Blazer v. Chrisman Mill Farms LLC
Filing
67
MEMORANDUM OPINION & ORDER: (1) GRANTING IN PART & DENYING IN PART pla's 21 Motion to Dismiss; (2) CMF's claim for declaratory judgment of invalidity of RE46421 due to inequitable conduct (Count IX) is DISMISSED with prejudice; all other claims remain pending; (3) DENYING CMF's 52 MOTION for Temporary Restraining Order & MOTION for Preliminary Injunction. Signed by Judge Danny C. Reeves on 1/2/18.(KJR)cc: COR, York (US Mail)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
CENTRAL DIVISION
(at Lexington)
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BRIAN R. BLAZER,
d/b/a CARPENTER BEE SOLUTIONS,
Plaintiff,
V.
CHRISMAN MILL FARMS, LLC,
Defendant.
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Civil Action No. 5: 17-430-DCR
MEMORANDUM OPINION
AND ORDER
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This matter is pending for consideration of Plaintiff Brian Blazer’s (“Blazer”) motion
to dismiss Defendant Chrisman Mill Farms, LLC’s (“CMF”) Amended Counterclaims [Record
No. 21] and CMF’s motion for a temporary restraining order and a preliminary injunction.
[Record No. 52] More specifically, CMF seeks an order requiring Blazer to revoke his takedown notices from online retailers and forgo further enforcement actions. For the reasons
discussed below, the Court will grant, in part, and deny, in part Blazer’s motion to dismiss.
CMF’s motion for injunctive relief will be denied.
I.
Blazer owns U.S. Patent No. 8,375,624 (“the ’624 Patent) which covers an insect trap
meant for carpenter bees. [Record No. 3-1] In December 2015, CMF began selling traps that
unknown to it allegedly infringed Blazer’s patent. [Record No. 57, p. 3] In light of the
allegations of infringement, CMF obtained a license under the ’624 Patent and began selling
traps under the license on December, 29, 2015. [Id.] The duration of the agreement was one
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year, ending in December 2016. [Id. at p. 2] Blazer sought to negotiate more favorable terms
for a new contract, but was unsuccessful. As a result, the business relationship ended and CMF
designed a new trap which it believed did not infringe the ’624 Patent. [Id.] CMF notified
Blazer of its intent to begin marketing the new trap, and provided Blazer the opportunity to
object and provide reasons why he believed the new trap infringed on his patent. [Id.] From
the record before the Court, it appears that Blazer never articulated to CMF why the trap
infringed his patent and instead filed this suit.
Blazer contacted several online retailers in February 2017, alleging CMF’s new trap
infringed the ’624 Patent. He contacted Amazon and asserted that CMF’s new trap infringes
the claims of the ’624 Patent, which caused Amazon to contact CMF and notify it of the
allegations. [Record No. 52-4] Amazon indicated to CMF that attempts to relist the new trap
prior to resolving the allegations of patent infringement may result in the removal of CMF’s
selling privileges on Amazon. [Id.] In Blazer’s original infringement contentions to Amazon,
he wrongly indicated that the roof of the new trap extended past the top of the trap to the shelter
the entrance. [Record No. 57, pp. 6-7] He later amended his infringement contentions to
correctly note that the roof does not extend past the top and modified his contentions further.
[Id.]
Blazer also contacted Etsy.com, Bonanzo.com, and Houzz.com, alleging that the new
trap infringes his patent. Subsequently, all of the retailors notified CMF of the allegations and
indicated any further attempt to relist the new trap prior to resolving the allegations of patent
infringement would result in the loss of selling privileges. [Record Nos. 7, 8, 9]
The ’624 Patent was reissued as RE46,421 (“RE46421”) on June 6, 2017. [Record No.
52-2] The reissue patent retains claims 1-12 without amendment, and adds reissue claims 13-2-
21. [Id.] Blazer has alleged that CMF’s trap infringes claims 1-4, 7-8, 10, 13-17, and 20-21
of the patent. [Record No. 56, p. 3]
II.
Under Rule 12(b)(6) of the Federal Rules of Civil Procedure, the Court must determine
whether the counterclaims state a viable claim for relief. Simply put, the counterclaims “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 factual allegations must be sufficient to raise a right to relief
above the speculative level, Twombly, 550 U.S. at 555, and permit the Court to “draw the
reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S.
at 678. While a counterclaim need not contain detailed factual allegations, it must contain
more than an “unadorned, the defendant-unlawfully-harmed-me accusation.” Id. “A pleading
that offers ‘labels and conclusions’ or a ‘formulaic recitation of the elements of a cause of
action’” is insufficient. Id. (quoting Twombly, 550 U.S. at 555).
A preliminary injunction is an extraordinary equitable measure.
It has been
characterized as “one of the most drastic tools in the arsenal of judicial remedies.” Am. Civ.
Liberties Union of Ky. v. McCreary Cnty., Ky., 354 F.3d 438, 444 (6th Cir. 2003) (internal
quotation marks and citation omitted). For this reason, it should not be extended to cases
which are doubtful or do not come within well-established principles of law. See id.
“Federal Circuit law governs the legal standard applicable to the question of whether a
court should issue a preliminary injunction in a patent case.” FieldTurf USA, Inc. v. Astroturf,
LLC, 725 F. Supp. 2d 609, 613 (E.D. Mich. 2010) (citing Mikohn Gaming Corp. v. Acres
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Gaming, Inc., 165 F.3d 891, 894 n. 3 (Fed. Cir. 1998)). “To obtain a preliminary injunction,
a party must show (1) reasonable likelihood of success on the merits; (2) irreparable harm; (3)
that the balance of hardships tips in its favor; and (4) the impact of the injunction on the public
interest.” Jack Guttman, Inc. v. Kopykake Enterprises, Inc., 302 F.3d 1352, 1356 (Fed. Cir.
2002). However, the factors do not all carry equal weight. The first two factors effectively
set a threshold showing that the moving party must meet before the other factors are weighted.
See Amazon.com, Inc. v. Barnesandnoble.com, Inc., 239 F.3d 1343, 1350 (Fed. Cir. 2001)
(“[A] movant cannot be granted a preliminary injunction unless it establishes both of the first
two factors, i.e., likelihood of success on the merits and irreparable harm.” (emphasis in
original)). The Federal Circuit’s standard of likelihood of success is whether success is more
likely than not. See Revision Military, Inc. v. Balboa Mfg. Co., 700 F.3d 524, 526 (Fed. Cir.
2012).
III.
A.
Motion to Dismiss Analysis
1.
Invalidity and Unenforceability Claim
Blazer argues that Count 3 of CMF’s Amended Counterclaim must be dismissed for
failure to state a claim, specifically alleging that Count 3 contains nothing more than a
formulaic recitation of various statutory bases for invalidity, while lacking any allegations of
facts to demonstrate the claims are plausible. While CMF contends that it has alleged
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sufficient facts to support its claims, it also argues that the heightened pleading standard of
Iqbal and Twombly do not apply to patent invalidity counterclaims.1
The allegations contained in Count 3 of CMF’s Amended Counterclaim state a
plausible claim for relief. While the Counterclaim does contains a paragraph listing the
statutory provisions CMF alleges have been violated, it goes on to state the facts on which it
bases it claims. The counterclaim alleges that the ’624 Patent and RE46421 are invalid as
indefinite “for failing to clearly set forth a definition for ambient other than its plain and
ordinary meaning.” [Record No. 18, ¶ 101] In addition, the two following paragraphs also
state CMF’s contention for invalidity coupled with the facts that form the basis of the
allegation. [Id. at ¶¶ 102, 103] Further, the relevant facts, which CMF restates and realleges
in each count, provide a factual basis for CMF’s invalidity and/or unenforceability count. [See
Id. at ¶¶ 64-70.] CMF has stated a plausible claim sufficient to overcome the Blazer’s motion
to dismiss.
2.
Ownership and Breach of Duty Claim
This claim arises solely from the actions of Blazer in this litigation. Blazer initiated
this case in the Northern District of Alabama on February 27, 2017. [Record No. 1] The
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CMF’s reliance on a lesser pleading standard stems from cases decided before the abrogation
of Fed. R. Civ. P. 84 and the forms it incorporated by the 2015 amendments to the Federal
Rules of Civil Procedure. CMF does not provide citation to any case decided after the 2015
amendments in support of its argument. While the Sixth Circuit has not directly addressed the
issue, “it is overwhelmingly accepted by courts that have examined the question that the
‘existing pleading standards’ referred to in the Advisory Committee Notes are those defined
in Twombly and further refined in Iqbal.” Webasto Thermo & Comfort North America, Inc. v.
Bestop, Inc., Case No. 16-CV-13456, 2017 WL 4535290, *4 (E.D. Mich. Oct. 11, 2017) (citing
various cases from around the country supporting the conclusion). Therefore, the Court will
address the sufficiently of the allegations under the Iqbal/Twombly standard.
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original complaint contained two counts, patent infringement and breach of contract. [Id.]
Regarding the breach of contract claim, the original complaint alleged that the parties had
entered into a written contract, and that CMF breached the contract by failing to pay the full
amount of royalties owed under it. Further, the original complaint alleged breach of contract
by the defendant “refusing to recognize the majority ownership interest . . . that was granted
to Plaintiff by the parties’ agreement.” [Id. at ¶ 50] The original complaint alleged that Blazer
was entitled to specific performance to remedy the breach in the form of a judgment that he
owns a majority ownership interest in CMF. [Id. at ¶ 51] The Court has serious reservations
about the authenticity of the document attached to the original complaint which purports to
give Blazer an ownership interest in CMF. [See Record No. 1-3.] Blazer filed an amended
complaint in this action, six days after his initial filing, in which he removed all reference to
the 51% ownership interest and claimed a breach of contact based solely upon a failure to pay
royalties. [Record No. 3] Further, the amended complaint replaced the questionable document
originally attached to the original complaint with what appears to be the original. [Record No.
3-3] To no surprise, the newly filed document made no reference to a 51% ownership.
CMF filed the counterclaim seeking a declaratory judgment that Blazer is not a member
of CMF, on the basis of Blazer having claimed to own an ownership interest in CMF. [Record
No. 18, ¶ 146] CMF claims in the alternative that if Blazer is a member of CMF, he owes a
fiduciary duty to CMF and alleges he has breached that duty. [Id. at ¶¶ 151-160] Blazer filed
his motion to dismiss, arguing that because he filed an Amended Complaint which removed
any such allegation of claimed ownership in CMF, the counterclaims should be dismissed.
[Record No. 21, p. 9] However, this reasoning fails to recognize that while he may have
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amended his complaint, CMF has a valid reason to seek declaratory judgment on the issue
because he had alleged an ownership interest and a document purporting to give him such an
interest is in existence, although of questionable authenticity. Further, while in his Answer to
the Amended Counterclaim he denies having claimed to own a 51% equity stake in CMF
(Record No. 23, ¶ 146), in the very next paragraph he also denies that his claim to be a member
of CMF is false (Record No. 23, ¶ 147). As such, a live case or controversy exists between
the parties and CMF has stated a valid claim.
3.
Inequitable Conduct Claim
“[I]n pleading inequitable conduct in patent cases, Rule 9(b) requires identification of
the specific who, what, when, where, and how of the material misrepresentation or omission
committed before the PTO.” Exergen Corp. v. Wal-Mart Stores, Inc., 575 F.3d 1312, 1327
(Fed. Cir. 2009). While “knowledge” and “intent” may be alleged generally, “a pleading of
inequitable conduct under Rule 9(b) must include sufficient allegations of underlying facts
from which a court may reasonably infer that a specific individual (1) knew of the withheld
material information or of the falsity of the material misrepresentation, and (2) withheld or
misrepresented this information with a specific intent to deceive the PTO.” Id. at 1328-29. To
adequately plead materiality, the allegations must “explain both ‘why’ the withheld
information is material and not cumulative, and ‘how’ an examiner would have used this
information in assessing the patentability of the claims.” Id. at 1329-30.
CMF’s Amended Counterclaim allegations are deficient because the pleading identifies
the “who” as “an individual associated with the filing and prosecution of RE46421 made an
affirmative misrepresentation of a material fact.” [Record No. 18, ¶ 162] Even looking to the
relevant facts section contained in the Amended Counterclaim, CMF only identifies the “who”
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as two inventors or their patent attorney. [See id. at ¶¶ 71, 72, 74, 75] As in Exergen, CMF
has not made the allegation against a specific person and instead broadly refers to everyone
involved in the prosecution of the patent. The pleading thus fails to identify the “who” of the
material omissions and misrepresentations. Further, CMF does not allege why the information
was material or how the examiner would have used the information in assessing the
patentability of the claims, all of which is required in pleading a claim for inequitable conduct.
See Exergen, 757 F.3d at 1329-30. CMF’s inequitable conduct claim fails to state a claim as
required by Rule 9.
B.
Preliminary Injunction Analysis
1.
Likelihood of Success on the Merits
a)
CMF’s non-infringment contention
“Patent infringement is a two-step inquiry. First, the court must construe the asserted
patent claims(s) as a matter of law. Second, the fact finder . . . must determine whether the
accused product, composition, system, or process contains each limitation of the properly
construed claims, either literally of under the doctrine of equivalents. The first step is a
question of law; the second step is a question of fact.” Anatomy of a Patent Case, Harry
Gutman, Editor-in-Chief, 2d ed. Chpt. 10.I. (citing Markman v. Westview Instruments, Inc.,
517 U.S. 370, 372-74 (1996); Ferguson Beauregard v. Mega systems, LLC, 350 F.3d 1327,
1338 (Fed. Cir. 2003)).
Claim terms are generally given their ordinary meaning as understood by persons
skilled in the art in question at the time of the invention. See Phillips v. AWH Corp., 415 F.3d
1303, 1312-13 (Fed. Cir. 2005) (en banc). “[T]he person of ordinary skill in the art is deemed
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to read the claim term not only in the context of the particular claim in which the disputed term
appears, but in the context of entire patent, including the specification.” Id. at 1313.
CMF’s non-infringement contention rests on the portion of claim 1 which reads “a
means to shelter an entrance to said hole is provided to reduce the admittance of ambient light.”
[Record No. 52-2, p. 17, col. 7, lines 49-51] CMF argues that for this claim element to be
understood, the terms and phrases “hole,” “entrance to said hole,” and “shelter” must be
construed. [Record No. 57, p. 15] CMF then goes on to provide its own proposed construction
of the terms and phrases, resulting in proposed construction limiting the claim element of
“means to shelter an entrance to said hole” to only include an overhanging roof. [Id.] CMF
attempts to support this construction by indicating that the specification itself describes the
overhanging roof as the “only” means to shelter the entrance to said hole. [Id.] However, not
only is CMF’s indication incorrect and fails to take into account the other means identified
later in the patent specification, CMF’s proposed construction of the terms and phrases would
result in a claim construction so narrow as to exclude three of the five preferred embodiments,
Figures 3A-D, 4A-B, and 5A-C.
CMF’s contention that the only “means to shelter the entrance to said hole” is the roof
which “overhangs and provides added shelter for at least one entrance hole,” fails by looking
at the words of the quoted language itself. [Id.] The overhanging roof is described as providing
“added shelter,” which ordinarily would mean it is not the only “means to shelter,” a
construction CMF is attempting to put forward. In fact, the sentence immediately preceding
the quoted language identifies an additional “means to shelter” stating that [t]he upward
sloping entrance mimics the preferred entrance style of a natural bee nest while reducing the
amount of ambient light entering the entrance hole.” [Record No. 52-2, p. 14, col. 2, lines 46-9-
49] And while CMF argues that the angle of the entrance hole cannot be the “means to shelter,”
the specification describes several times the angle of the entrance holes as providing sheltered
entrance holes. [Id. at p. 16, col. 6, lines 36-40; id. at p. 16, col. 6, lines 52-24]
“‘[A] claim interpretation that excludes a preferred embodiment from the scope of the
claim ‘is rarely, if ever, correct.’” Accent Packaging, Inc. v. Leggett & Platt, Inc., 707 F.3d
1318, 1326 (Fed. Cir. 2013) (quoting On0line Techs., Inc. v. Bodenseewerk Perkin-Elmer
GmbH, 386 F.3d 1133, 1138 (Fed. Cir. 2004)). Such a claim construction would require
‘“highly persuasive evidentiary support.’” Bowers v. Baystate Technologies, Inc., 320 F.3d
1317, 1328 (Fed. Cir. 2003) (quoting Vitronics Corp. v. Conceptronic, Inc., 90 F.3d 1576,
1583 (Fed. Cir. 1996)). Here, CMF provides no evidentiary support of its proposed claim
construction to support such a narrow claim construction that would exclude several preferred
embodiments. CMF has not showed a reasonable likelihood of success on the merits of noninfringement.
b)
Recapture Rule
CMF next argues that Claim 13-21 of RE464 are invalid under the “Recapture Rule.”
Under the rule against recapture, a patentee is prevented “from regaining through reissue the
subject matter that he surrendered in an effort to obtain allowance of the original claim. In re
Clement, 131 F.3d 1464, 1468 (Fed. Cir. 1997); see also Mentor Corp. v. Coloplast, Inc., 998
F.2d 992, 995 (Fed. Cir. 1993). “Claims that are broader than the original patent claims in a
manner directly pertinent to the subject matter surrendered during the prosecution are
impermissible.” Clement, 131 F.3d at 1468.
A three-step test is applied in determining whether the recapture rule has been violated.
See Pannu v. Storz Instruments, Inc., 258 F.3d 1366, 1371 (Fed. Cir. 2001). The first step is
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to ascertain “whether and in what ‘aspect’ the reissue claims are broader than the patent
claims.” Id. “For example, a reissue claim that deletes a limitation or element from the patent
claims is broader in that limitation’s aspect.” Clement, 131 F.3d at 1468. The second step is
to determine whether the broader aspects of the reissue claims relate to surrendered subject
matter of the original claim. Id. at 1468-69. Courts look to the prosecution history for
arguments and changes to the claims made in an effort to overcome a prior art rejection. Id.
Although the recapture rule does not apply in the absence of evidence that the applicant’s
amendment was “an admission that the scope of that claim was not in fact patentable,” Seattle
Box Co. v. Industrial Crating & Packing, Inc., 731 F.2d 818, 826, (Fed.Cir.1984), “the court
may draw inferences from changes in claim scope when other reliable evidence of the
patentee’s intent is not available,” Ball Corp. v. United States, 729 F.2d 1429, 1436 (Fed. Cir.
1984).
Finally, in the third step, courts must “determine whether the surrendered subject matter
has crept into the reissue claim.” Clement, 131 F.3d at 1469. “If the scope of the reissue claim
is the same as or broader than that of the canceled claim, then the patentee is clearly attempting
to recapture surrendered subject matter and the reissue claim is, therefore, unallowable.” Id.
“Violation of the rule against recapture may be avoided under this final step of the analysis if
the reissue claims ‘materially narrow’ the claims relative to the original claims such that full
or substantial recapture of the subject matter surrendered during prosecution is avoided.” In
re Mostafazadeh, 643 F.3d 1353, 1358 (Fed. Cir. 2011) (citing N. Am. Container, Inc. v.
Plastipak Packaging, Inc., 415 F.3d 1335, 1349 (Fed. Cir. 2005)).
CMF has only outlined the three-step test the Court is to apply when determining
whether the rule against recapture has been violated. After the overview of the test, CMF
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states “[t]he defendant believes that is has more than adequately demonstrated that claims 1321 of RE46421 are invalid for violating the recapture rule and cannot be infringed.” [Record
No. 57, p. 22] At no point does CMF actually apply the facts of the case to the three-part test.
Looking at the original claim that was finalized after proposed amendments by the
examiner to include “a means to shelter an entrance to said hole is provided to reduce the
admittance of ambient light;” [Record 52-10, Exhibit I] no evidence is put forth that allows
the Court to find that step-two is met. The amendment to the original claim must have been
made to overcome prior art rejection and CMF has not shown or argued how the amendment
was made to overcome any prior art.
c)
Prior Art Invalidity
CMF argues that the prior art renders the 624 Patent and RE46421 invalid and
unenforceable because it alleges that the combined prior art references disclose each and every
claim element of the claims of the patent in this case. However, CMF has not provided the
Court with any evidence of how a person of ordinary skill in the art would apply the references
to the asserted claims to render the claims obvious. See In re Mouttet, 686 F.3d 1322, 1333
(Fed. Cir. 2012) (stating “the test for obviousness is what the combined teachings of the
references would have suggested to those having ordinary skill in the art”). Because CMF has
not provided the Court with anything other than its own contentions, the Court cannot find that
CMF has met its burden of showing reasonable likelihood of success on prior art invalidity.
d)
§ 112 Invalidity
CMF also argues that the claims of the patent are invalid for lacking enablement or an
adequate written description under 35 U.S.C. § 112(a) or are indefinite under 35 U.S.C. §
112(b).
However, as with the test for obviousness, both the test for adequate written
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description and indefiniteness is evaluated form the perspective of a person of ordinary skill
in the art. See Araid Pharmaceuticals, Inc. v. Eli Lilly and Co., 598 F.3d 1336, 1351 (Fed. Cir.
2010) (en banc) (holding “the description must ‘clearly allow persons of ordinary skill in the
art to recognize that [the inventor] invented what is claimed.’” (citation omitted, alterations in
original)); See Nautilus, Inc. v. Biosig Instruments, Inc., 134 S.Ct. 2120, 2129 (2014) (holding
that 112 ¶ 2 requires “that a patent’s claims, viewed in light of the specification and prosecution
history, inform those skilled in the art about the scope of the invention with reasonable
certainty.”). Once again, CMF fails to provide the Court with any indication of how those
skilled in the art would read the patent at issue. Therefore, CMF cannot be found to have a
reasonable likelihood of success on the merits at this time.
e)
§ 102 Invalidity
CMF finally argues that the claims of the patent are invalid for prior public disclosure
under 35 U.S.C. § 102. However, CMF has provided no evidence regarding when Blazer’s
first public disclosure or sale of the invention occurred. Instead, CMF appears to be relying
on an assumption that it will ask for and receive a spoliation instruction from the Court because
of alleged destruction of evidence. But CMF cannot use this form of speculation to show a
reasonable likelihood of success on the merits that the patent is invalid for prior public
disclosure. Absent any evidence regarding the issue, the Court cannot grant CMF the
extraordinary remedy of injunctive relief based on pure speculation.
Because CMF has not established a reasonable likelihood of success on the merits, this
Court need not address other preliminary injunction factors. A finding of likelihood of success
is necessary before granting a preliminary injunction. Therefore, CMF is not entitled to a
preliminary injunction. See Amazon, 239 F.3d at 1350.
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IV.
Based on the foregoing analysis, it is hereby
ORDERED as follows:
1.
Plaintiff’s Motion to Dismiss [Record No. 21] is GRANTED, in part, and
DENIED, in part.
2.
Defendant CMF’s claim for declaratory judgment of invalidity of RE46421 due
to inequitable conduct (Count IX) is DISMISSED, with prejudice. All other claims remain
pending.
3.
Defendant CMF’s Motion for Temporary Restraining Order and Preliminary
Injunction [Record No. 52] is DENIED.
This 2nd day of January, 2018.
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