SI03, Inc. v. Musclegen Research, Inc.

Filing 28

MEMORANDUM AND ORDER re: 25 MOTION for Default Judgment filed by Plaintiff SI03, Inc., 19 MOTION for Default Judgment filed by Plaintiff SI03, Inc. IT IS HEREBY ORDERED that Plaintiff SI03, Inc.'s Motion and Re newed Motion for Default Judgment and Entry of Permanent Injunction (ECF No. 19, 25) is GRANTED. IT IS FURTHER ORDERED that a Permanent Injunction is entered in this case. IT IS FURTHER ORDERED that no later than 21 days from the date of this Order, Defendant MuscleGen Research, Inc. shall recall and remove all products and printed materials that include a claim as set forth above. IT IS FURTHER ORDERED that no later than 10 days from the date of this Order, Plaintiff shall submit a form AO 133 Bill of Costs for the Court's consideration. IT IS FINALLY ORDERED that the Clerk of the Court shall serve a copy of this Memorandum and Order on Defendant via regular mail and certified mail to the following address: MuscleGen Research, Inc., 2425 Kildaire Farm Road, Suite 407, Cary, NC 28518. A separate judgment of default shall accompany this Memorandum and Order. Signed by District Judge Ronnie L. White on 12/12/17. (CSG)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
SOUTHEASTERN DIVISION

SI03, INC.,
Plaintiff,
v.
MUSCLEGEN RESEARCH, INC., et al.,
Defendants.

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No. 1:16CV274 RLW

MEMORANDUM AND ORDER

This matter is before the Court on SI03, Inc.'s Motion and Renewed Motion for Default
Judgment and Entry of Permanent Injunction (ECF No. 19, 25). Plaintiff SI03, Inc. ("SI03"), a
manufacturer and seller of SYNTRAX-branded protein powder, brings this action alleging false
advertising under the Lanham Act, 15 U.S.C. § 1125(a) (Count I); unfair competition under
Missouri common law (Count II); and unjust enrichment under Missouri common law (Count
III). SI03 contends that Defendant, MuscleGen Research, Inc. ("MuscleGen") falsely represents
that its GenePro protein powder product contains 30 grams of protein per tablespoon serving,
when a tablespoon serving only contains 10 or less grams of protein. (Compl. iii! 18-19, ECF
No. 1) Plaintiff seeks an injunction permanently enjoining MuscleGen from falsely advertising
its products, damages in the amount of $145,000, and costs "to prevent ongoing consumer
confusion and harm to SI03 as a result of Defendant's ongoing and continuous false advertising
of its GenePro products." (ECF No. 25-1 p. 9) Upon consideration of the record and the
applicable law, the court will enter default judgment against MuscleGen.
I. Procedural History

Plaintiff filed suit in federal court on November 22, 2016, and MuscleGen, a North
Carolina corporation, was served through the North Carolina Secretary of State on January 4,

2017. (ECF No. 8) Under Rule 12 of the Federal Rules of Civil Procedure, MuscleGen was
required to file an answer or other responsive pleading within twenty-one (21) days of being
served with the Complaint. Fed. R. Civ. P. 12(a)(l)(A)(i). Because MuscleGen failed to timely
file a responsive pleading, the Clerk of the Court entered default against MuscleGen on April 19,
2017. (ECF No. 14) Thereafter, Plaintiff filed a Motion for Default Judgment and Entry of
Permanent Injunction. (ECF No. 19) On May 19, 2017, the Court, on review of the record,
ordered the Clerk of the Court to mail a copy of the Clerk's Entry of Default to Defendant
MuscleGen at the North Carolina Secretary of State and a P.O. Box address found on
MuscleGen's website. (ECF No. 20) The Order was received by the North Carolina Secretary
of State but returned unclaimed from the second address. (ECF Nos. 22, 24) Plaintiff then
renewed its motion on October 6, 2017. (ECF No. 25)
Because default judgments are generally disfavored, the Court once again order the Clerk
of the Court to mail copies of certain documents to Defendant at a new mailing address posted
on Defendant's website. In the Order dated October 18, 2017, the Court stated, "[ o]ut of an
abundance of caution, the Court will make one last attempt to notify Defendant MuscleGen of
the Complaint and pending motions for default judgment seeking injunctive and monetary
relief." (ECF No. 26) The record reflects that on November 8, 2017, Defendant's representative
received copies of the Complaint; Clerk's Entry of Default; Plaintiff SI03, Inc.'s Motion and
Renewed Motion for Default Judgment and Entry of Permanent Injunction; and the October 18,
2017 Order via certified mail. (ECF No. 27) Over one month has passed and Defendant
MuscleGen has failed to respond to the pending motions for default judgment.
II. Legal Standard
Under Rule 55 of the Federal Rules of Civil Procedure, a court may enter default
judgment for failure "to plead or otherwise defend." Fed. R. Civ. P. 55(a). "Default judgment
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for failure to defend is appropriate when the party's conduct includes 'willful violation of court
rules, contumacious conduct, or intentional delays."' Ackra Direct Marketing Corp. v. Fingerhut
Corp., 86 F.3d 852, 856 (8th Cir. 1996) (quoting United States v. Harre, 983 F.2d 128, 130 (8th
Cir. 1993)). "In considering a motion for default judgment, the Court is mindful that, by
defaulting, defendant is deemed to have admitted for purposes of this action all well-pleaded
factual allegations in the complaint." Terry v. Legal Asset Fin. Grp., LLC, No. 4:13-CV-1674JAR, 2014 WL 502173, at *3 (E.D. Mo. Feb. 7, 2014) (citation omitted). "[W]hen a default
judgment is entered, facts alleged in the complaint may not be later contested." Marshall v.
Baggett, 616 F.3d 849, 852 (8th Cir. 2010). However, '"it remains for the [district] court to
consider whether the unchallenged facts constitute a legitimate cause of action, since a party in
default does not admit mere conclusions oflaw."' Murray v. Lene, 595 F.3d 868, 871 (8th Cir.
2010) (quoting IOA C. Wright, A. Miller & M. Kane, Federal Practice and Procedure§ 2688 at
63 (3d ed. 1998)). Further, "[a] party seeking damages under a default judgment must ... prove
its rights to such damages with affidavits or other supporting documentation." Joe Hand
Promotions, Inc. v. Kickers Corner of the Americas, Inc., No. 4:12CV02387 AGF, 2014 WL
805731, at *2 (E.D. Mo. Feb. 28, 2014) (citations omitted).

III. Discussion
In the Complaint, Plaintiff claims that Defendant MuscleGen markets its GenePro
product by falsely claiming it contains 30 grams of protein in a roughly 11.15 gram (1
tablespoon) serving when GenePro has 10 or fewer grams of protein per 11.15 gram (1
tablespoon) serving. (Compl. iii! 17-22, ECF No. 1) Further, Plaintiff maintains that GenePro's
marketing and packaging statement that it contains "medical grade" protein is incorrect, false,
and misleading, as no industry or FDA standard for "medical grade" protein exists. (Id. at iii! 2324) Plaintiff SI03 asserts that purchasers of MuscleGen's products are likely to be misled and
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deceived by MuscleGen's product labeling, marketing, and advertising. (Id. at iJ 25) Further,
Plaintiff contends that the false and misleading advertising is damaging to Plaintiff SI03 's
reputation and goodwill, as MuscleGen's false and misleading representations are designed to
deceive and entice consumers to purchase MuscleGen's products over SI03's products based
upon the false belief that GenePro is superior to other protein powders. (Id. at i!i! 26-27)
According to Plaintiff, MuscleGen's wrongful conduct has caused confusion in the protein
market, deprived Plaintiff of business, injured Plaintiffs relationships with current and
prospective customers, and resulted in increased sales of MuscleGen's protein powder product.

(Id. at i!i! 28-29)
A. The Lanham Act and Unfair Competition
In Count I, Plaintiff alleges false advertising under§ 43(a) of the Lanham Act for false
designations of origin and false deceptions. 15 U.S.C. § 1125(a). In Count II, Plaintiff SI03
raises a claim of unf'1;ir competition under Missouri common law. 1 To establish a claim of false
advertising under the Lanham Act, SI03 must demonstrate: (1) a false statement of fact by
MuscleGen in a commercial advertisement about its product; (2) the statement actually deceived
or has a tendency to deceive a significant portion of its audience; (3) such deception is material
in that it is likely to influence the decision to purchase the product; (4) MuscleGen caused the
false statement of fact to enter interstate commerce; and (5) SI03 has been injured, or is likely to
be injured, as a result of the false statement, either by direct diversion of sales from SI03 to
MuscleGen or by a loss of goodwill associated with SI03 's products. United Indus. Corp. v.

Clorox Co., 140 F.3d 1175, 1180 (8th Cir. 1998). "A statement may be literally false, conveying
an explicit factual message and in fact be false ... , or may be implicitly false, conveying the
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Because the action under Missouri common law for unfair competition utilizes the same
elements as an action under the Lanham Act, the Court will discuss only the alleged violation of
the Lanham Act. Children's Factory, Inc. v. Benee 's Toys, Inc., 160 F.3d 489, 491 n.2 (8th Cir.
1998).
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implied message and thereby deceiv[ing] a significant portion of its recipients .... " Fair Isaac
Corp. v. Experian Info. Sols., Inc., 650 F.3d 1139, 1151 (8th Cir. 2011) (internal quotations and
citations omitted).
Plaintiff SI03 alleges that MuscleGen's claim that its GenePro product has 30 grams of
protein in a 1 tablespoon serving size and its use of the term "medical grade" in labeling,
marketing, and advertising are false statements of fact that deceive, or have a tendency to
deceive, a substantial segment of SI03 's customers and potential customers and likely influences
the purchasing decisions of SI03 's customers. (Compl.

iii! 32)

Defendant MuscleGen has failed

to appear in this case and thus concedes Plaintiff SI03 's allegations. Neal Techs., Inc. v. Craven
Performance & Off-Road, LLC, No. 4:15-cv-800-AGF, 2015 WL 9583395, at *3 (E.D. Mo. Dec.
31, 2015). Therefore, based on the uncontested factual allegations, the Court finds that Plaintiff
SI03 has stated a violation of§ 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), and is entitled to
default judgment on Counts I and II of the Complaint. Id.
B. Permanent Injunctive Relief

"The Lanham Act permits courts to enter permanent injunctive relief to prevent future
trademark infringement." Id. at *3 (citing 15 U.S.C. § 1116). To obtain a permanent injunction,
Plaintiff SI03 must demonstrate: "(1) its actual success on the merits; (2) that it faces irreparable
harm; (3) that the harm to it outweighs any possible harm to others; and (4) that an injunction
serves the public interest." Cmty. of Christ Copyright Corp. v. Devon Park Restoration Branch
ofJesus Christ's Church, 634 F.3d 1005, 1012 (8th Cir. 2011) (citation omitted). "[I]n
trademark law, injury is presumed once a likelihood of confusion has been established." Id.
MuscleGen's claim that its GenePro product has 30 grams of protein in a 1 tablespoon
serving size and its use of the term "medical grade" are likely to mislead and cause confusion
among consumers in that the stated protein amount is false, and there is no "medical grade"
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protein standard provided by the protein powder industry or the FDA. Further, SI03 faces
irreparable harm, as the continuing false advertising of MuscleGen's products that compete with
SI03 's products poses a risk to SI03 's sales and reputation. Conversely, MuscleGen has no
protectable interest in continuing to falsely advertise its GenePro products. Finally, the Court
finds that the public interest is served by preventing Defendant MuscleGen from misleading
consumers to believe that a one tablespoon serving size of GenePro contains 30 grams of protein
when the actual amount of protein is 10 grams or less. In addition, the public interest is
advanced by preventing MuscleGen from misleading consumers by advertising that the protein is
"medical grade."
In short, the Court concludes that, in light of MuscleGen's failure to answer or otherwise
respond, despite several attempts to notify Defendant of the pending lawsuit and motion for
default judgment, "that [MuscleGen's] infringement has irreparably harmed [SI03] and will
continue to irreparably harm [SI03]; the harm to [SI03] from the infringement outweighs any
potential harm to [MuscleGen] from enjoining [MuscleGen's] infringing activities; and the
public interest in preserving intellectual property rights will be served by an injunction." Neal

Techs., 2015 WL 9583395, at *4. Therefore, Plaintiff SI03 has established its right to a
permanent injunction, the Court will issue said injunction in Plaintiffs favor.
C. Damages
Finally, Plaintiff requests that the Court award actual damages in the amount of
$145,000.00 and award costs to be determined upon submission of a Bill of Costs under both the
Lanham Act and pursuant to its claim for unjust enrichment under Missouri common law as set
forth in Count III of the Complaint. To recover monetary damages, Plaintiff must "provide[]
evidence of defendants' profits from the infringing activity" for the Court to calculate damages.

Xiem Studio, LLC v. Nguyen, No. 4:14-CV-1366-CEJ, 2015 WL 3795852, at *4 (E.D. Mo. June
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18, 2015). Here, Plaintiff has not provided any calculable evidence in support of its allegation
that it has suffered over $145,000.00 in actual damages for lost sales attributable to Defendant
MuscleGen' s false advertising. Therefore, the Court will deny Plaintiff SI03 's request for
monetary damages.
Plaintiff also requests costs in an amount to be determined upon the submission of a Bill
of Costs. Pursuant to 15 U.S.C. § 1117(a), Plaintiff may recover the costs of the action.
Therefore, the Court will direct SI03 to submit a Bill of Costs.

IV. Conclusion
Upon review of the record, including Plaintiffs proposed permanent injunction order,
IT IS HEREBY ORDERED that Plaintiff SI03, Inc.'s Motion and Renewed Motion for
Default Judgment and Entry of Permanent Injunction (ECF No. 19, 25) is GRANTED.
IT IS FURTHER ORDERED that a Permanent Injunction is entered in this case as
follows:
Defendant MuscleGen Research, Inc., its officers, agents, servants, employees, attorneys,
and other persons who are in active concert or participation with any of the foregoing, are
immediately and permanently enjoined from:
1.

Claiming or implying in any form, including without limitation verbally, in

correspondence, on packaging materials, on advertising materials, and/or on marketing materials,
that any amount of a nutritional supplement product contains more protein than is actually
present in such amount of the product;
2.

Claiming that any product contains protein designated as "medical grade" or any

similar designation, unless such designation is approved by the U.S. Food and Drug
Administration.

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IT IS FURTHER ORDERED that no later than 21 days from the date of this Order,
Defendant MuscleGen Research, Inc. shall recall and remove all products and printed materials
that include a claim as set forth above.
IT IS FURTHER ORDERED that no later than 10 days from the date of this Order,
Plaintiff shall submit a form AO 13 3 Bill of Costs for the Court's consideration.
IT IS FINALLY ORDERED that the Clerk of the Court shall serve a copy of this
Memorandum and Order on Defendant via regular mail and certified mail to the following
address: MuscleGen Research, Inc., 2425 Kildaire Farm Road, Suite 407, Cary, NC 28518.
A separate judgment of default shall accompany this Memorandum and Order.
Dated this 12th day of December, 2017.

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RONNIE L. WHITE
UNITED STATES DISTRICT JUDGE

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