Cerule, LLC v. Stemtech Healthsciences, Inc.
1:16-cv-00873
D. Or.Aug 24, 2016Background
- Cerule LLC owns the registered trademark STEMENHANCE and previously manufactured the StemEnhance supplement (about 70% of its business) though it had no competing product on the market at the time of the hearing.
- From 2006 to 2016 Cerule supplied StemEnhance to Stemtech under a Supply Agreement that licensed Stemtech to market the product; disputes arose over missed payments and alleged arrearages.
- Cerule terminated the Supply Agreement in June 2016 and demanded Stemtech stop using the StemEnhance mark; Cerule then sued for breach of contract, trademark infringement, and related claims in May 2016.
- Cerule obtained a TRO prohibiting Stemtech from selling or marketing products associated with the StemEnhance mark; the court held a preliminary injunction hearing on August 23, 2016.
- Cerule sought a preliminary injunction preventing Stemtech from using STEMENHANCE and confusingly similar marks (including SE2 and SE3) in the United States; Cerule also moved to hold Stemtech in contempt for alleged TRO violations based on foreign webpages.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Use of STEMENHANCE in U.S. | Cerule: Stemtech continues to market products using STEMENHANCE; Cerule owns valid mark and will suffer harm if Stemtech keeps using it. | Stemtech: Has removed STEMENHANCE from U.S. products and webpages; Supply Agreement terminated so no license. | Court: Granted injunction — Stemtech enjoined from referencing/using STEMENHANCE in the U.S., including U.S. webpages. |
| Use/sale of SE2 and SE3 (alleged confusing marks) | Cerule: Stemtech previously used STEMENHANCE to market SE2/SE3 so consumer confusion likely; thus infringement and need to enjoin SE products/marks. | Stemtech: SE2/SE3 are not similar in sight/sound; no current U.S. use of STEMENHANCE; would suffer harm from injunction. | Court: Denied injunction as to SE2/SE3 — Cerule failed to show irreparable harm or a sufficiently strong record to resolve confusion claims now. |
| Irreparable harm standard for trademark injunction | Cerule: Loss of goodwill, market share and inability to launch competing product constitute irreparable harm; judgment-proof risk. | Stemtech: Plaintiff must present concrete evidence; mere speculation or past use insufficient; Ninth Circuit rejects presumption of irreparable harm. | Court: Applied Herb Reed standard; Cerule offered no evidence of actual irreparable harm or inability to satisfy judgment, so injunction beyond STEMENHANCE ban not warranted. |
| TRO contempt based on foreign webpages | Cerule: Stemtech continued to use STEMENHANCE on foreign-targeted webpages, so should be held in contempt and sanctioned. | Stemtech: TRO and court’s jurisdiction pertain to U.S. conduct; foreign pages are outside court’s authority. | Court: Denied show-cause motion — pages were directed at non-U.S. consumers and court declined to exert extra-territorial jurisdiction. |
Key Cases Cited
- Winter v. Natural Res. Def. Council, 555 U.S. 7 (2008) (preliminary injunction standard requires likelihood of success and irreparable harm; balance of equities and public interest considered)
- Grocery Outlet, Inc. v. Albertson's, Inc., 497 F.3d 949 (9th Cir.) (trademark infringement requires ownership of valid mark and use of confusingly similar mark)
- Herb Reed Enters., LLC v. Florida Entm't Mgmt., Inc., 736 F.3d 1239 (9th Cir.) (rejects presumption of irreparable harm in trademark cases; requires evidence and factual findings)