Bei Jing Han Tong San Kun Ke Ji You Xian Gong Si v. Atl. Med. Prods.

• Decision Date: 07 January 2022
• Docket Number: 8:20-CV-2972-CEH-TGW
• Court: U.S. District Court — Middle District of Florida
• Parties: BEI JING HAN TONG SAN KUN KE JI YOU XIAN GONG SI a/k/a HemaTone Beijing Science Technology Ltd. a Chinese Corporation, Plaintiff, v. ATLANTIC MEDICAL PRODUCTS, LLC d/b/a Scar Heal, a Florida limited Liability company, Defendant.

BEI JING HAN TONG SAN KUN KE JI YOU XIAN GONG SI a/k/a HemaTone Beijing Science Technology Ltd. a Chinese Corporation, Plaintiff,
v.
ATLANTIC MEDICAL PRODUCTS, LLC d/b/a Scar Heal, a Florida limited Liability company, Defendant.

No. 8:20-CV-2972-CEH-TGW

United States District Court, M.D. Florida, Tampa Division

January 7, 2022

ORDER

Charlene Edwards Honeywell, United States District Judge.

This matter comes before the Court on Defendant Atlantic Medical Products, LLC's Motion to Dismiss with Prejudice Claims I, II, V, and VI of Plaintiff's Amended Complaint [Doc. 36], the Declarations provided by Defendant [Docs. 37 and 38], and Plaintiff Bei Jing Han Tong San Kun Ke Ji You Xian Gong Si's Response in Opposition [Doc. 42]. Defendant argues that the Court lacks subject matter jurisdiction to hear Claims I, II and VI and that Claims I, II, V, and VI are not sufficiently pleaded. Having duly considered the submissions and being fully advised in the premises, the Court will GRANT the Motion to Dismiss, in part.

I. BACKGROUND

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a. Facts^[1]

Plaintiff Bei Jing Han Tong San Kun Ke Ji You Xian Gong Si is a Chinese corporation with its headquarters in Beijing, China. [Doc. 29 ¶ 1] . Plaintiff is known as HemaTone Beijing Science Technology, Ltd., which is the English equivalent of and alias for Bei Jing Han Tong San Kun Ke Ji You Xian Gong Si. Id. Plaintiff is an international marketer and distributor of medical devices and cosmetic consumer products, including skin care lotions, and scar removal gels, and regularly advises and collaborates with foreign companies to market their products in China. Id. at ¶¶ 13-14]. It has established a reputation for goodwill in China associated with its products and branding. Id. ¶ 15. Defendant Atlantic Medical Products, LLC is a Florida limited liability company based in Tampa, Florida. Id. ¶ 2. It conducts business as “Scar Heal.” Id. ¶ 3.

Plaintiff conceptualized various trademarks for the purpose of launching a new product for scar creams and scar healing gels in China. Id. ¶ 17. Among the brands conceptualized by Plaintiff in 2011 included the brand and concept for what would come to be known as the SI FU KANG MARK (“Si Fu Kang Mark” or “Mark”), pictured below:

(Image Omitted)

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Id. ¶ 18. Soon after, Plaintiff developed product packaging for its anticipated goods and the packaging bore the Si Fu Kang Mark. Id. ¶¶ 23-24.

Plaintiff sought out Defendant to produce skin creams and gels for sale in China. Id. ¶ 27. In or around 2011, Plaintiff came to the United States to meet with representatives of Defendant. Id. ¶ 31. Plaintiff and Defendant began discussing a distribution agreement for certain scar healing gels and creams in China under Defendant's Rejuvasil and Rejuvaskin trademarks. Id. ¶ 37. Plaintiff showed Defendant the Si Fu Kang Mark and product packaging. Id. ¶ 32. Prior to the 2011 meeting, Defendant had no products bearing the Mark nor did it have any sales in China for any Si Fu Kang-branded products. Id. ¶¶ 28-29.

Plaintiff granted Defendant a license for Defendant and its manufacturer, Trademark Cosmetics, Inc. (“TCI”), to affix the Si Fu Kang Mark directly on products in the United States for sale in China. Id. ¶¶ 33-34. In one manner of use, Defendant received tubes designed by Plaintiff bearing the Si Fu Kang Mark, shipped those tubes to TCI in California, and then shipped the completed products to Plaintiff for sale in China. Id. ¶¶ 35-36. In or around May 2011, Defendant exported several thousand units of its products to Plaintiff for distribution in China bearing Plaintiff's Mark. Id. ¶ 58. Due to the popularity of the products, Plaintiff continued to import Defendant's products for re-sale in China over the next two (2) years. Id.

On or about June 1, 2013, Plaintiff and Defendant entered into a formal three-year Distributorship Agreement, wherein Defendant appointed Plaintiff as the

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exclusive distributor in China of certain scar healing gel/cream products to import, sell, and distribute in China and use Defendant's trademarked product names- including Rejuvasil and Rejuvaskin products. Id. ¶¶ 38, 59. The Agreement provided, among other things, that Defendant granted Plaintiff a license to distribute certain products with certain of Defendant's marks, including Rejuvasil Scar Gel and Rejuvaskin Skin Serum and Eye Cream. Id. ¶ 39. Absent from the license granted by Defendant to Plaintiff in the 2013 Distribution Agreement was any mention of the Si Fu Kang Mark. Id. ¶ 40. Plaintiff granted Defendant a license to affix Plaintiff's mark on products, acknowledging, “custom packaging may include the Distributor's [Plaintiff's] trademark.” Id. ¶¶ 41, 66. As part of its marketing and branding, Plaintiff applied for and obtained a trademark registration in China for the Si Fu Kang Mark in 2013. Id. ¶ 42.

From 2013 to 2017, Plaintiff and Defendant operated under the Agreement without incident. Id. ¶ 67. After the initial term, the Agreement was never formally renewed, but the parties agreed to continue operating under its terms. Id. ¶ 72. Defendant's most popular products in China were “Rejuvasil Silicone Scar Gel” and “Scar Fx Silicone Sheeting.” Id. ¶ 70. Although Plaintiff was authorized under the Distribution agreement to sell other products from Defendant, the vast majority of Plaintiff's orders from Defendant were for these named products, branded with Plaintiff's Si Fu Kang Mark. Id. In the event the Agreement was terminated, Defendant had exclusive rights to any license or permit obtained by Plaintiff-at its own cost and expense-in order to import Defendant's products into China. Id. ¶

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66(e). Defendant was entitled to terminate the Agreement by giving written notice only upon (1) Plaintiff's “material failure” to perform its obligations under the contract, and (2) Plaintiff's failure to cure said breach within sixty (60) days of Defendant's written notice. Id. ¶ 66(k).

Between May 2011 and December 2018, Plaintiff imported 493, 409 units of Defendant's Products into China, from which Defendant generated over $1.6 million dollars in revenue. Id. ¶ 73. In or around July 2018, Plaintiff ordered 10, 000 units of 15 mL Rejuvasil Silicone Scar Gel, 10, 217 units of 4 mL Scar Esthetique Scar Crème, and 30, 000 units of 10 mL Scar Esthetique Scar Crème and paid Defendant approximately $114, 000 for these products. Id. ¶ 89. Upon inspection, 3, 000 units of the Rejuvasil Silicone Scar Gel, 1, 508 units of the 4 mL Scar Esthetique Scar Crème, and 3, 544 units of the 10 mL Scar Esthetique Scar Crème were confirmed defective. Id. ¶ 90. The defective products had a value of approximately $24, 000. Id. Around the same time this order was placed, in July 2018, Defendant terminated Plaintiff's authorization to sell scar Fx Silicone Sheeting. Id. ¶ 74. Plaintiff notified Defendant regarding the product quality issues in or around January 2019, offered photographs of the defective product, and offered Defendant the opportunity to inspect the products in Plaintiff's warehouse. Id. ¶ 91. Plaintiff requested that Defendant reimburse Plaintiff for the $24, 000 worth of defective products that could not be sold but Defendant has refused to do so. Id. ¶ 92.

On or about December 18, 2018, Plaintiff ordered 10, 000 units of 15 mL Rejuvasil Silicone Scar Gel from Defendant, affixed with the Si Fu Kang Mark, to

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distribute in China. Id. ¶ 94. Shortly after, Defendant confirmed the order and informed Plaintiff that 50% of the purchase price ($29, 050) was due immediately with the remaining balance due on a later date. Id. ¶ 95. On or about December 27, 2018, Defendant provided Plaintiff with a confirming invoice, which included a February 28, 2019, shipment date for the goods, and Plaintiff paid the initial deposit of $29, 050 on December 28, 2018. Id. ¶¶ 96-97. On January 2, 2019, Defendant confirmed receipt of the payment and stated it would begin production and inform Plaintiff of any updates. Id. ¶ 98. However, the product was never shipped. Id. ¶ 99.

Around the same time Plaintiff was awaiting shipment of the order, Defendant contacted Plaintiff and attempted to negotiate a royalty agreement for the use of the Si Fu Kang Mark, stating in a February 15, 2019, email to Plaintiff:

Although developed by [Plaintiff], this trademark is currently being used for our Rejuvasil product. This trademark may also be useful for other products in the future. [Defendant] would like [Plaintiff] to transfer ownership of this trademark to [Defendant]. [Defendant] is willing to compensate [Plaintiff] by offering a royalty on the use of this trademark on future sales of products bearing the name Si Fu Kang (in Chinese writing).

Id. ¶ ¶115-116. Unbeknownst to Plaintiff, on February 1, 2019, Defendant filed an application with the United States Patent and Trademark Office (“USPTO”)-under U.S. Application Serial Number 88286156-to register the Si Fu Kang^[2] despite

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knowledge that Plaintiff was the owner of the mark. Id. ¶¶ 114, 118. To support its application, the sample specimen contained the Si Fu Kang Mark on the product without Plaintiff's consent or authorization. Id. ¶ 119.

Beginning March 2019, Plaintiff contacted Defendant for updates on the status of the order that had been due to ship on February 28, 2019, but Defendant was unresponsive to telephone calls and emails. Id. ¶ 100. On or about July 29, 2019, over seven (7) months after Plaintiff placed the initial order, Plaintiff formally requested a refund of the $29, 050 deposit paid to Defendant. Id. ¶ 101. Again, Defendant's representatives were unresponsive to the request. Id.

Also unbeknownst to Plaintiff, on or around April 2019, Defendant appointed a different Chinese company known as Beijing Zheng De Tang Yi Liao Qi Xie You Xian Ze Ren Gong Si (“ZDT”) as its legal agent and exclusive distributor of Rejuvisil Scar Gel products in China. Id. ¶ 104...