Tuesday, October 29, 2019

ThermoLife continues mixed record in pleading competitive injury from other supplements

ThermoLife International LLC v. Compound Solutions Inc., No. CV-19-01473-PHX-SMM, 2019 WL 5448804 (D. Ariz. Jul. 30, 2019)

ThermoLife develops “amino acid nitrates used in dietary supplements to increase vasodilation,” and alleged that vasodilators are “included in nearly every pre-workout product on the market.” ThermoLife has over 16 patents that protect its use of amino acid nitrates, and one involves Creatine Nitrate for use in dietary supplements to promote vasodilation. Compound Solutions sells a patented green tea extract called VASO6 as a vasodilator. It allegedly falsely marked and advertised VASO6 as patented, because the patent with which VASO6 is marked is not being practiced, according to independent testing.

The court dismissed the complaint: the false patent marking claim didn’t properly allege competitive injury, and the false advertising claims failed Lexmark.  Specifically, ThermoLife didn’t identify any specific licensees of ThermoLife’s patents or allege that it “actually manufactures, markets or sells any dietary supplements or any ingredients” that compete with VASO6. Allegations that VASO6 is “in direct competition with ThermoLife’s patented ingredients and products that license ThermoLife’s patented ingredients,” that “numerous ThermoLife customers and potential customers have been fooled by Compound Solutions’ lies, having included VASO6 in their products and/or inquired with ThermoLife about VASO6 and how this ingredient compares to ThermoLife’s nitrates,” and that Compound Solutions’ false advertising “is likely to discourage or deter persons and companies from commercializing competing products or pursing research and development...which injures ThermoLife and the public by stifling competition and increasing the costs of goods” were no more than conclusory, showing again that Twiqbal is what you make it. 

Although ThermoLife alleged that the products had “at least one” similar purpose, ThermoLife failed to allege decreased sales due to competition with VASO6, or harm to its reputation, or harm to sales of specific nitrates, and failed to identify any licenses to a specific manufacturer who sells a competing product. “Generally alleging that ThermoLife and Compound Solutions are in the same industry is insufficient. To support a cognizable legal claim, ThermoLife must identify products that use Creatine Nitrate or identify sublicensees who use Creatine Nitrate in their products that compete with VASO6.”

For the same reasons, the state law claims were insufficiently pleaded. Although the shorthand is that Lanham Act and state law claims require the same elements, I think that’s potentially misleading, especially when it comes to doctrine from Lexmark, which relied very much on principles about federal statutory interpretation and applied them to a statute, the Lanham Act, that is worded very differently from the average state consumer protection law.  With that caveat, the court is certainly on solid precedential ground to say this (because so many federal courts before it have not been interested in doing a separate state law analysis, before or after Lexmark):  “Under Arizona law, an unfair competition claim requires a plaintiff to ‘either show that it was engaged in competitive business with [the defendant] ... or that [the defendant’s] actions were likely to produce public confusion.’ In the Ninth Circuit, common law unfair competition claims are ‘substantially congruent’ to Lanham Act claims and thus share the same analysis.”

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