Optimal Pets, Inc. v. Nutri-Vet, LLC

877 F. Supp. 2d 953, 2012 WL 2533016, 2012 U.S. Dist. LEXIS 91457
CourtDistrict Court, C.D. California
DecidedJune 29, 2012
DocketNo. EDCV-08-1795 MJG
StatusPublished
Cited by5 cases

This text of 877 F. Supp. 2d 953 (Optimal Pets, Inc. v. Nutri-Vet, LLC) is published on Counsel Stack Legal Research, covering District Court, C.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Optimal Pets, Inc. v. Nutri-Vet, LLC, 877 F. Supp. 2d 953, 2012 WL 2533016, 2012 U.S. Dist. LEXIS 91457 (C.D. Cal. 2012).

Opinion

MEMORANDUM AND ORDER RE: JUDGMENT AS A MATTER OF LAW

MARVIN J. GARBIS, District Judge.

The Court has before it Defendants’ Renewed Motion for Judgment as a Matter of Law pursuant to Fed.R.Civ.P. 50 and the materials submitted related thereto. The Court has held a hearing and had the benefit of the arguments of counsel.

I. BACKGROUND

The instant case grew out of the competition between two producers of pet vitamins and dietary supplements to obtain a contract with a national chain of vitamin distributors.

In 2004, the Garmon Corporation, led by Scott Garmon (“Garmon”) was a well-established producer of pet products, primarily selling to large retailers such as Petco, PetSmart, and Pet Supermarket, under various trademarked brand names, e.g., Green Tree, Pet Organics, and NaturVet. At this time, Bill Bookout (“Book-out”) was the President of the National Animal Supplement Council (“NASC”), an industry trade association. Bookout was also operating a “side” business — Genesis, Limited — that sold pet products primarily to veterinarians who resold the products to their patient’s owners.

Garmon and Bookout decided to form a jointly-owned business that would sell primarily to pet professionals, ie., breeders, trainers, rescue groups, kennels, etc. They chose a name for the new business that was unassociated with either Garmon or Bookout, since (1) the joint venture would be somewhat in competition with customers of both the Garmon Corporation and Genesis Limited, and (2) Bookout would be engaged in business with one of the members of the board of NASC, a board that included competitors of the Garmon Corporation.

They formed Plaintiff, Optimal Pets, Inc. (“OPI”). OPI purchased products from Garmon Corporation and Genesis Limited. OPI’s shares were owned 50% by Garmon, and 50% were in the name of Bookout’s cousin.1 OPI set up a website and commenced efforts to sell pet products under [956]*956the name “Optimal Pets” in January 2004, aiming to develop a national niche market presence.

As discussed in more detail herein, OPI started in early 2004 with a sales effort that, by 2008, had dwindled down to primarily accepting orders trickling in from the continuing offer of products on the internet website. By 2008, the sales “success” of “Optimal Pets” products was de minimis. Indeed, OPI’s total gross sales for the entire period for which there is evidence of sales volume, January 2004 through to March 2009, (five years and three months) was less than $35,000.00,2 which averages less than $6,700.00 per year. In terms of an alleged nationwide market presence, there was not a single sale in the entire five-year period in 16 states. In 28 states, the total gross sales for the entire five-year period' — not sales per year — was less than $5,400.00. This is an average of less than $200.00 in total sales per state during the entire five-year period. Accordingly, by the time of the events pertinent to the instant lawsuit, OPI was a minimally functioning business, essentially filling orders through its website.

In late 2007, Defendant Vitamin Shoppe Industries, Inc. (‘Vitamin Shoppe”) decided to add a product line of pet vitamins and supplements to sell in its chain of some 422 retail stores in 37 states and on the internet. Vitamin Shoppe was interested in having Garmon Corporation provide the products and commenced discussions with Garmon. There was no problem with the production side of the arrangement, but there was a problem with the brand name for the products.

Vitamin Shoppe did not like any of the brand names that Garmon Corporation proposed for the private label. Garmon did not propose the name “Optimal Pets,” presumably because using that name would have raised the possibility that the Bookout side of OPI would be entitled to some share of the Vitamin Shoppe business. Eventually, Vitamin Shoppe decided to find a different source of product and commenced discussions with Defendant Nutri-Vet, LLC (“Nutri-Vet”).

Initially, Nutri-Vet was no more able than Garmon to find a name that Vitamin Shoppe would accept. Ultimately, however, the name “Optimal Pet” was proposed, liked by Vitamin Shoppe, and cleared by Nutri-Vet’s trademark attorney as available for use and trademark registration. Thus, the name “Optimal Pet” was adopted as the brand name for the new line of products. Nutri-Vet applied for federal trademark registration of the “Optimal Pet” name in May 2008.3

Nutri-Vet thereafter began production of products under the name “Optimal Pet” for Vitamin Shoppe. The Vitamin Shoppe product launch of the “Optimal Pet” line of pet vitamins and supplements began on August 1, 2008. Within a few days, Garmon learned of the use of the name “Optimal Pet.” In September 2008, OPI had an attorney send a “cease and desist” letter to Defendants Vitamin Shoppe and NutriVet. The letter stated that OPI had nationwide common law rights to the trademark “Optimal Pets” for pet products and demanded that the Defendants cease and [957]*957desist infringing by use of the name “Optimal Pet.”

Defendants, deciding that OPI did not have common law trademark rights nationwide, or anywhere for that matter, refused to cease and desist. Garmon then decided to institute the instant lawsuit but found that Bookout did not wish to be associated — even through a cousin — with litigation against a member of the NASC board. Thereupon, Garmon acquired Bookout’s cousin’s ownership interest, and OPI filed the instant lawsuit.

II. PROCEDURAL SETTING

The Court, having denied Defendants’ motion for summary judgment,4 proceeded to trial by jury. Prior to submission of the case to the jury, both sides moved for Judgment as a Matter of Law under Fed.R.Civ.P. 50. Defendants sought judgment on all claims on the ground that OPI failed to introduce evidence sufficient to prove market penetration, resulting in the inability to establish that it had a valid and legally enforceable common law trademark.5 The Court denied the motion without prejudice to its renewal after verdict. OPI sought Judgment as a Matter of Law on Defendants’ lack of likelihood of confusion defense.6 The Court granted this motion.

Thus, the case was submitted to the jury for determination of whether, and to what extent, OPI had established enforceable common law trademark rights, and whether Defendants had adopted the name “Optimal Pet” in bad faith.

As detailed in the Appendix hereto, the jury ultimately returned a partial verdict on a Second Revised Verdict Form, providing unanimous answers to the questions relating to trademark rights as follows:

Question 1. In which geographical areas, if any, has Plaintiff Optimal Pets, Inc. proven by a preponderance of the evidence that, by August 2008, it had used in commerce the name “Optimal Pets” as a trademark for the products at issue?
Answer: The entire United States
Question 2 A. In which geographical area of the United States, if any, do you unanimously agree that Plaintiff Optimal Pets, Inc.

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Bluebook (online)
877 F. Supp. 2d 953, 2012 WL 2533016, 2012 U.S. Dist. LEXIS 91457, Counsel Stack Legal Research, https://law.counselstack.com/opinion/optimal-pets-inc-v-nutri-vet-llc-cacd-2012.