Vitamins Online, Inc. v. HeartWise, Inc.
| Decision Date | 10 November 2020 |
| Docket Number | Case No.: 2:13-cv-00982-DAK |
| Parties | VITAMINS ONLINE, INC., a Delaware corporation, Plaintiff, v. HEARTWISE, INC. an Oregon corporation d/b/a NATUREWISE, Defendant. |
| Court | U.S. District Court — District of Utah |
FINDINGS OF FACT AND CONCLUSIONS OF LAW
On October 28, 2013, Plaintiff filed a complaint against Defendant in this court alleging unfair competition under Section 43(a) of the Lanham Act (15 U.S.C. § 1125(a)) and Utah common law for false advertising. The Complaint alleged false advertising based on two types of conduct: (1) manipulating Amazon.com's ("Amazon") customer review system ("Review Claims"); and (2) falsely advertising and misrepresenting the content and characteristics of its green coffee and garcinia cambogia products ("Ingredients Claims").
The court held a bench trial in this matter on July 16 - August 6, 2020. Plaintiff was represented by James E. Magleby, Yevgen Kovalov, Edgar R. Cataxinos, and Geoffrey Kris Biehn. Defendant was represented by R. Joseph Trojan, Francis Wong, Kevin R. Davis, and Dylan C. Dang. Throughout the trial, the court heard the testimony of witnesses and received exhibits by the parties into evidence. At the close of Plaintiff's case in chief, Defendant moved for judgment on partial findings pursuant to Federal Rule of Civil Procedure 52(c).
The court now issues the following Findings of Fact and Conclusions of Law, finding that Plaintiff has met its burden in demonstrating that Defendant violated Section 43(a) of the Lanham Act and Utah state common law. In conjunction thereto, the court denies Defendant's Rule 52(c) motion.
1. Vitamins Online, Inc. ("Vitamins Online") is a Utah-based retailer that distributes supplements under the brand name NutriGold. Tr. 66-67 (Khan). Osman Khan ("Khan") and Sripriya Rangarajan ("Rangarajan") are the co-founders of Vitamins Online and NutriGold. Tr. 70. Khan is the Chief Financial Officer of Vitamins Online. Stip. Fact 3. Vitamins Online launched its brand of supplements under the NutriGold brand in 2010. Tr. 70. Prior to that time, Khan and Rangarajan invested considerable time and resources to identify options to make products without the excipients (e.g. magnesium stearate, silicon dioxide) commonly found in dietary supplements. Tr. 70. It took Vitamins Online approximately one year of preparation and an additional year to launch its first NutriGold product. Tr. 70. Khan testified at trial, and the court finds that he was a credible, reliable witness.
2. HeartWise, Inc d/b/a NatureWise ("NatureWise") is an Oregon Corporation that sells dietary supplements on Amazon under the brand name NatureWise. NatureWise wasincorporated in May of 2012. Tr. 419-420; Ex. 5144.001. DavidPaul Doyle ("Doyle") is NatureWise's founder and Chief Brand Officer. Stip. Facts 4-6. In 2018, Tom Nguyen of Robinson Pharma became NatureWise's Chief Executive Officer following his investment in the company. Tr. 423-424. Doyle currently owns 49% of NatureWise and has no active role in its management or daily operations. Tr. 424. Doyle testified at trial. The court finds that he was not a credible witness, and his testimony was unreliable.2
3. Vitamins Online first launched its NutriGold Garcinia Cambogia Gold supplement ("NutriGold Garcinia") in 2011. Tr. 106. Garcinia cambogia is a fruit that contains hydroxycitric acid ("HCA"). Tr. 106. NutriGold Garcinia contained the clinically proven, multi-patented SuperCitrimax garcinia cambogia ingredient supplied by the company InterHealth (now Lonza). Tr. 107-108; Tr. 114-115; Ex. 3. SuperCitrimax is a patented form of HCA from garcinia cambogia bound to calcium and potassium. Tr. 114-115; Ex. 3. SuperCitrimax provides 60% calcium/potassium salt HCA and is clinically proven to curb appetite, burn fat, and reduce body weight. Tr. 114-115; Ex. 3. Generic garcinia cambogia does not have the same clinical support as SuperCitrimax because the generic is not bound to the patented ratio of the calcium/potassium salt. Tr. 117. SuperCitrimax is significantly more expensive than generic extracts because it is proven to be effective and provides a competitive advantage in the marketplace. Tr. 119.
4. Prior to the middle of 2013, there were a few other competitors on Amazon that were offering garcinia cambogia products, and some contained SuperCitrimax. Tr. 123-24. However, by mid-2013, Vitamins Online was the only seller of SuperCitrimax garcinia cambogia on Amazon. Tr. 123-24. Vitamins Online advertised its NutriGold Garcinia product on Amazon as containing SuperCitrimax and 60% HCA. Tr. 110-19; Tr. 114-15; Ex. 3. Vitamins Online heavily advertised that its product contained SuperCitrimax because it was backed by clinical studies. Tr. 119.
5. The TV personality Dr. Mehmet Oz, known as "Dr. Oz," aired a television show on October 1, 2012, in which he promoted the benefits of garcinia cambogia. Ex. 55, 104. That show featured Dr. Harry Preuss, the chief researcher for the SuperCitrimax ingredient in several studies. Tr. 207-10; Exs. 104, 105, and 56. In the episode, Dr. Oz gave specific buying guidelines to help customers purchase the right product—garcinia cambogia extract with at least 50% HCA and potassium or calcium/potassium. Tr. 211; Ex. 56.1. He also emphasized that the dosage needed to be high. Tr. 211; Ex. 56.1. Dr. Oz's show on garcinia cambogia increased Vitamins Online's sales substantially. Tr. 212-13. In order to meet that demand, NutriGold had a supply agreement with InterHealth that guaranteed an uninterrupted supply of SuperCitrimax. Tr. 216-17; Ex. 607.
6. Vitamins Online spent millions advertising its NutriGold Garcinia and placed particular emphasis on the SuperCitrimax ingredient. Tr. 152-57; Ex. 611.1.
7. In 2012, Vitamins Online launched a green coffee product with Svetol ("NutriGold Green Coffee") (collectively, with NutriGold Garcinia, the "NutriGold Products"), a chlorogenic acid product produced by the company Naturex. Tr. 137. Svetol is approximately four or five times more expensive than generic green coffee bean extract. Tr. 142-43, 145.Despite its higher price, Vitamins Online chose to produce a green coffee product containing Svetol because it was backed by clinical studies. Tr. 137-39. The studies relied upon by Vitamins Online demonstrated that the amount of the active ingredient of the green coffee is critical, as a product with less than the amount used in the study may not provide the same benefit. Tr. 141-42; Ex. 634.3. Importantly, Svetol was the only green coffee extract that was clinically proven to provide a weight-loss benefit. Tr. 143-44. Therefore, on its Amazon product page, Vitamins Online advertised NutriGold Green Coffee as the only product that contained 400 milligrams, the dosage used in the clinical studies, of Svetol Green Coffee extract per capsule. Tr. 146; Ex. 380.2. Vitamins Online spent millions advertising its NutriGold Green Coffee and placed particular emphasis on the Svetol ingredient. Tr. 152-57; Ex. 611.1.
8. Dr. Oz aired a television show on March 1, 2012 promoting the benefits of green coffee. Tr. 157; Ex. 5. Sales of Vitamins Online's NutriGold Green Coffee spiked after the episode. Tr. 159. In late 2012, Dr. Oz aired a second episode on green coffee, offering buying guidelines for green coffee bean extract products. Tr. 199, 872; Exs. 41-42. In the second show, Dr. Oz told viewers to look for Svetol or GCA; products that had at least 45% chlorogenic acid; products dosages of 400 mg, 3x per day; and explained that a 30-day supply costs approximately $30. Tr. 201-03, 206-07, 873; Exs. 42.1, 42.2. He also warned consumers to not be duped by the word "pure." Tr. 201-03, 206-07, 873; Exs. 42.1, 42.2. In addition, Dr. Oz recommended purchasing products with no fillers and no artificial ingredients. Tr. 996; Ex. 56.
9. Following the second Dr. Oz show, sales of NutriGold Green Coffee increased significantly because the product matched Dr. Oz's requirements. Tr. 206. Eventually, NutriGold Green Coffee obtained a #1 ranking on the Amazon Best Sellers list. Tr. 160-61.
10. When Doyle launched NatureWise, he had no experience with supplements or the supplement industry. Tr. 425. He did, however, have experience in selling spiritual books on Amazon. Tr. 418-19. To transition from book sales to supplements on Amazon, Doyle watched a few videos on the internet and looked for a supplier. Tr. 430. In addition, he conducted research and discovered green coffee bean extract was the top seller in the health and personal care category on Amazon. Tr. 425. Accordingly, NatureWise's first product was a green coffee product. Tr. 427.
11. From approximately 2012 to the end of 2013, NatureWise launched six products-Green Coffee Bean Extract 800; Svetol with GCA; Garcinia Cambogia; Krill Oil; Ubiquinol; and Vitamin D. Tr. 427-28.
12. NatureWise launched the following products on the following dates: the first green coffee product (Amazon Standard Identification Number ("ASIN") B009VUZJTM) launched in July of 2012; the second green coffee product launched in October 2012 (ASIN B009aH4OR4); the first garcinia product launched in January 2013 (ASIN B00B5H5BHA); the second garcinia product launched in August 2015 (ASIN B01HRHBNJK). Tr. 429; Ex. 701.1.
13. NatureWise launched its first green coffee product in the summer of 2012 as a result of high consumer demand. Tr. 420, 433. That product was called NatureWise Green Coffee Bean Extract 800 (the "First Green Coffee"). Tr. 427. NatureWise used Private Label Nutraceuticals ("PLN") as its contract manufacturer. Tr. 859-61; Ex. 50.20. NatureWise's first purchase from PLN occurred in June 2012, and NatureWise continued purchasing product from PLN thereafter. Tr. 859-63; Ex. 50.20-30. At the start, NatureWise purchased generic green...
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