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Imagine That International, Inc. v. Cs Tech United States

United States District Court, S.D. California

July 21, 2015

IMAGINE THAT INTERNATIONAL, INC., a California corporation dba ALL FOUR PAWS, Plaintiff,
v.
CS TECH US, a Nevada corporation dba ZenPet and ZenPetUSA.com, CS TECH MEXICO, S.A. de C v., a foreign corporation, CHAD GIBSON, an individual, JEN BARRELLI, an individual, HECTOR D. CAMPA, an individual, and DOES 1-10, inclusive, Defendant.

ORDER DENYING PLAINTIFF'S EX PARTE APPLICATION FOR TEMPORARY RESTRAINING ORDER, ORDER TO SHOW CAUSE, AND REQUEST FOR EXPEDITED DISCOVERY [ECF No. 5]

GONZALO P. CURIEL, District Judge.

I. INTRODUCTION

On July 16, 2015, Plaintiff Imagine That International, Inc., dba All Four Paws, ("Plaintiff") filed an Ex Parte Application for Temporary Restraining Order, Order to Show Cause, and Request for Expedited Discovery. (ECF No. 5.) Defendants CS Tech US, dba ZenPet and ZenPetAUSA.com ("CS Tech"), CS Tech Mexico S.A. de C.V. ("CS Tech Mexico"), Chad Gibson ("Chad Gibson"), Jen Barrelli ("Barrelli"), and Hector D. Campa ("Campa") (collectively, "Defendants") oppose. (ECF No. 8.) Specifically, Plaintiff seeks three things: (1) a temporary restraining order (a "TRO") preventing Defendants from "displaying, offering to sell and selling the infringing products at the upcoming SuperZoo show in Las Vegas on July [21-23[1], 2015"; (2) an order to show cause why the TRO should not be converted to a preliminary injunction; and (3) expedited discovery to "confirm the identity of the Mexican manufacturer, find out how much inventory has already been imported and where it has gone, how much more remains, and the extent to which defendants Gibson and Barrelli were executing their plan for CS Tech U.S. even while they were employed by Contech." (ECF No. 5-1, at 4, 21, 24.) A hearing was held on Plaintiff's Ex Parte Application on July 20, 2015. (ECF No. 10.)

II. FACTUAL BACKGROUND

Plaintiff is the holder of two regular patents and one design patent on flexible pet protective collars: (1) U.S. Patent No. 8, 042, 494 (the "494 patent") titled "pet protective collar" which discloses a "custom fittable collar for an animal, useful to prevent the animal from contacting injured areas on the body, thus promoting healing of wounds"; (2) U.S. Patent No. 8, 720, 386 (the "386 patent") titled "pet protective collar with stays" which discloses a "flexible pet protective collar having stays formed of a more rigid material than flexible sheets of the collar, the stays being disposed inside channels located at seams of the collar"; and (3) U.S. Design Patent No. 705, 502 (the "D'502 patent") which discloses an "ornamental design for a pet protective collar." (ECF No. 1 ¶ 15; ECF No. 1-2, Exs. 1-3.) Plaintiff alleges that Defendants' ProCone/ZenCone products infringe all three patents. (ECF No. 1 ¶ 103.)

In 2012, Plaintiff previously sued Contech, the former maker of the ProCone over infringement of these patents. ( Id. ¶ 27.) The case settled and resulted in a license of the patents to Contech. ( Id. ) In 2014, Contech filed for bankruptcy. ( Id. ¶ 36) Plaintiff alleges that Defendants Chad Gibson and Barrelli "owned, ran, were employed by, or were otherwise affiliated with a California corporation G&B Marketing, Inc. (G&B')." (ECF No. 5-1, at 2.) Plaintiff alleges that, in 2011, Contech acquired G&B and Chad Gibson and Barrelli "became employed by Contech."[2] ( Id. ) Plaintiff alleges that CS Tech acquired ProCone inventory from Contech's bankruptcy and that Chad Gibson and Barrelli are now employees of CS Tech. ( Id. ¶¶ 64, 66.) Plaintiff alleges that CS Tech now sells ProCones under the name "ZenCone." ( Id. ¶ 86) Plaintiff alleges that, though there was an initial drop off in ProCone inventory after the bankruptcy, inventory has since been restocked, starting in mid to late-June 2015. ( Id. ¶¶ 59-60.) Plaintiff has terminated its license to Contech and is now suing Defendants over their sale of ProCones/ZenCones, alleging patent infringement and unfair competition. ( Id. ¶¶ 50, 126-145.)

III. LEGAL STANDARD

The purpose of a TRO is to preserve the status quo before a preliminary injunction hearing may be held; its provisional remedial nature is designed merely to prevent irreparable loss of rights prior to judgment. Granny Goose Foods, Inc. v. Brotherhood of Teamsters & Auto Truck Drivers, 415 U.S. 423, 439 (1974). The legal standard that applies to a motion for a TRO is the same as a motion for a preliminary injunction. See Stuhlbarg Int'l Sales Co. v. John D. Brush & Co., 240 F.3d 832, 839 n. 7 (9th Cir. 2001). To obtain a TRO or preliminary injunction, the moving party must show: (1) a likelihood of success on the merits; (2) a likelihood of irreparable harm to the moving party in the absence of preliminary relief; (3) that the balance of equities tips in the moving party's favor; and (4) that an injunction is in the public interest. Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20 (2008).

Under the Ninth Circuit's "sliding scale" approach, "serious questions" going to the merits and a balance of hardships that "tips sharply" in favor of the movant are can support injunctive relief so long as the other two elements are also met. Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1134-35 (9th Cir. 2011). A preliminary injunction is "an extraordinary remedy that may only be awarded upon a clear showing that the plaintiff is entitled to such relief, " Winter, 555 U.S. at 22, and the moving party bears the burden of meeting all four Winter prongs. See Cottrell, 632 F.3d at 1135; DISH Network Corp. v. FCC, 653 F.3d 771, 776-77 (9th Cir. 2011).

IV. DISCUSSION

A. Likelihood of Success on the Merits

The first factor is whether Plaintiff has shown a likelihood of success on the merits. Winter, 555 U.S. at 20. Plaintiff asserts four causes of action in this case, three for patent infringement and one for unfair competition. (ECF No. 1 ¶¶ 126-145.)

1. Patent Infringement

Plaintiff alleges that Defendants' ProCone/ZenCone product infringes Claim 1 of the D'502 patent, Claim 9 of the 386 patent, and Claim 13 of the 494 patent. (ECF No. 1 ¶¶ 127, 132, 137; ECF No. 5-1, at 7, 11.) Relying on the presumptive validity of issued patents, Plaintiff also argues that the patents-in-suit are valid. (ECF No. 5-1, at 13-14.) Defendants respond that: (1) they are protected by the first sale doctrine, (2) the patents-in-suit are invalid based on prior art, (3) the allegedly infringing products do not infringe Claim 1 of the 494 patent because they do not contain the required "flexible resilient padding layer, " 494 Patent, at 8:24.[3] (ECF No. 8, at 4-9.) However, Defendants only evidence that there is no "flexible resilient padding layer" is the declaration of Defendants' counsel and Defendants do not provide an example or description of the allegedly infringing products. ( See ECF No. 8-1 ¶ 9.[4]) Additionally, Defendants do not respond to Plaintiff's arguments regarding the D'502 or 386 patents. ( See ECF No. 8.)

First, Defendants argue that the first sale/patent exhaustion doctrine protects them because they acquired the ProCones from Contech who had a license from Plaintiff. (ECF No. 8, at 4-6.) While there may be some merit to the argument that the first sale doctrine may protect Defendants' sale of the approximately 38, 000 ProCones Defendants acquired from Contech, see Quanta Computer v. LG Electronics, 553 U.S. 617 (2008), Plaintiff argues and presents some evidence indicating that Defendants will be selling new ZenCones, ( see ECF No. 1 ¶¶ 86-87; ECF No. 5-2 ¶ 43). Indeed, Defendants' counsel stated at oral argument that Defendants would likely need to produce more ZenCones based on any orders received from SuperZoo. (ECF No. 10.) Thus the Court finds that the first sale doctrine has little application to Plaintiff's Ex Parte Application because Defendants have stated that they are seeking not only to sell the ProCones purchased from Contech but to sell additional ProCones/ZenCones as well, and any newly made ProCones/ZenCones would not be covered by the license and, hence, the first sale doctrine.

Second, Defendants argue that all three patents are invalid in light of prior art, primarily the Trimline Veterinary Recovery Collar. ( See ECF No. 8-1, Ex. C.) "A patent is invalid if an alleged infringer proves, by clear and convincing evidence, that the differences between the claimed subject matter and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the pertinent art." Otsuka Pharm. Co. v. Sandoz, Inc., 678 F.3d 1280, 1290 (Fed. Cir. 2012) (citing 35 U.S.C. §§ 103(a), 282(2); Microsoft Corp. v. i4i Ltd., ___ U.S. ___, 131 S.Ct. 2238, 2242 (2011)). "Obviousness is a question of law with underlying factual findings, including: (1) the scope and content of the prior art; (2) the level of ordinary skill in the pertinent art; (3) the ...


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