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Ocusoft, Inc. v. Walgreen Co.

United States District Court, S.D. Texas, Houston Division

May 8, 2017

Ocusoft, Inc., Plaintiff,
Walgreen Co., and, Inc., Defendants


          Gray H. Miller United States District Judge.

         Pending before the court is plaintiff Ocusoft, Inc.'s (“Ocusoft”) motion for a temporary restraining order and a motion for a preliminary injunction against defendants Walgreen Co. and, Inc. (collectively, “Walgreens”). Dkt. 7. After considering the motion, response, reply, evidentiary record, and the applicable law, the court finds that Ocusoft's motion for a temporary restraining order should be DENIED, but the court will set a hearing on the motion for a preliminary injunction.

         I. Background

         This case involves a dispute between Ocusoft and Walgreens regarding false advertising. Ocusoft specializes in eye and skin care products and introduced the first commercially available eyelid cleanser, Ocusoft Lid Scrub. Dkts. 1, 7. Walgreens sells the Ocusoft brand in its stores and online. Dkt. 1. Walgreens also sells its private label eyelid cleansing pads, (“Walgreens Private Label”) which are routinely placed next to Ocusoft's products on store shelves. Dkt. 1 at 6.

         On April 4, 2017, Ocusoft filed its complaint alleging claims of: false advertising and unfair competition under the Lanham Act, federal patent infringement, and unfair competition, dilution, § 1125(A); 35 U.S.C. § 284. On April 5, 2017, Ocusoft filed its motion for a temporary restraining order (“TRO”) and preliminary injunction against Walgreens for false advertising under the Lanham Act. Dkt. 7. In support of its TRO, Ocusoft alleges (1) that store clerks at three Walgreens stores in Texas made false representations that the Walgreens Private Label and the Ocusoft products were the same or were made by the same manufacturer, (2) that one local store in Texas falsely advertised consumer savings on a compare-and-save label showing a $7 discount, when the actual savings was $3.50, and (3) that Walgreens's online advertisements displayed the 2015 Walgreens Rinse-Free Pads, but customers were shipped the 2016 Walgreens Rinse-Free Pads, which contains different ingredients. Dkt. 7.

         On April 24, 2017, Walgreens responded and discussed the actions it took to address the allegations raised in the TRO. Dkt. 18. Walgreens argues that it “never instructed its local store employees to inform customers that Walgreens-branded products are the same as, or are manufactured by the same company, as Ocusoft eyelid pads.” Id. at 11. It also argued that these isolated incidents, including a single incorrect savings tag in one store were unlikely to influence the purchasing decisions of consumers. Id. at 20-22. Walgreens claims it is not aware of any customers other than Ocusoft's agents who asked whether the products are the same or were made by the same manufacturer, or of any online customers who complained about receiving the 2016 version of the product instead of the 2015 version. Dkt. 18, Ex. A (Duan Dec.), Ex. B (Fuller Dec.) (stating that less than one percent of Walgreens' sales of its Private Label eyelid products are sold online).

         Nevertheless, Walgreens argues it has corrected the alleged misrepresentations, including replacing the incorrect compare-and-save tag, issuing internal communications to all store managers nationwide to instruct local store employees to not tell customers that the Ocusoft and Walgreens Private Label products are the same or are from the same manufacturer, and removing images of the 2015 Walgreens Rinse-Free Pads from its website. Dkt. 18 at 11-12, Exs. A, B, C.

         On May 1, 2017, Ocusoft filed its reply and argued that a TRO is still necessary because at least one Walgreens store in Florida displayed an incorrect compare-and-save tag and an employee who was questioned about the Walgreens Private Label and Ocusoft products said that they were the same. Dkt. 25, Ex. A (Bernard Dec.).

         II. Legal Standard

         A party seeking a temporary restraining order or a preliminary injunction pursuant to Rule 65 of the Federal Rules of Civil Procedure must demonstrate four elements: (1) a substantial likelihood of success on the merits; (2) a substantial threat of irreparable injury if the injunction is denied; (3) that the threatened injury outweighs any prejudice the injunction might cause the defendant; and (4) that the injunction will not disserve the public interest. Bluefield Water Ass'n, Inc. v. City of Starkville, Miss., 577 F.3d 250, 252-53 (5th Cir. 2009); Affiliated Prof'l Home Health Care Agency v. Shalala, 164 F.3d 282, 285 (5th Cir. 1999). Injunctive relief, particularly at the preliminary stages of litigation, is an extraordinary remedy that requires an unequivocal showing of the need for the relief to issue. Valley v. Rapides Parish Sch. Bd., 118 F.3d 1047, 1050 (5th Cir. 1997). Thus, injunctive relief should only be granted where the movant has “clearly carried the burden of persuasion.” Bluefield Water Ass'n, 577 F.3d at 252-53; Anderson v. Jackson, 556 F.3d 351, 360 (5th Cir. 2009).

         III. Analysis

         Ocusoft moves for a temporary restraining order to prevent Walgreens from making false Walgreens responded by listing the actions it took to correct any inaccuracies in its online and in-store advertisements and argues that Ocusoft is not entitled to injunctive relief. Dkt. 18. Injunctive relief is an extraordinary remedy, and the court finds that Ocusoft has not carried its burden of persuasion with regard to proving the element of irreparable injury required for injunctive relief. Bluefield Water, 577 F.3d at 252-53.

         Ocusoft argues it is entitled to a presumption of irreparable harm. Dkt. 7 at 42 (citing Greater Houston Transp. Co. v. Uber Techs., Inc., 155 F.Supp.3d 670, 703 (S.D. Tex. 2015) (Gilmore, J.) (“Federal Courts have routinely held that injury should be presumed when a Lanham Act claim involves false or misleading comparative advertisements.”). Ocusoft also cites to cases where courts presume injury after plaintiffs establish a likelihood of confusion in trademark infringement cases. Dkt. 25 at 3 (citing T-Mobile US, Inc. v. AIO Wireless LLC, 991 F.Supp.2d 888, 926 (S.D. Tex. 2014) (Rosenthal, J.) (“All that must be proven to establish liability and the need for an injunction against [trademark] infringement is the likelihood of confusion-injury is presumed.”) (citing Abraham v. Alpha Chi Omega, 708 F.3d 614, 627 (5th Cir. 2013) (holding that a court may issue an injunction against trademark infringement once a likelihood of confusion is shown because irreparable injury is then presumed).

         Walgreens argues that the Fifth Circuit has not clearly determined that claims of false advertisement are entitled to a presumption of harm. Dkt. 18 at 12 (citing Paulsson Geophysical Services, Inc. v. Sigmar, 529 F.3d 303, 313 (5th Cir. 2008) (“We have no need to decide whether a court may presume irreparable injury upon finding a likelihood of confusion in a trademark case, a difficult question considering the Supreme Court's opinion in eBay.”)); see also ADT, LLC v. Capital Connect, Inc., 1 ...

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