MERIAL INC, et al v. CEVA SANTE ANIMALE SA, et al, No. 3:2015cv00040 - Document 109 (M.D. Ga. 2015)
Court Description: ORDER granting in part and denying in part 26 , 59 Motion to Dismiss Complaint; granting 28 , 62 Motion to Dismiss for Failure to State a Claim. Ordered by US DISTRICT JUDGE CLAY D LAND on 10/07/2015. (CGC)
Download PDF
<![CDATA[
IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF GEORGIA ATHENS DIVISION MERIAL INC. and MERIAL S.A.S., * Plaintiffs, * vs. * CEVA SANTÉ ANIMALE S.A., * HORIZON VALLEY GENERICS INC., TRUE SCIENCE HOLDINGS, LLC, and * TRURX LLC, * Defendants. * CASE NO. 3:15-CV-40 (CDL) O R D E R Plaintiffs Ceva Santé Merial Animale Inc. S.A., and Merial Horizon S.A.S. Valley sued Generics Defendants Inc., True Science Holdings, LLC, and TruRx LLC for breach of contract, false advertising, or deceptive misleading dismiss Count III, the breach of contract claim against them. As Horizon Valley against it. that True motion Generics moved (ECF to Science Nos. 28 dismiss and & TruRx and to below, practices. competition, moved discussed trade unfair 62) all is of granted. the claims For the reasons set forth below, that motion is (ECF Nos. 26 & 59) granted in part and denied in part. Counts I, II, and III against Horizon Valley Generics are dismissed. IV, V, and VI remain pending against all Defendants. Counts MOTION TO DISMISS STANDARD “To survive a motion to dismiss” under Federal Rule of Civil Procedure 12(b)(6), “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). The complaint must include sufficient factual allegations “to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555. In other words, the factual allegations must “raise a reasonable expectation that discovery will reveal evidence of” the plaintiff’s claims. Id. at 556. “Rule well-pleaded 12(b)(6) does not permit dismissal of a complaint simply because ‘it strikes a savvy judge that actual proof of those facts is improbable.’” Watts v. Fla. Int’l Univ., 495 F.3d 1289, 1295 (11th Cir. 2007) (quoting Twombly, 550 U.S. at 556). FACTUAL ALLEGATIONS Plaintiffs Merial Inc. and Merial S.A.S. (collectively, “Merial”) allege the following facts in support of their claims. Merial has rights to U.S. Patent No. 6,096,329 (“‘329 Patent”), which claims a flea and tick treatment for dogs and cats that contains the active ingredients fipronil and s-methoprene. Merial sells the fipronil and s-methoprene product under the name Frontline Plus. 2 In 2012, Merial accused Ceva Santé Animale, S.A. and its wholly owned subsidiary Horizon Valley Generics, Inc. (“HVG”) of infringing the ‘329 Patent. Agreement to settle the Settlement & License Merial and Ceva entered a License dispute. Agreement, ECF See No. Am. Compl. 15-1.1 The Ex. A, License Agreement grants Ceva a license to the ‘329 Patent and permits Ceva to distribute a generic, over-the-counter version of the Frontline Plus product (“licensed product”). Id. § 3.1. of of the License affiliates, Agreement, agreed not to Ceva, use on any behalf trademark, itself trade As part and name, its or packaging of Merial in any comparative advertising involving the licensed product. Id. § 3.3.4. This restriction, however, does not prevent Ceva from indicating that its product contains the same active ingredients as the “leading brand.” Id. The License Agreement further provides that neither Ceva nor any of its affiliates would be responsible for any prohibited comparative advertising by third party distributors unless Ceva or any of its affiliates “sponsor[ed], contribut[ed] funds for or actively encourage[ed]” such comparative advertising. Id. The Agreement does require Ceva to “notify its appointed Third Party distributor(s) not to engage in” 1 the type of comparative Merial attached copies of the relevant agreements to its Complaint. The documents are central to Merial’s claims, their authenticity is not challenged, and all parties rely on the agreements in their briefs. The Court may thus consider the agreements in ruling on the pending motions to dismiss. See Brooks v. Blue Cross & Blue Shield of Fla., Inc., 116 F.3d 1364, 1369 (11th Cir. 1997) (per curiam). 3 advertising that Ceva and its affiliates were prohibited from engaging in by the License Agreement. Id. And if Merial filed a lawsuit against a third party distributor claiming that it was engaging in this prohibited comparative advertising, Ceva agreed to use “reasonable efforts . . . to assist Merial by restraining or limiting the supply” of the licensed product to the third party distributor as long as Merial pursued the lawsuit and until the third party distributor stopped the advertising and agreed in writing with Ceva to refrain from any such further advertising. Id. After Ceva and Merial entered the License Agreement, HVG contracted Frontline with Plus CAP Supply, product. Inc. In the to distribute distribution the generic agreement, CAP Supply agreed not to engage in any comparative advertising using the name Frontline Plus or any Merial trademarks or tradenames. Ceva later Agreement. assumed CAP HVG’s Supply agreements subsequently under the entered CAP into Supply a sub- distribution agreement with True Science Holdings, LLC and TrueRx LLC (collectively, “True”) for True to distribute the generic Frontline Plus product. large retailers such True began distributing the product to as Walmart PetAction Plus and PetLock Plus. and Petco under the names The PetAction Plus website contained “an exact image of Merial’s FRONTLINE PLUS product, bearing Merial’s stylized trade name, trademarks, and trade dress 4 . . . next to an image of a PetAction Plus product with a similar color scheme.” “some, or all, packaging Am. Compl. ¶ 59, ECF No. 15. of designed the to PetAction imitate Plus the Merial asserts that products trade are dress sold and in overall commercial impression of Merial’s FRONTLINE PLUS packaging.” Id. ¶ 62. When PetLock True Plus, “Contains THE first the began packages SAME active distributing PetAction contained sticker a ingredients—FIPRONIL METHOPRENE—found in FRONTLINE PLUS.” Plus and that read: and (S)- Id. ¶¶ 55-57, ECF No. 15. The words “active ingredients” were “in much smaller font than the other words” on the sticker. Id. ¶¶ 56, 58. On newer packaging, there is no longer a “disparity in size” between the fonts, but the FRONTLINE PLUS trademark still appears on the sticker. Id. ¶ 69. After Plus, True True began entered distributing into an Agreement with Ceva and HVG. PetAction Authorization Plus and and PetLock Indemnification That agreement gave True permission to package and label the products consistent with HVG’s Environmental Protection Agency registrations. U.S. As part of that agreement, True agreed that it would not “modify or change the packaging of the Product manufactured by or on behalf of Ceva in any manner that references or identifies the trademark, trade name, trade dress or packaging of any third party.” 5 Am. Compl. Ex. B, Authorization & Indemnification Agreement ¶ 3, ECF No. 152. This restriction includes “any comparative advertising claim referencing or identifying such trademark, dress or packaging of any third party.” not identify any third party by name. Id. trade name, trade The provision does The Authorization and Indemnification Agreement states that it “is intended and agreed to be solely for the benefit of the Parties hereto and their permitted successors and assigns, and no other party will be entitled to rely on this Agreement or accrue any benefit, claim, or right of any kind through this Agreement.” whatsoever pursuant to, under, by, or Id. ¶ 18. When Merial learned that the PetAction Plus and PetLock Plus products were being marketed using comparative advertising that referred to Frontline Plus, Merial brought this action. Merial sues Ceva and HVG for breach of the License Agreement (Counts I & II), and Merial sues Defendants as a third party beneficiary of the Authorization and Indemnification Agreement between Ceva, HVG and True (Count III). Merial also asserts that all Defendants engaged in false or misleading advertising in violation of the Lanham Act, 15 U.S.C. § 1125(a) (Count IV) and that they engaged in unfair competition and deceptive trade practices in violation of Georgia law (Counts V & VI). 6 DISCUSSION HVG seeks dismissal of Merial’s claims against it that are based on the License Agreement (Counts I & II). HVG and True seek dismissal of Count III, which is based on the Authorization and Indemnification Agreement. And HVG seeks dismissal of Merial’s claims against it for false or misleading advertising, unfair competition, and deceptive trade practices (Counts IV-VI). The Court addresses each claim in turn. I. Breach of License Agreement Claims In Counts I and II of its Complaint, Merial alleges that Ceva and HVG breached the comparative advertising provision of the License Agreement. HVG moved to dismiss Counts I and II against it because HVG is not a party or signatory to the License Agreement. License Agreement at 1. Merial nonetheless argues that HVG should be bound by the Agreement. The License Agreement, which is governed by Georgia law, states: “Ceva will not, and will cause its Affiliates not to, in the Territory . . . use any trademark, trade name or packaging of Merial Limited advertising Agreement or any involving § 3.3.4 of a its Affiliates Licensed (emphasis Product added). The in any comparative . . . .” License License Agreement provides that Ceva had authority to bind its affiliates. § 6.1(b). Id. Reading these two clauses together, Merial argues that Ceva explicitly agreed that HVG would be bound by the comparative 7 advertising clause of the License Agreement. interpretation of the License Agreement is wrong. Merial’s While there is no serious question that Ceva could bind HVG, a plain reading of the License Agreement reveals that Ceva bound itself to cause affiliates like using Frontline the HVG not to engage mark. in Although comparative this distinction, it is legally significant. Agreement states that HVG itself may advertising be a subtle Nothing in the License agreed to do anything. Moreover, Ceva did not agree that HVG would be bound by the comparative advertising clause. Rather, the License Agreement reflects an intention to place performance obligations only on Ceva; if a Ceva Affiliate violates the comparative advertising clause, then Merial’s recourse is against Ceva itself. Merial argues that even if Ceva did not agree that HVG would be bound by the comparative advertising clause, HVG should be bound by the License Agreement under equitable estoppel principles because HVG received significant benefits under the License Agreement. principle of desire rewrite to general, Although Georgia law certainly recognizes the equitable equitable the estoppel, License estoppel equity Agreement seeks to cannot after prevent aid the a Merial’s fact. party In from attacking the very same agreement that the party simultaneously attempts to use to its advantage. Equity frowns upon a party’s attempt to “rely on the contract when it works to its advantage 8 and then repute it when it works to its disadvantage.” Helms v. Franklin Builders, Inc., 305 Ga. App. 863, 866, 700 S.E.2d 609, 612 (2010) (auoting LaSonde v. CitiFinancial Mortg. Co., 273 Ga. App. 113, 115, 614 S.E.2d 224, 226 (2005)). the present case to arbitration cases Merial analogizes that stand for the principle that a non-signatory to an agreement that contains an arbitration clause cannot claim the benefit of certain provisions of the agreement while arbitration clause. avoiding the requirements of the See, e.g., id.; Fencourt Reinsurance Co. v. ITT Indus., Inc., No. 06-4786, 2008 WL 2502139, at *9 (E.D. Pa. June 20, 2008); Amkor Tech., Inc. v. Alcatel Bus. Sys., 278 F. Supp. 2d 519, 521-22 distinguishable (E.D. because HVG Pa. is 2003). not The present seeking to case is disclaim a significant part of the agreement. Merial also relies on Sea-Land Serv., Inc. v. Sellan, 64 F. Supp. 2d refused 1255 to (S.D. sign a Fla. part 1999). of his In Sea-Land, settlement the plaintiff agreement, but his refusal did not render the contract unenforceable because the parties had an oral agreement on the portion of the agreement that he refused to sign and the plaintiff cashed the settlement check. evidence Id. at 1259. that the Importantly, in Sea-Land, there was some plaintiff had agreed to be bound settlement agreement even though he did not sign it. by the Here, as discussed above, there is no indication that HVG actually agreed 9 to be bound by the comparative advertising clause. In sum, Merial did not point to any authority applying equitable estoppel under the circumstances presented here, and the Court found none. Counts I and II against HVG are therefore dismissed.2 II. Breach of Authorization and Indemnification Agreement Claim In Count III of its Complaint, Merial, as a third party beneficiary, seeks to enforce the “No Comparative Advertising” provision of the Authorization between Ceva, HVG, and True. and Indemnification Am. Compl. ¶ 53. Agreement Defendants seek dismissal of Count III, arguing that it is foreclosed by the “No Third Party Beneficiaries” provision. The Court agrees with Defendants. The Authorization and Indemnification Agreement is governed by Delaware law. Authorization & Indemnification Agreement ¶ 15. Under Delaware law, “to qualify as a third party beneficiary of a contract, (a) the contracting parties must have intended that the third party beneficiary benefit from the contract, (b) the benefit must have been intended as a gift or in satisfaction of a pre-existing obligation to that person, and (c) the intent to benefit the third party must be a material part of the parties’ 2 Merial also argues that HVG should be considered a third party beneficiary of the License Agreement. Under Georgia law, “[t]he beneficiary of a contract made between other parties for his benefit may maintain an action against the promisor on the contract.” O.C.G.A. § 9-2-20(b). Merial cited no authority for its apparent contention that a party to a contract may maintain a breach of contract action against a third party beneficiary, and this argument fails for the same reasons Merial’s equitable estoppel argument fails. 10 purpose in entering into the contract.” In re Stone & Webster, Inc., 558 F.3d 234, 241 (3d Cir. 2009) (applying Delaware law). The Court must look to the contract language to determine whether a party is a third party beneficiary. Ellis v. Tri State Realty Assocs. LP, C.A. No.: N14C–03–051 PRW, 2015 WL 993438, at *6 (Del. Super. Ct. Feb. 27, 2015). If the contract does not mention the third party by name or by general reference and if it does not contain language indicating an intent to confer a benefit on the third party, then the third party is not a third party beneficiary. Bromwich v. Hanby, C.A. No. S08C–07–008, 2010 WL 8250796, at *2 (Del. Super. Ct. July 1, 2010). may benefit from the performance of the acquiring third party beneficiary status.” “A third party contract Id. without Thus, if the contract contains a third party beneficiary clause and there is no other language in the contract indicating an intent to confer a benefit on a third party, then the Delaware courts generally find that there is no third party beneficiary. Webster, Inc., 558 F.3d at 241 (finding In re Stone & no third party beneficiary standing based on a purchase agreement that contained a “no third party beneficiary” clause and contained no language indicating an intent to confer a benefit on a third party). Here, the Authorization and Indemnification Agreement states that it “is intended and agreed to be solely for the benefit of the Parties hereto and their permitted successors and assigns, 11 and no other party will be entitled to rely on this Agreement or accrue any pursuant benefit, to, claim, under, or by, right or of any through kind this Authorization & Indemnification Agreement ¶ 18. whatsoever Agreement.” The Agreement does not mention Merial by name, and there is no language in the contract indicating any intent to confer a benefit on Merial. Merial argues that the “No Comparative Advertising” provision is clearly intended to benefit Merial. the Court must look beyond the To reach that conclusion, unambiguous language of the contract and ignore the clear intent of the parties as described in that clear language. party beneficiaries” The Court refuses to interpret “no third to mean “Merial is a third party beneficiary.” For all of these reasons, the Court concludes that Merial is not a third party beneficiary of the Authorization and Indemnification Agreement, so Count III is dismissed. III. Advertising Claims In Counts IV, V, and VI, Merial alleges that all Defendants engaged in false or misleading advertising, unfair competition, and deceptive trade practices. Merial’s contention packaging statements. and that the advertising HVG seeks All of these claims are based on PetAction contained dismissal 12 of Plus false Counts and PetLock and IV, Plus misleading V, and VI, contending that Merial does not sufficiently allege that HVG was involved in making any false or misleading statements.3 Merial does not allege that HVG made any false or misleading statements directly. Rather, Merial alleges that True made false or misleading statements on the PetAction Plus and PetLock Plus packaging and in its advertising. Merial contends that HVG can be held liable for this conduct under an agency theory; according to Merial, True is HVG’s agent because True uses HVG’s EPA registration number to sell the products and is registered with the EPA as HVG’s supplemental distributor. accord Authorization & Am. Compl. ¶¶ 37-40; Indemnification Agreement ¶ 2; Authorization & Indemnification Agreement Ex. A, Label & Package Authorization, ECF No. 15-2 at 10 (giving TruRX permission to package and label PetAction Plus and PetLock Plus using HVG’s registration). “The relation of principal and agent arises wherever one person, expressly or by implication, authorizes another to act for him behalf.” or subsequently ratifies O.C.G.A. § 10-6-1. the acts of another in his HVG argues that even if True is HVG’s agent for some purposes, True cannot be considered the agent of HVG for purposes of Merial’s false advertising claims because True’s Indemnification conduct was contrary Agreement’s to the prohibition 3 Authorization on and comparative Although True disputes that Merial is entitled to relief on these claims, True did not move to dismiss them. 13 advertising. favorable But construing the allegations in the light most to Merial, the Court does not find this claim sufficiently implausible to dismiss it at this early stage of the litigation. HVG’s motion to dismiss Counts IV, V, and VI is therefore denied. CONCLUSION As discussed above, True’s Motion to Dismiss Count III (ECF Nos. 28 & 62) is granted. HVG’s Motion to Dismiss (ECF Nos. 26 & 59) is granted in part and denied in part. against HVG are against Ceva.4 dismissed. Counts I and Counts I and II II remain pending Count III is dismissed in its entirety because Merial is not a third party beneficiary of the Authorization and Indemnification Agreement. Counts IV, V, and VI remain pending against all Defendants. IT IS SO ORDERED, this 7th day of October, 2015. S/Clay D. Land CLAY D. LAND CHIEF U.S. DISTRICT COURT JUDGE MIDDLE DISTRICT OF GEORGIA 4 Ceva filed a motion to dismiss based on lack of service (ECF No. 105). That motion is not yet ripe for consideration, so the Court will address it in a separate order. 14
]]>
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You
should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google
Privacy Policy and
Terms of Service apply.
