Aceto Corp. v. Therapeuticsmd, Inc.

• Decision Date: 17 July 2013
• Docket Number: Case No. 12–81253–CIV.
• Parties: ACETO CORPORATION, a New York corporation, Plaintiff, v. THERAPEUTICSMD, INC., a Nevada corporation, BocaGreenMD, Inc., a Nevada corporation, Defendants.
• Court: U.S. District Court — Southern District of Florida

953 F.Supp.2d 1269

ACETO CORPORATION, a New York corporation, Plaintiff,

v.THERAPEUTICSMD, INC., a Nevada corporation, BocaGreenMD, Inc., a Nevada corporation, Defendants.

Case No. 12–81253–CIV.

United States District Court,

S.D. Florida.

July 17, 2013.

Matthew David Grosack, Michael Garrett Austin, DLA Piper LLP (U.S.), Miami, FL, for Plaintiff.

Travis Reid Chapin, Patricia Anne Leonard, Greenberg Traurig, P.A., West Palm Beach, FL, for Defendants.

OPINION AND ORDER ON MOTION TO DISMISS

KENNETH A. MARRA, District Judge.

THIS MATTER is before the Court upon Defendants' Motion to Dismiss Complaint and for More Definite Statement [DE 8]. The Court has carefully considered the motion, response, reply, and is otherwise fully advised in the premises.

Introduction¹

Plaintiff, Aceto Corporation (“Plaintiff” or “Aceto”) is an international marketing, sales and distribution company focused on the sourcing and distribution of human health products (including finished dosage form generics and nutritionals), pharmaceutical ingredients (including pharmaceutical intermediates and active pharmaceutical ingredients), and performance chemicals (including specialty chemicals and agricultural protections products). Compl. ¶ 3. Defendant BocaGreenMD, Inc. (“BocaGreenMD”) is a wholly owned and directly controlled subsidiary of Defendant TherapeuticsMD, Inc. (“TherapeuticsMD”). Compl. ¶ 6. Plaintiff alleges TherapeuticsMD and BocaGreenMD are engaged in the production, marketing, promotion and sale of a generic line of prenatal vitamins being marketed and sold under the name “Prena1,” throughout this country in violation of Aceto's rights. Compl. ¶ 7. Plaintiff brings this action because of “Defendants pattern of ongoing wrongful actions and improper competitive conduct relating to the unauthorized use, marketing, promotion and sale of the unique Quatrefolic Products (and the federally registered trademarks associated therewith) in direct violation of Aceto's legal rights to the same pursuant to a licensee arrangement.” DE 11.

Aceto has filed a Complaint against TherapeuticsMD and BocaGreenMD (together, “Defendants”) for Federal Unfair Competition and False Designation of Origin and False and Misleading Representations pursuant to the Lanham Act, 15 U.S.C. § 1125(a) (Count I); False Advertising pursuant to the Lanham Act, 15 U.S.C. § 1125(a) (Count II), common law unfair competition (Count III), violation of the Florida Deceptive and Unfair Trade Practices Act (“FDUTPA”) pursuant to Fla. Stat. § 501.201 et seq. (Count IV); statutory injury to business reputation and dilution pursuant to Fla. Stat. § 495.151 (Count V), common law unjust enrichment (Count VI); misappropriation and conversion (Count VII), tortious interference (Count VIII), and declaratory and supplemental relief pursuant to 29 U.S.C. §§ 2201 and 2202 (Count IX). DE 1.

Allegations

Aceto is an established international marketing, sales and distribution company which is a global leader in the marketing, sales and distribution of human health, pharmaceutical ingredients and performance chemical products. Compl. ¶ 14. Aceto functions as a virtual manufacturing company, distributing more than 1,100 compounds used principally as raw materials in the production of pharmaceutical and chemical products. Compl. ¶ 15. Aceto is an industry leader in the pharmaceutical ingredient supply industry, and has a long established reputation for excellence in the industry. With respect to its business operations, Aceto has strategic relationships with manufacturers of pharmaceutical, nutraceutical, agricultural and specialty chemical products in the United States and internationally which serve as a valuable resource for Aceto's customers, enabling them to procure high-quality ingredients and vital chemical-based products necessary for their diverse and complex applications. Compl. ¶ 16.

Among Aceto's multiple business segments, Aceto acquires and maintains certain exclusive marketing, sale, and distribution rights, including related patent rights and trademark rights for numerous active pharmaceutical ingredients (“APIs”) and other high quality pharmaceutical and nutraceutical ingredients which Aceto supplies to its customers, including various pharmaceutical companies. Compl. ¶ 17.

Aceto's ability to control properly the marketing, sales, and distribution strategies of its pharmaceutical/nutraceutical ingredient products is critical to the success of Aceto's business. Compl. ¶ 18. Likewise, Aceto's ability to ensure the quality and effectiveness of its products and pharmaceutical/nutraceutical ingredient products has developed substantial customer loyalty and customer goodwill which is critical to the success of Aceto's business. Compl. ¶ 19.

Pursuant to an exclusive distribution and supply agreement with the product manufacturer, Gnosis S.P.A. of Milan, Italy (“Gnosis”), dated January 1, 2011, Aceto is the exclusive licensee in the United States to market, sell, and distribute a patented pharmaceutical ingredient product manufactured by Gnosis, and known as Quatrefolic, which is a glucosamine salt ² powder (referred to herein as the “Quatrefolic Products”). Compl. ¶ 20. Pursuant to its exclusive distribution agreement with Gnosis, for prescription purposes Aceto has the exclusive license and rights within the United States to use, promote and sub-license the trademarks and trade-names associated with the Quatrefolic Products, including but not limited to, the registered trademark Quatrefolic & Design, United States Trademark Registration No. 3,799,826 (collectively referred to herein as the “Quatrefolic Mark”). Compl. ¶ 21.

Pursuant to its exclusive distribution agreement with Gnosis, for prescription purposes Aceto also has the exclusive license and rights within the United States to use, sell, offer for sale and import the patented Quatrefolic Products under United States Patent No. 7,947,662, and the related pharmaceutical ingredient products. Compl. ¶ 22. The Quatrefolic Mark has been prominently utilized in connection with all aspects of the marketing, advertising, promotion and sale of the Quatrefolic Products, including product packaging, marketing brochures, websites, print advertising, informational and promotional materials printed and distributed in connection with the Quatrefolic Products. Compl. ¶ 23.

Aceto has continuously used the Quatrefolic Mark in connection with the marketing, promotion and advertising for the Quatrefolic Products, as well as in connection with its relevant business transactions, throughout the United States. Compl. ¶ 24. Substantial monies and resources have been invested and utilized in connection with advertising and promoting the Quatrefolic Mark for the Quatrefolic Products. Compl. ¶ 25.

As a result of the marketing and promotion efforts and product sales, the Quatrefolic Mark has come to be recognized by purchasers within the pharmaceutical and nutraceutical industry as identifying the high-quality and consistent Quatrefolic Products. Compl. ¶ 27. Companies have come to trust the Quatrefolic Mark, and rely upon the quality, safety and effectiveness of products bearing the Quatrefolic Mark, and to associate the Quatrefolic Mark with the licensed and authorized sale and distribution of the Quatrefolic Products by Aceto. Compl. ¶ 28.

The Quatrefolic Mark has been continuously used by Aceto in marketing and promotional materials for the Quatrefolic Products in interstate commerce, and the Quatrefolic Mark has become, through widespread and favorable public acceptance and recognition, an asset of substantial value to Aceto as a symbol of goodwill and origin. Compl. ¶ 29. By virtue of Aceto's exclusive licensee rights, and its adoption and continuous use of the Quatrefolic Mark, Aceto is the exclusive licensee and owner of rights, title and interest in and to the Quatrefolic Mark in connection with the prescription pharmaceutical ingredient industry in the United States. Compl. ¶ 30.

In connection with the process for distribution of the Quatrefolic Products throughout the United States, Aceto has entered into certain limited supply agreements, whereby Aceto provided companies with certain limited distribution rights and limited sub-licensing rights in connection with Quatrefolic Products and the Quatrefolic Mark. Compl. ¶ 31. These limited supply agreements include express limitations and restrictions to ensure that Aceto can properly protect its critical legal rights and intellectual property rights relating to the Quatrefolic Products and the Quatrefolic Mark, and to ensure that Aceto can properly control the distribution and marketing strategy for the Quatrefolic Products. Compl. ¶ 32.

For one such limited supply agreement, Aceto and Pernix Therapeutics Holdings, Inc. (“Pernix”) entered into the Semi–Exclusive Supply Agreement dated August 4, 2011 (the “Pernix Supply Agreement”), whereby Pernix agreed to purchase exclusively the Quatrefolic Products from Aceto, and whereby Pernix obtained certain other limited rights to sub-license the Quatrefolic Products to third parties under specific circumstances and subject to specific conditions. Compl. ¶ 33. With respect to Pernix's limited rights, Section 4(b) of the Pernix Supply Agreement expressly provides that:

Pernix shall be entitled to sub-license Product to one or more (as set forth on Appendix I) third parties (“SubLicensees”), provided, that (i) Pernix enters into written agreements with each such Sub–Licensee under terms consistent with this Agreement ..., and (ii) Aceto remains the direct supplier of Product to each such Sub–Licensee, such that the Products will be shipped by Aceto directly to such Sub–Licensee. Aceto shall have the right to review and approve all proposed sub-license agreements ...

Compl. ¶ 34.

Based upon the superior quality, effectiveness and reputation of the Quatrefolic Products, Defendants wanted to obtain the high-quality Quatrefolic Products, and to...