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Collagen Nutraceuticals, Inc. v. Neocell Corp.

August 4, 2010

COLLAGEN NUTRACEUTICALS, INC., A CALIFORNIA CORPORATION PLAINTIFF,
v.
NEOCELL CORPORATION, A CALIFORNIA CORPORATION; FATMA BOUKHARI, AN INDIVIDUAL; AKRAM QUADRI, AN INDIVIDUAL; SARAH QUADRI, AN INDIVIDUAL; DARREN RUDE, AN INDIVIDUAL; MICHAEL NASSER, AN INDIVIDUAL DBA MFN PHARMACEUTICAL CONSULTING SERVICES, AND DOES 1-20, INCLUSIVE, DEFENDANTS.



The opinion of the court was delivered by: Hon. Dana M. Sabraw United States District Judge

ORDER (1) GRANTING PLAINTIFF'S MOTION FOR CONTINUANCE AND (2) DENYING WITHOUT PREJUDICE DEFENDANTS' MOTION FOR SUMMARY JUDGMENT [Docket Nos. 22, 24, and 25]

This matter comes before the Court on Defendants' motion for summary judgment. Plaintiff's opposition to the motion consisted of a motion for denial or continuance of Defendants' motion under Federal Rule of Civil Procedure 56(f). Defendants filed a reply to Plaintiff's opposition, and a separate opposition to Plaintiff's motion for continuance. For the reasons set out below, the Court grants Plaintiff's motion and denies Defendants' motion without prejudice.

I. FACTUAL BACKGROUND

Plaintiff Collagen Nutraceuticals, Inc., ("Collagen") is owned and controlled by Ahmad Alkayali ("Alkayali"). Alkayali was a shareholder of another company called Smarter Beauty. In 1998, Alkayali arranged for Defendant Akram Quadri to purchase Smarter Beauty. In connection with that purchase, Quadri and his wife Fatma Boukhari formed Defendant Neocell Corporation. Pursuant to Alkayali's request, Quadri made Alkayali and his wife 50% shareholders in Neocell. Thereafter, Alkayali sold Smarter Beauty to Neocell.

On January 1, 2002, Alkayali and his wife relinquished their ownership interest in Neocell in exchange for Alkayali becoming a consultant for the corporation. In October of 2008, Defendant Neocell discharged Alkayali from his consultant position. Alkayali objected to his termination and claimed that he still possessed an ownership interest in Neocell. Neocell then filed suit against Alkayali in state court. The state court issued a preliminary injunction against Alkayali, and after a jury trial, ruled that Quadri and Boukhari were the sole owners and shareholders of Neocell.

Four months after that ruling, Plaintiff filed the present case against Neocell, Quadri, Boukhari, their daughter, Sarah Quadri, Darren Rude and Michael Nasser alleging the following claims for relief:

(1) Federal Trademark Infringement 15 U.S.C. § 1114; (2) Federal Unfair Competition 15 U.S.C. § 1125(a); (3) Federal Unfair Competition - Lanham Act § 43(a)(1)(B); (4) False Designation of Origin and Description §§ 1114, 1125(a); (5) False Marking of Patent 35 U.S.C. § 292; (6) Contributory Trademark Infringement; (7) Inducing Trademark Infringement; (8) Unfair Competition under California Common law; and (9) Unfair Competition under Cal. Bus. & Prof. Code § 17500. The basis for these claims is Plaintiff's belief that Defendants are using Plaintiff's trademarks on their products without Plaintiff's permission.

II. DISCUSSION

The focal point of Defendants' motion for summary judgment is that Plaintiff lacks legal and factual grounds for bringing its claims against the individual Defendants. Plaintiff disputes this assertion, and argues the motion should be denied or continued so it may obtain additional discovery.

Federal Rule of Civil Procedure 56(f) provides:

If a party opposing [a motion for summary judgment] shows by affidavit that, for specified reasons, it cannot present facts essential to justify its opposition, the court may:

(1) deny the motion;

(2) order a continuance to enable affidavits to be obtained, depositions to be taken, or other ...


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