Malem Medical, LTD. v. Theos Medical Systems, Inc., 3:13-cv-05236

Plaintiffs Malem Medical and Enuresis Associates entered a consent decree with Defendants Theos Medical Systems and Saket Bhatia requiring removal/modification of specified factual statements from Plaintiffs’ website and other published materials and prohibiting disparagement.
Defendants moved for an order to show cause for civil contempt, alleging Plaintiffs failed to remove prohibited statements from (1) their website, (2) product packaging, and (3) third-party websites, and that Plaintiffs disparaged Defendants at a conference and in a product review.
The court evaluates contempt under the Ninth Circuit standard: moving party must prove violation by clear and convincing evidence; contemnors may show inability to comply or a good-faith reasonable interpretation of the order.
Key disputed phrases did not appear verbatim on Plaintiffs’ website; Plaintiffs contended those materials fell outside the consent decree’s scope or were posted by third parties pre-decree.
The court found Plaintiffs’ interpretations of the consent decree to be in good faith and reasonable on most points, but ordered limited discovery to determine Plaintiffs’ role in some third-party postings and required an inventory of packaging materials containing prohibited phrases.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether website statements violate the consent decree	Plaintiffs: statements differ from prohibited phrases and are excluded	Defendants: statements amount to the prohibited content and must be removed	Denied — Defendants failed to show clear and convincing evidence; Plaintiffs’ interpretation was reasonable
Whether third-party website postings are covered	Plaintiffs: "published materials" excludes third-party sites outside their control	Defendants: Plaintiffs are responsible for third-party content on their sites	Denied as to blanket contempt; limited discovery ordered to test whether Plaintiffs caused or control certain third-party postings
Whether product packaging is "published materials" under the decree	Plaintiffs: packaging is not covered by the term and thus excluded	Defendants: packaging containing prohibited phrases violates the decree	Denied on contempt; ambiguity favors Plaintiffs’ reasonable interpretation, but Plaintiffs must report inventory of such packaging and court may act if substantial inventory remains
Whether statements constituted disparagement (conference and review)	Plaintiffs: third-party or pre-decree statements not covered by ¶15	Defendants: statements at conference and in a product review disparaged Defendants, violating ¶15	Conference claim denied without prejudice for lack of reliable evidence; product review removal ordered though not held contemptuous due to pre-decree third-party posting

F.T.C. v. Affordable Media, 179 F.3d 1228 (9th Cir. 1999) (moving party must prove civil contempt by clear and convincing evidence)
Stone v. City & County of San Francisco, 968 F.2d 850 (9th Cir. 1992) (standard for contempt and burden-shifting explained)
United States v. FMC Corp., 531 F.3d 813 (9th Cir. 2008) (consent decrees construed as contracts for enforcement)
Hook v. State of Ariz., Dep’t of Corr., 972 F.2d 1012 (9th Cir. 1992) (same: consent decrees and contractual interpretation)
In re Dual-Deck Video Cassette Recorder Antitrust Litig., 10 F.3d 693 (9th Cir. 1993) (good-faith interpretation can negate contempt)
Vertex Distrib., Inc. v. Falcon Foam Plastics, Inc., 689 F.2d 885 (9th Cir. 1982) (a person should not be held in contempt for a reasonable interpretation of an order)