Case 1:12-cv-01306-REB-KLM Document 133 Filed 09/10/14 USDC Colorado Page 1 of 12
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF COLORADO
`Judge Robert E. Blackburn
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`Civil Action No. 12-cv-01306-REB-KLM
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`SALBA CORP., N.A., a Canadian corporation,
`SALBA SMART NATURALS PRODUCTS, a Colorado limited liabilty company,
`WILLIAM A. RALSTON, and
`RICHARD L. RALSTON,
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`Plaintiffs,
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`v.
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`X FACTOR HOLDINGS, LLC, an inactive Florida limited liability company, and
`ANCIENT NATURALS, LLC, a Florida limited liability company,
`MITCHELL A. PROPSTER, a resident of the State of Florida,
`CORE NATURALS, LLC, a Florida limited liability company, and
`NATURAL GUIDANCE, LLC, a Florida limited liability company,
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`Defendants and Counter-Claimants.
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`ORDER DENYING MOTION FOR PRELIMINARY INJUNCTION
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`Blackburn, J.
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`This matter is before me on the Plaintiffs’ Motion for Temporary Restraining
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`Order / Preliminary Injunction [#45]1 filed December 13, 2013. To the extent the
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`plaintiffs seek the entry of a preliminary injunction, I deny the motion.
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`On January 6, 2014, I conducted a hearing on the motion. Because the motion
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`was heard on an expedited basis, I found that the evidence in the record may not
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`present a comprehensive and complete picture of the relevant evidence. Therefore,
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`I limited my analysis to the motion for a temporary restraining order. Prior to the
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`January 6, 2014, hearing, the defendants filed a response [#56], the plaintiffs filed a
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`1 “[#45]” is an example of the convention I use to identify the docket number assigned to a
`specific paper by the court’s case management and electronic case filing system (CM/ECF). I use this
`convention throughout this order.
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`Case 1:12-cv-01306-REB-KLM Document 133 Filed 09/10/14 USDC Colorado Page 2 of 12
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`reply [#57]. After the hearing, I entered an order [#63] denying the motion to the
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`extent the plaintiffs sought a temporary restraining order. Following the hearing and
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`my order [#63], both the plaintiffs and the defendants submitted additional evidence and
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`briefing relevant to the motion [#72, #79, #80, #81, #82, #83, and #124]. In addition, the
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`briefing and exhibits submitted by the parties concerning the Defendants’ Motion and
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`memorandum To Enforce Settlement Agreement [#52] filed December 23, 2013, is
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`relevant.
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`I. JURISDICTION
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`I have jurisdiction over this case under 28 U.S.C. § 1331 (federal question), §
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`1338(a) (trademark and copyright), § 1338(b) (unfair competition claim joined with
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`copyright or trademark claim), § 1367 (supplemental), and 15 U.S.C. § 1121
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`(trademark).
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`II. STANDARD OF REVIEW
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`A party seeking a temporary restraining order or preliminary injunction must
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`show: (1) that the movant has a substantial likelihood of eventual success on the merits;
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`(2) that the movant will suffer imminent and irreparable injury unless the injunction
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`issues; (3) that the threatened injury to the movant outweighs whatever damage the
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`proposed injunction may cause the opposing party; and (4) that the injunction, if issued,
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`would not be adverse to the public interest. Lundgrin v. Claytor, 619 F.2d 61, 63 (10th
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`Cir. 1980); Heideman v. S. Salt Lake City, 348 F.3d 1182, 1189 (10th Cir. 2003)
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`(irreparable injury must be imminent).
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`When the moving party has established that the three harm factors tip decidedly
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`in the movant’s favor, the probability of success requirement is somewhat relaxed, and
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`the movant need only show questions going to the merits so serious, substantial,
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`Case 1:12-cv-01306-REB-KLM Document 133 Filed 09/10/14 USDC Colorado Page 3 of 12
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`difficult, and doubtful as to make them a fair ground for litigation. Nova Health Systems
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`v. Edmondson 460 F.3d 1295, 1298 n. 6 (10th Cir. 2006). On the other hand, some
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`types of temporary restraining orders or preliminary injunctions are disfavored and,
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`therefore, require the plaintiff to satisfy a heightened burden of showing that the four
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`primary factors
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`weigh heavily and compellingly in movant’s favor before such an injunction
`may be issued. The heightened burden applies to preliminary injunctions
`that (1) disturb the status quo, (2) are mandatory as opposed to
`prohibitory, or (3) provide the movant substantially all the relief he may
`recover after a full trial on the merits.
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`Kikumura v. Hurley, 242 F.3d 950, 955 (10th Cir. 2001) (internal quotation and citation
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`omitted). For the purpose of resolving the motion for preliminary injunction addressed in
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`this order, I conclude that neither the relaxed nor the heightened burden of proof is
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`applicable.
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`III. BACKGROUND
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`This case concerns disputes about the use by the defendants of trademarks
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`and other materials related to the Salba trademark used by the plaintiffs. In the
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`past, both the plaintiffs and the defendants have used the Salba name and
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`associated artwork in the sale of chia seeds and related products. In the original
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`complaint [#1], the plaintiffs asserted claims for (1) trademark counterfeiting and
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`infringement; (2) federal unfair competition and false advertising; (3) deceptive trade
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`practices; (4) cyber-squatting; and (5) common law trademark infringement and
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`unfair competition. These claims were brought against defendants X Factor
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`Holdings, LLC and Ancient Naturals, LLC. The parties reached a settlement and, in
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`early March 2013, executed a settlement agreement.
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`Now, the plaintiffs contend that defendants X Factor Holdings, LLC and
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`Ancient Naturals, LLC have violated the settlement agreement by continuing to use
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`the Salba trademarks owned by the defendants and by using packaging that is
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`illicitly similar to packaging used by the plaintiffs to sell products under the Salba
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`name. As named defendants, X Factor Holdings, LLC and Ancient Naturals, LLC
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`signed the settlement agreement. In addition, the settlement agreement was signed
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`by Mitchell Propster, an individual closely related to these two defendant entities,
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`and two other entities tied to Mr. Propster, Core Naturals, LLC and Natural
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`Guidance, LLC. Mr. Propster, Core Naturals, LLC, and Natural Guidance, LLC were
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`not named as defendants in the original complaint [#1].
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`By my order [#61], I granted the motion [#44] filed by the plaintiffs seeking
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`permission to file an amended complaint. In the amended complaint, the plaintiffs
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`assert new claims based on the alleged violation of the settlement agreement, and
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`the plaintiffs name Mr. Propster, Core Naturals, LLC and Natural Guidance, LLC as
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`additional defendants.
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`The plaintiffs now contend that X Factor Holdings, LLC, Ancient Naturals,
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`LLC, Mr. Propster, Core Naturals, LLC, and Natural Guidance, LLC have violated
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`the settlement agreement. The plaintiffs seek a preliminary injunction prohibiting Mr.
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`Propster and the four LLC entities from violating the settlement agreement.
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`IV. FACTS 2
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`The plaintiffs own and use the name Salba to sell seeds known as Salvia
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`Hispanica L, commonly known as chia seeds. The plaintiffs claim their Salba chia
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`seed product is uniquely valuable because they sell under the Salba name two
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`2 The facts described below have been established by a preponderance of the evidence,
`based on the evidence currently in the record. The findings of fact below are preliminary and are
`made solely for the purpose of determining the motion for preliminary injunction.
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`strains of chia seeds that are registered varieties of those seeds. These two
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`registered varieties, the plaintiffs claim, have unique nutritional value because they
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`provide nutritional consistency, unlike other chia seeds. The defendants also sell
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`chia seeds, but they do not sell the two registered varieties of chia seeds sold by the
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`plaintiffs.
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`Exhibit 1, admitted in evidence at the January 6, 2014, hearing, is the
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`Settlement Agreement and Release (Settlement Agreement) reached by the parties
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`when they agreed to settle this case. The Settlement Agreement can be found also
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`at [#45-9], pp. 2 - 67.
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`The Settlement Agreement includes exhibits with letter designations. Exhibit
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`B to the Settlement Agreement is a Trademark Assignment and Copyright License.
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`In the Trademark Assignment and Copyright License, the defendants agreed to
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`transfer the “SALBA Works” to plaintiff Salba Smart Natural Products, LLC.
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`Trademark Assignment and Copyright License [#45-9], CM/ECF pages 27 - 39. The
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`“SALBA Works” are defined as
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`materials containing the word SALBA or any derivative or form thereof,
`including, without limitation, all copyrights associated with documents,
`illustrations, labels, photographs, representations or other forms of use
`of the word SALBA including website content hosted as of the date that
`the Settlement Agreement is signed at the salba.com, salbausa.com,
`salbastore.com, salbarx.com or salbamiracle.com domains to which
`Transferor claims or may claim any copyright under United States
`federal law, state law, common law, or the law of any foreign country
`(the “SALBA Works”).
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`Trademark Assignment and Copyright License [#45-9], p. 27. Under this definition,
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`the key feature that defines the SALBA Works is the use of the word Salba or a
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`derivative form of that word.
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`In addition, the defendants granted a copyright license to plaintiff Salba Smart
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`Natural Products, LLC. The copyright license provides for
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`an irrevocable, unrestricted, worldwide, perpetual, royalty free, fully
`assignable, fully transferable right and license to use, modify,
`reproduce, distribute, display, perform, publish, sell, prepare derivative
`works of, and otherwise utilize and exploit (“Use”) the SALBA Works.
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`Id., ¶ 2.A. In addition, the copyright license provides:
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`If for any reason the foregoing grant of license is deemed insufficient to
`grant Transferee an unrestricted, worldwide, perpetual, royalty free,
`exclusive, fully assignable right and license to the SALBA Works, then
`Transferor agrees to and hereby does covenant to Transferee not to
`enforce any rights in or to the SALBA Works against Transferee . . . .
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`Id.
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`The Settlement Agreement and Release includes a paragraph titled
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`“Permanent Cessation of Use,” which is paragraph number three of the Settlement
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`Agreement. In this paragraph, the defendants agreed to cease using the word
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`SALBA and any SALBA-formative mark in the various ways specified in the lettered
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`sub-paragraphs of paragraph three. Most of these sub-paragraphs limit the actions
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`of the defendants only insofar as the defendants might use the “SALBA Works,”
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`which are defined primarily by use of the word Salba or any Salba formative marks.
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`However, sub-paragraph D of paragraph three includes a broader prohibition.
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`Subparagraph D provides that the defendants shall permanently cease and desist
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`from
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`performing any action or using any trademark, symbol, imagery, slogan
`or any false designation or origin or false advertising which is likely to
`cause confusion or mistake or lead the trade and/or public into
`believing that SALBA and the common species of chia, Salvia hispanica
`L, are one and the same, or that Plaintiffs are the sponsor of
`Defendants/Propster Entities or that Defendants’ or Propster Entities’
`products originate with Plaintiffs’ SALBA or are connected or offered
`with the approval, consent, authorization or under the supervision of
`Plaintiffs.
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`Settlement Agreement and Release, ¶ 3(D).
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`Before the Settlement Agreement, one or more of the defendants sold chia
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`seeds using the Salba name. After the Settlement Agreement, one or more of the
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`defendants sold chia seeds under the names Salvia and Chiajoy. The graphics
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`used on the Salvia and Chiajoy labels produced by the defendants after the
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`Settlement Agreement are very similar to the graphics used on the labels used by
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`the plaintiffs prior to September 2012. The similarity of these label graphics is
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`demonstrated by comparing Exhibits 6 and 15, showing examples of label graphics
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`used by the plaintiffs prior to September 2012, with Exhibits 7 and 24, showing
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`examples of label graphics used by the defendants after the Settlement Agreement.
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`There is no evidence that any of the defendants used the name Salba or any
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`derivative word on their labels after the Settlement Agreement was executed. At the
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`January 6, 2014, hearing, Mr. Propster testified that he became aware sometime
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`before the hearing that the word Salba was used as an intrawebsite key word on
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`one or more websites operated by his company. That intrawebsite key word has
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`been removed from the websites controlled by Mr. Propster. With that one small
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`exception, there is no evidence that the defendants otherwise used the name Salba
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`or any derivative word in the marketing of their products after the Settlement
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`Agreement was executed.
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`In September 2012, the plaintiffs changed the graphics used on many, and
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`maybe all, of the labels they place on jars and other containers in which they sell
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`chia seeds. The new label graphics adopted by the plaintiffs are shown in Exhibit
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`57. The new label graphics used by the plaintiffs differ significantly from the label
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`graphics used by the defendants after the Settlement Agreement. Evidence
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`submitted relevant to the motion for preliminary inunction [#45] and the motion to
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`enforce settlement agreement [#52] indicates that there is a material dispute of fact
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`about whether the plaintiffs or any of them continue to market products, especially
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`chia seeds, using label graphics that are similar to the label graphics used by the
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`defendants to market chia seeds. This factual dispute is relevant primarily to
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`paragraph 3(D) of the Settlement Agreement, quoted above, which prohibits the
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`defendants from using any trademark, symbol, or imagery likely to cause confusion
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`between the products of the defendants and the SALBA products of the plaintiffs.
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`The plaintiffs claim also to sell snack chips using labels with an appearance
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`similar to the labels used by the defendants on bottles of chia seeds. The fact that
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`these two products are dissimilar and the less striking similarity between the labels
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`presents, at most, a debatable issue about violation of paragraph 3(D) of the
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`Settlement Agreement.
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`V. ANALYSIS
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`A. Likelihood of Success on the Merits
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`The plaintiffs base their request for a preliminary injunction solely on the breach
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`of contract claim asserted in their amended complaint. In this claim, the plaintiffs allege
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`that the defendants have violated the Settlement Agreement by using forms of the word
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`Salba in the sales, distribution, and advertising materials used by the defendants and by
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`using trademarks, symbols, imagery, and slogans similar to those of the plaintiffs in
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`marketing the Salvia and Chiajoy products sold by the defendants. Given the current
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`state of the record, I conclude that the plaintiffs have not presented evidence that
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`demonstrates a substantial likelihood of eventual success on the merits of their breach
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`of contract claim against the defendants.
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`There is no evidence that any of the defendants used the name Salba or any
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`derivative word on their labels after the Settlement Agreement was executed. Thus,
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`there is no evidence in the record that any of the defendants are using, or are likely to
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`use in the future, the “SALBA Works,” as that term is defined in the Settlement
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`Agreement. Thus, to the extent the plaintiffs base their breach of contract claim on an
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`alleged use by the defendants of the “SALBA Works,” the plaintiffs have not shown a
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`substantial likelihood of success on the merits of their breach of contract claim.
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`Paragraph 3(D) of the Settlement Agreement prohibits the defendants from using
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`any trademark, symbol, or imagery that is likely to cause confusion or mistake or lead
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`the public or the trade into believing that the plaintiffs are the sponsor of the products of
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`the defendants, that the plaintiffs are affiliated with the defendants, or that Salba
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`products and the common species of chia, Salvia Hispanica L, are one and the same.
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`The similarity between the label graphics used by the defendants after the Settlement
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`Agreement and the label graphics used by the plaintiffs at least until September 2012 is
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`substantial. That similarity is close enough that it is likely to cause the type of confusion
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`or mistake addressed in paragraph 3(D) of the Settlement Agreement.
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`However, the evidence in the record shows there is a significant dispute of fact
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`about whether or not the plaintiffs continue to use label graphics that are substantially
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`similar to the label graphics used by the defendants. Given the competing and facially
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`credible evidence on this point, I cannot conclude that the plaintiffs have demonstrated
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`a substantial likelihood that they can show that the label graphics currently used by the
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`plaintiffs and the label graphics currently used by the defendants are so similar that the
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`defendants have violated paragraph 3(D) of the Settlement Agreement. Thus, to the
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`extent the plaintiffs base their breach of contract claim on an alleged use by the
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`defendants of any trademark, symbol, or imagery that is likely to cause confusion or
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`mistake or lead the public or the trade into believing that the plaintiffs are the sponsor of
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`the products of the defendants, the plaintiffs have not shown a substantial likelihood of
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`success on the merits of their breach of contract claim.
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`In my order [#63] denying the motion for temporary restraining order, I found that
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`the plaintiffs had shown a substantial likelihood of success on the merits of their breach
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`of contract claim based on this alleged violation of paragraph 3(D) of the Settlement
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`Agreement, but only for the period between execution of the Settlement Agreement and
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`September 2013. On further review of the evidence, I conclude that the evidence
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`currently in the record shows that is was in September 2012 that the plaintiffs changed
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`the graphics used on many, and maybe all, of the labels they place on jars and other
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`containers in which they sell chia seeds. Further, new evidence submitted by the
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`parties demonstrates a material factual dispute about whether or not the plaintiffs
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`continue to use label graphics that are substantially similar to the label graphics used by
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`the defendants.
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`B. Irreparable Injury
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`To establish irreparable injury for the purpose of a preliminary injunction, the
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`plaintiffs must show that they will suffer irreparable injury and that the irreparable injury
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`is of such imminence that there is a clear and present need for equitable relief to
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`prevent the harm. Heideman v. S. Salt Lake City, 348 F.3d 1182, 1189 (10th Cir.
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`2003). Generally, an injury is considered to be irreparable when it is incapable of being
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`fully compensated for in damages or where the measure of damages is so speculative
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`that it would be difficult if not impossible to correctly arrive at the amount of the
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`damages. “To constitute irreparable harm, an injury must be certain, great, actual and
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`not theoretical.” Heideman v. S. Salt Lake City, 348 F.3d 1182, 1189 (10th Cir. 2003)
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`(quotation and citation omitted). See also Gitlitz v. Bellock, 171 P.3d 1274, 1279
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`(Colo. App. 2007). Further, irreparable injury cannot be established absent a showing
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`that harm in the future is threatened. See, e.g., City of Los Angeles v. Lyons, 461
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`U.S. 95, 111, (1983). A temporary restraining order or preliminary injunction cannot
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`prevent harm that occurred in the past.
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`The evidence currently in the record leaves a substantial question about whether
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`any of the defendants currently are using label graphics in violation of paragraph 3(D) of
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`the Settlement Agreement or whether they are likely to do so in the future. As a result,
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`there is significant doubt about whether the plaintiffs are being injured irreparably as a
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`result of the use of such labels by any of the defendants. Thus, I conclude that the
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`plaintiffs have not shown that they will suffer irreparable injury absent a preliminary
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`injunction.
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`C. Other Factors
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`Given the failure of the plaintiffs to show a substantial likelihood of success on
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`the merits or to establish that they will suffer immediate and irreparable injury absent a
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`preliminary injunction, I decline to address the other relevant factors. The plaintiffs
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`would not be entitled to a preliminary injunction even if they had shown that the balance
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`of harms and public interest factors weigh in their favor.
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`VI. CONCLUSION & ORDERS
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`Having considered the evidence presented, arguments advanced, and authorities
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`cited by the parties in their filings cited at the beginning of this order together with the
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`evidence submitted, arguments advanced, and authorities cited at the January 6, 2014,
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`hearing, I find and conclude that the plaintiffs have not demonstrated that they are
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`entitled to a preliminary injunction.
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`THEREFORE, IT IS ORDERED as follows:
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`1. That to the extent the plaintiffs seek a preliminary injunction in the Plaintiffs’
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`Motion for Temporary Restraining Order / Preliminary Injunction [#45] filed
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`December 13, 2013, that portion of the motion is DENIED; and
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`2. That the Plaintiffs’ Motion for Temporary Restraining Order / Preliminary
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`Injunction [#45] filed December 13, 2013, is fully resolved, and the motion SHALL BE
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`TERMINATED on the docket of this case.
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`Dated September 10, 2014, at Denver, Colorado.
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`BY THE COURT:
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