Wednesday, May 10, 2017

remedial actions prevent finding of irreparable harm for TRO

Ocusoft, Inc. v. Walgreen Co., 2017 WL 1838106, No. H-17-1037 (S.D. Tex. May 8, 2017)

Ocusoft sells “the first commercially available eyelid cleanser, Ocusoft Lid Scrub,” which Walgreens aells alongside its private label eyelid cleansing pads, which are routinely placed next to Ocusoft’s products on store shelves.  Ocusoft sued for false advertising and unfair competition under the Lanham Act, federal patent infringement, and unfair competition, dilution, misappropriation of goodwill, and unjust enrichment under Texas common law. In support of its accompanying motion for a TRO, Ocusoft alleged (1) that store clerks at three Walgreens stores in Texas made false representations that the Walgreens Private Label and the Ocusoft products were the same or were made by the same manufacturer, (2) that one local store in Texas falsely advertised consumer savings on a compare-and-save label showing a $7 discount, when the actual savings was $3.50, and (3) that Walgreens’s online advertisements displayed the 2015 Walgreens Rinse-Free Pads, but customers were shipped the 2016 Walgreens Rinse-Free Pads, which contained different ingredients.

Walgreens argued that it “never instructed its local store employees to inform customers that Walgreens-branded products are the same as, or are manufactured by the same company, as Ocusoft eyelid pads.” t argued that “these isolated incidents, including a single incorrect savings tag in one store, were unlikely to influence the purchasing decisions of consumers.” Walgreens denied awareness of any customers other than Ocusoft’s agents who asked whether the products are the same or were made by the same manufacturer, or of any online customers (less than 1% of eyelid care customers) who complained about receiving the 2016 version of the product instead of the 2015 version. However, Walgreens also claimed that it had corrected the alleged misrepresentations, including replacing the incorrect compare-and-save tag, issuing internal communications to all store managers nationwide to instruct local store employees to not tell customers that the Ocusoft and Walgreens Private Label products are the same or are from the same manufacturer, and removing images of the 2015 Walgreens Rinse-Free Pads from its website.

Ocusoft argued that a TRO was still necessary because at least one Walgreens store in Florida displayed an incorrect compare-and-save tag and an employee who was questioned about the Walgreens Private Label and Ocusoft products said that they were the same.

The court found that Ocusoft hadn’t shown irreparable injury, although the court wasn’t persuaded that Ocusoft’s ten-week delay in seeking a TRO rebutted any presumption of irreparable harm. Ocusoft argued that it filed its TRO after completing its investigation, which included store visits, lab testing, and a survey; the court found that a two-to-three-month delay in seeking a TRO does not foreclose injunctive relief.

In addition, Ocusoft alleged loss of market share, goodwill, or reputation due to Walgreens’ false statements, but presented no record evidence. Speculative injury isn’t sufficient.  Though Ocusoft argued that lost market share was irreparable harm, it didn’t present any data on that alleged loss.

Without deciding whether Ocusoft was entitled to a presumption of harm, the court held that Walgreens’ corrective action avoided any alleged imminent harm. One additional allegation of an incorrect compare-and-save tag in one store in Florida was insufficient to revive Ocusoft’s claim.

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