Medimport sued defendants alleging that they conspired to
usurp Medimport’s business opportunities by conducting business under
Medimport's registered trademark and trade name, Halimed Medical Equipment,
without authorization. Cabreja and
others entered into an exclusive distribution agreement to sell Halimed
products in the US, South America, and the Carribean, but then allegedly
misrepresented their sales, engaging in multiple sales under the Halimed name
that weren’t disclosed to Medimport.
Defendants allegedly tried to get the Halimed name for themselves
through various maneuvers. Medimport
sued for unfair competition, breach of contract, fraudulent inducement,
misappropriation of trade secrets, etc.
Medimport’s initial motion for preliminary injunction based
on its unfair competition, state unfair trade practices, and breach of contract
claims was denied. However, the
magistrate judge did find that the court had subject matter jurisdiction based
on the Lanham Act claim, the sole federal claim. Defendants argued that direct competition in
US commerce was required, but the judge disagreed and held that Medimport had constitutional
and prudential standing. Even if direct
competition in the US were required, competition existed between Medimport
(albeit through its representative Cabreja) and Cabreja (on behalf of
himself). Medimport showed a substantial
likelihood of prevailing on the merits, but failed to demonstrate irreparable
harm because defendants stopped using the Halimed name and Cabreja represented
that they wouldn’t restart.
On further proceedings, defendants renewed their argument
that Medimport lacked rights because they weren’t using the mark in the
US. But, under the distribution
agreement, Cabreja and another defendant had exclusive rights to promote and
sell Halimed products in the US, and the complaint alleged that Cabreja in fact
made a sale in Florida under the agreement.
That was enough for US use.
Defendants also challenged Medimport’s constitutional and
prudential standing, and the judge found it worthwhile to use the awful Phoenix of Broward standard, even though
this wasn’t a false advertising case.
(For Article III purposes, Medimport alleged an actual injury fairly
traceable to defendants' alleged misconduct that would be redressed by the
relief sought.) Of course, the factors
were useless and mechanically favored the alleged trademark owner in this
trademark case: false association is the type of harm the Lanham Act aims to
prevent; the injury of infringement to a trademark owner is direct; no one else
has a greater interest; there’s a causal link between the alleged misconduct
and the alleged harm; and there was no risk of duplicative damages from another
owner.
The magistrate judge also rejected the argument that the
economic loss rule barred most of Medimport’s claims, including its Lanham Act
claim. Unfortunately the reasoning was
bizarre: Florida’s economic loss rule doesn’t bar intentional torts, and “[t]rademark
infringement and unfair competition are intentional torts.” I’m pretty sure a
better reason would be that federal trademark infringement (which does not
require intent) can’t be governed by Florida rules (not to mention that
Florida’s unfair trade practices statute has its own rules). Furthermore, Medimport alleged more than just
breach of contract; the allegedly deceptive acts and usurpation of corporate
opportunities were enough to plead a valid FDUPTA claim.
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