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Nutraceutical Corp. v. Affordable Naturals, LLC

United States District Court, D. Utah

October 10, 2017

NUTRACEUTICAL CORP., a Delaware corporation, and NUTRAMARKS, INC., a Delaware corporation, Plaintiffs and Counterclaim Defendants,
v.
AFFORDABLE NATURALS, LLC, a Minnesota limited liability company, Defendant and Counterclaim Plaintiff .

          Paul M. Warner, Magistrate Judge

          MEMORANDUM DECISION AND ORDER GRANTING DEFENDANT'S MOTION FOR PARTIAL SUMMARY JUDGMENT

          Jill N. Parrish United States District Judge

         Before the Court is Defendant's Motion for Partial Summary Judgment (ECF No. 53). Having considered the motion, the related pleadings, and the record, the Court GRANTS the motion.

         I. INTRODUCTION

         Plaintiffs and Counterclaim Defendants Nutraceutical Corporation and NutraMark, Inc. (collectively, “Nutraceutical”) brought claims against Defendant and Counterclaim Plaintiff Affordable Naturals, LLC (“AN”) for (1) trademark infringement, (2) false advertising, (3) declaratory relief, and (4) trademark cancellation. In response, AN brought a single counterclaim seeking a declaration that it does not infringe and has not infringed any Nutraceutical trademark. This dispute arises from AN's use of the SIMPLY mark in connection with lip balms and other lip products and Nutraceutical's use of the SIMPLERS BOTANICALS and SIMPLERS marks in connection with essential oils. Nutraceutical claims that AN's use of the SIMPLY mark infringes the SIMPLERS mark. AN has moved for partial summary judgment, arguing that no reasonable juror could conclude that there is a likelihood of confusion. The Court agrees and holds that AN is entitled to judgment in its favor on all four of Nutraceutical's claims.

         II. UNDISPUTED FACTS

         A. Affordable Naturals' SIMPLY Mark

         AN sells lip-related personal care products, such as lip balms, lip shimmers, and lip glosses. AN's products are made with natural and organic ingredients, including olive oil and beeswax, and its mission is “to bring organic products back down-to-earth [sic] by providing the first all-natural, premium quality, U.S.-made eco-conscious personal-care products offered on the market at a reasonable rate.” AN maintains certain standards to ensure that its goods qualify for USDA Organic certification.

         AN owns the SIMPLY mark and has sold millions of products bearing the SIMPLY mark in interstate commerce since as early as August 1, 2009. The SIMPLY mark is registered with the United States Patent and Trademark Office (“USPTO”) for personal care products, namely lip balms, lip glosses, lip shimmers, and other lip-related products. Reg. No. 3, 935, 337. AN applied for registration of its SIMPLY mark under § 1(b) of the Lanham Act, 15 U.S.C. § 1051(b), as an Intent-to-Use application on November 24, 2009. AN then filed a “Statement of Use” for the SIMPLY mark on December, 8, 2010. The USPTO registered AN's SIMPLY mark on the Principal Register on March 22, 2011, creating a constructive-use date of November 24, 2009.

         Paul Henson, a consultant for AN, first had the idea to use the SIMPLY mark in connection with AN's products. He chose SIMPLY because he “wanted a name that would sort of connote the concept of [a] brand with simple ingredients.” Henson also chose the mark because he “notice[d] there were no products in the [lip-care] category with the name Simply.” AN markets and sells its products with the philosophy that quality goods can be affordable to consumers. AN sells its products online and through various distribution relationships with national retailers, including stores like Walgreens and Target. In stores, SIMPLY-branded products are usually found at end-cap displays and check-out aisles. AN targets impulse buyers, those who make purchases on a whim, and label readers, those who check the ingredients and compare prices when deciding to buy. The suggested retail price for SIMPLY-branded products ranges from $0.99 to about $2.99, with lip balms generally having a lower suggested retail price than lip shimmers or lip glosses.

         B. Nutraceutical's SIMPLERS BOTANICALS and SIMPLERS Marks

         Nutraceutical is not the original holder of the SIMPLERS BOTANICALS and SIMPLERS marks. Since approximately September 1, 1983, Simplers Botanicals, LLC purportedly used “simplers” in connection with the sale of essential oils. On August 7, 2013, Nutraceutical acquired Simplers Botanicals along with its intellectual property, including any purported rights in the SIMPLERS and SIMPLERS BOTANICALS marks. While there is some evidence that Simplers Botanicals sold products bearing only the word SIMPLERS before it was acquired, all of Nutraceutical's current products bear the words SIMPLERS BOTANCIALS.[1]

         Nutraceutical sells essential oils and blends of essential oils. According to Robin Lander, Nutraceutical's brand manager, an essential oil is an oil essential to plants that can be extracted and used for various purposes. Lander suggests that there is virtually no limit on how essential oils can be used: consumers can inhale them, use them in compresses, use them as perfumes, use them as massage oils, use them to treat urinary tract infections, and even use them to “increase sexual pleasure.”

         Lander previously worked as Simpler Botanicals' national sales manager starting in 2007. During her tenure with both Simplers Botanicals and Nutraceutical, neither sold a lip product that was similar to Blistex or a lip product that “comes in a tube.” Likewise, neither company has sold a lip salve (a lip product with a wax base) under the SIMPLERS or SIMPLERS BOTANICALS marks. To date, Nutraceutical does not sell “mixtures of oils and waxes together, ” and it has never sold a product labeled as a “cream.”

         Nutraceutical markets its products for therapeutic uses, including aromatherapy. For instance, Nutraceutical advertises its products in an Aromatherapy Guide, which it distributes to teachers of massage, acupuncture, and naturopathic medicine. According to Lander, “there's literally hundreds” of practitioners who use Nutraceutical's essential oils in their practice.

         Nutraceutical, according to Lander, has a number of products in development, including soaps, creams, powders, and blends of essential oils. Lander is “always coming up with ideas, ” but when pressed for specifics by AN's attorney, she stated, “I don't want to tell you, you know, that is all.” Sometime in 2011, Lander considered “creating a Simplers product that would be a wax consistency lip product, ” but Nutraceutical does not currently have a lip balm, lip shimmer, or lip gloss in the planning stage of development. According to Lander, if someone wanted to create a “waxy-type lip balm” with Nutraceutical's products, they would need to “buy from somewhere else a bees wax or soy wax or similar type of wax.”

         Before it was acquired, Simplers Botanicals sold a lip product called “Herp Aid, ” which supposedly treated cold sores and herpes sores. Nutraceutical now sells the same product under the name “Lip Clarity.” Nutraceutical uses the SIMPLERS BOTANICALS mark on the Lip Clarity packaging. Lip Clarity, like the majority of Nutraceutical's products, is an essential oil that is similar in consistency to a liquid-if a consumer broke a bottle of it, it would “splash everywhere.” Lip Clarity can be applied directly on the lips, but Nutraceutical recommends that its users mix Lip Clarity with a “carrier oil, ” such as lavender. As Lander explained:

If [someone] had a particularly painful sore on the lips or genital area, they might find the tingling sensation of the product a little too strong. They could put [Lip Clarity] in a little bit of carrier oil or lotion or even an existing lip product they had. They could make a salve or lip balm and put some in it. And then they could use that on the genitals or the lips to help, you know, alleviate that pain of application.

         According to Lander, “[s]omeone might not want to be seen carrying around a bottle of Herp Aid or Lip Clarity, ” so “they could make it into a lip balm or something of a waxy consistency that they can more inconspicuously apply to their lips.” Lander has seen cases where people with cold sores covering their face or genitals “put the Herp Aid or Lip Clarity into a lotion that they purchased or a carrier oil that they purchased so they can massage it over a larger area of the face [or genitals].”

         A five-milliliter bottle (or about one teaspoon) of Lip Clarity is available on Nutraceutical's website for $13.19. Lip Clarity is also available online at Walmart for $11.21, eBay for $9.70, and Amazon for $7.39. Other products in the SIMPLERS BOTANCIALS line, such as Jojoba Oil, cost as little as $7.39. Nutraceutical's SIMPLER BOTANICALS-branded products are also sold in several national chains, including Whole Foods Market, Earth Fare, and Vitamin Shoppe. Nutraceutical, according to Lander, recommends that retail stores put its products “with their other aromatherapy products or near fragranced products, or [it] might ask [the stores] to put the Herp Aid next to other lip products.” Sometimes retailers “ke[ep] everything Simplers all together, like in one area.”

         On September 30, 2013, Nutraceutical filed a § 1(a) trademark application, 15 U.S.C. § 1051(a), with the USPTO for actual use in commerce of the SIMPLERS mark for two classes of goods. For the first class of goods (international class 003 for cosmetics and cleaning preparations), Nutraceutical identified the following goods for which it was purportedly using the SIMPLERS mark in commerce:

[C]osmetic preparations, namely, essential oils for personal use and aromatherapy use; perfume oils, non-medicated cosmetics and skin care products, namely, face and body creams, face, body and lip salves, face and body sprays, face and body balms, face and body oils, face and body liquid soaps, face and body moisturizers, face, body, and hand lotions, lip balms, shaving lotions, shaving balms, perfumes and colognes, and face and body bar soaps; hair care preparations; massage oils[.]

(emphasis added). In the second class of goods (international class 005 for pharmaceuticals and dietetic substances adapted for medical use), Nutraceutical identified the following goods for which it was purportedly using the SIMPLERS mark in commerce:

Dietary and nutritional supplements; herbal products, namely, herbal supplements and medicinal herbal extracts sold as a component ingredient of dietary and nutritional supplements, and liquid herbal supplements sold as a component ingredient of dietary and nutritional supplements that aid in sleep, relaxation and wellness[.]

         The USPTO has not registered the SIMPLERS mark on the Principal Register.

         On September 20, 2013, Nutraceutical also filed a § 1(a) trademark application with the USPTO for actual use in commerce of the SIMPLERS BOTANICALS mark for two classes of goods. Nutraceutical registered the SIMPLERS BOTANICALS mark for the same international classes of goods as the SIMPLERS mark, and it identified the same goods for which it purportedly uses the SIMPLERS BOTANICALS mark in commerce as it purports to use the SIMPLERS mark. Nutraceutical disclaimed the exclusive rights to the word BOTANICALS in the SIMPLERS BOTANICALS mark, apart from the mark as shown in its registration. The USPTO registered Nutraceutical's SIMPLERS BOTANICALS mark on December 2, 2014, creating a constructive first-use date of September 1, 1983.

         Nutraceutical's actual use of the SIMPLERS and SIMPLERS BOTANCIALS marks is not consistent with its trademark applications. When asked about specific categories of goods, Jeffery Hinrichs, Nutraceutical's COO and Executive Vice President, admitted that the company does not sell any products other than those in essential-oil form. For instance, Hinrichs admitted that Nutraceutical does not sell soap, bar soap, shaving cream, or hair-care products-all classes of goods listed in the applications for both the SIMPLERS and SIMPLERS BOTANICALS marks.

         There is no evidence of actual consumer confusion based on AN's use of the SIMPLY mark. Lander knows of no specific instances where a consumer confused SIMPLY-branded products with Nutraceutical's products. In fact, after fielding “thousands” of inquiries from consumers, Lander does not “recall anybody referencing Simply ...


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