United States District Court, N.D. California
ORDER DENYING MOTION FOR PRELIMINARY INJUNCTION AND
DISMISSING CASE RE: ECF NO. 5
TIGAR United States District Judge.
the Court is Plaintiff Halcyon Horizon, Inc., d/b/a Elevate
Addiction Services' (“Elevate”) motion for
preliminary injunction. The Court will deny the motion and
dismiss the case for lack of standing.
is a California company that operates addiction recovery
centers. Specifically, Elevate is a “licensed,
certified and accredited detoxification, residential and
outpatient facility.” ECF No. 5 at 7; Nos. 5-5, 5-6. In
September and November 2015, respectively, Elevate CEO and
Chairman of the Board Daniel Manson filed applications for
the “ELEVATE ADDICTION SERVICES” word mark and a
related figurative mark. ECF Nos. 5-2 (word mark), 5-3
(figurative mark) (collectively, the “ELEVATE
Marks”). Manson filed the applications as an
individual, but now states that “[he] made that filing
in [his] capacity as the President and Chairman of the Board
for Halcyon Horizons, Incorporated, for use by the
company.” ECF No 23 ¶ 5. Elevate claims to have
used the ELEVATE Marks “in connection with addition
recovery services since that date.” The Elevate Marks
were registered in early 2016. Id.
October 12, 2016, Manson and Halcyon entered into an
Exclusive Trademark License Agreement. ECF No. 5-4. Under the
licensing agreement, Manson “retains the right . . . to
monitor the quality of the Services” provided using the
ELEVATE Marks. Id. (Section 2(b)). Moreover,
“[a]ll use of any Trademarks licensed by this Agreement
and used in connection with any Services shall inure to the
benefit of [Manson].” Id. (Section 2(d)). With
respect to enforcement and protection of the marks, the
licensing agreement provides that “Licensee shall have
the right, at its own expense to prosecute actions against
infringers and defend against infringement actions, subject
to the prior written approval of the Licensor.”
Id. (Section 3(b)). Manson also retains the option
to “prosecute such actions independently” if he
believes the marks are being infringed and Elevate declines
to file suit. Id.
asserts that it has “established itself as a trusted
and respected addiction recovery center, and has spent
substantial resources establishing its brand under the
ELEVATE Marks.” ECF No. 5 at 8. For example, Elevate
obtained a license from the State of California's
Department of Health Care Services to provide
“individual sessions; recovery or treatment planning;
group sessions; educational sessions and
detoxification.” ECF No. 5-6. Elevate is also
accredited by the Joint Commission as a Behavioral Health
Care Program. ECF Nos. 5-7, 5-8, 5-10. The California
Consortium of Addiction Program and Professionals recognized
Elevate as a “Program of Distinction.” ECF No.
5-10. Each of these licenses, accreditations, and awards
occurred under the Elevate Addiction Services name.
claims to have received positive reviews on various websites
where customers can post comments. One person wrote, for
example, “[t]his facility is your best chance if you
have an addiction problem.” ECF No. 5-11 (screen shots
of comments). Another stated, “Elevate saved my family,
I would recommend it to anyone and everyone who is in need of
treatment.” Id. Also to promote its brand,
Elevate “participates in a number of community events,
” including co-hosting a sober grad night and
sponsoring local women's shelters, all using the Elevate
Marks. ECF No. 23 at 3. Finally, Elevate has spent money
“advertising, branding and marketing the Elevate
Addiction Services name.” ECF No. 5 at 10. For example,
Elevate spent several hundred thousand dollars on direct
marketing, and several hundred thousand more for website
branding and marketing, website maintenance and promotion,
and television commercial advertising. ECF No. 23 at 3;
see also ECF Nos. 23-1-23-5 (exhibits to Manson
Delphi Behavioral Health Group, LLC, also operates addiction
recovery centers, one of which it calls “Elevate
Recovery Center.” ECF No. 5 at 10. Like
Elevate's facilities, the Elevate Recovery Center is
located in California. Elevate Recovery Center registered to
do business in California with the Secretary of State on
November 24, 2014. ECF No. 27-1 ¶ 4, signed a lease with
a May 15, 2015 effective date, id. ¶¶ 6,
8, employed over a dozen staff since June 2015, id.
¶¶ 5, 14, and claims to have served over 50
patients between June 2015 and September 23, 2015,
id. ¶ 16. According to both parties'
websites, the facilities offer similar categories of service.
ECF No. 5 at 11.
these similarities, Elevate claims that compared with its own
clinics, the Elevate Recovery Center has poor treatment
services and bad business practices. Elevate Recovery Center
is not licensed by the State of California to provide
“detoxification or residential addiction treatment
services, ” despite advertising them on its website.
ECF No. 5-13. Elevate also claims to have identified
unfavorable reviews of Defendants' center on Facebook.
ECF No. 5 at 11.
claims that Defendants' use of the “Elevate”
name has created confusion among its customers because both
companies advertise similar services and operate facilities
in California. Id. at 11. For example, consumers
have called Elevate to complain about the poor business
practices at Elevate Recovery Center, not realizing that
Elevate Recovery Center is operated by Defendants, not
Plaintiff. ECF No. 5-1 at 3.
to prevent further confusion, Elevate contacted Defendants to
inform them of their “infringement of the registered
service mark-ELEVATE Addiction Services” and to demand
that Defendants “cease and desist from using Elevate
Recovery in public branding or promotion.” ECF No.
5-15. In spite of this warning, Defendants have continued to
operate the Elevate Recovery Center under that name. ECF No.
5-1 at 4. Instead, Defendant Elevate Recovery LLC filed an
application for trademark registration of the mark
“ELEVATE” for “[a]ddiction treatment
services, rehabilitation of drug, alcohol and narcotic
addicted patients.” ECF No. 5-14 at 3. On December 28,
2016, the United States Patent and Trademark Office
(“USPTO”) refused registration of Defendants'
applied-for mark based on a likelihood of confusion with
Plaintiff's ELEVATE Marks. Id.
February 17, 2017, Elevate filed suit against Defendants
alleging trademark infringement of the ELEVATE Marks under
the Lanham Act, 15 U.S.C. § 1114, unfair competition in
violation of California Business Code § 17200, and
cybersquatting in violation of 15 U.S.C. § 1125. Then,
on February 21, 2017, Elevate filed the present motion for
preliminary injunction to stop Defendants “from further
use of the ‘Elevate Recovery Center' name, and all
similarly confusing names, in connection with its addiction
recovery centers.” ECF No. 5 at 6.
plaintiff seeking a preliminary injunction must establish
that he is likely to succeed on the merits, that he is likely
to suffer irreparable harm in the absence of preliminary
relief, that the balance of equities tips in his favor, and
that an injunction is in the public interest.”
Winter v. Natural Resources Defense Council, Inc.,
555 U.S. 7, 20 (2008). Courts use different formulations to
describe the first factor, including “reasonable
probability, ” “fair prospect, ”
“substantial case on the merits, ” and
“serious legal questions . . . raised.” Lair
v. Bullock, 697 F.3d 1200, 1204 (9th Cir.2012). These
formulations “are largely interchangeable, ” and
“indicate that, ‘at a minimum, ' a petitioner
must show that there is a ‘substantial case for relief
on the merits.'” Id. (quoting
Leiva-Perez v. Holder, 640 F.3d 962, 968 (9th Cir.
2011). “The standard does not require the petitioners
to show that ‘it is more likely than not that they will
win on the merits.'” Id. (quoting
Leiva-Perez, 640 F.3d at 966). “[S]erious
questions going to the merits and a balance of hardships that
tips sharply towards the plaintiff can support issuance of a
preliminary injunction, so long as the ...