Quantum, Inc. v. Akeso Health Scis., LLC

• Decision Date: 02 August 2017
• Docket Number: Civil No.: 3:16-cv-00334-JE
• Parties: QUANTUM, INC., an Oregon corporation Plaintiff, Counterclaim Defendant, v. AKESO HEALTH SCIENCES, LLC, a California corporation, Defendant, Counter-Claimant.
• Court: U.S. District Court — District of Oregon

QUANTUM, INC., an Oregon corporation Plaintiff, Counterclaim Defendant, v. AKESO HEALTH SCIENCES, LLC, a California corporation, Defendant, Counter-Claimant.

Civil No.: 3:16-cv-00334-JE

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF OREGON

August 2, 2017

FINDINGS OF FACT, CONCLUSIONS OF LAW, OPINION AND ORDER

Jon P. Stride, Steven Olson, Sarah Einowski

Tonkon Torp LLP

1600 Pioneer Tower

888 SW Fifth Avenue, Suite 1600

Portland, OR 97204-2099

Attorneys for Plaintiff/Counterclaim Defendant

Aaron M. Brian, Staci Jennifer Riordan

Nixon Peabody LLP

300 South Grand Avenue, Suite 4100

Los Angeles, CA 90071-3151

Attorneys for Defendant/Counter-Claimant

JELDERKS, Magistrate Judge:

Akeso Health Sciences, LLC is a California limited liability company and is the successor in interest to PR-Osteo (collectively referred to as "Akeso"). Akeso is in the business of developing and selling nutritional supplements. Curt Hendrix is the Chief Science Officer and primary spokesperson for Akeso. Quantum is an Oregon corporation based in Eugene, Oregon that is in the business of selling natural health products. Its president and primary spokesperson is David Shaw.

This case involves numerous claims and counterclaims brought by Plaintiff/Counter-Defendant Quantum and Defendant/ Counter-Claimant Akeso relating to their long-term business relationship involving the sale and distribution of a natural migraine relief formula. For ease of reference, the claims and counterclaims are listed below.

Claims and Counterclaims

I. Quantum's Claims

Claim One seeks a declaration under the Declaratory Judgment Act that the 2002 Contract between the parties expired on October 31, 2004.

Claim Two:

Count One: Trademark Infringement of the MigreLief trademark under 15 U.S.C. §1114.

Count Two: Unfair Competition in violation of 15 U.S.C. §1125(a). Quantum alleges Akeso's use of the MigreLief trademark after its right to do so terminated has caused and will continue to cause customer confusion.

Count Three: Common law trademark infringement and unfair competition through Akeso's wrongful use of the MigreLief trademark.

II. Akeso's Counterclaims

Count 1: Declaratory Relief under the Declaratory Judgment Act that the 2002 Contract is valid and enforceable.

Count 2: Breach of Contract/Specific Performance. Akeso seeks an Order that Quantum sell to Akeso the MigreLief trademark and any common law trademark rights to MigreLief for the price of $25,000.

Count 3: Breach of contract through sales to improper accounts.

Count 4: Breach of implied covenant of good faith and fair dealing through failure to honor the 2002 Contract and the trademark purchase provisions therein.

Count 5: Promissory Estoppel. Akeso alleges Quantum failed to fulfill promises with respect to Akeso's right to purchase the MigreLief trademark for $25,000 or a later agreement to transfer the trademark to Akeso at no cost. Akeso seeks an Order that Quantum specifically perform in conformity with the terms of the 2002 Contract or in an alternative manner deemed equitable by the Court. Akeso alternatively asks the Court to grant it the right to continue using the MigreLief trademark and/or transfer to Akeso the MigreLief trademark, the trademark application, any common law trademark rights and the goodwill attached.

Count 6: Equitable Estoppel. Akeso asks the Court to order that Quantum specifically perform in conformity with the terms of the 2002 Contract or in an alternative manner deemed equitable by the Court with respect to Akeso's right to purchase or receive the MigreLief trademark. Akeso alternatively asks the Court to grant it the right to continue using the MigreLief trademark and/or transfer to Akeso the MigreLief trademark, the trademark application, any common law trademark rights and the goodwill attached.

Count 7: Cancellation of MigreLief trademark. Akeso alleges that Quantum has not engaged insubstantially exclusive use or controlled the quality of the use of the MigreLief trademark and has not had the use in commerce required to support the trademark registration. Akeso asks the Court to cancel and invalidate the MigreLief trademark or, alternatively, to grant Akeso the right to continue using the trademark due to its invalidity.

Count 8: Cancellation of MigreLief trademark application. Akeso alleges Quantum has filed a second application for the MigreLief trademark. It seeks a declaration that Quantum's continuing efforts to register the MigreLief trademark are an infringement of Akeso's rights and seeks an Order enjoining Quantum from filing further documents with the USPTO to complete or sustain registration of the MigreLief trademark.

Count 9: Breach of Implied Contract/Specific Performance. Akeso seeks an Order compelling Quantum to sell or transfer to Akeso the MigreLief trademark, any common law trademark rights and the goodwill attached.

Count 10: Breach of Implied Contract through sales to improper accounts. Akeso alleges Quantum breached the parties' implied contract by selling MigreLief tablets outside the agreed upon sales channels.

Count 11: Federal Trademark Infringement of the MigreLief trademark. Akeso alleges that it is the rightful owner of the MigreLief trademark. It further alleges that Quantum is selling under the MigreLief trademark and with the same or similar packaging, marketing and sales materials, a tablet containing an alternate formula to the Patented Formula.

Count 12: Akeso alleges Quantum engaged in unfair competition in violation of 15 U.S.C. §1125(a) through use of the MigreLief trademark on tablets containing the Alternate Formula.

Count 13: Akeso asserts common law trademark infringement and unfair competition claims regarding use of the MigreLief trademark on Alternate Formula tablets.

Count 14: Akeso alleges Quantum violated state unfair and deceptive trade practices laws through its alleged use of the MigreLief trademark.

Count 15: Federal Trademark Infringement of the PURACOL trademark. Akeso alleges Quantum is using Akeso's PURACOL trademark to sell migraine relief tablets similar to what Akeso sells using the same trademark.

Count 16: Akeso alleges Quantum engaged in unfair competition in violation of 15 U.S.C. §1125(a) with respect to the use of Akeso's PURACOL trademark.

Count 17: Akeso asserts common law trademark infringement and unfair competition claims regarding Quantum's alleged use of the PURACOL trademark.

Count 18: Akeso alleges Quantum violated state unfair and deceptive trade practices laws through its alleged use of the PURACOL trademark.

Count 19: Akeso seeks injunctive relief.

Procedural Background

On March 31, 2017, Quantum filed a motion for summary judgment which this Court granted in part and denied in part by Opinion and Order dated June 5, 2017. (Dkt. #122). The Court's Order resolved in Quantum's favor Quantum's Claim One and Akeso's Counterclaims 1, 2, 3, 4, 6, 11, 12, 13, 14, and 19. The Court then decided that trial on the remaining issues would be bifurcated with questions regarding trademark infringement being reserved for phase two. Due to the Court's concern regarding the parties' disagreement as to whether Akeso was entitled to a jury trial on Counterclaim 9, the Court advised the parties at the pretrial conference that, pursuant to the discretion granted it by Fed. R. Civ. Pro. 39(c), it would most likely consider the jury's verdict on that claim to be advisory.

THE COURT: So even if the jury decided question two, in Akeso's -- question two - I mean, claim two, in Akeso's favor, I would probably make an independentdetermination. At least I would give it more thought, whether it was incumbent on me to make that independent determination, so that if there was an appeal, the case wouldn't be sent back by the Court of Appeals . . . . So I'm just putting that out there so it doesn't come as a surprise if we have some argument and issues of that nature after the jury comes in with a verdict.

* * *

Do you understand what I'm saying?

MR. BRIAN: I do, Your Honor.

THE COURT: Mr. Stride?

MR. STRIDE: I understand, Your Honor . . . .

(Pretrial Trans. 89:2-13; 89:24-90:2).

A jury was empaneled and trial was held June 6, 7, 8, 9 and 12, 2017 on Akeso's Counterclaims 5, 9 and 10. As Akeso's counterclaims were the only issues for trial, it presented its case first. The jury heard evidence regarding Counterclaims 9 and 10. At the close of Akeso's case Quantum moved for judgment as a matter of law or, in the alternative, on the merits on Counterclaims 9 and 5 and a potential unjust enrichment claim. (Dkt. #134). The Court denied the motion and again indicated that even though Counterclaim 9 may go to the jury, the Court was inclined to treat the jury's verdict on that issue as advisory. (Trans. 437:15-438:16). At the close of the evidence presented to the jury, Quantum renewed its motion for judgment as a matter of law or, alternatively, on the merits, which the Court again denied. (Trans. 683:7-15). On June 12^th, while the jury was deliberating, additional evidence was presented to the Court concerning Counterclaim 5 and proposed Counterclaim 20.

On June 12, 2017, the jury returned a verdict awarding Akeso damages on Counterclaim 10 in the amount of $504,381.00. The jury also returned a verdict in Akeso's favor onCounterclaim Nine, determining that the parties had an implied contract which required Quantum to transfer the MigreLief trademark to Akeso for $25,000. (Trans. 836:11-837:13).

Although the jury's verdict resolved the issue as to out of channel sales, there are several issues for resolution by the Court involving the MigreLief trademark and minor issues involving Akeso's PURACOL trademark. At a July 11, 2017 status conference, after allowing submission of post-trial briefing, the Court discussed the terms of a potential judgment and took additional argument. The Court also granted leave to submit additional briefing on certain discrete issues. The parties submitted subsequent briefing by letter.

Pursuant to Fed. R. Civ. P. 52(a), the Court now sets...