp.
v. Mason, 710 F.2d 1480, 1491 (11th Cir. 1983).
In this case, there appears to be no dispute that Sarati actually placed the infringing labels on
the packaging. Sarati appears to argue, based on Optimum, that such ‘use’ should be attributed solely
to Wellsprings because it provided the labels.3 In Optimum, a defendant-distributor was not liable for
the infringement of retailers that incorrectly labeled products. In that case, the plaintiff manufactured
a trademarked “carpet adhesive” product called “Lok-Lift,” which it sold to various home
improvement stores. 496 F.3d 1231 (11th Cir. 2007). Defendant began producing a similar product
and used its influence in the market (combined with its position as plaintiff’s distributor) to replace
Lok-Lift with its own product called “Hold-It.” Id. at 1235-39. As retailers sold out of Lok-lift, they
replaced it with the similar Hold-It–often resulting in Hold-It products being placed on shelves labeled
“Lok-Lift.” The court found that this was sufficient to constitute an “unauthorized use” in commerce
by the retail stores. Id. at 1242. (citing Coca-Cola Co. v. Overland, Inc., 692 F.2d 1250, 1252 (9th
Cir.1982) (stating, where a defendant-restaurant gave store customers Coca-Cola when they asked for
Pepsi, and indicated on store receipts that its customers were getting “Coke” when they were in fact
getting “Pepsi,” that “[t]aken alone, such conduct ... appears to present a clear-cut case of trademark
infringement”)). The “pivotal question” in the eyes of the court however, was whether the
‘misplacement’ of Hold-It products on “Lok-Lift” labeled shelves should be attributed to the
defendant. Id. The court found that defendant was not liable because the labels were printed and
placed on the shelves by the retailers without the knowledge of the defendant.

3

Both parties apparently agree that Optimum controls as to this issue.
-4-

Optimum does not stand for the proposition that “he who prints the label commits the
infringement,” as Sarati appears to argue. Instead, in affirming summary judgement, the court
concluded that “there is no evidence that [defendant] itself ‘misused’ the Lok-Lift mark, that is, that
it ‘placed’ the Lok-Lift mark on ‘goods’ or ‘displays’ at the level of the retail stores.” Id. at 1243.
Rather, the defendant “advised its retailers” that it would be “switching over to a new ‘rug gripper
product,’ ” and that the Lok-Lift would no longer be available. Id. at 1244. In this case, the Second
Amended Complaint alleges that Sarati effectively “placed” the Serenity mark on a product it
manufactured, and that it was aware of the alleged infringement. (Doc. 59, ¶ 45). Sarati’s proffered
evidence notwithstanding,4 the Court finds that the Second Amended Complaint sufficiently states a
cause of action for direct infringement against Sarati.
Further, even if it is correct that Wellsprings was solely responsible for the direct infringement
in this case, the Second Amended Complaint sufficiently alleges a cause of action for contributory
infringement. To establish such a claim, a plaintiff must show “a direct infringement by a third party,
and . . . an intentional or knowing contribution to that infringement by the defendant.” Id. (citing
Inwood Labs., Inc. v. Ives Labs., Inc., 456 U.S. 844, 850 (1982)) (stating that Ives “allege[d] that the
[manufacturers] contributed to the infringing activities of pharmacists who mislabeled [generic
drugs]”).5 The Second Amended Complaint states, inter alia, “Wellsprings engaged Sarati to
manufacture, distribute, promote, offer for sale and sell natural progesterone cream bearing the

4

See supra, note 1.

5

The court in Optimum declined to construe plaintiff’s case as one for contributory negligence
because the necessary elements had not been pled. Optimum Techs. Inc., 496 F.3d at 1246 (noting that
there we no allegations of “ ‘contribution’ to a direct trademark infringement or of a ‘knowing
participation’ in a direct trademark infringement.”).
-5-

SERENITY Mark,” (Doc. 59, ¶ 30), that Sarati is currently “manufacturing, distributing, promoting,
offering for sale and selling” such a product, (Doc. 59, ¶ 31), and “[s]everal years ago, Sarati
manufactured progesterone cream for Plaintiff bearing the SERENITY Mark. Thus[,] Sarati is well
aware of Plaintiff’s rights in the SERENITY Mark.” (Doc. 59, ¶ 45). These allegations are sufficient
to state a cause of action for contributory infringement.
Therefore, it is ORDERED that Defendant’s Motion (Doc. 87) is DENIED.
DONE and ORDERED in Chambers, Orlando, Florida on January 10, 2012.

Copies furnished to:
Counsel of Record
Unrepresented Party

-6-