Puricle, Inc. v. Church & Dwight Co., Inc.

568 F. Supp. 2d 1144, 2008 U.S. Dist. LEXIS 57235, 2008 WL 2930307
CourtDistrict Court, C.D. California
DecidedJuly 25, 2008
DocketCV 08-3082 ABC (OPx)
StatusPublished
Cited by1 cases

This text of 568 F. Supp. 2d 1144 (Puricle, Inc. v. Church & Dwight Co., Inc.) 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
Puricle, Inc. v. Church & Dwight Co., Inc., 568 F. Supp. 2d 1144, 2008 U.S. Dist. LEXIS 57235, 2008 WL 2930307 (C.D. Cal. 2008).

Opinion

ORDER DENYING MOTION FOR PRELIMINARY INJUNCTION

AUDREY B. COLLINS, District Judge.

Pending before the Court is Defendant and Counterclaimant Church & Dwight Co., Inc.’s (“C & D”) Motion for a Preliminary Injunction (“Motion”), filed on June 30, 2008. Plaintiff and Counterclaim Defendant Puricle, Inc. (“Puricle”) filed an Opposition on July 9, 2008, and C & D filed a Reply on July 15, 2008. The Court heard oral argument on July 21, 2008. *1145 For the foregoing reasons, the Court DENIES the Motion.

I. PROCEDURAL BACKGROUND

Puricle filed its First Amended Complaint (“FAC”) in this matter on June 27, 2008. Therein, Puricle asserts several contract-based claims; claims for conversion, misappropriation, and unfair competition; and seeks declaratory relief to the effect that the non-competition clause in the Manufacturing Agreement between Puricle and C & D is unconscionable and unenforceable. On June 30, 2008, C & D filed its Answer and Verified Counterclaims wherein C & D asserts claims for breach of contract and breach of the covenant of good faith and fair dealing, and seeks declaratory relief adjudicating the enforceability of the Manufacturing Agreement. Along with its Answer and Counterclaims, C & D filed an Application for Temporary Restraining Order and Order to Show Cause Why a Preliminary Injunction Should Not Issue. The Court denied the TRO, and set a briefing schedule for the Motion for Preliminary Injunction

II. FACTUAL BACKGROUND

Puricle was founded in 2001. Its business focuses on the development, manufacture, marketing, and sale of self-cleaning toilet systems, in particular, a line of products called the “NeverScrub” products. (FAC ¶¶ 9,10.)

On September 26, 2005, Puricle and Orange Glo International, Inc. (“Orange Glo”) entered into a written Manufacturing Agreement (the “MA,” attached as Exhibit A to the FAC) by which Puricle agreed to manufacture, and Orange Glo agreed to purchase, Puricle’s NeverScrub system and its associated refills. 1 These items were to be manufactured by Puricle and sold by Orange Glo as the “Kaboom Nev-erScrub System” and “Kaboom Never-Scrub System Refill” (collectively, the “Kaboom NeverScrub Products”). (FAC ¶ 12.)

Under the MA, Puricle agreed to stop its own direct sales of the NeverScrub products to retailers (by December 31, 2006), and Orange Glo became the exclusive distributor of the “NeverScrub” products to retailers under the “Kaboom” brand. (FAC ¶ 13.) The MA acknowledges that the trademark “NeverScrub” belongs to Puricle, and the trademark “Kaboom” belongs to Orange Glo. (FAC Ex. A, Schedule 2.)

The term of the agreement was for three years, with automatic renewal terms of one year, unless a party wishing to terminate the agreement provided written notice of termination 180 days prior to the automatic renewal date. (FAC Ex. A, §§ 6.1, 6.2.)

By these provisions, the three year initial term of the MA was set to expire on September 26, 2008. By a March 14, 2008 letter, Elisa Sim of Puricle reminded C & D that the final day to provide written notice of termination of the contract was March 26, 2008; otherwise, the MA would automatically renew for one year. (Wor-rell Decl. Ex. 1.) On March 21, 2008, C & D instructed Puricle by email to cease all production of the Kaboom NeverScrub Products. (FAC ¶ 30.) On March 24, 2008, C & D notified Puricle by letter that C & D was terminating the MA effective September 25, 2008. (FAC ¶ 31.)

In a March 31, 2008 letter, Puricle proposed an early termination of the MA and that C & D work with Puricle to transfer retailers currently purchasing Puricle’s products from C & D to Puricle so that *1146 Puricle could provide Puricle-branded products to those retailers. (FAC ¶ 33.) On April 4, 2008, C & D stated that “at present we have no intention of issuing further purchase orders for the supply of [Kaboom Products] during the period running through the September 25 termination effective date.” (FAC ¶ 34.)

Shortly thereafter, on May 9, 2008, Puri-cle filed its Complaint initiating this action. In its FAC, filed on June 27, Puricle alleges that C & D acted in a manner that reduced the sale of the Kaboom Never-Scrub Products to retailers, including, for example, by failing to promote and market the products, and that this conduct violated the MA. (FAC ¶¶ 17-23.) Puricle further alleges that C & D breached the MA by failing to provide a forecast of C & D’s estimated orders of the Kaboom Never-Scrub Products or a production plan. (FAC ¶¶ 24-29.) Puricle also alleges that C & D has used Puriele’s confidential information to produce a competing product, called Kaboom Scrub Free, that is substantially similar to Puriele’s NeverScrub product. (FAC 42-43; Sim Decl. ¶¶ 58-59.)

Thereafter, C & D filed its Answer and Counterclaims, pursuant to which it now seeks a preliminary injunction. C & D contends that Puricle is now selling its own version of the Kaboom NeverScrub Products, labeling them as “NeverScrub,” and that this conduct breaches several provisions of the MA, which C & D argues remains in place until September 25. Specifically, C & D argues that by selling NeverScrub, Puricle is violating section 5.2 of the MA, in which Puricle granted to C & D the exclusive rights to distribute and sell the Kaboom NeverScrub Products:

[Puricle] ... shall [not] manufacture, sell, or otherwise handle or deal (indirectly or directly) in any goods which are copies, replicas or imitations of the Products, or [ ] are based upon the Specifications [ ] of the products. (FAC Ex. A, § 5.2.)

C & D also contends that Puricle is violating section 5.4 of the MA, in which Puricle granted to C & D an exclusive license to market, distribute and sell the Kaboom NeverScrub Products, as follows:

[Puricle] hereby grants to [C & D] an exclusive, irrevocable worldwide license [to] market, distribute and sell the Products [] worldwide in all channels of trade. [] For avoidance of doubt, during the Term, [Puricle] shall not grant any license to any third party to market, distribute or sell the Product or to otherwise use the Technical Information, nor shall [Puricle] engage in any such activities on its own behalf except as specified within this agreement. 2 (FAC Ex. A, § 5.4.)

Finally, C & D argues that Puricle is violating section 5.7 of the agreement, a non-competition and non-solicitation agreement barring Puricle from engaging in competition with C & D, as follows:

[D]uring the Term of the Agreement and for a period ending six (six) months following the termination of expiration hereof (the “Non-Competition Period”) [Puricle shall not] manufacture, market, sell or distribute any products which are directly or indirectly competitive with the Products [and shall not] solicit or induce ...

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568 F. Supp. 2d 1144, 2008 U.S. Dist. LEXIS 57235, 2008 WL 2930307, Counsel Stack Legal Research, https://law.counselstack.com/opinion/puricle-inc-v-church-dwight-co-inc-cacd-2008.