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Allergan USA, Inc. v. Imprimis Pharmaceuticals, Inc.

United States District Court, C.D. California

July 11, 2019





         Before the Court is Plaintiff Allergan USA, Inc.'s (“Plaintiff” or “Allergan”) Motion for Permanent Injunction (“Motion”) (Dkt. 234). The Court heard oral argument on June 28, 2019. Having reviewed the papers and considered the parties' arguments, the Court GRANTS IN PART the Motion.

         I. Background

         Allergan filed this action against Imprimis Pharmaceuticals, Inc. (“Imprimis”) on September 7, 2017. See Complaint (Dkt. 1). Allergan asserted two claims: (1) unfair competition and false advertising in violation of the Lanham Act, 15 U.S.C. § 1125(a); and (2) unlawful and/or unfair business practices in violation of California's Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code, § 17200, et seq. by unlawfully marketing, selling, and distributing their products in violation of the California Sherman Law and compounding laws. Compl. ¶¶ 108-24.

         On March 27, 2019, the Court granted partial summary judgment in favor of Allergan on the issue of liability as to both of its claims (“Summary Judgment Order”) (Dkt. 138). The Court ruled as a matter of law that five categories of statements made by Imprimis representatives constituted false advertising under the Lanham Act. Id. The Court detailed violations of the Sherman Law, discussed infra. Id. Allergan did not move for summary judgment on damages. But the Court granted Imprimis's motion for partial summary and held that only injunctive relief is proper under the UCL claim. Id. at 23-25. All that was left for trial was the amount of damages, if any, Allergan suffered due to the false advertising. Id.

         The case proceeded to trial on May 9, 2019. On May 16, 2019, the jury returned a verdict awarding Allergan $48, 500.00 as a result of Imprimis's false advertising and $0.00 in profits garnered through false advertising such that it should be disgorged. Dkt. 231.

         On May 22, 2019, Allergan filed the present Motion seeking permanent injunction under both the false advertising and Sherman Law claims. On June 3, 2019, Imprimis opposed (“Opp'n”) (Dkt. 241). On June 10, 2019, Allergan replied (“Reply”) (Dkt. 242). The Court heard oral argument on June 28, 2019.

         II. Legal Standard

         The UCL empowers courts to enjoin “any unlawful, unfair or fraudulent business act or practice.” Cal. Bus. & Prof. Code §§ 17200, 17203. The Lanham Act also empowers courts “to grant injunctions, according to the principles of equity and upon such terms as the court may deem reasonable . . . to prevent a violation under subsection (a) . . . of section 1125 of this title.” 15 U.S.C. § 1116(a).

         Permanent injunctive relief is appropriate where liability has been established and the plaintiff demonstrates “(1) that it has suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.Monsanto Co. v. Geertson Seed Farms, 561 U.S. 139, 156-57 (2010) (quoting eBay Inc. v. MercExchange, LLC, 547 U.S. 388, 391 (2006)). “[T]he decision whether to grant or deny injunctive relief rests within the equitable discretion of the district courts.” eBay, 547 U.S. at 1841.

         III. Discussion

         Allergan argues it is entitled to a permanent injunction under both the Lanham Act and the UCL. See generally Mot. The Court addresses whether a permanent injunction is warranted under each claim in turn.

         A. Lanham Act

         Allergan seeks an order enjoining Imprimis from misrepresenting in any commercial speech, advertising, or other promotional communication with any health care provider, consumer, or other customer that:

• Defendant's standardized ophthalmic formulations have been customized to meet the needs of an individual patient;
• Defendant's products or services have been demonstrated to be safe or effective;
• FDA has found Defendant's products or services to be safe or effective;
• Defendant or any product manufactured or compounded by Defendant is FDA-approved;
• Defendant uses FDA-approved ingredients, FDA-approved components, components of FDA-approved drugs, or FDA-approved Active Pharmaceutical Ingredients (“APIs”);
• Defendant's compounded formulations are comprised of FDA-approved medications;
• any of Defendant's compounded formulations has safely combined FDA-approved components, ingredients, drugs, APIs, or medications;
• any of Defendant's products produces an outcome that is clinically superior or equivalent to that produced by a commercially available drug product, unless supported by reliable comparative testing between Defendant's product and the commercially available drug product(s); or
• health care providers prefer Defendant's product(s) to one or more commercially available drug products.

         Proposed Order (Dkt. 234-5). Plaintiff also asks the Court to order Imprimis to make corrective advertising statements including that its products are “Not FDA Approved” and that “Clinical data sufficient to determine the safety and efficacy of this drug product has not been developed, and the safety and efficacy of this drug product are untested and unknown.” Mot. at 4; Proposed Order at 13.

         According to Allergan, Defendant's Lanham Act violations have caused and continue to cause irreparable harm in two independent ways. Mot. at 12. First, Allergan argues Defendant's “continued violations” of the Lanham Act could “result in lost sales” to Allergan. Id. at 13. Second, Allergan notes that courts have also held that the irreparable harm factor can be met where “the presumption that consumers have been deceived by Defendants' literally false statements” applies. Id. at 14 (citing Nutrition Distribution LLC v. IronMag Labs, LLC, No. CV 15-8233-R, 2018 WL 6264986, at *4 (C.D. Cal. Nov. 16, 2018)).

         Imprimis responds that Allergan has failed to sustain its burden of presenting evidence of proving that it is likely to suffer irreparable harm under the Lanham Act because the parties stipulated that all use of the false advertisements at issue ceased nearly a year-and-a-half ago, and the evidence is uncontroverted that Imprimis has neither the intention nor motivation to resume use of the ads. Opp'n at 9.

         To warrant a permanent injunction, Plaintiff must demonstrate that it has suffered irreparable harm, which the Court now considers. As the parties stipulated, Allergan and Imprimis are in commercial competition in the ophthalmic drug market.” Dkt. 223 at 6. And the jury did find that Allergan presented evidence of some injury resulting from the deception of Imprimis's false advertisements (the jury awarded $48, 500.00 in damages Allergan suffered as a result of the false advertising). Dkt. 231. But Allergan cannot overcome its stipulation that all use of the false advertisements at issue ceased in January 2018. Dkt. 241-9 (Transcript, May 15, 2019, Vol. 3 at 21:20-21 (“Imprimis stopped making the false statements on or about January 31, 2018.”)). The evidence at trial supported this stipulation. And post-trial evidence including the Declaration of Andrew Boll (“Boll Decl.”) (Dkt. 241-1) further supports this fact. See Boll Decl. ¶ 11 (“[W]e have not made any of those statements since January 2018 at the latest, [. . . and] we have no reason or intent to make the statements in the future.”).

         The evidence at trial made clear that the false statements were vetted by Imprimis's committee that included outside counsel, see Dkt. 241-6 (Transcript, May 14, 2019, Vol. II at ¶ 76:1-17), and that within days of being put on notice via the Complaint, Imprimis took down the statements identified. Dkt. 241-5 (Transcript, May 14, 2019, Vol. I at 7:19-9:1). And Imprimis removed the remaining statements after the FDA met with Allergan and shortly thereafter issued a warning letter regarding the false statements (Id. at 8:1-23; Dkt. 241-7 (Transcript, May 14, 2019, Vol. III) at 71:24-72:9). There is no evidence in the record that suggests Imprimis would continue to market its materials in a misleading manner in the future. Much of this lawsuit arises from FDA inaction. But the evidence presented at the Lanham Act trial consistently demonstrated that where FDA has acted clearly-including by issuing a warning letter with regards to misleading statements-Imprimis has responded and complied by removing the advertisements. Even if Allergan demonstrated that it lost some market share because of the false advertising, Allergan has not demonstrated how it would continue to be harmed absent a Lanham Act injunction in light of Imprimis's response to the FDA warning letter and the stipulation that the false statements stopped in January 2018. Allergan cannot rely on a statement by its own witness, Dave LeCause, that the “confusion still persists today.” See Reply at 5. Allergan presented no evidence of a customer or potential buyer to show that Imprimis continues to make false statements and continues to cause confusion. A permanent injunction is not appropriate under these circumstances.

         The Court similarly denies Allergan's request for corrective advertising. There is no evidence suggesting that this remedy is reasonable in light of the jury's verdict. Allergan relies repeatedly on the testimony of Dr. Michael Rauser, who testified at trial that he learned the drugs were not FDA approved the day before he testified. See Dkt. 234-2 at 110-11. But this testimony does not demonstrate that deception was so widespread such that corrective advertisement is warranted. Allergan's arguments at the June 28, 2019 hearing regarding the rebuttable presumption of actual deception are well taken. But at least as to the Lanham Act claim, the jury's verdict of $48, 500.00 reflects the limited effect these ...

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