Free Response to Motion - District Court of Colorado - Colorado

Case 1:04-cv-00617-LTB-BNB

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PolyRock Technologies, LLC, v. General Steel Domestic Sales, LLC, et al.

EXHIBIT 2 to P A N IFS P O II NT L I TF ' O P STO O MOTION TO DISMISS DEFENDANT DEMAREST -- ORAL ARGUMENT REQUESTED --

H aho t t vRvr E g P am cucl LL . elpi, d . i ' de hr aeta ,.. , t nL . es is C 2005 WL 356839 (W.D. Tex. 2005)

EXHIBIT 2 04-cv-617-LTB-BNB

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Slip Copy, 2005 WL 356839 (W.D.Tex.), 2005-1 Trade Cases P 74,698 Briefs and Other Related Documents United States District Court,W.D. Texas, San Antonio Division. HEALTHPOINT, LTD. and DPT Laboratories, Ltd., Plaintiffs, v. RIVER'S EDGE PHARMACEUTICALS, L.L.C., Defendant. No. SA-03-CV-984-RF. Feb. 14, 2005.

sulfacetamide wash used to treat seborrheic dermatitis of the face. Seborrheic dermatitis is a common and chronic skin disorder that causes a red, scaly, and itchy rash most commonly seen on the face and scalp. While it cannot be cured, seborrheic dermatitis of the face can be treated effectively by using a prescription 10% sodium sulfacetamide wash. Plaintiffs developed, manufacture, and market a version of this drug product under the trade name OVACE0. FN2 Healthpoint, Ltd. (" Healthpoint" ), markets OVACE to dermatologists and other physicians. DPT Laboratories, Ltd. (" DPT" ) developed and now manufactures OVACE for Healthpoint in San Antonio, Texas. Plaintiffs are both Texas limited partnerships with their main offices in San Antonio, Texas.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS FURGESON, J. *1 BEFORE THE COURT is the Motion of Defendant River's Edge Pharmaceuticals, L.L.C. (" River's Edge" to Dismiss for Failure to State a ) Claim and Want of Subject Matter Jurisdiction (Docket No. 31), filed on August 6, 2004, along with Plaintiffs' Response and supplemental briefing filed by both sides. The Court held a hearing on January 4, 2005 and finds that Defendant Harmony's Motion to Dismiss (Docket No. 31) should be GRANTED IN PART and DENIED IN PART. FN2. Plaintiffs allege that a U.S. patent application is pending on OVACE but has not issued. However, since a 10% sodium sulfacetamide wash per se is not novel, the wash itself could not be patented. Instead, Plaintiff Healthpoint applied in 2002 for a formulation patent, which, upon issue, would protect the manner in which OVACE is produced. Plf.'s Original Complaint, at 5, n. 1. Since OVACE is not currently covered by an extant U.S. patent, anyone may copy it and market it without interference by Plaintiffs or any other party. U.S. Const. art. I, § 8. See Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225, 231, 84 S.Ct. 784, 11 L.Ed.2d 661 (1964) ; Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141, 109 S.Ct. 971, 103 L.Ed.2d 118 (1989). Harmony Laboratories, Inc. (" Harmony" is a custom ) manufacturer of numerous pharmaceuticals that is incorporated under the laws of North Carolina with its principal place of business in Landis, North Carolina. FN3 Defendant River's Edge Pharmaceuticals, L.L.C. (" River's Edge" is a ) Georgia corporation with its principal place of business in Suwanee, Georgia. Pursuant to a contract with River's Edge, Harmony formulated a 10% sodium sulfacetamide wash from raw ingredients to compete with OVACE. FN4 Harmony now manufactures this OVACE competitor for River's Edge, who supplies all the specifications and sells the

Factual and Procedural Background This case involves claims under section 43(a) of the Trademark Act of 1946 (" Lanham Act" and under ) Texas common law. FN1 Plaintiffs Healthpoint, Ltd. and DPT Laboratories, Ltd. (" Plaintiffs" complain ) that River's Edge engages in false advertising, unfair competition, and trade dress infringement in violation of the Lanham Act's provisions. Additionally, Plaintiffs bring common law claims of unfair competition and misappropriation and request a declaratory judgment.

FN1. 15 U.S.C. § 1125(a). The factual basis of the suit involves a public domain prescription drug that comprises a 10% sodium

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Slip Copy Slip Copy, 2005 WL 356839 (W.D.Tex.), 2005-1 Trade Cases P 74,698 (Cite as: Slip Copy) product as " RE-10." River's Edge is solely responsible for the distribution, advertising, sales, and promotion of RE-10.

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FN3. Originally, the Plaintiffs also sought relief against Harmony Laboratories for the claims at issue here. However, Plaintiffs and Harmony recently reached agreement on their differences and jointly moved to dismiss their mutual claims without prejudice. Upon that motion, the Court entered an Order dismissing all claims against Harmony and all of Harmony's claims against Plaintiff Healthpoint. (Docket No. 58). FN4. This reverse engineering is permissible in the absence of a valid and extant U.S. patent. See Compco Corp. v. Day-Brite Lighting, Inc., 376 U.S. 234, 237-38, 84 S.Ct. 779, 11 L.Ed.2d 669 (1964). Like all prescription drugs, OVACE and RE-10 are sold via the prescription drug system. Each of the fifty states has individual laws that govern the dispensing of prescriptions. FN5 The Food and Drug Administration (" FDA" also oversees a process by ) which all new drugs must be approved for the market prior to sale. FN6 However, a drug is not a " new drug"if it was " grandfathered"under the terms of either the 1938 provisions or 1962 amendments to the Federal Food Drug and Cosmetic Act (" FDCA" ). FN7 Neither OVACE nor RE-10 have been subject to FDA approval because 10% sodium sulfacetamide wash is one of thousands of prescription drugs grandfathered under the FDCA.

*2 Plaintiffs have requested a declaratory judgment and have alleged misappropriation, trade dress violations, and liability for unfair competition against River's Edge. The essence of Plaintiffs' complaint is that their marketing plan is being thwarted by pharmacists who are violating pharmacy laws by substituting RE-10 for prescriptions written for OVACE. Plaintiffs complain that River's Edge markets RE-10 primarily to drug distributors, wholesalers, pharmacies and managed care organizations as a generic equivalent to OVACE. FN8 Even though pharmacists, pharmacy chains, hospitals, and formularies are not parties to this suit, Plaintiffs request that the Court enjoin all such parties, along with nursing homes, HMOs, Medicare, Medicaid, health insurance companies, and fifty state agencies and governments from making or causing any substitution of RE-10 for OVACE.

FN8. Plf.'s Complaint at 6. Plaintiffs allege that River's Edge deliberately mimicked OVACE packaging, describing similarities in the appearance of the RE-10 and OVACE bottles. Plaintiffs also allege that River's Edge, in presentations and promotions to drug wholesalers, distributors, pharmacies, and managed care organizations, fails to differentiate between OVACE and RE-10 on any basis other than price. Further, Plaintiffs complain that the actions of Defendants have had their intended effect and that RE-10 is now " linked"as an equivalent product to OVACE in major drug databases that pharmacists use to make decisions about whether to substitute one drug for another. The real basis for Plaintiffs' claims is that drugs like RE-10 appear on computer databases of the three large drug distributors whenever a pharmacist looks up at 10% sodium sulfacetamide product. FN9 Since pharmacies often select, or may be required to select, the least expensive 10% sodium sulfacetamide product alternative among a variety of options, they may choose RE-10 over OVACE in order to provide the less expensive alternative. Additionally, some drug formularies determine that drugs like RE-10 and OVACE are acceptable substitutes for one another and dictate that all prescriptions for 10% sodium sulfacetamide products be filled with the least expensive brand.

FN5. See, e.g., Tex. Occ.Code § 551.001 (2004). FN6. See 21 U.S.C. § 355(a). FN7. Federal Food, Drug, and Cosmetic Act, § § 201(p)(1), 505(d), as amended, 21 U.S.C.A. § § 321(p)(1) , 355(d) ; Drug Amendments of 1962, § 107(c)(4), 21 U.S.C.A. § 321. See also Weinberger v. Hynson Westcott & Dunning, Inc., 412 U.S. 609, 609-10, 93 S.Ct. 2469, 37 L.Ed.2d 207 (1973) ; United States v. Atropine Sulfate 1.0 mg. (Article of drug) Dey-Dose, 843 F.2d 860, 861-62 (5th Cir.1988).

FN9. See http://www.cardinal.com; http://www.mckesson.com; http://

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Slip Copy Slip Copy, 2005 WL 356839 (W.D.Tex.), 2005-1 Trade Cases P 74,698 (Cite as: Slip Copy) www.amerisourebergen.com. Plaintiffs' main allegations focus on Defendant's marketing efforts. They claim that River's Edge is engaged in false and misleading marketing of RE-10 and that these efforts have brought about a false impression that RE-10 is genuinely generic to and substitutable for OVACE. Further, Plaintiffs claim that RE-10 is now being substituted for OVACE prescriptions. Because of these alleged substitutions, Plaintiffs argue that River's Edge has engaged in unfair competition against them, in violation of Section 43(a) of the Lanham Act. Plaintiffs also allege that River's Edge mimicked the design of the OVACE label and packaging, which they claim is infringement of OVACE's trade dress and an additional violation of section 43(a). Defendant River's Edge moves to dismiss, claiming that Plaintiffs have failed to state essential elements of their claims. River's Edge also moves to dismiss for lack of subject matter jurisdiction Plaintiffs' sixth count, a plea for declaratory judgment, alleging that the Court is without subject matter jurisdiction over this claim.

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person who believes that he or she is or is likely to be damaged by such act. FN11

FN11. Id. § 1125(a)(1). Section 43(a) is designed to protect the rights of consumers to be told the truth, contrasted with the goal of trademark law in general: protecting the property rights of trademark holders against infringing competitors. FN12 The Fifth Circuit has described this section of the Lanham Act as providing " protection against a ` myriad of deceptive commercial practices,' including false advertising or promotion."FN13 Thus, section 43(a) is designed to provide protection for consumers' rights to the truth in advertising.

FN12. See J.W. Burns, Confused Jurisprudence: False Advertising under the Lanham Act, 79 Boston U.L.Rev. 807, 87475 (1999). FN13. Pizza Hut, Inc. v. Papa John's Intern., Inc., 227 F.3d 489, 495 (5th Cir.), cert. denied, 532 U.S. 920, 121 S.Ct. 1355, 149 L.Ed.2d 285 (2001). 1. False Advertising A claim of false advertising under section 43(a) requires the plaintiff to plead: (1) A false or misleading statement of fact about a product; (2) Such statement either deceived, or had the capacity to deceive a substantial segment of potential consumers; (3) The deception is material, in that it is likely to influence the consumer's purchasing decision; (4) The product is in interstate commerce; and (5) The plaintiff has been or is likely to be injured as a result of the statement at issue. FN14

Discussion I. Applicable Law A. The Lanham Act, Section 43(a)

*3 This action arises pursuant to section 43(a) of the Lanham Act FN10 and Texas unfair competition and misappropriation law. Section 43(a) of the Act, as amended, prohibits the use of any false or misleading representation on or in conjunction with goods in commerce.

FN10. Trademark Act of 1946, 15 U.S.C. § 1125(a). (1) Any person who ... uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any ... false or misleading representation of fact which ... (B) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services, or commercial activities, shall be liable in a civil action brought by any FN14. Pizza Hut, 227 F.3d at 495; Taquino v. Teledyne Monarch Rubber, 893 F.2d 1488, 1500 (5th Cir.1990); McCarthy characterizes this list as the elements of a prima facie case for an injunction. See 4 J. Thomas McCarthy, McCarthy on Trademarks and Unfair Competition, § 27:24 (4th ed.1996). The plaintiff is entitled to prevail on the merits of its

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Slip Copy Slip Copy, 2005 WL 356839 (W.D.Tex.), 2005-1 Trade Cases P 74,698 (Cite as: Slip Copy) section 43(a) false advertising claim if it establishes either of two propositions: that the defendant's promotional campaign is literally false, or although literally true, is likely to mislead and confuse consumers. FN15 If the statement is shown to be misleading, the plaintiff must also produce evidence of the statement's impact on consumers, referred to as " materiality."FN16 holding the competition). examples to be

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unfair

FN19. Taylor Publishing, 216 F.3d at 486; Schoellkopf v. Pledger, 778 S.W.2d 897, 904-05 (Tex.App.-Dallas 1989, writ denied ). FN20. See id. (" Without some finding of an independent substantive tort or other illegal conduct, we hold that liability cannot be premised on the tort of ` unfair competition." ' ). *4 In this case, Plaintiffs' allegations in support of their claim of unfair competition under section 43(a) are generally the same as those alleged for false advertising, so the Court construes their complaint as alleging a primary tort of false advertising with a dependant or supplemental claim for unfair competition. FN21 This unfair competition claim will be dependent upon Plaintiffs' showing with regard to the previous false advertising claim. Accordingly, the Court will first analyze the federal false advertising claim set forth above and then turn its attention to the claim for unfair competition under section 43(a). FN22

FN15. Pizza Hut, 227 F.3d at 495; SevenUp Co. v. Coca-Cola Co. ., 86 F.3d 1379, 1390 (5th Cir.1996). FN16. Pizza Hut, 227 F.3d at 495 (citing American Council of Certified Podiatric Physicians and Surgeons v. American Bd. of Podiatric Surgery, Inc., 185 F.3d 606, 614 (6th Cir.1999)). 2. Unfair Competition Claims for unfair competition are also encompassed within the ambit of section 43(a) of the Lanham Act. This is a much less defined cause of action, encompassing numerous specific actionable events. Generally, the law of " unfair competition is the umbrella for all statutory and non-statutory causes of action arising out of business conduct which is contrary to honest practice in industrial or commercial matters." FN17 The category of unfair competition includes a number of types of objectionable trade practices, including trademark infringement, dilution of good will, misappropriation of business value, " palming off,"and theft of trade secrets. FN18 The tort requires that the plaintiff show an illegal act by the defendant which interfered with the plaintiff's ability to conduct its business. FN19 Although the illegal act need not necessarily violate criminal law, it must at least be an independent tort. FN20 Thus, unfair competition functions like a " piggy-back" tort, applying only when the court finds that a related, independent tort has been committed.

FN21. See Plf.'s Original Complaint, at paras. 36-50 FN22. See Laughlin Prod., Inc. v. ETS, Inc., 257 F.Supp.2d 863, 871-72 (N.D.Tex.2002) (Court, upon reviewing plaintiffs' complaint, and finding no specific elements or theories of their common law unfair competition claims that would require a different analysis from that used by the Court in ruling on the plaintiffs' false advertising claims under the Lanham Act, concluded that the claims could be analyzed under the federal statute), aff'd, 68 Fed.App. 976, 2003 WL 21674751 (Fed.Cir.). 3. Trade Dress Infringement Trade dress is another concept associated with trademark protection under section 43(a) of the Lanham Act. Section 43(a) prohibits a broader range of practices than does section 32, which applies only to registered trademarks. FN23 Section 43(a) can thus be used to protect a product's appearance, or " trade dress," without having a registered trademark. FN24 Trade dress refers to the total image, design,

FN17. Taylor Publishing Co. v. Jostens, Inc., 216 F.3d 465, 486 (5th Cir.2000) (quoting American Heritage Life Ins. Co. v. Heritage Life Ins. Co., 494 F.2d 3, 14 (5th Cir.1974)); 3 R. Callman, The Law of Unfair Competition § 4.1, at 120 (3d ed.1969). FN18. See 4 McCarthy on Trademarks and Unfair Competition, § 1:10 (citing cases

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Slip Copy Slip Copy, 2005 WL 356839 (W.D.Tex.), 2005-1 Trade Cases P 74,698 (Cite as: Slip Copy) and appearance of a product and may include features such as color, color combinations, and graphics. FN25 When considering trade dress claims, the question for the court is whether the " combination of features creates a distinctive visual impression, identifying the source of the product." FN26 The purpose of protecting trade dress is to secure for the owner of the trade dress " goodwill of his business the and to protect the ability of consumers to distinguish among competing products." FN27

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unregistered trademark if it is nonfunctional, distinctive, and has acquired a secondary meaning. Second, a finding of labor, skill, and money; 2) defendant's use of that product in competition with plaintiff; 3) plaintiff thereby gaining a special advantage in that competition because the defendant is burdened with little or none of the expense incurred by the plaintiff; and 4) commercial damage to the plaintiff. FN34

FN23. Inwood Labs., Inc. v. Ives Labs., Inc., 456 U.S. 844, 858, 102 S.Ct. 2182, 72 L.Ed.2d 606 (1982). FN24. See Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 112 S.Ct. 2753, 120 L.Ed.2d 615 (1992) ; Eppendorf-NethelerHinz GMBH v. Ritter GMBH, 289 F.3d 351, 354-55 (5th Cir.2002) ; Allied Marketing Group, Inc. v. CDL Marketing, Inc., 878 F.2d 806, 812 (5th Cir.1989). FN25. See Pebble Beach Co. v. Tour 18 Ltd., 155 F.3d 526, 536 (5th Cir.1998). FN26. Id. FN27. Eppendorf, 289 F.3d at 355 (quoting Taco Cabana, 505 U . S. at 774). A leading authority on trade dress protection writes that there are at least three essential elements of a trade dress claim: 1. The plaintiff must show either that its trade dress is " inherently distinctive"or, if not, that it has acquired " secondary meaning." 2. The trade dress plaintiff must show that the alleged infringer's trade dress is confusingly similar, that is, that it is likely to cause confusion of prospective customers. 3. The plaintiff must establish ownership of the alleged trade dress. FN28

FN34. Alcatel, 166 F.3d at 788. Having established the required elements for the causes of action plead by Plaintiffs, the Court will analyze whether Plaintiffs adequately pleaded their causes of action.

II. Motion to Dismiss for Lack of Subject Matter Jurisdiction *5 When motions to dismiss based on Fed. R. Civ. P. 12(b)(1) and 12(b)(6) are filed together, the court should consider the jurisdictional attack before addressing the attack on the merits. FN35 A motion to dismiss for lack of subject matter jurisdiction should be granted " only if it appears certain that the plaintiff cannot prove any set of facts in support of his claim that would entitle plaintiff to relief."FN36 To assess whether subject matter jurisdiction exists, this Court may look to the complaint and the undisputed facts in the record. When analyzing the complaint, the Court treats the allegations in the complaint as true. FN37 However, the plaintiff constantly bears the burden of proof that jurisdiction exists. FN38

FN35. Ramming v. United States, 281 F.3d 158, 161 (5th Cir.2001). FN36. Id.; Home Builders Ass'n of Miss., Inc. v. City of Madison, 143 F.3d 1006, 1010 (5th Cir.1998). FN37. Sawar Partnership v. United States, 67 F.3d 567, 569 (5th Cir.1995). FN38. See Boudreau v. United States, 53 F.3d 81, 82 (5th Cir.), cert. denied, 516 U.S. 1071, 116 S.Ct. 771, 133 L.Ed.2d 724 (1995).

FN28. William E. Levin, Trade Dress Protection (1996). To this list, courts and others sometimes add a fourth clement, " The Plaintiff must show that the trade dress is not functional." at 6-1. Id. The Fifth Circuit recognizes two distinct sets of elements in a trade dress infringement claim. " First, the trade dress of a product may be protected as an

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The Court finds as an initial matter that it has subject matter jurisdiction over the Lanham Act § 43(a) claims alleged in Plaintiffs' Original Complaint under either of two theories. First, the Court may exercise jurisdiction because the Lanham Act claims present federal questions, making jurisdiction proper under 28 U.S.C. § § 1331 and 1338. FN39 The Court could also exercise diversity jurisdiction over Plaintiffs' claims against the out-of-state Defendants pursuant to 28 U.S.C. § 1332. In addition, the Court may exercise jurisdiction over the state law claims of unfair competition and misappropriation, since they involve claims that are clearly related to those over which the Court has original jurisdiction. FN40

focuses on parties that are not before the Court. With its supplemental memorandum in support of its motion to dismiss, River's Edge challenges Plaintiff's implicit contention that declaratory relief is even necessary. River's Edge states that it is undisputed that it is lawful, under some circumstances, for pharmacists to provide RE-10 to patients whose physicians have prescribed a sodium sulfacetamide 10% wash. River's Edge also concedes that it would violate state pharmacy law, under some circumstances, for pharmacists to provide RE-10 to patients whose physicians have specifically prescribed OVACE. River's Edge contends that Plaintiffs have not actually alleged that actual unlawful substitutions have occurred. Rather, River's Edge maintains that Plaintiffs have merely speculated that River's Edge has indirectly brought about the improper substitutions. Since Plaintiffs have not alleged any act of Defendant that would cause unlawful substitution, River's Edge argues, the pleadings present no ripe controversy for the Court to settle through declaratory relief. *6 The Court is cognizant of the danger of issuing broad, declaratory relief against parties not before it. Since it is clear that there is no real challenge to the Court's subject matter jurisdiction over Plaintiffs' claims against River's Edge, the Court will exercise jurisdiction as to claims stated in the first five counts. However, the Court will grant Defendant's motion as to the final count, dismissing the prayer for declaratory relief against parties who are not before the Court, since the Court finds no basis on which to assert jurisdiction over these parties.

FN39. Alum-A-Fold Shutter Corp. v. Folding Shutter Corp. et al., 441 F.2d 556 (5th Cir.1971). See also 15 U.S.C. § 1121. FN40. See 28 U.S.C. § 1367(a)(1990)(codifying the traditional concept of " pendant" jurisdiction-which allows federal courts to hear state law claims that form part of the same case or controversy as federal claims over which the courts have jurisdiction-as " supplemental" jurisdiction). Defendant River's Edge moves under Rule 12(b)(1) to dismiss the sixth count in Plaintiffs' complaint, which seeks a declaratory judgment regarding substitutions of RE-10 for OVACE in Texas and other states. Plaintiffs seek three types of declaratory relief. First, Plaintiffs request a declaration that, because RE-10 is not listed as a therapeutic equivalent to OVACE in the Orange Book, it is unlawful for pharmacists to substitute RE-10 for OVACE. Plaintiffs also request a declaration that, because RE-10 has not been proven to be therapeutically equivalent to OVACE, it is unlawful for pharmacists to substitute RE-10 for prescriptions of OVACE in Therapeutic Equivalence and Orange Book States. Finally, Plaintiffs seek a declaration that, because RE-10 is not pharmaceutically equivalent to OVACE, it is unlawful for pharmacists to substitute RE-10 for prescriptions of OVACE wash in Pharmaceutical Equivalence, Therapeutic Equivalence, or Orange Book states. River's Edge moves under Rule 12(b)(1) to dismiss these requests, initially arguing that the Court lacks subject matter jurisdiction to grant the declaratory relief sought by Plaintiffs because the relief sought

III. Motion to Dismiss for Failure to State a Claim A. Rule 12(b)(6) Standard

For purposes of a Rule 12(b)(6) motion to dismiss for failure to state a claim, the complaint must be liberally construed in favor of the plaintiff, and all the facts pleaded in the complaint must be taken as true. FN41 Dismissal on this basis is a disfavored means of disposing of a case, FN42 and district courts should avoid such dismissals " unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." FN43 " question therefore is whether, The in the light most favorable to the plaintiff and with every doubt resolved in his behalf, the complaint

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finds that Plaintiffs have adequately stated a cause of action against River's Edge under section 43(a) of the Lanham Act.

FN41. Campbell v. Wells Fargo Bank, N.A., 781 F.2d 440, 442 (5th Cir.1986). C. Lanham Act and State Law Unfair Competition FN42. Kennedy v. Tangipahoa Parish Library Bd. of Control, 224 F.3d 359, 365 (5th Cir.2000). FN43. Conley v. Gibson, 355 U.S. 41, 4546, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957). FN44. Brown v. Nationsbank Corp., 188 F.3d 579, 586 (5th Cir.1999) (citing 5 Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure § 1357, at 601 (1969)). The majority of River's Edge's briefing regarding the instant motion to dismiss focuses appropriately on the question of whether Plaintiffs state claims against River's Edge upon which relief may be granted under the Lanham Act and state law. River's Edge contends that Plaintiffs do not plead the essential elements of their claims and that Defendant's motion to dismiss these claims should be granted. The Court will address the claims in turn. *7 The Court has already determined that Plaintiffs have adequately pleaded their Lanham Act false advertising claim. Since Plaintiffs also claim that false advertising by River's Edge constitutes unfair competition in violation of section 43(a) and Texas state law, the Court finds in addition that Plaintiffs have adequately pleaded their unfair competition claims. If the Court later determines, on a motion for summary judgment, that the false advertising claim is without merit on the evidence before it, the Court will dismiss the unfair competition claims as well, since they cannot survive independent of the other claims alleged. FN45

FN45. See Taylor Publishing, 216 F.3d at 486. D. Lanham Act Trade Dress Plaintiffs claim that they have developed a distinctive trade dress for OVACE that distinguishes it in the marketplace. They further allege that OVACE's trade dress has acquired a secondary meaning in the pharmaceutical and medical industries as well as among patients who use OVACE. Plaintiffs also allege that use by River's Edge of a similar bottle with similar color designs creates a likelihood of confusion among doctors and patients that RE-10 is actually OVACE. In arguments in support of its motion to dismiss, River's Edge argues that Plaintiffs will be unable to prove the elements of their trade dress claim: that their trade dress is non-functional; that the alleged infringement creates a likelihood of confusion; that the trade dress is either inherently distinctive or has acquired secondary meaning. However, River's Edge does not contend that Plaintiffs have failed to state a cause of action for trade dress violations under the Lanham Act. Since it concludes that Plaintiffs have adequately stated such a cause of action, the Court will deny the motion to dismiss this claim.

B. Lanham Act False Advertising River's Edge moves to dismiss Plaintiffs' false advertising claims, arguing that Plaintiffs fail to allege any false statements of fact or a likelihood of improper influence on purchasing decisions. Plaintiffs respond that they have adequately pleaded the proper elements. Specifically, Plaintiffs state that they have alleged that River's Edge uses the statements " Compare to OVACE" and " First to Market" in advertising RE-10 and that these statements misrepresent the nature, characteristics, or qualities of RE-10 by creating the false impression in the pharmaceutical supply chain that RE-10 is equivalent to and substitutable for OVACE. Plaintiffs have alleged that River's Edge uses statements in marketing RE-10 that are misleading about the nature of its product in comparison to OVACE, that the ads have the capacity to deceive potential customers in a material way, and that Plaintiffs have been injured by the substitutions that are alleged to have taken place as a result. There is no dispute that the pharmaceutical products at issue here are in interstate commerce. As a result, the Court

E. State Misappropriation Claim Plaintiffs allege that they have developed name

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Slip Copy Slip Copy, 2005 WL 356839 (W.D.Tex.), 2005-1 Trade Cases P 74,698 (Cite as: Slip Copy) recognition and intellectual property rights in OVACE at significant expense and labor. Plaintiff further allege that River's Edge is engaged in unfair competition against Plaintiff, and that River's Edge have profited from substitutions of its RE-10 for the Plaintiffs' OVACE. In addition, Plaintiffs stated that they have sustained damages as a result of the alleged unfair business practices. The Court finds that Plaintiff has plead the basic elements of a misappropriation claim under Texas law. Therefore, River's Edge's request to dismiss the claim under Rule 12(b)(6) will be denied.

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Conclusion The Court finds that it has jurisdiction over the federal and state claims under the Lanham Act and analogous state laws. However, the Court does not have jurisdiction over pharmacies, doctors, and other medical personnel not before the Court as parties to this suit. As a result, the Court will grant Defendant's Motion to Dismiss for Lack of Subject Matter Jurisdiction (Docket No. 31) as to Plaintiffs' request for declaratory relief. Accordingly, it is ORDERED that Defendant's Motion to Dismiss for Lack of Subject Matter Jurisdiction (Docket No. 31) is GRANTED as to Count Six, Plaintiff's Request for Declaratory Judgment. *8 It is further ORDERED that Defendant's Motion to Dismiss for Failure to State a Claim (Docket No. 31) is DENIED. W.D.Tex.,2005. Healthpoint, Ltd. v. River's Edge Pharmaceuticals, L.L.C. Slip Copy, 2005 WL 356839 (W.D.Tex.), 2005-1 Trade Cases P 74,698 Briefs and Other Related Documents (Back to top) · 5:03CV00984 (Docket) (Oct. 07, 2003) END OF DOCUMENT

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