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Obesity Research Institute, LLC v. Fiber Research International, LLC

United States District Court, S.D. California

February 21, 2018

OBESITY RESEARCH INSTITUTE, LLC, Plaintiff,
v.
FIBER RESEARCH INTERNATIONAL, LLC, Defendant. AND RELATED COUNTERCLAIM.

         ORDER: (1) GRANTING IN PART AND DENYING IN PART FIBER RESEARCH INTERNATIONAL, LLC'S MOTION FOR PARTIAL SUMMARY JUDGMENT (ECF NO. 339) AND (2) GRANTING IN PART AND DENYING IN PART OBESITY RESEARCH INSTITUTE, LLC'S CROSS MOTION FOR SUMMARY JUDGMENT (ECF NO. 345)

          Hon. Cynthia Bashant, United States District Judge

         Presently before the Court is Defendant/Counterclaimant Fiber Research International, LLC's (“FRI”) motion for partial summary judgment (ECF No. 339) and Plaintiff/Counterdefendant Obesity Research Institute, LLC's (“ORI”) cross motion for summary judgment (ECF No. 345). Both parties also submit related requests for judicial notice and evidentiary objections.

         The Court finds these motions suitable for determination on the papers submitted and without oral argument. See Civ. L. R. 7.1 (d)(1). For the following reasons, the Court GRANTS IN PART AND DENIES IN PART FRI's motion for partial summary judgment (ECF No. 339) and GRANTS IN PART AND DENIES IN PART ORI's motion for cross summary judgment (ECF No. 345).

         I.BACKGROUND[1]

         1. Factual Background

         a. Introduction

         Both ORI and FRI sell, or seek to sell, glucomannan dietary supplements. According to both parties, glucomannan is a soluble-viscous fiber derived from the Konjac plant root. (JSUMF ¶ 4; FACC ¶ 24; ECF No. 345 at 2.) Glucomannan is used to manufacture fiber-based weight loss supplements. (See JSUMF ¶ 1; see also FACC ¶ 24; FAC ¶ 10.) Both parties also represent that numerous studies have shown that at least some types of glucomannan are effective for losing weight. (See JSUMF ¶¶ 5-7; see also FACC ¶ 24; FAC ¶ 10). One of the main disputes between the parties is whether different types, grades, places of origin, processing procedures, and/or characteristics, including viscosity, of the specific glucomannan products alter its effectiveness on weight loss. (ECF No. 339 at 7-11, 13-15; ECF No. 345 at 3-5, 6-9.)

         b. ORI and Lipozene

         “In 2002, Fiber Thin, LLC entered into an agreement with its contract manufacturer, Natural Alternatives, Inc. (‘NAI'), to manufacture a fiber-based weight loss supplement also called FiberThin.” (FACC ¶ 1.) At the time of the 2002 agreement between Fiber Thin, LLC and NAI, NAI had an agreement to source all glucomannan from Shimizu [Chemical Corporation (‘Shimizu')].” (Id. ¶ 2.) According to ORI, in 2003, Fiber Thin, LLC's contractual rights to sell glucomannan were assigned to ORI, who eventually sold glucomannan as a supplement under the product names of “Propolene” and “Lipozene.” (ECF No. 345 at 4 (citing to Ex. 22[2]); JSUMF ¶ 1.) For the Fiber Thin and Propolene products, ORI contracted with NAI to manufacture these products, and NAI sourced its glucomannan from Shimizu. (JSUMF ¶ 8.)

         In sum, ORI's former glucomannan products were branded as Fiber Thin and Propolene, sourcing glucomannan from Shimizu through NAI. Currently, ORI sells its glucomannan supplements branded as Lipozene, which is not manufactured with Shimizu's glucomannan.

         c. Relevant Clinical Testing

         “In 2003, ORI and NAI agreed to jointly fund a clinical study [(the “Kaats Study”)] and NAI hired Dr. Gilbert Kaats and his clinical research organization, Health & Medical Research Foundation.” (JSUMF ¶ 5.) “When comparing those in the placebo group to those in the treatment group Dr. Kaats found ‘a highly significant reduction in scale weight . . . % body fat . . . and fat mass . . . without a loss of fat-free mass or bone density.'” (Id. ¶ 6.) “The difference in mean weight lost was 4.93 pounds, and in fat lost was 3.86 pounds; thus, Dr. Kaats found that 78% of weight lost was attributable to fat.” (Id. ¶ 7.) ORI's references in its Lipozene advertising to clinical findings of “78% fat loss” and its “holiday study” relate to the Kaats Study. (Id. ¶¶ 15-16.) “The Kaats Study was neither developed nor paid for by either Shimizu or FRI.” (Id. ¶ 25.) An additional glucomannan study referenced by the parties is a 1984 study completed by Dr. David Walsh (the “Walsh Study”). (Ex. 118.) Yoshi Shimizu, the Chief Executive Officer of Shimizu, represents that Shimizu supplied the glucomannan studied in the Kaats Study (Propol KW) and Walsh Study (Propol A). (ECF No. 360-15 (“Shimizu Opp. Decl.”) ¶¶ 4-9.)[3]

         When advertising Lipozene, ORI makes several claims about its effectiveness and composition, and uses the Kaats Study to support some of these claims. (JSUMF ¶¶ 10-15.) For example, Lipozene's packaging advertises that it “Helps Reduce Body Fat.” (Id. ¶ 10.) More specifically, Lipozene's advertising references the Kaats Study as showing that seventy-eight percent of the weight lost while taking Lipozene was fat. (Id. ¶ 15; see also Exs. 2-4, 99[4] (showing the difference in the mean weight lost was 4.93 of which 3.86 pounds were fat).) Lipozene also states in its commercials that the study's participants “were asked not to change their diet or exercise.” Lipozene also characterizes the study as “major university double blind study.” (JSUMF ¶ 11.) Additionally, Lipozene's packaging stated that there are “[n]o known allergens in this product.” (Id. ¶ 13.)

         d. FRI and Shimizu

         FRI is a Nevada limited liability corporation that was formed on December 22, 2014. (JSUMF ¶ 20.) Shimizu and FRI entered into a Distribution and Claims Assignment Agreement on February 21, 2015 (“February 2015 Agreement”). (Ex. 94.)[5] Under Section I, titled “Assignment of Legal Claims, ” the agreement states “Shimizu hereby assigns to Fiber Research all rights title and interest it has to any legal claim related to the false advertising claims relying on Shimizu's studies for the products with improper Glucomannan ingredients against Obesity Research Group (Lipozene).” (Id. § I(a).) The assignment section also states that “[t]his assignment of legal claims, which is incidental to the distribution rights under Section II [Assignment of Distribution Rights in the United States], shall have a term of Three (3) years.” (Id. § I(d).) Section II, titled “Assignment of Distribution Rights in the United States, ” states “Shimizu hereby grants to Fiber Research the right to distribute its propriety Glucomannan product in the United States in retail, on the internet and to end users.” (Id. § II(a).) Further, the agreement states “[a]s to this Section II only, this assignment of distribution rights in the United States shall have a terms of Three (3) years.” (Id. § II(c).) This section also includes an exclusivity provision that states “Fiber Research agrees only to sell, handle or use only Shimizu provided Glucomannan powder, Konjac powder, Yam flour or any other Glucomannan product.” (Id. § II(d).)

         Shimizu and FRI subsequently amended the February 2015 Agreement, making changes to the scope and duration of the legal claims assignment provision. On August 18, 2017, Shimizu and FRI amended Section I(a) to state “Shimizu hereby assigns to Fiber Research all rights title and interest it has to any legal claim related to violation of the Lahnam [sic] Act or similar law claim, false advertising, fraud, trademark, copyright, intentional interference, or any other similar claim, including, without limitation, relying on Shimizu's studies and any trademark claim, against Obesity Research Group (Lipozene).” (Ex. 93 at 1.) To be effective February 1, 2017, the parties replaced Section I(d) with the following: “Permanent Assignment of Legal Claims. The assignment of Legal Claims in Section I a. of the [February 2015] Agreement, as amended, shall be permanent and without limitation, unless agreed by the Parties in writing.” (Ex. 95 at 1.)

         On March 10, 2015, FRI sent a letter to ORI's general counsel regarding Lipozene and its advertising. (Ex. 107.) The letter stated, among other things, that ORI's Lipozene contains “adulterations, ” “is not an equivalent glucomannan product, ” and “has less viscosity [than Shimizu's products].” (Id.) In the letter, FRI also accused ORI of “falsely and fraudulently market[ing] and promot[ing] Lipozene® using three clinical studies on pure, unadulterated glucomannan, ” taking the position that ORI's reliance on “the glucomannan studies is not scientifically valid.” (Id.) The letter also contains accusations that ORI caused “significant damages” to FRI and that ORI “[stole] . . . research on the more expensive, pure product.” (Id.) And finally, FRI concluded its letter by stating that this “commercial injury gives rise to a suit for a claim under the Lanham Act.” (Id.)

         2. Procedural Background

         On March 16, 2015, ORI filed a Complaint for Declaratory Judgment against FRI asking the Court to declare that ORI has no liability under either the Lanham Act, 15 U.S.C. §§ 1125 et seq., or the Federal Food, Drug, and Cosmetic Act (“FFDCA”), 21 U.S.C. §§ 301 et seq. (ECF No. 1.) On April 13, 2015, FRI filed an Answer, in which it asserts the affirmative defense of unclean hands, and related counterclaims. (ECF No. 16.) FRI amended its counterclaims, and filed the FACC on May 28, 2015. (ECF No. 41.) The FACC alleges a violation of the Lanham Act (false advertising, unfair competition, and false designation in violation of section 1125(a)(1)), a violation of California's unfair competition law (“UCL”), Cal. Bus. & Prof. Code §§ 17200 et seq., and a violation of California's false advertising law (“FAL”), Cal. Bus. & Prof. Code §§ 17500 et seq. (Id.) ORI filed a Motion to Dismiss (ECF No. 43), and the Court denied in part and granted in part the motion. (ECF No. 120.)

         Following the Court's Order on the Motion to Dismiss, ORI amended its Complaint to add Shimizu as a defendant. (ECF No. 139.) Shimizu moved to dismiss for lack of subject matter jurisdiction (ECF No. 207), and the Court granted Shimizu's motion. (ECF No. 335.) The parties now bring the present motion for partial summary judgment (ECF No. 339) and cross motion for summary judgment (ECF No. 345).

         II. STANDARD

         1. Motion for Summary Judgment

         Summary judgment is appropriate under Rule 56(c) where the moving party demonstrates the absence of a genuine issue of material fact and entitlement to judgment as a matter of law. See Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). A fact is material when, under the governing substantive law, it could affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute about a material fact is genuine if “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id.

         A party seeking summary judgment always bears the initial burden of establishing the absence of a genuine issue of material fact. Celotex, 477 U.S. at 323. The moving party can satisfy this burden in two ways: (1) by presenting evidence that negates an essential element of the nonmoving party's case; or (2) by demonstrating that the nonmoving party failed to make a showing sufficient to establish an element essential to that party's case on which that party will bear the burden of proof at trial. Id. at 322-23. “Disputes over irrelevant or unnecessary facts will not preclude a grant of summary judgment.” T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass'n, 809 F.2d 626, 630 (9th Cir. 1987). “The purpose of partial summary judgment ‘is to isolate and dispose of factually unsupported claims or defenses.'” Regents of Univ. of Cal. v. Micro Therapeutics, Inc., 507 F.Supp.2d 1074, 1077 (N.D. Cal. 2007) (quoting Celotex, 477 U.S. at 323-24).

         If the moving party fails to discharge this initial burden, summary judgment must be denied, and the court need not consider the nonmoving party's evidence. Adickes v. S.H. Kress & Co., 398 U.S. 144, 159-60 (1970). If the moving party meets this initial burden, however, the nonmoving party cannot defeat summary judgment merely by demonstrating “that there is some metaphysical doubt as to the material facts.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986); Triton Energy Corp. v. Square D Co., 68 F.3d 1216, 1221 (9th Cir. 1995) (“The mere existence of a scintilla of evidence in support of the non-moving party's position is not sufficient.” (citing Anderson, 477 U.S. at 242, 252)). Rather, the nonmoving party must “go beyond the pleadings” and by “the depositions, answers to interrogatories, and admissions on file, ” designate “specific facts showing that there is a genuine issue for trial.” Celotex, 477 U.S. at 324 (quoting Fed.R.Civ.P. 56(e)). Such admissions may be presented in testimony of a party's own witnesses through declarations. See Fed. R. Civ. Pro. 56(c)(4) (“An affidavit or declaration used to support or oppose a motion must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant or declarant is competent to testify on the matters stated.”); see also Clark v. County of Tulare, 755 F.Supp.2d 1075, 1082-83 (E.D. Cal 2010). Additionally, declarations that contain only conclusory statements, instead of specific facts, are insufficient unless accompanied by other evidence to corroborate the statements. See Hansen v. U.S., 7 F.3d 137, 138 (9th Cir. 1993) (finding no genuine issue of whether an IRS form was sent when the supporting declaration only contained a conclusory statement that the form was never received).

         When making this determination, the court must view all inferences drawn from the underlying facts in the light most favorable to the nonmoving party. See Matsushita, 475 U.S. at 587. “Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge, [when] he [or she] is ruling on a motion for summary judgment.” Anderson, 477 U.S. at 255.

         “[T]he district court may limit its review to the documents submitted for the purposes of summary judgment and those parts of the record specifically referenced therein.” Carmen v. S.F. Unified Sch. Dist., 237 F.3d 1026, 1030 (9th Cir. 2001). The court is not obligated “to scour the record in search of a genuine issue of triable fact.” Keenan v. Allan, 91 F.3d 1275, 1279 (9th Cir. 1996) (citing Richards v. Combined Ins. Co. of Am., 55 F.3d 247, 251 (7th Cir. 1995)).

         2. Article III Standing

         “A federal court is presumed to lack jurisdiction in a particular case unless the contrary affirmatively appears.” Stock West, Inc. v. Confederated Tribes, 873 F.2d 1221, 1225 (9th Cir. 1989) (citation omitted). “Article III of the Constitution confines the federal courts to adjudication of actual ‘Cases' and ‘Controversies.'” Lujan v. Defenders of Wildlife, 504 U.S. 555, 590 (1992). “[T]he core component of standing is an essential and unchanging part of the case-or-controversy requirement of Article III.” Id. at 560 (citation omitted). The “irreducible constitutional minimum” of Article III standing is comprised of three elements: (1) “the plaintiff must have suffered an ‘injury in fact' . . . which is (a) concrete and particularized; and (b) ‘actual or imminent, ' not ‘conjectural' or ‘hypothetical'”; (2) “there must be a causal connection between the injury and the conduct complained of” such that the injury is “fairly . . . trace[able] to the challenged action of the defendant, and not . . . th[e] result [of] the independent action of some third party not before the court”; and (3) “it must be ‘likely, ' as opposed to merely ‘speculative, ' that the injury will be ‘redressed by a favorable decision.'” Lujan, 504 U.S. at 560-61 (citations omitted). “The party invoking federal jurisdiction bears the burden of establishing these elements.” Id. at 561.

         Consequently, a case that lacks Article III standing must be dismissed for lack of subject matter jurisdiction. See Maya v. Centex Corp., 658 F.3d 1060, 1067 (9th Cir. 2011).

         3. Standing under the Lanham Act

         The Lanham Act “authorizes suit by ‘any person who believes that he or she is likely to be damaged' by a defendant's false advertising.” Lexmark Int'l, Inc. v. Static Control Components, Inc., 134 S.Ct. 1377, 1388 (2014) (quoting 15 U.S.C. § 1125(a)(1)). The Supreme Court has determined that a statutory cause of action under the Act extends only to plaintiffs “whose interests ‘fall within the zone of interests protected by the law invoked, '” id. (quoting Allen v. Wright, 468 U.S. 737, 751 (1984)), and “whose injuries are proximately caused by violations of the statute, ” id. at 1390. Therefore, to allege statutory standing under the Lanham Act, a party must first meet the “zone of interest” test. Id. Second, a party must sufficiently allege that the injuries were proximately caused by a violation of the statute. Id.

         The “zone of interest” test is not a particularly demanding one, and the benefit of the doubt goes to the one alleging the cause of action. Lexmark, 134 S.Ct. at 1389 (citing Match-E-Be-Nash-She-Wish Band of Pottawatomi Indians v. Patchak, 567 U.S. 209, 225 (2012) (“[W]e have always conspicuously included the word ‘arguably' in the test to indicate that the benefit of any doubt goes to the plaintiff.”)). “[T]he test forecloses suit only when a plaintiff's interests are so marginally related to or inconsistent with the purposes implicit in the statute that it cannot reasonably be assumed that Congress authorized the plaintiff to sue.” Id. (citation and quotations omitted). In the false advertising context, Congress' goal was to protect persons engaged in commerce against unfair competition. Id. Thus, “to come within the zone of interests in a suit for false advertising under §1125(a), ” a plaintiff must show an injury to a commercial interest in reputation or sales. See id. at 1390.

         To establish proximate cause under section 1125(a), a plaintiff “ordinarily must show economic or reputational injury flowing directly from the deception wrought by the defendant's advertising; and that that occurs when deception of consumers causes them to withhold trade from the plaintiff.” Lexmark, 134 S.Ct. at 1391. “That showing is generally not made when the deception produces injuries to a fellow commercial actor that in turn affect the plaintiff.” Id. Although it may be more difficult to establish proximate causation when the parties do not directly compete, there need not be an allegation that the parties are in direct competition with each other. Id. at 1392; see also Luxul Tech. Inc. v. Nectarlux, LLC, 78 F.Supp.3d 1156, 1170 (N.D. Cal. 2015) (finding proximate cause when defendants were marketing consultants (and not direct competitors) who misbranded the plaintiff's product); Merck Eprova AG v. Brookstone Pharm., LLC, 920 F.Supp.2d 404, 416 (S.D.N.Y. 2013) (finding standing even though parties were not direct competitors “as [plaintiff] does not produce finished consumer products, [but because the parties] both produce competing sources of folate for use in dietary supplements”).

         III. Evidence for Summary Judgment

         The Court first addresses the parties' requests regarding the evidence supporting the motions for partial summary judgment and cross summary judgment. These requests fall into two categories: requests for judicial notice and evidentiary objections to the evidence cited by the parties.

         1. Request for Judicial Notice

         Federal Rule of Evidence 201 allows a court to take judicial notice of certain evidence and facts that are not subject to reasonable dispute if they are (1) “generally known within the trial court's territorial jurisdiction” or (2) “can be accurately and readily determined from sources whose accuracy cannot reasonably be questioned.” Fed.R.Evid. 201(b). For example, a court may take judicial notice of “matters of public record.” Id.; Mack v. South Bay Beer Distrib., 798 F.2d 1279, 1282 (9th Cir. 1986). But a court may not take judicial notice of a fact that is “subject to reasonable dispute.” Fed.R.Evid. 201(b). Therefore, while the court may take notice of the existence of documents in some cases, it does not necessarily take notice of the facts within those documents. See Rezentes v. Sears, Roebuck & Co., 729 F.Supp.2d 1197, 1206 (D. Haw. 2010).

         The parties each submit requests for judicial notice of various documents, including books, journal articles, regulations, and many others. The parties also opposed each other's requests for judicial notice, showing that many of these document are disputed and that their accuracy can be reasonably questioned. The Court does not need to address each request in turn, but rather declines to take judicial notice of any documents for the purposes of these summary judgment motions. Not only do many questions of material fact remain, but many of the documents are not appropriate for judicial notice. The Court will, however, take judicial notice of the Federal Drug Administration (“FDA”) regulation under 21 C.F.R. § 101.100 because the Court must judicially notice federal regulations and the contents of the Federal Register. See 44 U.S.C. § 1507; see also Bayview Hunters Point Cmty. Advocates v. Metro. Transp. Comm'n, 366 F.3d 692, 702 n. 5 (9th Cir. 2004); Adams v. United States, No. 03-0049-E-BLW, 2009 WL 2590205, at *2 (D. Idaho Aug. 16, 2009).

         2. Evidentiary Objections

         For a motion for summary judgment, “a party does not necessarily have to produce evidence in a form that would be admissible at trial.” See Block v. City of Los Angeles, 253 F.3d 410, 418-19 (9th Cir. 2001). “Rule 56[(c)] requires only that evidence ‘would be admissible', not that it presently be admissible.” Burch v. Regents of Univ. of Cal., 433 F.Supp.2d 1110, 1120 (E.D. Cal. 2006); see also Comite de Jornaleros de Redondo Beach v. City of Redondo Beach, 657 F.3d 936, 964 n.7 (9th Cir. 2011) (“Rule 56 is precisely worded to exclude evidence only if it's clear that it cannot be presented in an admissible form at trial.”) Thus, “[t]he focus is on the admissibility of the evidence's contents, not its form.” Estate of Hernandez-Rojas ex rel. Hernandez v. United States, 62 F.Supp.3d 1169, 1174 (S.D. Cal. 2014) (citing Fonseca v. Sysco Food Servs. of Ariz., Inc., 374 F.3d 840, 846 (9th Cir. 2004). And while a court will consider a party's evidentiary objections to a motion for summary judgment, “[o]bjections such as lack of foundation, speculation, hearsay and relevance are duplicative of the summary judgment standard itself.” All Star Seed v. Nationwide Agribusiness Ins. Co., No. 12CV146 L BLM, 2014 WL 1286561, at *16-17 (S.D. Cal. Mar. 31, 2014) (citing Burch v. Regents of the Univ. of Cal., 433 F.Supp.2d 1110, 1119-20 (E.D. Cal. 2006)); see also Comite de Jornaleros de Redondo Beach, 657 F.3d at 964 n.7 (“[Rule] 56(c)(2) permits a party to ‘object that the material cited to support or dispute a fact cannot be presented in a form that would be admissible in evidence'” (quoting Fed. R. Civ. Pro. 56)).

         The number of evidentiary objections in this case are in the hundreds, which is overwhelmingly due to ORI. The Court declines to address each objection, and will rather grant or deny an objection as needed for this order. Additionally, if addressed individually, the majority of ORI's objections would be dismissed as baseless because ORI misapplies the standard for evidence at summary judgment. ORI argues that the form of the evidence at summary judgment must be admissible at trial. That is squarely wrong. Additionally, ORI's objections are largely “boilerplate recitations of evidentiary principles or blanket objections without analysis applied to specific items of evidence, ” which should be rejected. Stonefire Grill, Inc. v. FGF Brands, Inc., 987 F.Supp.2d 1023, 1033 (C.D. Cal. 2013) (quoting Doe v. Starbucks, Inc., 2009 WL 5183773, at *1 (C.D. Cal. Dec. 18, 2009)). Though ORI submitted amended objections in an attempt to resolve this issue (ECF No. 399), the sheer volume of objections remains superfluous, repetitive, and wasteful, especially given ORI continues to use the incorrect standard for evidence at summary judgment.

         Thus, the Court will address any specific objections as needed for its ruling on these summary judgment motions. Otherwise, the evidentiary objections are denied as moot.

         IV. ANALYSIS

         1. Standing

         a. FRI's Standing to Bring Representative Claims for Shimizu

         ORI moves for summary judgment arguing that FRI lacks Article III standing and statutory standing under the Lanham Act to bring representative claims for Shimizu. First, the Court will analyze whether Shimizu's assignment of its legal claims is enforceable under Nevada law. Second, the Court will address whether Shimizu has a “case or controversy” and will discuss its previous order, which ORI argues determined that Shimizu lacked Article III standing. Lastly, the Court will address whether FRI lacks statutory standing under the Lanham Act to bring Shimizu's claims.

         i. Assignment of Shimizu's Claims

         ORI challenges whether Shimizu's assignment of its legal claims to FRI was valid. ORI argues that Nevada law prohibits the assignment of tort and fraud legal claims. Additionally, ORI argues that, if legal claims were assigned, Shimizu assigned “bare” claims to FRI because the assignment was unaccompanied by an interest in Shimizu's underlying intellectual property. ORI further contends that if FRI did receive an interest, FRI received no more than a non-exclusive license. FRI objects to these characterizations of its agreement with Shimizu, and instead contends FRI was validly assigned Shimizu's legal claims along with an exclusive interest to sell Shimizu's products.

         For the foregoing reasons, the Court finds that, through the February 2015 Agreement, Shimizu assigned FRI the legal claims asserted in this case. To the extent it is relevant, Shimizu also assigned FRI a non-exclusive license to distribute Shimizu's products in the United States.

         A. Distribution and Assignment Agreement

         As an initial matter, for standing purposes, a court must evaluate the positions of the parties at the time the pending lawsuit is filed and throughout the proceedings. See Davis v. Fed. Election Comm'n, 554 U.S. 724, 734 (2008) (“[T]he standing inquiry remains focused on whether the party invoking jurisdiction had the requisite stake in the outcome when the suit was filed.”). Shimizu and FRI entered into a “Distribution and Claims Assignment Agreement” on February 21, 2015 (Ex. 94 (mistakenly dated as “February 21, 2014”)), then subsequently amended the agreement on August 18, 2015 (Ex. 93 (amending the “Assignment of Legal Claims” section) and February 1, 2017 (Ex. 95 (creating a “Permanent Assignment of Legal Claims”). (See ECF No. 339 at 23 (“On February 21, 2015, Shimizu and Fiber Research entered into a Distribution and Claim Assignment Agreement, amended August 18, 2015, and again as of February 1, 2017 to make the assignment permanent and unlimited . . . .”).) ORI initially filed its Complaint on March 16, 2015 (ECF No. 1), and FRI subsequently filed its counterclaims on behalf of itself and Shimizu on April 13, 2015 (ECF No. 16), which it amended on May 28, 2015 (ECF No. 41). Therefore, the Court will evaluate the unamended February 2015 Agreement for standing purposes because FRI must establish it had standing when it filed its counterclaim, and both amendments occurred after that date.

         B. Validity of Assignment

         Turning to the legal claims at issue, FRI only asserts claims under the Lanham Act on behalf of Shimizu.[6] The Court must determine whether the February 2015 Agreement encompassed the Lanham Act claim and whether the assignment of those claims were valid under Nevada law.

         First, the parties do not dispute that the Lanham Act false advertising claims would fall under the language of the assignment. The Court agrees. Turning to the language of the February 2015 Agreement, the assignment provision states “Shimizu hereby assigns to Fiber Research all rights title and interest it has to any legal claim related to the false advertising claims relying on Shimizu's studies for the products with improper Glucomannan ingredients against Obesity Research Group (Lipozene).” (Ex. 94 § I(a).) This provision is clear and unambiguous, and, though it is limited in scope, the Court finds that it encompasses the Lanham Act false advertising claim. Am. First Fed. Credit Union v. Soro, 359 P.3d 105, 106 (Nev. 2015) (“[The] court initially determines whether the ‘language of the contract is clear and unambiguous; if it is, the contract will be enforced as written.'”) (quoting Davis v. Beling, 278 P.3d 501, 151 (Nev. 2012)). Here, the Lanham Act claim asserted by FRI on behalf of Shimizu is (1) against ORI, (2) is a legal claim, and (3) is based on ORI's allegedly false advertising statement for its glucomannan product that uses the Kaats Study, which studied Shimizu's Propol-branded glucomannan.

         Second, the Court finds that Shimizu and FRI's assignment agreement is valid under Nevada law.[7] Though ORI contends that Nevada law prohibits the assignment of tort claims, Nevada law only prohibits the assignment of personal injury tort claims. See, e.g., Edward J. Achrem v. Expressway Plaza Ltd. P'ship, 112 Nev. 737, 740 (1996) (prohibiting assignment of personal injury claim); Platinum Unit-Owners' Ass'n v. Residential Constructors, LLC, No. 2:14-CV-01076-GMN-GW, 2015 WL 1186530, at *5 (D. Nev. Mar. 16, 2015) (“Though the Nevada Supreme has never expressly held that property damage claims may be assigned, the policy reasons for prohibiting the assignment of personal injury claims are premised upon the personal nature of the claims themselves and a desire to limit unscrupulous people trafficking in pain and suffering.” (internal citations and quotations omitted)). This prohibition of assigning personal tort claims makes sense given the personalization of the injuries and damages that creates a need for the actually injured party to be a part of the case. See id.; Waterton Global Mining Co. LLC v. Cummins Rocky Mountains, No. 14-cv-0405-RCJ-VPCLLC, 2015 WL 714485, at *4 (D. Nev. February 18, 2015) (“It appears that a significant policy reason for precluding the assignment of the tort action in these cases is premised on the personal nature of the claim itself.”). These policy concerns against assignment are absent when the injury is not personal in nature. See id.

         Similarly, Nevada law prevents the assignment of fraud claims when a party is personally defrauded (ECF No. 345 at 16 (citing to Prosky v. Clark, 32 Nev. 441, 109 P. 793 (1910), which finds a personal fraud claim unassignable because such claims “are personal to the one defrauded”)), but this assignment is not at issue here. Unlike the UCL or FAL claims that require a plaintiff to be defrauded, the Lanham Act has no such requirement. See 15 U.S.C. § 1125(a) (including no requirement of scienter); Island Insteel Sys., Inc. v. Waters, 296 F.3d 200, 213 (3d Cir. 2002) (“[T]he scienter requirement for common law fraud is absent from § 43(a).”); Johnson & Johnson v. Carter-Wallace, Inc., 631 F.2d 186, 189 (2d Cir. 1980) (“[Section 43(a)] does not require proof of intent to deceive.”); SKEDKO, Inc. v. ARC Prod., LLC, No. 3:13-CV-00696-HA, 2014 WL 585379, at *2 (D. Or. Feb. 13, 2014) (“[P]laintiff proceeds under Section 43 of the Lanham Act, which does not require plaintiff to prove fraud as an element.); see also Waterton, 2015 WL 714485, at *4 (declining to extend prohibition on assignments where the underlying policy is not served in the current case). Further, the Court is not convinced that Nevada state law prevents the assignment of federal false advertising claims like Lanham Act claims. C.f. Silvers v. Sony Pictures Entm't, Inc., 402 F.3d 881, 906 (9th Cir. 2005) (“[C]ourts have upheld restrictions on assignment of certain federal claims where assignment of such claims would result in nuisance suit.”) Though ORI states “[t]here is no authority to support the contention that federal false advertising claims are assignable under Nevada contract law, ” it does not cite to any law to the contrary.[8](ECF No. 347 at 17.)

         Thus, though Nevada's law and public policy prevents the assignment of personal injury tort claims and fraud claims where a party is personally defrauded, neither of those claims are at issue here. The Court finds that the assignment is valid.[9]

         C. Commercial Interest Conveyed

         For the purposes of this motion, the Court finds FRI held a non-exclusive license to distribute Shimizu in the United States when it filed its counterclaims. First, FRI and Shimizu's agreement is, by definition, not exclusive. See Black's Law Dictionary (10th ed. 2014) (defining an “exclusive right to sell” as a “right to sell a principal's products . . . to the exclusion of all others, including the owner.”). Mr. Shimizu's declaration states “Shimizu negotiated an exclusive distribution agreement with FRI, in which we transferred distribution rights with the United States to Propol® . . . (with the exception of a few existing customers).” (Shimizu Opp. Decl. ¶ 22 (emphasis added).) Despite FRI characterizing the agreement as “exclusive, ” it is not.[10] Though it may be true that FRI has the majority of the rights to distribute Shimizu's products in the United States, FRI is not the only customer permitted to do so. The only “exclusive” interest granted by the February 2015 Agreement belongs to Shimizu. (Ex. 94 § II(c) (binding only FRI to distribute Shimizu's products exclusively and is silent as to Shimizu's obligations).) Second, the agreement amounts to a license because FRI received a ...


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