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DOWNEY BRAND LLP MICHAEL J. THOMAS (Bar No. 172326) APARNA RAJAGOPAL-DURBIN (Bar No. 218519) 555 Capitol Mall, Tenth Floor Sacramento, CA 95814-4686 Telephone: (916) 444-1000 Facsimile: (916) 444-2100 E-mail: [email protected] E-mail: [email protected] Attorneys for Plaintiff Nutrishare, Inc. UNITED STATES DISTRICT COURT EASTERN DISTRICT OF CALIFORNIA

Nutrishare, Inc., a California corporation, Plaintiff, v. BioRx, LLC, an Ohio Limited Liability Company, Defendant.

Case No. 2:08-CV-01252-WBS-EFB
REPLY IN SUPPORT OF MOTION FOR PRELIMINARY INJUNCTION ORAL ARGUMENT REQUESTED Date: Time: Dept: Judge: August 18, 2008 2:00 p.m. Courtroom 5 Hon. William B. Shubb

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TABLE OF CONTENTS Page I. II. INTRODUCTION...........................................................................................................1 LEGAL ARGUMENT.....................................................................................................2 A. NUTRISHARE IS LIKELY TO SUCCEED ON THE MERITS OF ITS CLAIMS ..............................................................................................................2 1. Nutrishare Has Established a "Likelihood of Confusion." ..........................2 a. Strength of the Mark ......................................................................2 b. Similarity of the Marks ..................................................................7 c. Evidence of Actual Confusion........................................................8 d. Degree of Purchaser Care.............................................................10 e. Intent to Deceive Consumers........................................................12 f. Proximity of the Products and Services Offered by the Parties .....12 2. BioRx's Federal Trademark Application for "NutriThrive" Is Not a Defense to this Action .............................................................................15 a. NutriThrive's Notice of Allowance is Not a Defense to Trademark Infringement ................................................................................15 b. That Nutrishare Has Not Yet Challenged the NutriThrive Mark at the USPTO is Also Not a Defense to Trademark Infringement .....16 3. BioRx Cannot Establish an Affirmative Defense of Laches .....................17 a. There is a Strong Presumption that Laches is Inapplicable Because Nutrishare Filed its Lawsuit Within Four Years ...........................17 b. Laches is also Inapplicable Under the Six E-Systems Factors.......18 c. The doctrine of Inevitable Confusion Also Bars BioRx's laches defense.........................................................................................22 B. NUTRISHARE WILL SUFFER IRREPARABLE HARM UNLESS BIORX IS ENJOINED FROM USING THE "NUTRITHRIVE" MARK...........22 1. Erosion of Nutrishare's Market Share Qualifies as Irreparable Harm Entitling Nutrishare to a Preliminary Injunction.......................................22 2. In Addition to the Erosion of its Market Share, Nutrishare Has Lost Control Of its Brand and Reputation to a Newcomer Who May Tarnish It.................................................................................................23 3. Nutrishare's Delay Does Not Preclude Irreparable Harm .........................24 C. THE BALANCE OF THE HARDSHIPS STRONGLY TIPS IN NUTRISHARE'S FAVOR.................................................................................24 D. A PRELIMINARY INJUNCTION WILL PROTECT THE PUBLIC INTEREST ........................................................................................................26 CONCLUSION .............................................................................................................27

III.

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TABLE OF AUTHORITIES Page FEDERAL CASES Alfacell Corp. v. Anticancer Inc., 71 U.S.P.Q.2d 1301 (C.D. Cal. 2004) ......................................................................5, 11, 27 American Int'l Group v. American Int'l Bank, 926 F.2d 829 (9th Cir. 1991) .............................................................................................. 8 AMF Inc. v. Sleekcraft Boats, 599 F.2d 341 (9th Cir. 1979) .........................................................................................2, 13 Au-Tomotive Gold, Inc. v. Volkswagen of Am., Inc., 457 F.3d 1062 (9th Cir. 2006) ............................................................................................ 8 Brookfield Communs. v. W. Coast Entm't Corp., 174 F.3d 1036 (9th Cir. 1999) .................................................................................2, 10, 12 Century 21 Real Estate Corp. v. Magee, 19 U.S.P.Q.2d 1530 (C.D. Cal. 1991) ................................................................................. 5 Champions Golf Club v. Champions Golf Club, 78 F.3d 1111 (6th Cir. 1996) ............................................................................................ 10 Daddy's Junky Music Stores v. Big Daddy's Family Music, 109 F.3d 275 (9th Cir. 1997) ............................................................................................ 12 Dreamwerks Production Group, Inc. v. SKG Studio, 142 F.3d 1127 (9th Cir. 1998) .......................................................................................... 14 E. & J. Gallo Winery v. Gallo Cattle Co., 967 F.2d 1280 (9th Cir. 1992) .......................................................................................... 14 Earth Technology Corp. v. Environmental Research & Technology, Inc., 222 U.S.P.Q. 585 (C.D. Cal. 1983)..................................................................................... 5 Earthquake Sound Corporation v. Bumper Industries, Inc., 188 F.3d 513 (9th Cir. 1999)................................................................................................ 7 Eclipse Associates Ltd. v. Data General Corp., 894 F.2d 1114 (9th Cir. 1990) ............................................................................................ 9 Entrepreneur Media, Inc. v. Smith, 279 F.3d 1135 (9th Cir. 2002) .......................................................................................... 13 Ethicon, Inv. v. American Cyanamid Company 192 U.S.P.Q. 647 (TTAB 1976) ..................................................................................23, 27 Fleischmann Distilling Corp. v. Maier Brewing Co., 314 F.2d 149 (9th Cir. 1963) ............................................................................................ 14

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TABLE OF AUTHORITIES (continued) Page Geigy Chemical Corp. v. Atlas Chemical Indus., Inc., 58 C.C.P.A. 972 (C.C.P.A. 1971) ..................................................................................... 11 GoTo.com, Inc. v. The Walt Disney Co., 202 F.3d 1199 (9th Cir. 2000).................................... 2 Guaber, S.P.A. v. Nutri-Metics Int'l, Inc., 1991 U.S. App. LEXIS 10842 (Fed. Cir. 1991) .................................................................. 5 In re Corning Glass Works, 229 USPQ 65 (TTAB 1985) ............................................................................................. 14 In re Jeep Corp., 222 USPQ 333 (TTAB 1984) ........................................................................................... 14 In re Martin's Famous Pastry Shoppe, Inc., 748 F.2d 1565 (Fed. Cir. 1984)......................................................................................... 14 In Re Merck. & Co. 1982 TTAB LEXIS 35 (TTAB 1992) ............................................................................... 27 In re National Data Corp, 753 F.2d 1056 (Fed. Cir. 1985)........................................................................................... 5 Kroger Co. v. Suprex, Inc., 193 U.S.P.Q. 245 (E.D. Pa. 1976)..................................................................................... 10 Lambert Pharmacal Co. v. Kalish Pharmacy, 219 F. 323 (C.C.N.Y. 1911) ............................................................................................... 8 McLeod v. Hosmer-Dorrance, Inc., 1976 U.S. Dist. LEXIS 12289, 192 U.S.P.Q.683 (C.D. Cal. 1976).................................... 26 Nutri/System, Inc. v. Con-Stan Industries, Inc., 809 F.2d 601 (9th Cir. 1987) .......................................................................................2, 3, 4 Official Airlines Guides, Inc. v Goss, 6 F.3d 1385 (9th Cir. 1993) ............................................................................................4, 12 On-line Careline Inc. v. America Online Inc., 229 F.3d 1080 (Fed. Cir. 2000)......................................................................................... 14 Paul Sachs Originals Co. v. Sachs, 325 F.2d 212 (9th Cir. 1963) .............................................................................................. 5 Personeta, Inc. v. Persona Software, Inc., 418 F.Supp.2d 1013 (N.D. Ill., 2005).................................................................................. 7 Rodeo Collection, Ltd v. West Seventh, 812 F.2d 1215 (9th Cir. 1987) ........................................................................................ 4, 8

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TABLE OF AUTHORITIES (continued) Page Russell v. Caesar, 62 U.S.P.Q.2d 1125 (N.D. Cal. 2001)................................................................................. 5 Steinway & Sons v. Demars & Friends, 210 U.S.P.Q. 954, 1981 U.S. Dist. LEXIS 15169, at *36 (C.D. Cal. 1981) ....................... 10 Stork Restaurant v. Sahati, 166 F.2d 348 (9th Cir. 1948.) ........................................................................................... 12 Syntex Laboratories, Inc. v. Norwich Pharmacal Co., 437 F.2d 566 (2d Cir. 1971) ............................................................................................. 11 Thane Int'l v. Trek Bicycle Corp., 305 F.3d 894 (9th Cir. 2002) .............................................................................................. 9 Tillamook Country Smoker v. Tillamook County Creamery Ass'n, 311 F. Supp. 2d 1023 (D. Or. 2004).................................................................................. 14 Watts Health Systems, Inc. v. United Healthcare Corp., 960 F. Supp. 1431 (C.D. Cal. 1996).................................................................................. 26 FEDERAL STATUTES 15 U.S.C. § 1125(a) ............................................................................................................... 10 STATE STATUTES Bus. & Prof. Code § 4051 ........................................................................................................ 3 OTHER AUTHORITY 4 J. Thomas McCarthy, MCCARTHY ON TRADEMARKS AND UNFAIR COMPETITION §23:41 (4th ed. 2008)7, 12, 13, 19, 20, 21 THE NEW SHORTER OXFORD ENGLISH DICTIONARY (ed. Leslie Brown), Clarendon Press, Oxford (1993), at 671.............................................................................. 7 Trademark Manual of Examining Procedure § 1201(a)(i) ..................................................13, 14

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I.

INTRODUCTION

After establishing its brand identity and reputation over nearly two decades of hard work and dedication to its patients, Nutrishare is now in the untenable position of not only losing market share to a copycat business, but of now having the reputation of its brand name at risk of being tarnished or destroyed altogether while in the hands of a third party. That is the necessary result when a competitor such as defendant Nutrithrive here begins using a mark that is likely to cause consumer confusion as to the source, sponsorship, or affiliation. Aside from the presumption of irreparable harm the flows from the likelihood of confusion determination, the threatened loss of market share from a direct competitor also establishes irreparable harm. BioRx's opposition is replete with hyperbole and overstatements. None of its arguments have any merit. Laches is not a defense to this action or this motion. The Nutrithrive mark is strong, and all of the Sleekcraft factors weigh in favor of a finding of infringement. Recognizing the weakness of its arguments, BioRx engages in an effort at misdirection, and would have the Court believe that Nutrishare's motion seeks to "shut down NutriThrive" and prevent BioRx from "providing enteral care and other infusion products and services," (Opposition to Motion for Preliminary Injunction, filed 8/4/08 (hereinafter "Opp.") at 19:16.). This could not be farther from the truth. Nutrishare merely seeks an injunction requiring BioRx to cease using a name which is likely to cause consumer confusion. BioRx can continue to engage in any business it chooses, as long as it does so in a manner that is not likely to cause consumer confusion. Where, as in this case, the public welfare is also implicated in view of the nature of the competing pharmaceutical products at issue, the need to avoid consumer confusion is that much more compelling. This case is about "dangerous drugs or dangerous devices" as defined by the California Business & Professions Code, which are prescribed by doctors and dispensed by licensed pharmacies. Confusion about source, affiliation, sponsorship, or relationship of such products could lead to tragic consequences. Accordingly, preliminary injunctive relief to protect both Nutrishare and the consuming public during the pendency of this action is absolutely necessary and appropriate.

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II.

LEGAL ARGUMENT

NUTRISHARE IS LIKELY TO SUCCEED ON THE MERITS OF ITS CLAIMS. 1. Nutrishare Has Established a "Likelihood of Confusion."

In its moving brief, Nutrishare demonstrated why it is likely to prevail on each of the eight "likelihood of confusion" factors under AMF Inc. v. Sleekcraft Boats, 599 F.2d 341, 348 (9th Cir. 1979). BioRx's response incorrectly analyzes several of the factors, and completely fails to address two critical Sleekcraft factors: (1) the relatedness or proximity of the goods and services; and (2) the marketing channels used. (See generally Opp.) BioRx's failure to discuss these key factors can only mean that BioRx admits that: (1) the NutriThrive goods and services are essentially identical to Nutrishare's goods and services; and (2) both parties utilize identical marketing channels. BioRX's failure to addresses these factors strongly suggest that Nutrishare is likely to succeed on the merits of its claims. See Brookfield, 174 F.3d at 1054 (relatedness of goods and services "will always be important"); GoTo.com, Inc. v. The Walt Disney Co., 202 F.3d 1199, 1207 (9th Cir. 2000) GoTo.com, 202 F.3d at 1207 (use of same marketing channels, especially the Internet, "is particularly susceptible to a likelihood of confusion.") Even if the Court were to consider the remaining Sleekcraft factors, BioRx's arguments on these factors are unavailing. a. Strength of the Mark.

In its moving brief, Nutrishare demonstrated why the "Nutrishare" mark at a minimum is entitled to protection as a "suggestive" mark under Nutri/System, Inc. v. Con-Stan Industries, Inc., 809 F.2d 601 (9th Cir. 1987), which holds that Plaintiff's "Nutri/System" mark was entitled to protection as a "suggestive" mark. Furthermore, Nutrishare established that its seventeen-year campaign of building a name and reputation around its "Nutrishare" mark has only strengthened the mark. BioRx's response turns the Nutri/System case on its head and argues that, if the Nutri/System court found "Nutri"-prefix marks to be suggestive in "food and health products field" (Nutri/System,809 F.2d at 605), then that necessarily means that "Nutri"-prefix marks are
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generic or descriptive in the nutrition industry and not entitled to protection.1 BioRx's argument is belied by its own actions, and characterization of the products and services at issue in this case. This case is not about energy bars, Vitamin Water or any other run-of-the-mill "nutritional" product, as BioRx would have the Court believe. This case is about "dangerous drugs or dangerous devices" as defined by the California Business & Professions Code. See Bus. & Prof. Code § 4051. This case is about medicine and pharmaceuticals. If parenteral and enteral nutrition were not medicine, but rather, simply a nutritional product such as baby formula, then there would be no requirement that doctors prescribe, or that licensed pharmacies dispense it. (see Opp. at 3:21-22). There would have been no reason for BioRx to obtain a pharmacy license with the California Board of Pharmacy. There would have been no basis for BioRx to have applied for registration of the "NutriThrive" name in the category of "medical services" and "pharmaceutical preparations." (See Opp. at 4:27-5:7.) BioRX took all of these actions because it clearly understands and admits that the products and services that it and Nutrishare provide are pharmaceuticals. Furthermore, although Nutri/Systems represents an example of a case involving "Nutri"prefix marks, that is the extent of its relevance to this case: that is, it is only an example and its "likelihood of confusion" analysis is by no means controlling. Likelihood of confusion is determined on a case-by-case basis only after examining all eight Sleekcraft factors. Accordingly, just because the Ninth Circuit previously held a "Nutri"-prefix mark not to be infringed in one unique situation, does not mean that all courts of this circuit should across the board find that "Nutri"-prefix marks are not entitled to any trademark protection. More importantly, although the marks at issue in Nutri/Systems, like the marks at issue in this case, contain "Nutri" prefixes, the similarity in the cases ends there. Specifically: · ·
1

Nutri/Systems was about health food products. Id. at 605. By contrast, this case is about medical products and pharmaceuticals. The competing marks in Nutri/Systems ­ "Nutri/Systems" and "Nutri-Trim" ­ were completely dissimilar, containing different punctuations between the

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Interestingly, by applying for a federal trademark for the mark Nutrithrive, BioRX is necessarily representing to the USPTO that its mark is distinctive and entitled to full protection under the Lanham Act.
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"Nutri" prefix and the suffix, and containing completely different suffixes that do not share the same number of syllables or other linguistic characteristics. Id. at 606. By contrast, the marks in this case are very similar, both containing no punctuations between the "Nutri" prefix and the suffixes, and both containing single-syllable suffixes that begin with rhyming digraphs and end in a silent "e." The marketing channels and customer base for the products and services in Nutri/Systems were completely different, with both parties serving different socioeconomic groups. Id. By contrast, the marketing channels in this case are identical. The defendant in Nutri/Systems had been using the "Nutri"-prefix to market its products long before the plaintiff even existed. Id. at 606. By contrast, BioRx began using the "Nutri" prefix only one year ago and sixteen years after Nutrishare started using the "Nutri" prefix to identify its products and services. The sales volumes in Nutri/Systems were so high that the few instances of actual confusion were considered "de minimis." Id. By contrast, here, the sales volumes of the parties' products are so low ­ in the tens (Opp. at 5:26-27) ­ that even a single instance of actual confusion is highly probative.

In addition to improperly relying on the Nutri/Systems case, BioRx also improperly dissects the "Nutrishare" mark to argue that the "Nutri" root stem is generic of nutritional products, and therefore entitled to little weight in considering a likelihood of confusion. However, the strength of the "Nutrishare" mark should not be determined by dissecting the mark into separate components, but rather, by analyzing the mark "in its entirety and in the context of [the relevant] services, not piecemeal and in the abstract." Rodeo Collection, Ltd v. West Seventh, 812 F.2d 1215, 1218 (9th Cir. 1987) (West Seventh mistakenly focused on part of Rodeo's mark, `collection,' and then argued that the overall mark was weak because the phone book revealed eleven other business uses of the term `collection.'); Official Airlines Guides, Inc. v Goss, 6 F.3d 1385 (9th Cir. 1993) ("under the anti-dissection rule, the validity and distinctiveness of a composite trademark is determined by viewing the trademark as a whole, as it appears in the marketplace.") Thus, one must consider the specific associations that the composite mark triggers in the minds of consumers when it is used on the identified goods and/or services. In this case, customers are unlikely to dissect the marks and consider the "thrive" and "share" portions independently of the "Nutri" prefixes. And indeed, as explained in Nutrishare's moving brief, it is the "Nutri" prefixes that will dominate the minds of the consumers as they observe the marks in
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the marketplace.2 As further "support" for its erroneous argument that the "Nutrishare" mark is allegedly weak, BioRx cites to examples of marks where the USPTO purportedly "required a disclaimer of the phrase `nutri' or `nutra'." (Opp. at 8:25-9:8.) BioRx opines "[t]his list of disclaimed Nutri/Nutra marks is further evidence that `nutri' is a weak source identifier for nutrition products." Given BioRX's reliance on US Patent and Trademark Office practice, one must question why BioRX chose not to disclose the Guaber, S.P.A. v. Nutri-Metics Int'l, Inc., 1991 U.S. App. LEXIS 10842, 1-5 (Fed. Cir. 1991) decision. In that case, the Court of Appeals for the Federal Circuit affirmed the TTAB's determination that the marks "Nutromed" and "Nutri-metrics" were likely to cause consumer confusion. Moreover, BioRx's purported list of disclaimers (Opp. at 8:27-28) is evidence of nothing. As a matter of law, "the technicality of a disclaimer . . . has no legal effect on the issue of likelihood of confusion" because (1) "The public is unaware of what words have been disclaimed during prosecution of the trademark application at the PTO;" (2) "The power of the PTO to accept or require disclaimers is discretionary under the statute;" and (3) "its practice over the years has been far from consistent." In re National Data Corp, 753 F.2d 1056 (Fed. Cir. 1985). A review of the USPTO file history of other marks containing the "Nutri" prefix only confirms that the USPTO is indeed inconsistent in requiring a disclaimer of "Nutri," and follows no particular formula in this regard. (Declaration of Ellen Tenud in support of Reply in support of Motion for Preliminary Injunction, filed herewith (hereinafter "Tenud Decl."), ¶ 6, Ex. C.) Thus, "it is inappropriate to give the presence or absence of a disclaimer any legal significance." Id.
2

Contrary to BioRx's assertion that Nutrishare has improperly dissected the marks by noting that the "nutri" prefix is the dominant feature of the mark, (Opp. at 11:3-4), as discussed in Nutrishare's moving brief, focusing on the dominant "Nutri" feature of the mark "does not amount to a dissection of the mark" (Guaber, 1991 U.S. App. LEXIS 10842 at * 3; McCarthy, § 23:42) and courts of this circuit have routinely found a likelihood of confusion based on the parties' use of identical dominant features. See, e.g., Paul Sachs Originals Co. v. Sachs, 325 F.2d 212 (9th Cir. 1963); Century 21 Real Estate Corp. v. Magee, 19 U.S.P.Q.2d 1530 (C.D. Cal. 1991) ("CENTURY 21" and "CENTURY 31" for real estate services); Earth Technology Corp. v. Environmental Research & Technology, Inc., 222 U.S.P.Q. 585 (C.D. Cal. 1983) ("ERT" and "ERTEC" for environmental consulting services; preliminary injunction granted); Alfacell Corp. v. Anticancer Inc., 71 U.S.P.Q.2d 1301 (C.D. Cal. 2004) ("ONCANASE" and "ONCASE" for anti-cancer drugs); Russell v. Caesar, 62 U.S.P.Q.2d 1125 (N.D. Cal. 2001) ("RABBIT RIDGE" and "RABBIT HILL" for wine).
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Furthermore, without reviewing the history of each of the marks in BioRx's "list," it is impossible to know if the disclaimed matter was disclaimed voluntarily, or required by the USPTO. What Nutrishare does know is that the first three references relied upon by BioRx are all for the identical mark, owned by the same entity. (See Declaration of Steven Coffaro in support of Opp., filed 8/4/08, Ex. C.) Therefore, BioRx's alleged evidence of disclaimers is unavailing. BioRx also attempts to contrive a "crowded" field of "Nutri" prefix marks in the parenteral nutrition industry by listing three trademark registrations that BioRx alleges show "entities offering parenteral nutrition-related products and services that currently use a `nutri' prefix." (Opp. at 9:19-26.) This argument too holds no water. First, two of these registrations have been cancelled. (See id.) Second, the existence of one live trademark registration does not constitute proof that the owner of that registration currently offers parenteral nutrition-related products and services. Succinctly stated, the fact that these registrations exist on paper or on the USPTO's Register has no bearing in the real world. Next, BioRx refers to two website addresses ­ www.nutrepletion.com and www.nutricia.com ­ to support the argument that "the marketplace includes other providers of nutritional therapies with similar names." (Opp. at 10-11.) Initially, there is no evidence before the court as to what markets these supposed businesses actually serve, what geographic regions they serve, or whether the are able to actually in business. Moreover, a review of these websites reveals that "Nutrepletion Resources" and "Nutricia" are merely trade names of businesses, and not product identifiers. (Tenud Decl., ¶ 7.) In fact, Nutricia uses other trademarks for its supposed products such as Nutilis, Nutrilon Royal, Forticare, and Flocare. (Id.) In addition, neither Nutricia nor Nutrepletion offers total parenteral services. (Id.) Therefore, BioRx's assertions that the existence of these two websites and the use of these trade names "conclusively shows" that Nutrishare's mark "is neither unique or uncommon" is simply false. In summary, the "Nutrishare" mark, when considered as a whole as it must be considered, is a strong mark and this factor weighs in favor of finding a likelihood of confusion. ///
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3

b.

Similarity of the Marks.

The "Nutrishare" and "NutriThrive" marks are confusingly similar on several grounds. Both marks start with the identical term "Nutri" and end with single syllable suffixes that are nearly the same in length (5 versus 6 letters), and which begin with the rhyming digraphs3 "sh" and "th," followed by "are" and "rive," which contain silent "e's." Moreover, the two marks share the same cadence, word structure, and differ in length only by one letter, and neither has any punctuation. See, e.g., Earthquake Sound Corporation v. Bumper Industries, Inc., 188 F.3d 513 (9th Cir. 1999) (finding likelihood of confusion where "Both Earthquake and Carquake are one word, two syllable marks of the same length, ending in `quake.'"); Personeta, Inc. v. Persona Software, Inc., 418 F.Supp.2d 1013, 78 U.S.P.Q.2d 1142 (N.D. Ill., 2005) (finding likelihood of confusion between "Personeta, Inc." and "Persona Software, Inc." on the grounds that "both marks have the identical six letters, and both end in an `a.' [and] although Personeta contains an extra syllable, the term `person' is identical in the two names" In its argument that the "Nutrishare" and "NutriThrive" marks are not similar, BioRx engages in a side-by-side comparison and dissection of the marks at issue, neither of which are the proper test for determining likelihood of confusion. See MCCARTHY ON TRADEMARKS AND UNFAIR COMPETITION (hereinafter "MCCARTHY"), § 23:41 (Fourth Ed. 2008). Side-by-side comparisons are inappropriate based on the common sense observation that the impression of a mark is created by the purchaser's cursory reaction to a mark in the marketplace, not a meticulous comparison of it to others to access possible legal differences or similarities. Indeed, purchasers do not have the luxury of making a side-by-side comparison between the marks. They are not infallible in their recollection of trademarks and often retain only a general overall commercial impression of marks that they may have previously seen in the marketplace. This is particularly true in the present case because the marks are visually seen at separate times in the point-and-click world of the Internet, where slight differences are not likely to be noted or remembered by consumers and where their respective digraphs ­ "sh and "th" ­
A digraph is a linguistic term for a pair of letters representing a single speech sound, as "ea" in meat or "th" in path. THE NEW SHORTER OXFORD ENGLISH DICTIONARY (ed. Leslie Brown), Clarendon Press, Oxford (1993), at 671.
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can be easily mistaken for each other. Nor is dissection appropriate. It is well-settled that composite marks should be examined in their entirety, not piece by piece. Rodeo, supra. This is because the commercial impression of a mark on an ordinary consumer is created by the mark as a whole, and not only by its component parts. In this respect, the Court must look beyond the mere suggestiveness or descriptiveness of any one portion or component of the marks and evaluate the likelihood of confusion on the basis of the commercial impression that the marks as a whole convey to prospective purchasers. It is furthermore unlikely that purchasers will be able to mentally and visually dissect the marks into two separate components, disregard the identical term "Nutri," and compare only "share" to the "Thrive." Rather, consumer, being familiar with Nutrishare's mark, and encountering the "NutriThrive" mark on identical goods, likely will confuse the marks, and misremember one as the other, or mistakenly conclude that there is an association, sponsorship, or affiliation between Nutrithrive and Nutrishare. Au-Tomotive Gold, Inc. v. Volkswagen of Am., Inc., 457 F.3d 1062, 1075-76 (9th Cir. 2006). ("There is a likelihood of confusion when consumers who see a mark `would probably assume that the product or service it represents is associated with the source of a different product or service identified by a similar mark.'"); Lambert Pharmacal Co. v. Kalish Pharmacy, 219 F. 323 (C.C.N.Y. 1911) ("The trade-name [Listerseptine] was chosen by the defendant...about 17 years after complainant's origination of the trade-mark `Listerine.' The similarities of the names in appearance and sound, when considered with the similarity of the articles to which the trade-names are applied, is clearly apparent, and the probabilities of the defendant's designation misleading the unwary customer in my opinion is so clear that it amounts to infringement of the complainant's trade-mark.") Thus, the "Nutrishare" and "NutriThrive" marks are highly similar, and this factor favors Nutrishare. c. Evidence of Actual Confusion.

The Ninth Circuit has recognized that evidence of actual confusion is not required to find a likelihood of confusion, and it is certainly not a prerequisite to issuing a preliminary injunction. American Int'l Group v. American Int'l Bank, 926 F.2d 829, 832 (9th Cir. 1991); Eclipse
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Associates Ltd. v. Data General Corp., 894 F.2d 1114 (9th Cir. 1990). However, "[e]vidence of actual confusion constitutes persuasive proof that future confusion is likely." Thane Int'l v. Trek Bicycle Corp., 305 F.3d 894, 902 (9th Cir. 2002). In its moving and supplemental declarations, Nutrishare demonstrated that, within six months of its launch, BioRx already has caused doctors, nurses, pharmacists, and other medical professionals to become confused regarding the relationship, sponsorship, or affiliation between NutriThrive and Nutrishare. These instances are chronicled in great detailed in the original and supplemental declarations of Rod Okamoto4 and the declarations of Reid Nishikawa, Anita Wallin, and Kerry Stone filed in support of this motion. (Okamoto Decl. ISO Moving Brief, filed 6/24/08, ¶ 16; Nishikawa Decl. filed 6/24/08, ¶ 4; Wallin Decl filed 6/24/08, Stone Decl. filed 7/8/08, Suppl. Okamoto Decl. filed 7/8/08). In its opposition, BioRx relies on cases from other jurisdictions (while conveniently ignoring controlling 9th Circuit authority) in an erroneous effort to discredit this evidence of actual confusion by stating that these individuals were not actually confused, but merely raised "questions as to whether Plaintiff and Defendant are connected" and asked to "clarify the relationship, if any, between NutriThrive and Nutrishare."5 (Opp. at 12:10-17.) This argument is nonsensical. Pure logical deduction and plain common sense indicates that if someone enquires regarding whether two companies are connected or related, and seeks clarification regarding the same, that person by definition is "confused" regarding the affiliation or relationship between the companies. Controlling law confirms common sense. BioRx's citations to non-controlling law from the Eighth and Second Circuits are inappropriate and misleading. (See Opp. at 13:5-16.) Courts of this circuit have accepted such inquiries regarding
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BioRx has attempted to attack the veracity of Mr. Okamoto's original and supplemental declarations, in which Mr. Okamoto discusses instances related to confusion between the "Nutrishare" and "NutriThrive" marks. (See Decl. of Timothy Fensky filed 8/4/08; Decl. of Eric Hill filed 8/8/08). As explained in Mr. Okamoto's reply declaration filed herewith, BioRx's attacks are unavailing.
5

BioRx also argues that the Declaration of Sheila Messina, which Nutrishare filed on 7/28/08 in support of its Opposition to BioRx's Motion to Dismiss or Transfer Venue, is not evidence actual confusion. (Opp. at 12:22-25.6.) But Nutrishare did not submit Ms. Messina's declaration to show that Ms. Messina was confused. Rather, Nutrishare submitted this declaration in connection with BioRx's pending Motion to Dismiss or Transfer Venue to show that NutriThrive was actively marketing to California residents at a conference in California.
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affiliation as evidence of actual confusion. Steinway & Sons v. Demars & Friends, 210 U.S.P.Q. 954, 1981 U.S. Dist. LEXIS 15169, at *36 (C.D. Cal. 1981) (considering evidence that plaintiff's retailers and wholesalers were making inquiries about a connection between the parties); see also Kroger Co. v. Suprex, Inc., 193 U.S.P.Q. 245, 247 (E.D. Pa. 1976) ("customers evidenced such confusion by inquiring as to whether defendant's store was affiliated with [plaintiff's] national chain"). The Steinway court specifically held that

Since reliable evidence of actual confusion is difficult to obtain in trademark infringement cases, any such evidence is substantial evidence that confusion is likely. . . . Very little proof of actual confusion [is] necessary to prove likelihood of confusion. Steinway & Sons, 1981 U.S. Dist. LEXIS 15169, at *36. Thus, Moreover, contrary to BioRx's claims that "there has been no confusion between the two marks [because] third parties have actually recognized a difference between them" (Opp. at 12:13-15), actual confusion need not occur only as to the source of the parties' products and/or services. Rather, under the plain words of the Lanham Act, confusion that gives rise to a trademark infringement or unfair competition claim can also be about the "affiliation, connection, or association" between the parties. See Lanham Act section 43(a), 15 U.S.C. section 1125(a); Brookfield Communs. v. W. Coast Entm't Corp., 174 F.3d 1036 (9th Cir. 1999) (holding that Lanham Act protects against many forms of confusion); see also Champions Golf Club v. Champions Golf Club, 78 F.3d 1111 (6th Cir. 1996) (where there were two golf courses named "Champions," the issue was not whether golfers were confused about which course they were playing on, but rather, whether the courses were affiliated).

d.

Degree of Purchaser Care.

In its opposition, BioRx argues that the "customers" for TPN and enteral products are doctors and pharmacists, and that these customers are not likely to be confused about the source, affiliation or sponsorship of Nutrishare and NutriThrive's products and services because they are "as sophisticated a group as one could imagine." (Opp. at 14:4-15:5.) This argument is specious given that the "pharmacist" is not BioRx's "customer" ­ rather,
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BioRx is the pharmacist. Nutrishare's customer is the TPN patient, and not the doctor or pharmacist. (Reply Okamoto Decl., ¶7.) Moreover, BioRx's argument is akin to claiming that companies like Walgreens and Rite-Aid are marketing directly to doctors, and not to end users of pharmaceuticals. BioRx's argument is particularly ludicrous in light of the fact that BioRx admits that it is working directly with a patient family in Redding, not with their doctor. Moreover, BioRx's web-site for its NuriThrive products obviously is directed to the end user, and not medical professionals. It is the TPN consumer, not the doctor, who would sign up on-line to be a "NutriThrive customer." It is the TPN consumer, not the doctor, who would post messages on the on-line message board asking NutriThrive's clinician team for advice. And if BioRx was more concerned about marketing to doctors, it would not have attended the Oley Conference, which is a consumer-oriented conference, and it would not have aggressively solicited TPN consumers at that conference. Even assuming, arguendo, the thrust of BioRx's marketing is directed to doctors, and not enteral and parenteral nutrition customers, it is very telling that even doctors ­ who BioRx alleges to be the most sophisticated of customers for medical products ­ have actually experienced confusion. Medical professionals are the proverbial "canary in the cole mine." If medical professionals are confused, there can be no question that lay persons will be even more confused. Moreover, even doctors and pharmacists are not infallible, and can experience confusion despite their sophistication. See e.g., Alfacell Corp. v. Anticancer Inc., 71 U.S.P.Q.2d 1301 (TTAB 2004) ( "there is no reason to believe that medical expertise as to pharmaceuticals will ensure that there will be no likelihood of confusion as to source or affiliation"); Geigy Chemical Corp. v. Atlas Chemical Indus., Inc., 58 C.C.P.A. 972, 974 (C.C.P.A. 1971) ("Given even a moderate interval of time, and even though these are prescription drugs, we do not feel that physicians who prescribe these two diuretics would be immune from confusion either as to the products or their source. The prefixes HYDRO- and HYGRO- sound very much alike and convey almost the same meaning. There is also an obvious similarity in the last four letters of the marks, -ONOL and ­OTON"); Syntex Laboratories, Inc. v. Norwich Pharmacal Co., 437 F.2d 566, 569 (2d Cir. 1971) (pharmacists can be confused "if the prescriptions are written, because of
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physicians' illegible style, or if they are telephoned, because of the phonetic similarities.") Finally, when there is a strong likelihood of confusion created by other factors, even the existence of the most discerning customer base will not be sufficient to tip the scales in favor of the infringer. MCCARTHY, § 23:103. e. Intent to Deceive Consumers.

BioRx cites to no authority for its argument that, although it had actual and constructive knowledge of Nutrishare's mark, there is no evidence of intent to deceive. (Opp. at 15.) Controlling law does not require Nutrishare to show that BioRx adopted its mark with the specific purpose of infringing Nutrishare's mark. Daddy's Junky Music Stores v. Big Daddy's Family Music, 109 F.3d 275, 287 (9th Cir. 1997). Rather, it is sufficient that, despite having an "infinity" of names to choose from, BioRx adopted its confusingly similar "NutriThrive" mark with actual or constructive knowledge of Nutrishare's mark. Id. (citing Official Airlines Guides, 6 F.3d at 1394); see also Stork Restaurant v. Sahati, 166 F.2d 348 (9th Cir. 1948.) It is also disingenuous for BioRx to deny that it intentionally hired spokespersons who are former Nutrishare customers and/or family members, as it could not be purely coincidental that these particular individuals ­ rather than any of the other 30-odd NutriThrive customers ­ became BioRx's spokespersons. Accordingly, BioRx should be presumed to have acted with the intent to deceive the public. Brookfield, 174 F.3d at 1059. f. Proximity of the Products and Services Offered by the Parties.

Although BioRx has failed to specifically address this factor in its opposition brief, BioRx has in various court filings and elsewhere in its opposition brief attempted to draw false distinctions between "enteral" and "parenteral" nutrition in order to prove that the parties' products and services are non-competitive. (Opp. at 5:27-28, BioRx's Motion to Dismiss or Transfer Venue, filed 7/23/08, at 2:13-14.) In the event that BioRx intends to make such an argument at the hearing on this motion, Nutrishare would like to dispel this argument once and for all. As an initial matter, BioRx's argument fails because both parties provide both enteral and parenteral nutrition products and services to their customers. (Okamoto Decl. in support of
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Nutrishare's Opp. to BioRx's Motion to Dismiss, filed 7/28/08, ¶ 14; Okamoto Decl. in support of Reply, filed herewith (hereinafter "Okamoto Reply Decl." ¶¶ 6-7.) And the customer base for these two products is essentially the same. Depending on their physical condition, some patients are on both enteral and parenteral therapy, some are exclusively on enteral therapy, some are exclusively on parenteral therapy, some are on enteral therapy and occasionally "revert" to parenteral therapy, and some are on parenteral therapy and may "graduate" to enteral therapy. (Okamoto Reply Decl., ¶ 6.) The products and services offered by the parties are therefore identical and competitive. Moreover, BioRx's sales of even completely unrelated and noncompetitive products under the "NutriThrive" name can give rise to trademark infringement and unfair competition, as long as there is a likelihood of confusion about the source, affiliation, sponsorship, or relationship of the products and services offered by the two parties. Competition between the parties is but one of eight factors the Court evaluates to determine whether the relevant consuming public is likely to be confused. AMF Inc. v. Sleekcraft Boats, 599 F.2d 341, 348 (9th Cir. 1979). In fact, the Sleekcraft test was developed for the very purpose of determining if there is infringement when the products "are not in direct competition" Id. at 348 (emphasis added). McCarthy's treatise on trademark law also echoes the sentiment that "The vast majority of modern decisions have adopted the rule that competition is not necessary between the parties for there to be a likelihood of confusion." MCCARTHY, §24:13. The Trademark Manual of Examining Procedure, published by the United States Patent and Trademark Office, likewise provides: The goods or services do not have to be identical or even competitive in order to determine that there is a likelihood of confusion. . . . The issue is not whether the goods will be confused with each other, but rather whether the public will be confused about their source. TMEP § 1201(a)(i). Following this rationale, numerous courts of this and other circuits have held there to be infringement notwithstanding that the parties' products and/or services were not competitive. See e.g. Entrepreneur Media, Inc. v. Smith, 279 F.3d 1135, 1147 (9th Cir. 2002) (ENTREPRENEUR
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for public relations company held likely to be confused with ENTREPRENEUR for magazine); Dreamwerks Production Group, Inc. v. SKG Studio, 142 F.3d 1127, 1131-32 (9th Cir. 1998) (DREAMWORKS for film studio held likely to be confused with DREAMWERKS for company that promotes science fiction merchandise and organizes Star Trek conventions); E. & J. Gallo Winery v. Gallo Cattle Co., 967 F.2d 1280, 1291 (9th Cir. 1992) (GALLO for cheese held likely to be confused with GALLO for wine and salame). Fleischmann Distilling Corp. v. Maier Brewing Co., 314 F.2d 149, 151 (9th Cir. 1963) (BLACK AND WHITE for beer held likely to be confused with BLACK AND WHITE for whisky); On-line Careline Inc. v. America Online Inc., 229 F.3d 1080, 56 USPQ2d 1471 (Fed. Cir. 2000) (ON-LINE TODAY for Internet connection services held likely to be confused with ONLINE TODAY for Internet content); In re Martin's Famous Pastry Shoppe, Inc., 748 F.2d 1565, 223 USPQ 1289 (Fed. Cir. 1984) (MARTIN'S for wheat bran and honey bread held likely to be confused with MARTIN'S for cheese); In re Corning Glass Works, 229 USPQ 65 (TTAB 1985) (CONFIRM for a buffered solution equilibrated to yield predetermined dissolved gas values in a blood gas analyzer held likely to be confused with CONFIRMCELLS for diagnostic blood reagents for laboratory use); In re Jeep Corp., 222 USPQ 333 (TTAB 1984) (LAREDO for land vehicles and structural parts therefor held likely to be confused with LAREDO for pneumatic tires). Under this law, even if NutriThrive sold no enteral or parenteral products ­ which is not true ­ its activities could still constitute infringement as long as the public is likely to be confused. Furthermore, even if NutriThrive sold only enteral nutrition products ­ which is also not true ­ the fact that the parties' products are "likely to be encountered by the same persons" suggests infringement is likely. TMEP § 1201(a)(i). E. & J. Gallo Winery, 967 F.2d at 1291 (GALLO salame and cheese are "are sold in the same deli cases in grocery stores"); Tillamook Country Smoker v. Tillamook County Creamery Ass'n, 311 F. Supp. 2d 1023, 1042 (D. Or. 2004) (defendant's TILLAMOOK cheese and plaintiff's TILLAMOOK smoke meats "appear in the same supermarkets and thus are likely to be encountered by consumers during the same shopping trip"). BioRx cannot deny that its NutriThrive enteral products and services and Nutrishare's

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TPN products and services are likely to be encountered by the same consumer in the marketplace; that is, BioRx and Nutrishare would be in the same proverbial "aisle" of an on-line drug store. Accordingly, this factor strongly supports a finding of likelihood of confusion. 2. BioRx's Federal Trademark Application for "NutriThrive" Is Not a Defense to this Action. a. NutriThrive's Notice of Allowance is Not a Defense to Trademark Infringement.

Throughout its opposition brief, BioRx cites to the United States Patent and Trademark Office's granting of a Notice of Allowance for the mark "NutriThrive" as indicative of the fact that there is no likelihood of confusion. Specifically, BioRx states that "the U.S PTO has completed its review of the [NutriThrive] mark by an Examining Attorney, with no citation to the Nutrishare mark as being confusingly similar" (Opp. at 5.) and that Nutrishare "ignores the opinion of the US Patent and Trademark Office, which examined the applications for NutriThrive . . . and found no likelihood of confusion with the Nutrishare marks[.] (Opp. at 10.) The reason that Nutrishare has "ignored" the USPTO's actions with respect to BioRx's "NutriThrive" application is that the USPTO's actions do not impact this court's decision making.6 It is well-established that determinations by the USPTO during the trademark application process must be regarded as inconclusive since they are made at its lowest administrative level. See Chesebrough-Pond's, Inc. v. Faberge, Inc., 666 F.2d 393, 397 (9th Cir. Cal. 1982) ("a decision of the Patent and Trademark Office allowing the registration of Chesebrough's trademark would not preclude a subsequent infringement action or be determinative of the issues involved"); Carter-Wallace, Inc. v. Procter & Gamble Co., 434 F.2d 794, 802 (9th Cir. Cal. 1970); Self-Insurance Inst. of Am. v. Software & Info. Indus. Ass'n, 208 F. Supp. 2d 1058, 1071 (C.D. Cal. 2000) ("[a]dministrative decisions of the PTO are not binding on the Court.") In fact, in practice, the Trademark Trial and Appeal Board (the "TTAB") routinely

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The only relevance to BioRX's trademark application is that it constitutes a binding admission by BioRX that a composite mark starting with the "Nutri" prefix used for pharmaceuticals is distinctive and entitled to full protection under the Lanham Act. This is the only conclusion one can draw from BioRX's attempt to register the Nutrithrive mark on the Lanham Act Principal Register.
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overturns "likelihood of confusion" determinations made by lower-level trademark examiners. See e.g., In re The W.W. Henry Co., L.P., 82 USPQ2d 1213 (TTAB 2007); In re Emissive Energy Corp., Serial No. 78358172 (June 15, 2006); In re Box Solutions Corp., 79 USPQ2d 1953 (TTAB 2006). Therefore, the Notice of Allowance issued by a single trademark examiner at the USPTO for the mark "NutriThrive," and any determinations related to the application, are neither determinative, conclusive, nor binding upon this Court. Moreover, what BioRx has failed to state is that the USPTO did not even consider the "Nutrishare" mark in its determination of whether to issue a Notice of Allowance for the "NutriThrive" mark. The "Nutrishare" mark was never before the examiner who was reviewing the "NutriThrive" mark because no combination of queries in the examiner's search for conflicting marks would have brought to light the "Nutrishare" mark. (Tenud Decl., ¶¶ 3-5, Ex. A-B.) Therefore, the Examiner's granting of a Notice of Allowance on the "NutriThrive" marks says nothing of whether it is likely to be confused with the "Nutrishare" mark. b. That Nutrishare Has Not Yet Challenged the NutriThrive Mark at the USPTO is Also Not a Defense to Trademark Infringement.

BioRx also argues that the fact that Nutrishare has not yet challenged the "NutriThrive" marks before the USPTO weighs against granting a preliminary injunction. But the fact that Nutrishare, although aware of NutriThrive's pending federal trademark application, chose to challenge the mark in Court rather than at the USPTO, is inconsequential. Faced with NutriThrive's infringement, Nutrishare had several strategic options. Nutrishare could have challenged NutriThrive's mark at the USPTO level in lieu of filing this lawsuit, but this would have accomplished nothing with regard to preventing the likelihood of confusion, as the cancellation or non-registration of a mark would not have prevented NutriThrive from using the "NutriThrive" name in commerce. The trademark branch of the USPTO, and the TTAB, have no power to issue injunctions. They only have the power to register or cancel trademarks on the Lanham Act registers. Nutrishare could have challenged the mark in tandem with filing this lawsuit, but this too would have achieved nothing because the USPTO likely would have suspended Nutrishare's petition pending resolution of this litigation. See TMEP § 510.02.
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Nutrishare could also wait to challenge the mark until after the Court rules on its preliminary injunction motion, or after final judgment is entered, since a favorable Court decision likely will be binding on the USPTO and result in a more efficient resolution of Nutrishare's USPTO action. Or, Nutrishare could decide never to challenge NutriThrive's mark, as a finding of infringement and issuance of injunction will be sufficient to preclude NutriThrive from being able to use its trademark in a way that will be likely to confuse the public. The bottom line is that the decision whether to challenge an infringing trademark at the USPTO or through a civil action has no bearing on whether NutriThrive is infringing Nutrishare's marks. 3. BioRx Cannot Establish an Affirmative Defense of Laches.

BioRx erroneously argues that Nutrishare's trademark infringement claims are foreclosed under the doctrine of laches because Nutrishare unduly delayed in filing its lawsuit. (Opp. at 1617.) Citing Tillamook Country Smoker, Inc. v. Tillamook County Creamery Ass'n, 465 F.3d 1102, 1108-11 (9th Cir. 2006), and two non-controlling cases decided by district courts in New York and Ohio, BioRx claims that Nutrishare waited "a full year after learning of BioRx's intentions in June, 2007," and that such delay is "inexcusable." (Id.) However, BioRx is wrong on the facts and utterly fails to cite the well-established law on laches or analyze the relevant factors, which demonstrate that BioRx has no viable laches defense. a. There is a Strong Presumption that Laches is Inapplicable Because Nutrishare Filed its Lawsuit Within Four Years.

As a preliminary matter, equitable defenses such as laches are not favored by the courts where ­ as is the case here ­ injunctive relief has been sought in cases of clear trademark infringement." United States Jaycees v. San Francisco Junior Chamber of Commerce, 354 F. Supp. 61, 73 (N.D. Cal. 1972), aff'd, 513 F.2d 1226 (9th Cir.1975) (citing McLean v. Fleming, 96 U.S. 245, 253 (1877)) Second, the applicable period of delay that is presumed to be "unreasonable" under the laches defense, is four years. Tillamook Country Smoker, Inc. v. Tillamook Country Creamery Ass'n, 465 F.3d 1102 (9th Cir 2006) ("To determine the correct limitation period for a laches
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claim "where an injunction is sought, courts first determine when the statute of limitations period expired for the most closely analogous action under state law.") (citing Jarrow Formulas, Inc. v. Nutrition Now, Inc., 304 F.3d 829, 836 (9th Cir. 2002)); Miller v. Glenn Miller Prods., 318 F. Supp. 2d 923 (C.D. Cal. 2004) (the California state causes of action "most closely analogous" to federal trademark infringement are state unfair competition claims under California Business and Professional Code § 17208). If the plaintiff files suit within this four-year period, "the strong presumption is that laches is inapplicable." Jarrow Formulas, 304 F.3d at 836; Tillamook, 465 F.3d at 1108. In this case, Nutrishare waited only six months from when BioRx officially launched the NutriThrive division to file its lawsuit. But even assuming, arguendo, that Nutrishare waited one year, Nutrishare falls well within the four-year period and there is therefore a strong presumption that laches does not apply. b. Laches is also Inapplicable Under the Six E-Systems Factors.

Laches is also inapplicable because Nutrishare's alleged delay was reasonable in light of the six factors espoused by this Circuit in E-Systems, Inc. v. Monitek, Inc.: (1) the strength and value of the trademark rights asserted; (2) plaintiff's diligence in enforcing the mark; (3) harm to the senior user if relief is denied; (4) good faith ignorance by the junior user; (5) competition between the senior and junior users; and (6) extent of harm suffered by the junior user because of the senior user's delay. E-Systems, Inc. v. Monitek, Inc., 720 F.2d 604, 607 (9th Cir. 1983); see also Tillamook, 465 F.3d at 1108 (after determining expiration of the analogous statute of limitations, district court must consider six E-Systems factors "to determine whether the trademark owner's delay in filing suit was unreasonable"); Grupo Gigante, 391 F.3d at 1102(same); Internet Specialties West v. ISPwest, 2006 U.S. Dist. LEXIS 96351, at *15 (C.D. Cal. Nov. 14, 2006) (same). Interestingly, BioRx does not even cite the E-Systems factors, let alone analyze them. Factors (1) and (5) are the same as three of the Sleekcraft factors, and are already addressed in Subsections II(A)(1)(a) and (f) above. Factor (3), the harm to Nutrishare, is
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addressed in great detail in Subsection II(B) below. Analysis of the remaining three factors, (2), (4), and (6), indicates that BioRx does not have a valid laches defense. (i) Nutrishare was diligent in enforcing its mark.

BioRx also does not have a viable laches defense under the "progressive encroachment" doctrine. The Ninth Circuit has long recognized that "laches cannot bar injunctive relief when an infringing user progressively encroaches on the owner's mark over time." Grupo Gigante S.A. de C.V. v. Dallow & Co., 391 F.3d 1088, 1103 (9th Cir. 2004). Under this doctrine, laches is not measured from NutriThrive's first use of the mark, but from the date that NutriThrive's acts "first significantly impacted on [Nutrishare's] good will and business reputation. . . . Any change in the format or method of use of the mark or expansion into new product lines or territories should be sufficient to excuse a prior delay." MCCARTHY, § 31:19. Following this rationale, courts have excused delays of even twenty years on the grounds that the parties did not squarely compete until the respondent either expanded its products/services or expanded into a new territory. See Id. (citing Westchester Media v. PRL USA Holdings, Inc., 214 F.3d 658, 55 U.S.P.Q.2d 1225 (5th Cir. 2000). The "progressive encroachment" doctrine is also cited in the Tillamook case, on which BioRx relies to make its laches argument. Under Tillamook, Nutrishare need not have taken immediate action in the face of de minimis infringement by BioRx. Rather, Nutrishare was permitted to wait until BioRx "move[d] into direct competition...selling the same `product' through the same channels and causing actual market confusion.'" Tillamook, 465 F.3d at 1110 (quoting Prudential Ins. Co. of America v. Gibraltar Fin. Corp. of California, 694 F.2d 1150, 1154 (9th Cir. 1982). Specifically, Nutrishare was permitted to wait until BioRx expanded its NutriThrive business "into different regions or into different markets." Tillamook, 465 F.3d at 1110 (citing Grupo Gigante, 391 F.3d at 1103) (citing also Prudential Ins., 694 F.2d at 1154). Furthermore, under the progressive encroachment doctrine: a period of low-profile sales by a fledgling business should not be counted toward laches. The trademark owner is justified in delaying the unleashing of litigation until it is seen if the infringing business or product line will survive, let alone
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Filed 08/12/2008

Page 25 of 33

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significantly impact on plaintiff's trademark rights. MCCARTHY, § 31.19. This case is a veritable exemplar of "progressive encroachment." When BioRx made its announcement a year ago, Nutrishare's founders were not aware of the exact nature of NutriThrive's business, the territory in which it intended to provide its products and services, or the extent to which NutriThrive intended to compete with Nutrishare. (Motion at 2:24-28, 3:1-7.) Even when NutriThrive was officially launched in November, 2007, it was unclear that the business would survive. In fact, BioRx admits in its opposition that even today, "NutriThrive is still in its relative infancy," and is in fact only a "nascent competitor" with a mere thirty-six customers nationwide, and which only now has "started to make inroads into [Nutrishare's] market share." (Opp. at 2:12-13, 5:26, 19:26, 1:23-24) Thus, Nutrishare was more than justified in waiting until this fledgling business survived, and after it became clear that BioRx's activities were significantly impacting Nutrishare's trademark rights, to file its lawsuit. (ii) BioRx did not have good faith ignorance of Nutrishare's trademark.

BioRx may not raise laches as a defense because it infringed Nutrishare's mark notwithstanding its prior knowledge of the registered "Nutrishare" mark. Competition Specialties, 87 Fed. Appx. at 40 (citing Danjaq LLC v. Sony Corp., 263 F.3d 942, 956-957 (9th Cir. 2001). That is, BioRx cannot claim laches because it is not a good faith junior user. Chips `N Twigs, Inc. v. Prives, 226 F. Supp. 529 (N.D. Cal. 1963); In re Beatrice Foods Co., 429 F.2d 466, 472 (CCPA 1970); Dawn Donut Co. v. Hart's Food Stores, Inc., 267 F.2d 358 (2d cir. 1959). First, BioRx has admitted that it had actual knowledge of Nutrishare's mark before BioRx used the NutriThrive mark in commerce. BioRx was familiar with the Oley Foundation and its national events; and it knew that Nutrishare was one of exhibitors at the June 2007 conference. (Opp. at 4:5-13.) It was at this event that BioRx first unveiled NutriThrive to the market, so it could not have used its mark in commerce until after that date. (Id. at 4:5-7.) It also applied for federal registration of the NutriThrive mark following the conference and after it had knowledge of Nutrishare's mark. (Id. at 4:26-28.) 20
REPLY ISO MOT. FOR PRELIMINARY INJUNCTION

Case 3:08-cv-01493-JM-BLM

Document 60

Filed 08/12/2008

Page 26 of 33

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