Derma Pen v. 4EverYoung Limited et al

Filing 70

WRITTEN MEMORANDUM DECISION AND ORDER following 65 Minute Order on Motion for TRO, Motion for Preliminary Injunction (oral order of 10/24/13). Signed by Judge David Nuffer on 10/29/13 (alt) Modified on 10/29/2013: added link to 11 Motion (alt)

IN THE UNITED STATES DISTRICT COURT
DISTRICT OF UTAH, CENTRAL DIVISION
DERMA PEN, LLC,

v.

MEMORANDUM DECISION AND
ORDER DENYING PLAINTIFF DERMA
PEN, LLC’S MOTION FOR
TEMPORARY RESTRAINING ORDER
AND PRELIMINARY INJUNCTION

4EVERYOUNG LIMITED,
DERMAPENWORLD, BIOSOFT (AUST)
PTY LTD d/b/a DERMAPENWORLD,
EQUIPMED INTERNATIONAL PTY LTD
d/b/a DERMAPENWORLD, and STENE
MARSHALL d/b/a DERMAPENWORLD,

Case No.: 2:13-cv-00729-DN

Plaintiff,

Defendants.

District Judge David Nuffer

Plaintiff Derma Pen, LLC's ("Derma Pen") motion for temporary restraining order and
preliminary injunction 1 (the “Motion”) was heard October 24, 2013. 2 Defendants 4EverYoung
Limited, Equipmed International Pty Ltd., and Stene Marshall (collectively, the "Defendants")
opposed the Motion, 3 and on October 23, 2013, Derma Pen filed its reply memorandum. 4 After
considering the issued raised in the parties' memoranda and the arguments of counsel, and for
other good cause appearing, Derma Pen's Motion is DENIED.

1

Docket no. 11, filed October 9, 2013.

2

Docket no. 65, Minute Entry, entered October 24, 2013.

3

Docket no. 48, filed October 19, 2013.

4

Docket no. 57.

Background
This dispute is the aftermath of a Sales Distribution Agreement (the "Agreement") 5
between Derma Pen and 4EverYoung Ltd ("4EverYoung"), the purported worldwide OEM
distributor 6 of a micro-needling skin resurfacing system known as the Dermapen. The
Agreement sets forth the rights and obligations of the parties and contains provisions addressing
the ownership and use of the domain name www.dermapen.com (the "Domain Name") and the
"Dermapen" trademark in the United States, both during the term of the Agreement and upon its
termination. It also contains a "Governing Law" provision related to enforcement of the
Agreement.
Derma Pen initiated this action by filing its complaint on August 1, 2013. 7 Derma Pen's
complaint asserts numerous causes of action, including trademark infringement and Lanham Act
claims, along with many pendent state law claims. Subsequently, on October 9, 2013, Derma
Pen filed the Motion and a related motion for expedited discovery. 8 An initial hearing 9 on
Derma Pen's Motion was held the following day. At that initial hearing, Defendants were not
represented by counsel. However, Mr. Justin Williams appeared telephonically on behalf of
Defendants, representing himself as a “partner” in Defendant 4EverYoung.
Based upon Derma Pen's filings and representations and Mr. Williams’s representations
and request for an extension for Defendants to retain counsel and respond to Derma Pen’s

5

Docket no. 25, filed under seal on October 10, 2013.

6

Through 4EverYoung or one of its affiliated companies.

7

Docket no. 2.

8

Docket no. 12.

9

Docket no. 21, Minute Entry, entered October 10, 2013.

2

Motion, the following action was taken at the initial hearing: a status conference was scheduled
for October 17, 2013; a hearing on Derma Pen's Motion was continued until October 24, 2013;
and Derma Pen's motion for expedited discovery was granted. 10 The order permitting expedited
discovery was reciprocal. 11 On October 16 and 17, 2013 counsel for Defendants entered their
appearances 12 and expedited discovery related to the Motion occurred thereafter.
The root of Derma Pen's request for injunctive relief stems from its contentions that it is
the lawful owner of the Dermapen trademark in the United States and that Defendants are
intentionally infringing Derma Pen's rights by marketing and selling Dermapen products in the
United States using the Dermapen trademark without authorization. Derma Pen claims that
Defendants' conduct is causing actual confusion in the market place and that Defendants'
representatives are informing actual and prospective Derma Pen customers that Derma Pen no
longer has the legal right to continue using the Dermapen trademark.
Defendants contend that Derma Pen is not likely to succeed on the merits of its claims,
most notably because Derma Pen terminated the Agreement with 4EverYoung and because
Derma Pen has refused to sell the Dermapen trademark in the United States to Defendants, in
violation of the Agreement. Defendants also rely on the "Governing Law" provision of the
Agreement to argue that the dispute between the parties must be adjudicated in the United
Kingdom. Finally, Defendants contend that Derma Pen will not succeed on the merits or suffer
any irreparable harm because when Derma Pen terminated the Agreement, it lost all rights to sell

10

Docket no. 26, entered October 10, 2013.

11

Id.

12

Docket nos. 32, 33, 34 and 37, 38, and 39, filed October 16, 2013 and October 17, 2013, respectively.

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the Dermapen-marked products in the United States or to restrict the use of the Dermapen
trademark by Defendants in the United States.
Derma Pen was represented at the October 24, 2013 hearing by Samuel F. Miller and
Maia T. Woodhouse of BAKER, DONELSON, BEARMAN, CALDWELL & BERKOWITZ, P.C. and Marc
T. Rasich of STOEL RIVES LLP. Defendants were represented by Christine T. Greenwood and
Christopher M. Von Maack of MAGLEBY & GREENWOOD, P.C.
Discussion
I.

Derma Pen Did Not Meet its Burden for Injunctive Relief.

The issuance of a temporary restraining order or preliminary injunction is an equitable
remedy within the sound discretion of the trial court. 13 To obtain a temporary restraining order
or preliminary injunction, Derma Pen must establish the following: (1) substantial likelihood of
success on the merits; (2) irreparable injury will be suffered unless the injunction issues; (3) the
threatened injury to Derma Pen outweighs any damage the proposed restraining order or
injunction may cause Defendants; and (4) an injunction would not be adverse to the public
interest. 14
Derma Pen did not meet its burden to justify injunctive relief for several reasons. First,
Derma Pen has not established a substantial likelihood of success on the merits. Derma Pen
terminated the Agreement. While the parties do not dispute that there is no automatic transfer of
the United States Dermapen trademark or the Domain Name rights upon termination of the

13

See Tri-State Generation & Transmission Ass'n, Inc. v. Shoshone River Power, Inc., 805 F.2d 351, 354 (10th Cir.
1986).
14

See Beltronics USA, Inc. v. Midwest Inventory Distrib., LLC, 562 F.3d 1067, 1070 (10th Cir. 2009).

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Agreement, 4EverYoung has the right to purchase those rights and has made attempts to do so, to
which Derma Pen has been non-responsive. Derma Pen's rights in the trademark are waning and
will be extinguished once 4EverYoung completes the purchase of the Domain Name and the
United States trademark rights to Dermapen.
Additionally, for purposes of the narrow issue of trademark infringement, Section 12.1 of
the Agreement does not clearly and unequivocally restrict Defendants from using the Dermapen
trademark in the United States during the term of the Agreement, and it certainly does not restrict
Defendants from using the Dermapen trademark after termination of the Agreement. This case
is not a case based simply on trademark rights under United States law. Rather, it is a contract
case in which the Agreement between the parties governs the rights and obligations of the parties
related to the Dermapen trademark in the United States. Derma Pen's purported trademark rights
must be analyzed in the context of the Agreement; the Agreement cannot be ignored for purposes
of Derma Pen's Motion.
Second, Derma Pen has not established that irreparable injury will occur absent
injunctive relief. This case is not a pure trademark case – there are contractual rights arising in
the Agreement that underlie the parties' respective rights to the Dermapen trademark in the
United States. A presumption of irreparable harm depends upon a showing of substantial
likelihood of success on Derma Pen's claims, which Derma Pen cannot establish. Even if this
were a pure trademark case, monetary damages could adequately compensate Derma Pen if it did
ultimately succeed on the merits (which is unlikely).
Third, Derma Pen has not shown that the threatened hardship it will suffer in the absence
of injunctive relief outweighs the hardship injunctive relief will cause Defendants. Either Derma

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Pen or Defendants will suffer significant hardship depending on whether injunctive relief is
issued. However, turning again to the factor of substantial likelihood of success on the merits,
because Derma Pen has not shown that it is substantially likely to succeed on the merits of its
claims, injunctive relief that would cause significant harm to Defendants is not warranted.
Finally, the public interest is not implicated by the issuance of injunctive relief in this
case. As discussed in greater detail above, the trademark rights at issue are impacted by the
Agreement and the parties' rights and obligations set forth in that Agreement. The Agreement
governs the dispute between the parties related to the Domain Name and the Dermapen
trademark rights in the United States. For all of the reasons set forth herein, Derma Pen's motion
for a temporary restraining order and a preliminary injunction is denied.
II.

The Dispute Over the Agreement Should be Adjudicated in the United Kingdom.

The Agreement contains a "Governing Law" provision at Section 17.7 as follows:

Whether this court should resolve the substantive claims between the parties arising
under the Agreement depends on the interpretation of Section 17.7. Analyzing the Agreement as
a whole, including the provisions regarding valuation of the trademark rights and the Domain
Name in the United Kingdom, Section 17.7 is unambiguous and requires that disputes arising
under the Agreement be resolved in the United Kingdom in accordance with the laws of the
United Kingdom.

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This ruling does not necessarily mean that none of Derma Pen's causes of action can be
litigated in this venue. At least some of Derma Pen's 21 causes of action do not appear to be
directly related to the Agreement. But because the Agreement governs the rights of the parties
related to the use of the Dermapen trademark in the United States and the Domain Name, and
because Defendants' use of the trademark forms the foundation for many of Derma Pen's causes
of action, many of Derma Pen's claims appear to be affected by and subject to the Agreement and
others are at least indirectly related to the Agreement. It is unclear whether Derma Pen's claims
that may be unrelated to the Agreement can proceed independent of the claims arising directly
under the Agreement, or whether they should be stayed until a court in the United Kingdom
interprets and enforces the Agreement.
Because the parties did not address whether this case should be stayed pending resolution
of the claims related to the Agreement, the parties must each submit a brief on or before
November 7, 2013 addressing whether this case should be stayed until a court in the United
Kingdom has resolved the claims arising under the Agreement. The parties’ briefs should
include proposals for scheduling and sequencing any further proceedings in this court in the
event a stay is not issued or that a partial stay is issued.

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Order
Based on the foregoing, it is hereby
ORDERED that Plaintiff Derma Pen, LLC's Motion is DENIED in its entirety.
IT IS FURTHER ORDERED that on or before November 7, 2013, the parties shall
submit briefs on (a) whether further proceedings should be stayed pending resolution of the
dispute arising under the Agreement; and (b) the purpose, sequence, and schedule of any further
proceedings in this court.
Dated October 29, 2013.
BY THE COURT:

David Nuffer
United States District Judge

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