Certified Nutraceuticals Inc. v. The Clorox Company

• Court: District Court, S.D. California
• Decided: September 29, 2021
• Docket: 3:18-cv-00744
• Status: Unknown

Opinion

1 2 3 4 5 6 UNITED STATES DISTRICT COURT 7 SOUTHERN DISTRICT OF CALIFORNIA 8 9 CERTIFIED NUTRACEUTICALS. INC., Case No.: 18-cv-0744 W (KSC)

10 Plaintiff, ORDER: 11 v. (1) GRANTING IN PART AND 12 THE CLOROX COMPANY, et al., DENYING IN PART THE CLOROX 13 Defendants. DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT [DOC. 117]; 14 AND 15 (2) GRANTING IN PART AND 16 DENYING IN PART DEFENDANT 17 AVICENNA NUTRACEUTICAL’S MOTION FOR SUMMARY 18 JUDGMENT, OR IN THE 19 ALTERNATIVE PARTIAL SUMMARY JUDGMENT [DOC. 120.] 20 21 Pending before this Court are Defendants The Clorox Company, Nutranext, and 22 Neocell Holding Company’s motion for summary judgment [Doc. 117] and Defendant 23 Avicenna Nutraceutical LLC’s motion for summary judgment [Doc. 120]. The Court 24 decides the matters without oral argument pursuant to Civil Local Rule 7.1(d)(1). For the 25 reasons that follow, the Court GRANTS-IN-PART and DENIES-IN-PART both 26 motions [Docs. 117, 120]. 27 Further, good cause showing, the Court GRANTS the parties’ respective motions 28 to file under seal [Docs. 115, 118, 124, 127, 131]. 1 I. BACKGROUND 2 The Clorox Company, Neocell Holding Company, and Nutranext (collectively “the 3 Clorox Defendants”) are retailers that sell dietary supplements using the raw materials 4 provided by Plaintiff Certified Nutraceuticals Inc.’s (“Certified”) competitor, Defendant 5 Avicenna Nutraceutical LLC (“Avicenna”). (J. Stmt. Undisputed Facts [Doc. 130] ¶¶ 6– 6 9.) 7 Certified brings two claims under the Lanham Act based on allegations that the 8 Clorox Defendants and Avicenna engaged in a scheme to falsely advertise the source of 9 chicken collagen used in dietary supplements sold to retail consumers. (Third Amended 10 Complaint (“TAC”) [Doc. 50] ¶¶ 1, 2.) Specifically, Certified claims the Clorox 11 Defendants labeled their Collagen2 Joint Complex (“CJC”) product as containing 12 “Chicken Sternum Collagen Type II,” but that the collagen in the product is not pure 13 sternal collagen, but rather collagen produced by Avicenna using chicken carcasses of 14 inferior quality which are much more inexpensive to produce. (Id. ¶¶ 18–20.) 15 The Clorox Defendants and Avicenna have now filed timely motions seeking 16 summary judgment in their favor on Certified’s Lanham Act claims. The Clorox 17 Defendants’ motion seeks to establish the following: 18 (1) Certified cannot demonstrate that the product label was false or misleading, 19 or that any deception was material; 20 (2) Certified has presented no evidence of damages; and 21 (3) Certified’s unclean hands bar any recovery. 22 (Clorox P&A [Doc. 117-1] 1:19–2:2.) Avicenna’s motion seeks to establish that: 23 (1) Certified cannot show a false or misleading advertisement by Avicenna; 24 (2) Certified cannot establish an actual injury; 25 (3) In the alternative, that Certified cannot prove damages for Avicenna’s sales 26 after January 2018; and 27 (4) Certified’s unclean hands bar any recovery. 28 (Avicenna P&A [Doc.120-1] 1:20–23.) 1 II. LEGAL STANDARD 2 Summary judgment is appropriate under Rule 56(c) where the moving party 3 demonstrates the absence of a genuine issue of material fact and entitlement to judgment 4 as a matter of law. See Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 5 (1986). A fact is material when, under the governing substantive law, it could affect the 6 outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A 7 dispute about a material fact is genuine if “the evidence is such that a reasonable jury 8 could return a verdict for the nonmoving party.” Id. at 248. 9 A party seeking summary judgment always bears the initial burden of establishing 10 the absence of a genuine issue of material fact. Celotex, 477 U.S. at 323. The moving 11 party can satisfy this burden in two ways: (1) by presenting evidence that negates an 12 essential element of the nonmoving party’s case; or (2) by demonstrating that the 13 nonmoving party failed to make a showing sufficient to establish an element essential to 14 that party’s case on which that party will bear the burden of proof at trial. Id. at 322–23. 15 “Disputes over irrelevant or unnecessary facts will not preclude a grant of summary 16 judgment.” T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass’n, 809 F.2d 626, 630 17 (9th Cir. 1987). If the moving party fails to discharge this initial burden, summary 18 judgment must be denied and the court need not consider the nonmoving party’s 19 evidence. Adickes v. S.H. Kress & Co., 398 U.S. 144, 159–60 (1970). 20 If the moving party meets this initial burden, the nonmoving party cannot avoid 21 summary judgment merely by demonstrating “that there is some metaphysical doubt as to 22 the material facts.” In re Citric Acid Litig., 191 F.3d 1090, 1094 (9th Cir. 1999) (citing 23 Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986); Triton 24 Energy Corp. v. Square D Co., 68 F.3d 1216, 1221 (9th Cir. 1995) (citing Anderson, 477 25 U.S. at 252) (“The mere existence of a scintilla of evidence in support of the nonmoving 26 party’s position is not sufficient.”). Rather, the nonmoving party must “go beyond the 27 pleadings and by her own affidavits, or by ‘the depositions, answers to interrogatories, 28 and admissions on file,’ designate ‘specific facts showing that there is a genuine issue for 1 trial.’” Ford Motor Credit Co. v. Daugherty, 279 Fed. Appx. 500, 501 (9th Cir. 2008) 2 (citing Celotex, 477 U.S. at 324). Additionally, the court must view all inferences drawn 3 from the underlying facts in the light most favorable to the nonmoving party. See 4 Matsushita, 475 U.S. at 587. 5 Rule 56(d) provides for partial summary judgment. See Fed. R. Civ. P. 56(d) 6 (“[T]he court . . . shall if practicable ascertain what material facts exist without 7 substantial controversy and what material facts are actually and in good faith 8 controverted.”). Under Rule 56(d), the court may grant summary judgment on less than 9 the non-moving party’s whole claim. Zapata Hermanos Sucesores, S.A. v. Hearthside 10 Baking Co., Inc., 313 F.3d 385, 391 (7th Cir. 2002) (Posner, J.). Partial summary 11 judgment is a mechanism through which the Court deems certain issues established 12 before trial. Lies v. Farrell Lines, Inc., 641 F.2d 765, 769 n.3 (9th Cir. 1981) (quoting 6 13 Moore’s Federal Practice ¶ 56.20 (3.–2) (2d ed. 1976)). “The procedure was intended to 14 avoid a useless trial of facts and issues over which there was really never any controversy 15 and which would tend to confuse and complicate a lawsuit.” Id. 16 17 III. MOTIONS TO SEAL 18 “Historically, courts have recognized a ‘general right to inspect and copy public 19 records and documents, including judicial records and documents.’” Kamakana v. City 20 and County of Honolulu, 447 F.3d 1172, 1178 (9th Cir. 2006) (quoting Nixon v. Warner 21 Commc’ns, Inc., 435 U.S. 589, 597 & n. 7 (1978)). Although access to judicial records is 22 not absolute, there is a “narrow range” of documents that have traditionally been kept 23 secret for policy reasons: “grand jury transcripts and warrant materials in the midst of a 24 preindictment investigation.” Id. (citing Times Mirror Co. v. United States, 873 F.2d 25 1210, 1219 (9th Cir. 1989)). The importance of this narrow range is that “[u]nless a 26 particular court record is one ‘traditionally kept secret,’ a ‘strong presumption in favor of 27 access’ is the starting point.” Id. (citing Foltz v. State Farm Mutual Auto. Insurance 28 Company, 331 F.3d 1122, 1135 (9th Cir. 2003)). 1 “[T]he strong presumption of access to judicial records applies fully to dispositive 2 pleadings, including motions for summary judgment and related attachments.” 3 Kamakana, 447 F.3d at 1179. The reason is “because the resolution of a dispute on the 4 merits, whether by trial or summary judgment, is at the heart of the interest in ensuring 5 the ‘public’s understanding of the judicial process and of significant public events.’” Id. 6 (quoting Valley Broadcasting Co. v. U.S. Dist. Ct., 798 F.2d 1289, 1294 (9th Cir. 1986)). 7 “Thus, ‘compelling reasons’ must be shown to seal judicial records attached to a 8 dispositive motion.” Id. (citing Foltz, 331 F.3d at 1136). This standard applies “even if 9 the dispositive motion, or its attachments, were previously filed under seal or protective 10 order.” Id. Relying on “a blanket protective order is unreasonable and is not a 11 ‘compelling reason’ that rebuts the presumption of access.” Id. at 1183 (citing Foltz, 331 12 F.3d at 1138). 13 The compelling reasons standard imposes a high threshold on parties seeking to 14 maintain the secrecy of documents attached to dispositive motions. Kamakana, 447 F.3d 15 1180. “In general, ‘compelling reasons’ sufficient to outweigh the public’s interest in 16 disclosure and justify sealing court records exist when such ‘court files might have 17 become a vehicle for improper purposes,’ such as the use of records to gratify private 18 spite, promote public scandal, circulate libelous statements, or release trade secrets.” Id. 19 at 1179 (quoting Nixon, 435 U.S. at 598). “The mere fact that the production of records 20 may lead to a litigant’s embarrassment, incrimination, or exposure to further litigation 21 will not, without more, compel the court to seal its records.” Id. (quoting Foltz, 331 F.3d 22 at 1136). 23 The parties have requested to file numerous exhibits under seal. [Docs. 115, 118, 24 124, 127, 131]. After review, these exhibits and references to them in the parties’ briefs 25 reveal confidential proprietary business and financial information. Disclosing such 26 information to the public would cause competitive harm to the parties. As such, 27 compelling reasons exist to file the specified documents under seal. See, e.g., In re 28 Electronic Arts, 298 F. App’x 568, 569 (9th Cir. 2008) (stating that compelling reasons 1 may exist if sealing is required to prevent documents from being used “as sources of 2 business information that might harm a litigant’s competitive standing”). 3 4 IV. DISCUSSION 5 Avicenna begins its motion for summary judgment by arguing that Certified’s 6 claims are barred by the doctrine of unclean hands. The Clorox Defendants join in 7 Avicenna’s arguments and incorporate them by reference in their separately-filed motion 8 for summary judgment. 9 10 A. Unclean Hands 11 In a prior case between Avicenna and Certified, Judge Benitez granted summary 12 judgment in Avicenna’s favor on Certified’s Lanham Act claim because “Certified 13 brought its claims with unclean hands by engaging in the same improper conduct for 14 which it faulted Avicenna—publishing false statements about a product being ‘patented’ 15 without a patent.” (Ex. C to Avicenna P&A [Doc. 120-4.] 2:8-10.) Defendants contend 16 that the doctrines of unclean hands and issue preclusion bar Certified’s claims here. The 17 Court disagrees. 18 Unclean hands is a defense to a Lanham Act infringement suit, but the defendant 19 must demonstrate that the plaintiff’s conduct relates to the subject matter of its claims. 20 See FLIR Sys., Inc. v. Sierra Media, Inc., 965 F. Supp. 2d 1184, 1197 (D. Or. 2013); 21 Fuddruckers, Inc. v. Doc’s B.R. Others, Inc., 826 F.2d 837, 847 (9th Cir. 1987). For 22 unclean hands, “‘[i]t is fundamental to [the] operation of the doctrine that the alleged 23 misconduct by the plaintiff relate directly to the transaction concerning which the 24 complaint is made.’” Dollar Sys., Inc. v. Avcar Leasing Sys., Inc., 890 F.2d 165, 173 25 (9th Cir. 1989) (quoting Arthur v. Davis, 126 Cal.App.3d 684, 693–94, (Cal. Ct. App. 26 1981)). The misstatement must be material and misleading. Fuddruckers, Inc. v. Doc's 27 B.R. Others, Inc., 826 F.2d 837, 847 (9th Cir. 1987). 28 1 Defendants argue that because Certified engaged in the same type of wrongful 2 conduct that forms the basis of its claims against Avicenna—falsely representing an 3 essential characteristic of its product that is responsible for its purported health benefits— 4 unclean hands bars its claims. However, the alleged misconduct by Certified does not 5 directly relate to the claims here. The crux of the Complaint in the previous case was that 6 Avicenna was marketing its products by making false claims about whether the products 7 enjoyed a patent monopoly. This action concerns a claim about false statements 8 regarding whether and to what extent the product is chicken sternal collagen. 9 Misstatements of patent ownership do not directly relate to misstatements about a 10 product’s ingredients. 11 12 B. False Advertising 13 There are five elements of a Lanham Act false advertising claim: 14 (1) a false statement of fact by the defendant in a commercial advertisement about its own or another’s product; (2) the statement actually deceived or 15 has the tendency to deceive a substantial segment of its audience; (3) the 16 deception is material, in that it is likely to influence the purchasing decision; (4) the defendant caused its false statement to enter interstate commerce; and 17 (5) the plaintiff has been or is likely to be injured as a result of the false 18 statement, either by direct diversion of sales from itself to defendant or by a lessening of the goodwill associated with its products. 19 20 Southland Sod Farms v. Stover Seed Co., 108 F.3d 1134, 1139 (9th Cir. 1997). To 21 demonstrate falsity, a plaintiff may show the statement was literally false or that it was 22 literally true but likely to mislead consumers. Id. A claim for literal falsity must be 23 analyzed in its full context such that a claim may be literally false by necessary 24 implication. Id. 25 1. Literally False 26 As discussed above, Certified contends the Clorox Defendants’ CJC product “lists 27 as an ingredient ‘Sternal Chicken Collagen,’ however, independent 28 testing has revealed the contents of this product are not comprised of pure Sternal 1 Chicken, but rather chicken carcasses of inferior quality which are much more 2 inexpensive to produce.” (TAC ¶ 31.) Likewise, Certified claims “Avicenna sells 3 chicken collagen which it passes off as Chicken Sternum Collagen Type II, but, in reality, 4 is derived from Chicken ‘full frames.’” (Id. ¶ 19.) Clorox Defendants and Avicenna both 5 contend Certified cannot demonstrate that the listing of sternal chicken collagen on the 6 product label is false or misleading. 7 The evidence shows that CJC does in fact contain sternal chicken collagen. 8 Avicenna claims its process derives chicken collagen that is 90 percent sternum cartilage. 9 Independent testing of Avicenna’s collagen backs this up, showing batches purchased 10 from Avicenna contained sternal chicken collagen in substantially similar amounts to 11 Certified’s product. It is therefore literally true for the Clorox Defendants and Avicenna 12 to advertise their products as containing sternal chicken collagen. 13 Certified contends the issue is not merely that Defendants advertise their products 14 as containing some portion of sternal chicken collagen, but rather that Defendants 15 advertise their products as 100% sternal chicken cartilage. Avicenna has advertised its 16 product as “Avian (Chicken) Sternum Cartilage” (used pre-2018) and “Chicken (Avian) 17 Full Frame Sternum Cartilage” (used post-January 2018). Although there is no 18 established definition of sternal chicken collagen in the industry, there is a triable issue as 19 to whether the term “Avian (Chicken) Sternum Cartilage” necessarily leads a consumer 20 to understand Avicenna’s product is 100% sternum cartilage. By advertising its 21 purportedly single-ingredient product as chicken sternal collagen, Avicenna appears to be 22 representing that the entire product is chicken sternal collagen. 23 As for the phrase used post-January 2018—“Chicken (Avian) Full Frame Sternum 24 Cartilage”—it cannot be said that it is literally false. It is an accurate depiction of 25 Avicenna’s manufacturing process: deriving chicken sternum collagen from the full 26 frame of a chicken. 27 Because Avicenna’s product is not derived from pure chicken sternum, Certified 28 argues the Clorox Defendant’s product also must be false. Specifically, Certified claims 1 the statement on the CJC product label that a serving of the product contains 2,400 mg of 2 sternal chicken collagen protein is literally false. Unlike Avicenna, the Clorox 3 Defendants did not advertise their product as comprised of only a single ingredient. 4 Rather, they advertise that CJC contains 2,400 mg of sternal collagen among other 5 ingredients. The Clorox Defendants therefore argue that just because the source of 6 collagen in CJC is not made of pure sternal chicken collagen does not necessitate that it 7 invariable contains less than 2,400 mg. However, the other ingredients are listed, and 8 none of them correlate with a suggestion that the source of sternal collagen is not pure. 9 Certified has not supplied any evidence, other than supposition, that CJC does not in fact 10 contain 2,400 mg of sternal chicken collagen. It has therefore failed to make a showing 11 that there is no genuine issue of material fact as to this element. Because the raw 12 ingredient of CJC is not made of 100% collagen type II from chicken sternal cartilage, a 13 factfinder could conclude that labeling the CJC product as pure sternal chicken cartilage 14 is literally false. 15 However, a jury could very easily lean against a finding of literal falsity, in which 16 case, Certified would need to show that the advertisements were at least misleading. 17 2. Misleading 18 If an advertisement is not literally false, a plaintiff must provide extrinsic evidence 19 showing that the advertisement either deceived or has the tendency to deceive customers. 20 Southland Sod Farms, 108 F.3d at 1140. “Even if an advertisement is not literally false, 21 relief is available under [the Lanham Act] if it can be shown that the advertisement has 22 misled, confused, or deceived the consuming public . . . typically tested through the use 23 of consumer surveys.” Id. 24 Certified has failed to provide evidence showing a likelihood of customer 25 deception. The two populations likely to be misled were consumers comprising a 26 “substantial segment of the public,” and manufacturers of collagen supplements. (TAC ¶ 27 33.) The one survey Certified has presented is not representative of a population that 28 actually consumes the product. The survey tested a population of non-customers— 1 rheumatologists. (See Gelb Report [Doc. 117-12]; Gelb Decl. [Doc. 117-11].) Further, 2 the surveyor that conducted the survey had no evidence that rheumatologists actually 3 influence buyers of the product. The product is not prescribed by a physician and the 4 surveyor failed to establish that any of her survey respondents specifically recommended 5 sternal chicken collagen supplements to patients. 6 Additionally, the rheumatologists surveyed reviewed the supplement label on 7 Clorox’s product, not Avicenna’s. Avicenna has produced declarations of its customers 8 stating Avicenna never represented its product as 100% sternum and that customers 9 understood that it was not. Thus, Certified has failed to present evidence that either the 10 Clorox Defendants or Avicenna’s customers were likely to be deceived. Summary 11 Judgment is granted as to this element. Since the alternate element of literal falsity 12 survives, the Court continues its analysis of the relevant elements of the false advertising 13 claim. 14 3. Injury 15 To prevail on its false advertising claim, Certified must show that it “has 16 been or is likely to be injured as a result of the false statement, either by direct 17 diversion of sales from itself to defendant or by a lessening of the goodwill 18 associated with its products.” Southland Sod Farms, 108 F.3d at 1139. Certified 19 claims it “has suffered both an ascertainable economic loss of money and 20 reputational injury” as a result of Defendants’ alleged false labeling. (TAC ¶ 38.) 21 Specifically, it claims monetary damages in the form of lost customers, reduced 22 profits, additional advertising costs, and lost market share. (Clorox P&A 17:13-15). 23 In asserting it has suffered direct injury, Certified presents as evidence the 24 following: (1) a list of 45 customers it contends it lost; and (2) profit and loss data 25 indicating its profits declined and Advertising and Promotion expenses increased 26 over disputed time periods. (Opp’n to Clorox MSJ [Doc. 126] 19:2-7; 19:15-21:3.) 27 Clorox Defendants argue Certified has presented no evidence to substantiate 28 its claim that it: (1) lost customers or market share as a result of Defendants’ 1 labeling; or (2) spent additional advertising, marketing and related costs to combat 2 the effects of Defendants’ alleged false labeling. (Clorox P&A 18:6–19:19.) 3 Avicenna argues Certified has not presented sufficient evidence to satisfy its 4 burden of demonstrating it lost any customers as a result of Defendants’ labeling 5 because: (1) the five customers Certified purports to have lost to Avicenna have 6 sworn under oath that they did not purchase Avicenna’s product based on the 7 alleged misrepresentation; and (2) Certified’s theory as to why these customers 8 were diverted to Avicenna is supported only by “hearsay, speculative testimony.” 9 (Avicenna P&A 19:13-21:4.) Further, Avicenna argues Certified failed to make 10 any effort to show what, if any, sales of Avicenna’s product are attributable to the 11 alleged misrepresentations. (Id. 23:2-7.) 12 Citing 15 U.S.C. § 1117 (a) and Lindy Pen Co. v. Bic Pen Corp., 982 F.2d 13 1400 (9th Cir. 1993), a false comparative advertising case, Certified argues it 14 should be entitled to damages based on Defendants’ profits under an unjust 15 enrichment theory. (Opp’n to Clorox MSJ 18:15-19.) Further, Certified argues that 16 because Defendants’ expert’s conclusion could have been different had he used an 17 alternate date range to conduct his analysis, that Certified has presented evidence 18 of injury. (Id. 19:25-21:11.) 19 The Court disagrees with Certified’s reasoning for the following reasons. 20 a) Non-comparative false advertising 21 In seeking damages under section 43(a) of the Lanham Act, providing 22 “actual evidence of some injury resulting from the deception is an essential 23 element of the plaintiff’s case.” Harper House, Inc. v. Thomas Nelson, Inc., 889 24 F.2d 197, 210 (9th Cir. 1989). “[A]n award of profits with no proof of harm is an 25 uncommon remedy in a false advertising suit.” TrafficSchool.com, Inc. v. Edriver 26 Inc., 653 F.3d 820, 831 (9th Cir. 2011). 27 Where advertising does not directly compare the defendant’s product against 28 the plaintiff’s, as in the case of false noncomparative advertising cases, plaintiffs 1 must produce proof of past injury or causation. See id. In TrafficSchool, the Ninth 2 Circuit held that the defendants’ use of the website DMV.org deceived a 3 substantial segment of its audience into believing its third-party referrals were 4 recommended by the state’s DMV, and that this could reasonably lead the 5 defendants to capture market share from the plaintiff. TrafficSchool, 653 F.3d at 6 826–29. However, despite presenting evidence its business decreased over a 7 number of years, TrafficSchool did not provide evidence quantifying its harm nor 8 did it show its decrease in business was specifically caused by the defendants’ 9 deceptive practices. Id. at 831; TrafficSchool, 633 F.2d 1063 at 1073-74 and 1087 10 (affirmed in TrafficSchool.com, Inc. v. Edriver Inc., 653 F.3d 820 (9th Cir. 2011)). 11 The district court, therefore, had no way of determining with any degree of 12 certainty what award would be compensatory. TrafficSchool, 653 F.3d at 831. 13 Unlike in TrafficSchool, where the plaintiff presented evidence that its 14 business decreased over a period of years, the data provided by Certified shows its 15 sales actually increased over the time period for which full year data is supplied. 16 (Ex. M, Zimmer Report [Doc 116-7] p. 330.) While Certified shows a loss in 17 profitability, this is due to a large increase in the cost of sales in 2019 for which 18 advertising costs remain a negligible proportion. (Id.) Since Certified’s Complaint 19 rests on the argument that Defendants’ alleged false advertising affected its sales, it 20 is not reasonable for the Court to assume the significant unaccounted for increase 21 in the cost of sales, which could be attributed to the cost of goods sold among other 22 things, is a direct result of Defendants’ product labeling. 23 Despite stating in its TAC that “as of February of 2018, and on information 24 and belief, continuing to the present, the [Clorox] Defendants falsely advertised 25 CJC products at numerous retail outlets across the country…,” Certified claims the 26 alleged false advertising started as early as April 2016. (TAC ¶ 23.) However, 27 observing Certified’s advertising costs beginning with the year ended December 28 31, 2016, the company’s advertising costs have declined through the alleged 1 damages period. (Ex. M, Zimmer report [Doc 116-7] p. 328.) Further, Certified 2 does not establish causation: the Advertising expense data is presented without any 3 supplemental evidence linking the costs, or a portion thereof, to educating 4 consumers as a result of the alleged false advertising of Defendants. (Id.) 5 Certified’s attempts to recalculate its advertising expenses by way of Defendants’ 6 expert report lacks any support or foundation. Given such a dearth of supporting 7 evidence, it is unreasonable for the Court to assume every dollar Certified spent on 8 advertising from 2016 on forward was for the purpose of combating Defendant’s 9 alleged false advertising.1 10 Certified argues in its Opposition that it lost 45 customers as a result of 11 Defendants’ alleged false advertising. Certified provided this list in an 12 interrogatory response. (Ex. H, Certified’s Third Supplemental Responses to 13 Clorox’s Interrogatory Nos. 15 and 17 [Doc. 116-5].) However, when questioned 14 about this list, Certified’s CEO testified that it was merely a list of all the 15 customers who bought collagen from Certified since 2012. (Ex. C, Alkayali Dep. 16 [Doc 133-4] 337:21-338:6.) Such a list does not prove that any of those customers 17 were lost as a result of Defendants’ false advertising. Importantly, the majority of 18 sales from these 45 customers had already rolled off by 2016. (Zimmer Report p. 19 329.) Further, the five customers Certified’s CEO actually identified as being lost 20 because of Defendants’ false advertising, as opposed to merely the 45 customers it 21 had in 2012, have all indicated that their decision to stop using Certified’s product 22 was not due to deception. (Ex. D, Alkayali Dep. [Doc. 116-4] 203:17-204:16; 23 213:3-12.) Four of the five have sworn under oath that they did not purchase the 24 competing product of Defendant Avicenna based on any representations that the 25 product was derived from 100% chicken sternum. (See Ex. W, Stroup Decl. [Doc. 26 27 28 1 Avicenna’s evidentiary objection to Certified’s use of Paragraph 5 of the Alkayali Declaration 1 120-6]; Ex. X, Quadri Decl.[Doc. 120-6]; Ex. Y, Cuadro Decl. [Doc. 120-6]; Ex. Z, 2 Timon Decl. [Doc. 102-6].) As for the fifth customer, the evidence indicates it had 3 not purchased collagen from Certified since 2014, years before the alleged false 4 advertising began. (Zimmer report p. 329.) 5 For the foregoing reasons, Certified has not established it suffered actual 6 injury as a result of Defendants’ alleged false advertising. 7 b) Unjust Enrichment 8 Citing 15 U.S.C. § 1117(a) and Lindy, Certified argues that “because it is 9 often difficult for a plaintiff to prove actual damages in a false advertising case, the 10 Lanham Act permits a court, ‘subject to the principles of equity,’ to award 11 damages based on the defendant’s profits on an unjust enrichment theory.” (Opp’n 12 to Clorox MSJ 18:15-22.) Further, Certified argues that when assessing profits 13 under 15 U.S.C. § 1117(a), “the plaintiff need prove only the defendant’s sales and 14 the defendant must prove any costs or deductions therefrom.” (Id. 18:22-24.) 15 However, 15 U.S.C. § 1117(a) and Lindy both address damages in false 16 comparative advertising cases, where a defendant violates “any right of the 17 registrant of a mark registered in the Patent and Trademark Office.” 15 U.S.C. § 18 1117(a). 19 In Lindy, suit was brought against Bic for advertising one of its pen models 20 using the “Auditor’s” moniker, which Lindy had trademarked fourteen years prior. 21 Lindy, 982 F.2d at 1403 (abrogated on other grounds by SunEarth, Inc. v. Sun 22 Earth Solar Power Co., 839 F.3d 1179 (9th Cir. 2016)). Contrastingly, in 23 TrafficSchool, the Ninth Circuit noted that “neither the comparative advertising 24 nor good will cases are relevant here,” because the advertising in question 25 concerned a defendant promoting a product as different than what was ultimately 26 delivered as opposed to its violating the rights of registrants of a mark. 27 TrafficSchool, 653 F.3d at 831. Similarly here, Certified is not claiming 28 Defendants’ violated Certified’s rights as registrants of a mark but that Defendants 1 advertised their product as being pure sternal chicken collagen despite being made 2 from full frames. Thus, damages under the theory of unjust enrichment are not 3 applicable. 4 Summary judgment is granted as to this element. However, in addition to 5 damages, Certified asks for injunctive relief enjoining Defendants from false 6 advertising of their CJC products. “[A] competitor need not prove injury when 7 suing to enjoin conduct that violates section 43(a).” Harper House, Inc. v. Thomas 8 Nelson, Inc., 889 F.2d 197, 210 (9th Cir.1989). The Lanham Act claim is therefore 9 still viable even though Certified has failed to raise a triable issue as to injury. See 10 Southland Sod Farms, 108 F.3d at 1145–46 (9th Cir. 1997) (“[E]ven if Plaintiffs 11 had failed to raise a triable issue as to causation and injury, their Lanham Act claim 12 would still be viable to the extent it sought an injunction.”). 13 14 C. False Designation of Origin 15 A false designation of origin claim requires proof that a defendant “(1) use[d] a 16 designation (any word, term, name, device, or any combination thereof) or false 17 designation of origin; (2) the use was in interstate commerce; (3) the use was in 18 connection with goods or services; (4) the designation or false designation is likely to 19 cause confusion, mistake, or deception as to (a) the affiliation, connection, or association 20 of defendant with another person, or (b) as to the origin, sponsorship, or approval of 21 defendant’s goods, services, or commercial activities by another person; and (5) plaintiff 22 has been or is likely to be damaged by these acts.” Summit Tech., Inc. v. High–Line 23 Med. Instruments, Co., 933 F.Supp. 918, 928 (C.D. Cal.1996). “The test for likelihood of 24 confusion is whether a ‘reasonably prudent consumer’ in the marketplace is likely to be 25 confused as to the origin of the good or service.” Dreamwerks Prod. Grp., Inc. v. SKG 26 Studio, 142 F.3d 1127, 1129 (9th Cir.1998). 27 Certified’s false designation of origin claim fails for the same reasons discussed 28 above. First, Certified has failed to provide evidence showing a likelihood of customer 1 ||deception. As explained above, Certified did not conduct an adequate survey of 2 ||consumers in the marketplace. Thus, Certified has failed to present evidence that either 3 || the Clorox Defendants or Avicenna’s customers were likely to be deceived. Second, 4 || Certified has failed to show that it has been or is likely to be damaged by either 5 || Avicenna’s or the Clorox Defendants’ alleged false designation of origin. Summary 6 || Judgment is granted as to this claim. 7 8 V. CONCLUSION & ORDER 9 For the foregoing reasons, the Court GRANTS-IN-PART and DENIES-IN- 10 PART both motions for summary judgment [Docs. 117, 120]. 11 IT IS SO ORDERED. 12 I Dated: September 29, 2021 \ {Th wiry 14 Hn. 1 omas J. Whelan 15 United States District Judge 16 17 18 19 20 21 22 23 24 25 26 27 28