Healthpoint, Ltd. v. Ethex Corp., CIV.SA-00-CA-0757-OG.

Citation273 F.Supp.2d 817
Decision Date12 July 2001
Docket NumberNo. CIV.SA-00-CA-0757-OG.,CIV.SA-00-CA-0757-OG.
PartiesHEALTHPOINT, LTD., Plaintiff, v. ETHEX CORPORATION, Defendant. Ethex Corporation, Counterclaim Plaintiff, v. Healthpoint, Ltd., DPT Laboratories, Ltd. and DFB Pharmaceuticals, Inc. (f/k/a DFB Holding, Inc.), Counterclaim Defendants. Dpt Laboratories, Ltd. and Dfb Pharmaceuticals, Inc., Counterclaim Plaintiffs, v. Ethex Corporation and KV Pharmaceuticals, Inc., Counterclaim Defendants.
CourtUnited States District Courts. 5th Circuit. Western District of Texas

Charles W. Hanor, Gunn, Lee & Hanor, P.C., San Antonio, TX, C. David Kinder, Saul H. Perloff, Kirt S. O'Neill, Akin, Gump, Strauss, Hauer & Feld, L.L.P., San Antonio, TX, Eric W. Cernyar, Attorney at Law, San Antonio, TX, for Plaintiff.

George H. Spencer, Jr., Clemens & Spencer, San Antonio, TX, Jeffrey J. Jowers, Charles A. Weiss, Daniel M. O'Keefe, St. Louis, MO, Clemens & Spencer, San Antonio, TX, Terrence J. O'Toole, St. Louis, MO, Peter R. Mathers, Kleinfeld, Kaplan & Beck, Washington, DC, for Defendant.

ORDER

GARCIA, District Judge.

Pending before the Court are the Motions for Partial Summary Judgment filed by Healthpoint, Ltd. (Dkt.# 187, 188); the Report and Recommendation of the United States Magistrate Judge (Dkt.# 204) and Ethex Corporation's objections thereto (Dkt.# 217).

Where no party has objected to the Magistrate Judge's Memorandum and Recommendation, the Court need not conduct a de novo review. In such cases, the Court need only review the Memorandum and Recommendation and determine whether it is either clearly erroneous or contrary to law. United States v. Wilson, 864 F.2d 1219, 1221 (5th Cir.1989), cert. denied, 492 U.S. 918, 109 S.Ct. 3243, 106 L.Ed.2d 590 (1989).

On the other hand, if any party objects to the Memorandum and Recommendation, the Court must review those portions of the report de novo. See 28 U.S.C. § 636(b)(1) (a judge of the court shall make a de novo determination of those portions of the report or specified proposed findings and recommendations to which objection is made); see also Kreimerman v. Casa Veerkamp, S.A. de C.V., 22 F.3d 634, 646 (5th Cir.1994), cert. denied, 513 U.S. 1016, 115 S.Ct. 577, 130 L.Ed.2d 492 (1994). Such a review means that the Court will examine the entire record and make an independent assessment of the law. The Court need not, however, conduct a de novo review when the objections are frivolous, conclusive, or general in nature. Battle v. United States Parole Comm'n, 834 F.2d 419, 421 (5th Cir.1987).

In its objections, Ethex Corporation correctly notes some inconsistent statements in the Magistrate Judge's report. She recommends, without objection, that Healthpoint's Motion for Partial Summary Judgment on its claim of "palming off" should be denied (Dkt. # 204 @ p. 14). She further recommends, without objection, that Healthpoint's Motion for Partial Summary Judgment on Ethex Corporation's counterclaims of "misbranding" and distribution of industry letters also be denied. (Dkt. # 204 @ pp. 17-18). In conclusion, however, she states that Healthpoint's Motion for Partial Summary Judgment on Ethex's counterclaims should be "granted in part and denied in part." (Dkt. # 204 @ p. 18). This statement is contrary to the findings in the report, and it clearly appears that the recommendation is a denial of summary judgment on all claims.

Because Healthpoint has not objected to the recommendation, and the Court agrees with the findings therein, the recommendation should be accepted, with the exception of the misstatement contained in the conclusion, which the Court has rejected and clarified accordingly.

It is therefore ORDERED that the U.S. Magistrate Judge's report and recommendation (Dkt.# 204) is ACCEPTED in part and REJECTED in part as set forth above, and the Motions for Partial Summary Judgment filed by Healthpoint, Ltd. (Dkt.# 187, 188) are hereby DENIED in their entirety.

REPORT AND RECOMMENDATION

MATHY, United States Magistrate Judge.

Pursuant to the Orders of referral in the above-styled and numbered cause of action to the undersigned United States Magistrate Judge1 and consistent with the authority vested in United States Magistrate Judges under the provisions of 28 U.S.C. § 636(b)(1)(B) and rule 1(d) of the Local Rules for the Assignment of Duties to United States Magistrates, effective January 1, 1994, in the Western District of Texas, the following report addressing the referred motion for preliminary injunction is submitted for your review and consideration.

I. JURISDICTION

The Court has jurisdiction pursuant to 28 U.S.C. § 1331, 1332, 1338, and 1367.

II. PROCEDURAL HISTORY

By way of introduction, this lawsuit concerns two competing papain-urea wound debridement ointments, Accuzyme made by Healthpoint Ltd. ("Healthpoint") and Ethezyme made by Ethex Corporation ("Ethex"). Both ointments are available by prescription only. Healthpoint introduced Accuzyme to the market in 1996 after reverse-engineering Panafil White, a papain-urea debridement ointment then marketed by Rystan. Thereafter, Healthpoint spent millions of dollars promoting Accuzyme, creating brand awareness and market acceptance. In 2000, Ethex introduced Ethezyme, a competing papain-urea wound debridement ointment, which Ethex created by reverse engineering Accuzyme. Ethex promoted Ethezyme as an "alternative" to Accuzyme. Advertising campaigns were launched for the allegiance of physicians, pharmacists, hospitals, long-term care facilities and formularies through technical advertisements in professional magazines designed to reach those consumers as well as marketing presentations by Healthpoint and letters sent by both Ethex and Healthpoint.

On August 3, 2000, Healthpoint filed this suit alleging, among other claims, that Ethex copied Accuzyme, a known trademark, by adopting a name "highly similar in sight and connotation" and sound causing confusion, falsely advertised Ethezyme as an alternative for Accuzyme, and "palmed off" Ethezyme as a Healthpoint product.2 On the other hand, among other counterclaims, Ethex alleges that Healthpoint falsely advertised the ingredients of its Accuzyme product and that Healthpoint engaged in a false and disparaging advertising campaign regarding Ethezyme.3

The procedural history relevant to the motions addressed in this report is relatively complicated. This lawsuit began on or about August 3, 2000, when Healthpoint filed its original complaint against Ethex.4 On October 11, 2000, Healthpoint filed a pre-answer first amended complaint.5 On February 2, 2001, Healthpoint filed a second amended complaint, its "live" pleading in this case, which brings claims under the Lanham Act, 15 U.S.C. §§ 1051 et seq. for trademark infringement in violation of § 1114(1); false advertising in violation of § 1125, unfair competition in violation of § 1125(a)(1)(A); and dilution in violation of § 1125(c); and claims under the laws of Texas for trademark infringement, false advertising, unfair competition, dilution, defamation, business disparagement, misappropriation, and palming off.6 Healthpoint requests damages, an accounting of profits, treble damages, punitive damages, attorney's fees, costs, pre-judgment interest, and permanent and preliminary injunctive relief on certain of its claims.

On October 27, 2000, Ethex filed a counterclaim against Healthpoint7 and on February 2, 2001, filed an amended counterclaim adding DPT Laboratories, Ltd. ("DPT") and DFB Pharmaceuticals, Inc. ("DFB") as counterclaim defendants and pleading counterclaims for false advertising in violation of 15 U.S.C. § 1125(a) and for unfair competition, injurious falsehood, interference with prospective business relationships, and common law fraud in violation of Texas law.8 Ethex requests compensatory damages, punitive damages attorney's fees, costs, pre-judgment interest, an accounting of profits, treble damages and injunctive relief on various of its claims.

On March 15, 2001, DPT and DFB filed their original answer to Ethex's counterclaim which included counterclaims against Ethex and an added party, KV Pharmaceuticals, Inc. ("KV"), the parent of Ethex, alleging trademark infringement in violation of 15 U.S.C. § 1114, common law trademark infringement, false advertising in violation of 15 U.S.C. § 1125, common law false advertising, unfair competition in violation of 15 U.S.C. § 1125, common law unfair competition, trademark dilution in violation of 15 U.S.C. § 1125(c), trademark dilution under Texas law, defamation under Texas law, business disparagement under Texas law, common law misappropriation under Texas law, common law palming off under Texas law, tortious interference, civil conspiracy, misappropriation of trade secrets and confidential information, breach of contract (the protective order), breach of confidential relationship, conversion, fraud, and violation of the Texas Theft Liability Act. DPT and DFB seek actual damages, an accounting of profits, treble damages, attorney's fees, costs expenses, pre-judgment interest and preliminary and permanent injunctive relief.

Ethex filed a motion for preliminary injunctive relief against Healthpoint on November 22, 2000.9 On November 30, Ethex filed its memorandum in support of its motion for preliminary injunction.10 On January 5, 2001, Healthpoint filed objections to Ethex's evidence in support of its motion for preliminary injunction.11 On January 8, 2000, after several unopposed extensions of time, Healthpoint filed its response to the motion for preliminary injunction.12 On January 17, 2001, Ethex's motion for preliminary injunction was set for a hearing on February 20, 2001.13 On February 2, 2001, at the joint request of the parties and after Healthpoint had tendered its cross-motion for preliminary injunction, the Court postponed the hearing on Ethex's motion for preliminary injunction...

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