MERIAL INC, et al v. CEVA SANTE ANIMALE SA, et al
Filing
109
ORDER granting in part and denying in part 26 , 59 Motion to Dismiss Complaint; granting 28 , 62 Motion to Dismiss for Failure to State a Claim. Ordered by US DISTRICT JUDGE CLAY D LAND on 10/07/2015. (CGC)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
ATHENS DIVISION
MERIAL INC. and MERIAL S.A.S.,
*
Plaintiffs,
*
vs.
*
CEVA SANTÉ ANIMALE S.A.,
*
HORIZON VALLEY GENERICS INC.,
TRUE SCIENCE HOLDINGS, LLC, and *
TRURX LLC,
*
Defendants.
*
CASE NO. 3:15-CV-40 (CDL)
O R D E R
Plaintiffs
Ceva
Santé
Merial
Animale
Inc.
S.A.,
and
Merial
Horizon
S.A.S.
Valley
sued
Generics
Defendants
Inc.,
True
Science Holdings, LLC,
and TruRx LLC for breach of contract,
false
advertising,
or
deceptive
misleading
dismiss Count III, the breach of contract claim against them.
As
Horizon
Valley
against it.
that
True
motion
Generics
moved
(ECF
to
Science
Nos.
28
dismiss
and
&
TruRx
and
to
below,
practices.
competition,
moved
discussed
trade
unfair
62)
all
is
of
granted.
the
claims
For the reasons set forth below, that motion is (ECF
Nos. 26 & 59) granted in part and denied in part.
Counts I, II,
and III against Horizon Valley Generics are dismissed.
IV, V, and VI remain pending against all Defendants.
Counts
MOTION TO DISMISS STANDARD
“To survive a motion to dismiss” under Federal Rule of Civil
Procedure 12(b)(6), “a complaint must contain sufficient factual
matter, accepted as true, to ‘state a claim to relief that is
plausible on its face.’”
Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570
(2007)).
The
complaint
must
include
sufficient
factual
allegations “to raise a right to relief above the speculative
level.”
Twombly, 550 U.S. at 555.
In other words, the factual
allegations must “raise a reasonable expectation that discovery
will reveal evidence of” the plaintiff’s claims.
Id. at 556.
“Rule
well-pleaded
12(b)(6)
does
not
permit
dismissal
of
a
complaint simply because ‘it strikes a savvy judge that actual
proof of those facts is improbable.’” Watts v. Fla. Int’l Univ.,
495 F.3d 1289, 1295 (11th Cir. 2007) (quoting Twombly, 550 U.S.
at 556).
FACTUAL ALLEGATIONS
Plaintiffs
Merial
Inc.
and
Merial
S.A.S.
(collectively,
“Merial”) allege the following facts in support of their claims.
Merial has rights to U.S. Patent No. 6,096,329 (“‘329 Patent”),
which claims a flea and tick treatment for dogs and cats that
contains
the
active
ingredients
fipronil
and
s-methoprene.
Merial sells the fipronil and s-methoprene product under the name
Frontline Plus.
2
In 2012, Merial accused Ceva Santé Animale, S.A. and its
wholly owned subsidiary Horizon Valley Generics, Inc. (“HVG”) of
infringing the ‘329 Patent.
Agreement
to
settle
the
Settlement
&
License
Merial and Ceva entered a License
dispute.
Agreement,
ECF
See
No.
Am.
Compl.
15-1.1
The
Ex.
A,
License
Agreement grants Ceva a license to the ‘329 Patent and permits
Ceva to distribute a generic, over-the-counter version of the
Frontline Plus product (“licensed product”).
Id. § 3.1.
of
of
the
License
affiliates,
Agreement,
agreed
not
to
Ceva,
use
on
any
behalf
trademark,
itself
trade
As part
and
name,
its
or
packaging of Merial in any comparative advertising involving the
licensed product.
Id. § 3.3.4.
This restriction, however, does
not prevent Ceva from indicating that its product contains the
same active ingredients as the “leading brand.”
Id.
The License Agreement further provides that neither Ceva nor
any of its affiliates would be responsible for any prohibited
comparative advertising by third party distributors unless Ceva
or any of its affiliates “sponsor[ed], contribut[ed] funds for or
actively encourage[ed]” such comparative advertising.
Id.
The
Agreement does require Ceva to “notify its appointed Third Party
distributor(s)
not
to
engage
in”
1
the
type
of
comparative
Merial attached copies of the relevant agreements to its Complaint.
The documents are central to Merial’s claims, their authenticity is not
challenged, and all parties rely on the agreements in their briefs.
The Court may thus consider the agreements in ruling on the pending
motions to dismiss.
See Brooks v. Blue Cross & Blue Shield of Fla.,
Inc., 116 F.3d 1364, 1369 (11th Cir. 1997) (per curiam).
3
advertising that Ceva and its affiliates were prohibited from
engaging in by the License Agreement.
Id.
And if Merial filed a
lawsuit against a third party distributor claiming that it was
engaging in this prohibited comparative advertising, Ceva agreed
to use “reasonable efforts . . . to assist Merial by restraining
or limiting the supply” of the licensed product to the third
party distributor as long as Merial pursued the lawsuit and until
the third party distributor stopped the advertising and agreed in
writing with Ceva to refrain from any such further advertising.
Id.
After Ceva and Merial entered the License Agreement, HVG
contracted
Frontline
with
Plus
CAP
Supply,
product.
Inc.
In
the
to
distribute
distribution
the
generic
agreement,
CAP
Supply agreed not to engage in any comparative advertising using
the name Frontline Plus or any Merial trademarks or tradenames.
Ceva
later
Agreement.
assumed
CAP
HVG’s
Supply
agreements
subsequently
under
the
entered
CAP
into
Supply
a
sub-
distribution agreement with True Science Holdings, LLC and TrueRx
LLC (collectively, “True”) for True to distribute the generic
Frontline Plus product.
large
retailers
such
True began distributing the product to
as
Walmart
PetAction Plus and PetLock Plus.
and
Petco
under
the
names
The PetAction Plus website
contained “an exact image of Merial’s FRONTLINE PLUS product,
bearing Merial’s stylized trade name, trademarks, and trade dress
4
. . . next to an image of a PetAction Plus product with a similar
color scheme.”
“some,
or
all,
packaging
Am. Compl. ¶ 59, ECF No. 15.
of
designed
the
to
PetAction
imitate
Plus
the
Merial asserts that
products
trade
are
dress
sold
and
in
overall
commercial impression of Merial’s FRONTLINE PLUS packaging.”
Id.
¶ 62.
When
PetLock
True
Plus,
“Contains
THE
first
the
began
packages
SAME
active
distributing
PetAction
contained
sticker
a
ingredients—FIPRONIL
METHOPRENE—found in FRONTLINE PLUS.”
Plus
and
that
read:
and
(S)-
Id. ¶¶ 55-57, ECF No. 15.
The words “active ingredients” were “in much smaller font than
the other words” on the sticker.
Id.
¶¶ 56, 58.
On newer
packaging, there is no longer a “disparity in size” between the
fonts, but the FRONTLINE PLUS trademark still appears on the
sticker.
Id. ¶ 69.
After
Plus,
True
True
began
entered
distributing
into
an
Agreement with Ceva and HVG.
PetAction
Authorization
Plus
and
and
PetLock
Indemnification
That agreement gave True permission
to package and label the products consistent with HVG’s
Environmental Protection Agency registrations.
U.S.
As part of that
agreement, True agreed that it would not “modify or change the
packaging of the Product manufactured by or on behalf of Ceva in
any manner that references or identifies the trademark, trade
name, trade dress or packaging of any third party.”
5
Am. Compl.
Ex. B, Authorization & Indemnification Agreement ¶ 3, ECF No. 152.
This restriction includes “any comparative advertising claim
referencing
or
identifying
such
trademark,
dress or packaging of any third party.”
not identify any third party by name.
Id.
trade
name,
trade
The provision does
The Authorization and
Indemnification Agreement states that it “is intended and agreed
to be solely for the benefit of the Parties hereto and their
permitted successors and assigns, and no other party will be
entitled to rely on this Agreement or accrue any benefit, claim,
or
right
of
any
kind
through this Agreement.”
whatsoever
pursuant
to,
under,
by,
or
Id. ¶ 18.
When Merial learned that the PetAction Plus and PetLock Plus
products were being marketed using comparative advertising that
referred to Frontline Plus, Merial brought this action.
Merial
sues Ceva and HVG for breach of the License Agreement (Counts I &
II), and Merial sues Defendants as a third party beneficiary of
the Authorization and Indemnification Agreement between Ceva, HVG
and True (Count III).
Merial also asserts that all Defendants
engaged in false or misleading advertising in violation of the
Lanham Act, 15 U.S.C. § 1125(a) (Count IV) and that they engaged
in unfair competition and deceptive trade practices in violation
of Georgia law (Counts V & VI).
6
DISCUSSION
HVG seeks dismissal of Merial’s claims against it that are
based on the License Agreement (Counts I & II).
HVG and True
seek dismissal of Count III, which is based on the Authorization
and
Indemnification
Agreement.
And
HVG
seeks
dismissal
of
Merial’s claims against it for false or misleading advertising,
unfair competition, and deceptive trade practices (Counts IV-VI).
The Court addresses each claim in turn.
I.
Breach of License Agreement Claims
In Counts I and II of its Complaint, Merial alleges that
Ceva and HVG breached the comparative advertising provision of
the License Agreement.
HVG moved to dismiss Counts I and II
against it because HVG is not a party or signatory to the License
Agreement.
License Agreement at 1.
Merial nonetheless argues
that HVG should be bound by the Agreement.
The License Agreement, which is governed by Georgia law,
states:
“Ceva will not, and will cause its Affiliates not to, in
the Territory . . . use any trademark, trade name or packaging of
Merial
Limited
advertising
Agreement
or
any
involving
§ 3.3.4
of
a
its
Affiliates
Licensed
(emphasis
Product
added).
The
in
any
comparative
. . . .”
License
License
Agreement
provides that Ceva had authority to bind its affiliates.
§ 6.1(b).
Id.
Reading these two clauses together, Merial argues that
Ceva explicitly agreed that HVG would be bound by the comparative
7
advertising
clause
of
the
License
Agreement.
interpretation of the License Agreement is wrong.
Merial’s
While there is
no serious question that Ceva could bind HVG, a plain reading of
the License Agreement reveals that Ceva bound itself to cause
affiliates
like
using
Frontline
the
HVG
not
to
engage
mark.
in
Although
comparative
this
distinction, it is legally significant.
Agreement
states
that
HVG
itself
may
advertising
be
a
subtle
Nothing in the License
agreed
to
do
anything.
Moreover, Ceva did not agree that HVG would be bound by the
comparative advertising clause.
Rather, the License Agreement
reflects an intention to place performance obligations only on
Ceva; if a Ceva Affiliate violates the comparative advertising
clause, then Merial’s recourse is against Ceva itself.
Merial argues that even if Ceva did not agree that HVG would
be bound by the comparative advertising clause, HVG should be
bound
by
the
License
Agreement
under
equitable
estoppel
principles because HVG received significant benefits under the
License Agreement.
principle
of
desire
rewrite
to
general,
Although Georgia law certainly recognizes the
equitable
equitable
the
estoppel,
License
estoppel
equity
Agreement
seeks
to
cannot
after
prevent
aid
the
a
Merial’s
fact.
party
In
from
attacking the very same agreement that the party simultaneously
attempts to use to its advantage.
Equity frowns upon a party’s
attempt to “rely on the contract when it works to its advantage
8
and then repute it when it works to its disadvantage.”
Helms v.
Franklin Builders, Inc., 305 Ga. App. 863, 866, 700 S.E.2d 609,
612 (2010) (auoting LaSonde v. CitiFinancial Mortg. Co., 273 Ga.
App. 113, 115, 614 S.E.2d 224, 226 (2005)).
the
present
case
to
arbitration
cases
Merial analogizes
that
stand
for
the
principle that a non-signatory to an agreement that contains an
arbitration clause cannot claim the benefit of certain provisions
of
the
agreement
while
arbitration clause.
avoiding
the
requirements
of
the
See, e.g., id.; Fencourt Reinsurance Co. v.
ITT Indus., Inc., No. 06-4786, 2008 WL 2502139, at *9 (E.D. Pa.
June 20, 2008); Amkor Tech., Inc. v. Alcatel Bus. Sys., 278 F.
Supp.
2d
519,
521-22
distinguishable
(E.D.
because
HVG
Pa.
is
2003).
not
The
present
seeking
to
case
is
disclaim
a
significant part of the agreement.
Merial also relies on Sea-Land Serv., Inc. v. Sellan, 64 F.
Supp.
2d
refused
1255
to
(S.D.
sign
a
Fla.
part
1999).
of
his
In
Sea-Land,
settlement
the
plaintiff
agreement,
but
his
refusal did not render the contract unenforceable because the
parties had an oral agreement on the portion of the agreement
that he refused to sign and the plaintiff cashed the settlement
check.
evidence
Id. at 1259.
that
the
Importantly, in Sea-Land, there was some
plaintiff
had
agreed
to
be
bound
settlement agreement even though he did not sign it.
by
the
Here, as
discussed above, there is no indication that HVG actually agreed
9
to
be
bound
by
the
comparative
advertising
clause.
In
sum,
Merial did not point to any authority applying equitable estoppel
under the circumstances presented here, and the Court found none.
Counts I and II against HVG are therefore dismissed.2
II.
Breach of Authorization and Indemnification Agreement Claim
In Count III of its Complaint, Merial, as a third party
beneficiary, seeks to enforce the “No Comparative Advertising”
provision
of
the
Authorization
between Ceva, HVG, and True.
and
Indemnification
Am. Compl. ¶ 53.
Agreement
Defendants seek
dismissal of Count III, arguing that it is foreclosed by the “No
Third
Party
Beneficiaries”
provision.
The
Court
agrees
with
Defendants.
The Authorization and Indemnification Agreement is governed
by Delaware law.
Authorization & Indemnification Agreement ¶ 15.
Under Delaware law, “to qualify as a third party beneficiary of a
contract, (a) the contracting parties must have intended that the
third
party
beneficiary
benefit
from
the
contract,
(b)
the
benefit must have been intended as a gift or in satisfaction of a
pre-existing obligation to that person, and (c) the intent to
benefit the third party must be a material part of the parties’
2
Merial also argues that HVG should be considered a third party
beneficiary of the License Agreement.
Under Georgia law, “[t]he
beneficiary of a contract made between other parties for his benefit
may maintain an action against the promisor on the contract.”
O.C.G.A. § 9-2-20(b).
Merial cited no authority for its apparent
contention that a party to a contract may maintain a breach of contract
action against a third party beneficiary, and this argument fails for
the same reasons Merial’s equitable estoppel argument fails.
10
purpose in entering into the contract.”
In re Stone & Webster,
Inc., 558 F.3d 234, 241 (3d Cir. 2009) (applying Delaware law).
The Court must look to the contract language to determine
whether a party is a third party beneficiary.
Ellis v. Tri State
Realty Assocs. LP, C.A. No.: N14C–03–051 PRW, 2015 WL 993438, at
*6 (Del. Super. Ct. Feb. 27, 2015).
If the contract does not
mention the third party by name or by general reference and if it
does
not
contain
language
indicating
an
intent
to
confer
a
benefit on the third party, then the third party is not a third
party beneficiary.
Bromwich v. Hanby, C.A. No. S08C–07–008, 2010
WL 8250796, at *2 (Del. Super. Ct. July 1, 2010).
may
benefit
from
the
performance
of
the
acquiring third party beneficiary status.”
“A third party
contract
Id.
without
Thus, if the
contract contains a third party beneficiary clause and there is
no other language in the contract indicating an intent to confer
a benefit on a third party, then the Delaware courts generally
find that there is no third party beneficiary.
Webster,
Inc.,
558
F.3d
at
241
(finding
In re Stone &
no
third
party
beneficiary standing based on a purchase agreement that contained
a “no third party beneficiary” clause and contained no language
indicating an intent to confer a benefit on a third party).
Here, the Authorization and Indemnification Agreement states
that it “is intended and agreed to be solely for the benefit of
the Parties hereto and their permitted successors and assigns,
11
and no other party will be entitled to rely on this Agreement or
accrue
any
pursuant
benefit,
to,
claim,
under,
or
by,
right
or
of
any
through
kind
this
Authorization & Indemnification Agreement ¶ 18.
whatsoever
Agreement.”
The Agreement
does not mention Merial by name, and there is no language in the
contract indicating any intent to confer a benefit on Merial.
Merial argues that the “No Comparative Advertising” provision is
clearly intended to benefit Merial.
the
Court
must
look
beyond
the
To reach that conclusion,
unambiguous
language
of
the
contract and ignore the clear intent of the parties as described
in that clear language.
party
beneficiaries”
The Court refuses to interpret “no third
to
mean
“Merial
is
a
third
party
beneficiary.”
For all of these reasons, the Court concludes that Merial is
not
a
third
party
beneficiary
of
the
Authorization
and
Indemnification Agreement, so Count III is dismissed.
III. Advertising Claims
In Counts IV, V, and VI, Merial alleges that all Defendants
engaged in false or misleading advertising, unfair competition,
and deceptive trade practices.
Merial’s
contention
packaging
statements.
and
that
the
advertising
HVG
seeks
All of these claims are based on
PetAction
contained
dismissal
12
of
Plus
false
Counts
and
PetLock
and
IV,
Plus
misleading
V,
and
VI,
contending that Merial does not sufficiently allege that HVG was
involved in making any false or misleading statements.3
Merial does not allege that HVG made any false or misleading
statements directly.
Rather, Merial alleges that True made false
or misleading statements on the PetAction Plus and PetLock Plus
packaging and in its advertising.
Merial contends that HVG can
be held liable for this conduct under an agency theory; according
to
Merial,
True
is
HVG’s
agent
because
True
uses
HVG’s
EPA
registration number to sell the products and is registered with
the EPA as HVG’s supplemental distributor.
accord
Authorization
&
Am. Compl. ¶¶ 37-40;
Indemnification
Agreement
¶
2;
Authorization & Indemnification Agreement Ex. A, Label & Package
Authorization, ECF No. 15-2 at 10 (giving TruRX permission to
package and label PetAction Plus and PetLock Plus using HVG’s
registration).
“The relation of principal and agent arises wherever one
person, expressly or by implication, authorizes another to act
for
him
behalf.”
or
subsequently
ratifies
O.C.G.A. § 10-6-1.
the
acts
of
another
in
his
HVG argues that even if True is
HVG’s agent for some purposes,
True cannot be considered the
agent of HVG for purposes of Merial’s false advertising claims
because
True’s
Indemnification
conduct
was
contrary
Agreement’s
to
the
prohibition
3
Authorization
on
and
comparative
Although True disputes that Merial is entitled to relief on these
claims, True did not move to dismiss them.
13
advertising.
favorable
But construing the allegations in the light most
to
Merial,
the
Court
does
not
find
this
claim
sufficiently implausible to dismiss it at this early stage of the
litigation.
HVG’s motion to dismiss Counts IV, V, and VI is
therefore denied.
CONCLUSION
As discussed above, True’s Motion to Dismiss Count III (ECF
Nos. 28 & 62) is granted.
HVG’s Motion to Dismiss (ECF Nos. 26 &
59) is granted in part and denied in part.
against
HVG
are
against Ceva.4
dismissed.
Counts
I
and
Counts I and II
II
remain
pending
Count III is dismissed in its entirety because
Merial is not a third party beneficiary of the Authorization and
Indemnification Agreement.
Counts IV, V, and VI remain pending
against all Defendants.
IT IS SO ORDERED, this 7th day of October, 2015.
S/Clay D. Land
CLAY D. LAND
CHIEF U.S. DISTRICT COURT JUDGE
MIDDLE DISTRICT OF GEORGIA
4
Ceva filed a motion to dismiss based on lack of service (ECF No. 105).
That motion is not yet ripe for consideration, so the Court will
address it in a separate order.
14
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