Case 1:12-cv-01306-REB-KLM Document 63 Filed 01/14/14 USDC Colorado Page 1 of 11
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF COLORADO
`Judge Robert E. Blackburn
`
`Civil Action No. 12-cv-01306-REB-KLM
`
`SALBA CORP., N.A., a Canadian corporation,
`SALBA SMART NATURALS PRODUCTS, a Colorado limited liabilty company,
`WILLIAM A. RALSTON, and
`RICHARD L. RALSTON,
`
`Plaintiffs,
`
`v.
`
`X FACTOR HOLDINGS, LLC, an inactive Florida limited liability company, and
`ANCIENT NATURALS, LLC, a Florida limited liability company,
`
`Defendants and Counter-Claimants, and
`
`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,
`
`Defendants.1
`
`ORDER DENYING MOTION FOR TEMPORARY RESTRAINING ORDER
`
`Blackburn, J.
`
`This matter is before me on the Plaintiffs’ Motion for Temporary Restraining
`
`Order / Preliminary Injunction [#45]2 filed December 13, 2013. The defendants filed
`
`a response [#56], and the plaintiffs filed a reply [#57]. On January 6, 2014, I conducted
`
`a hearing on the motion at which I received evidence and argument. Because the
`
`motion was heard on an expedited basis, the evidence in the record may not present
`
`1 These defendants are named in the caption as a result of the Order Granting Motion To
`Amend Complaint [#61] entered January 13, 2014.
`
`2 “[#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.
`
`

`
`Case 1:12-cv-01306-REB-KLM Document 63 Filed 01/14/14 USDC Colorado Page 2 of 11
`
`a comprehensive and complete picture of the relevant evidence. Therefore, I
`
`address in this order only the request of the plaintiffs for a temporary restraining
`
`order. The motion for preliminary injunction will be resolved after the parties have had
`
`an opportunity to present any additional relevant evidence. I deny the motion for
`
`temporary restraining order.
`
`I. JURISDICTION
`
`I have jurisdiction over this case under 28 U.S.C. § 1331 (federal question), §
`
`1338(a) (trademark and copyright), § 1338(b) (unfair competition claim joined with
`
`copyright or trademark claim), § 1367 (supplemental), and 15 U.S.C. § 1121
`
`(trademark).
`
`II. STANDARD OF REVIEW
`
`A party seeking a temporary restraining order or preliminary injunction must
`
`show: (1) that the movant has a substantial likelihood of eventual success on the merits;
`
`(2) that the movant will suffer imminent and irreparable injury unless the injunction
`
`issues; (3) that the threatened injury to the movant outweighs whatever damage the
`
`proposed injunction may cause the opposing party; and (4) that the injunction, if issued,
`
`would not be adverse to the public interest. Lundgrin v. Claytor, 619 F.2d 61, 63 (10th
`
`Cir. 1980); Heideman v. S. Salt Lake City, 348 F.3d 1182, 1189 (10th Cir. 2003)
`
`(irreparable injury must be imminent). In addition, a party seeking a temporary
`
`restraining order also must demonstrate clearly, with specific factual allegations, that
`
`immediate and irreparable injury will result absent a temporary restraining order. FED.
`
`R. CIV. P. 65(b).
`
`When the moving party has established that the three harm factors tip decidedly
`
`in the movant’s favor, the probability of success requirement is somewhat relaxed, and
`
`2
`
`

`
`Case 1:12-cv-01306-REB-KLM Document 63 Filed 01/14/14 USDC Colorado Page 3 of 11
`
`the movant need only show questions going to the merits so serious, substantial,
`
`difficult, and doubtful as to make them a fair ground for litigation. Nova Health Systems
`
`v. Edmondson 460 F.3d 1295, 1298 n. 6 (10th Cir. 2006). On the other hand, some
`
`types of temporary restraining orders or preliminary injunctions are disfavored and,
`
`therefore, require the plaintiff to satisfy a heightened burden of showing that the four
`
`primary factors
`
`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.
`
`Kikumura v. Hurley, 242 F.3d 950, 955 (10th Cir. 2001) (internal quotation and citation
`
`omitted). For the purpose of resolving the motion for temporary restraining order
`
`addressed in this order, I conclude that neither the relaxed nor the heightened burden of
`
`proof is applicable.
`
`III. BACKGROUND
`
`This case concerns disputes about the use by the defendants of trademarks
`
`and other materials related to the Salba trademark used by the plaintiffs. In the
`
`past, both the plaintiffs and the defendants have used the Salba name and
`
`associated artwork in the sale of chia seeds and related products. In the original
`
`complaint [#1], the plaintiffs asserted claims for (1) trademark counterfeiting and
`
`infringement; (2) federal unfair competition and false advertising; (3) deceptive trade
`
`practices; (4) cyber-squatting; and (5) common law trademark infringement and
`
`unfair competition. These claims were brought against defendants X Factor
`
`Holdings, LLC and Ancient Naturals, LLC. The parties reached a settlement and, in
`
`early March of 2013, executed a settlement agreement.
`
`3
`
`

`
`Case 1:12-cv-01306-REB-KLM Document 63 Filed 01/14/14 USDC Colorado Page 4 of 11
`
`Now, the plaintiffs contend that X Factor Holdings, LLC and Ancient Naturals,
`
`LLC have violated the settlement agreement by continuing to use the Salba
`
`trademarks owned by the defendants and by using packaging that is illicitly similar to
`
`packaging used by the plaintiffs to sell products under the Salba name. As named
`
`defendants, X Factor Holdings, LLC and Ancient Naturals, LLC signed the
`
`settlement agreement. In addition, the settlement agreement was signed by Mitchell
`
`Propster, an individual closely related to these two defendant entities, and two other
`
`entities tied to Mr. Propster, Core Naturals, LLC and Natural Guidance, LLC. Mr.
`
`Propster, Core Naturals, LLC, and Natural Guidance, LLC were not named as
`
`defendants in the original complaint [#1].
`
`The plaintiffs now contend that X Factor Holdings, LLC, Ancient Naturals,
`
`LLC, Mr. Propster, Core Naturals, LLC, and Natural Guidance, LLC have violated
`
`the settlement agreement. The plaintiffs seek a temporary restraining order
`
`prohibiting Mr. Propster and the four LLC entities from violating the settlement
`
`agreement. In an order entered concurrently with this order, I granted the motion
`
`[#44] filed by the plaintiffs seeking permission to file an amended complaint. In the
`
`amended complaint, the plaintiffs assert new claims based on the alleged violation
`
`of the settlement agreement, and the plaintiffs name Mr. Propster, Core Naturals,
`
`LLC and Natural Guidance, LLC as additional defendants.
`
`IV. FACTS3
`
`3 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 a temporary restraining order. If the parties
`have additional evidence relevant to the issues discussed in this order and to the request of the
`plaintiffs for a preliminary injunction, they may present that evidence to the court before the motion for
`preliminary injunction is resolved.
`
`4
`
`

`
`Case 1:12-cv-01306-REB-KLM Document 63 Filed 01/14/14 USDC Colorado Page 5 of 11
`
`The plaintiffs own and use the name Salba to sell seeds known as Salvia
`
`Hispanica L, commonly known as chia seeds. The plaintiffs claim their Salba chia
`
`seed product is uniquely valuable because they sell under the Salba name two
`
`strains of chia seeds that are registered varieties of those seeds. These two
`
`registered varieties, the plaintiffs claim, have unique nutritional value because they
`
`provide nutritional consistency, unlike other chia seeds. The defendants also sell
`
`chia seeds, but they do not sell the two registered varieties of chia seeds sold by the
`
`plaintiffs.
`
`Exhibit 1, admitted in evidence at the January 6, 2014, hearing, is the
`
`Settlement Agreement and Release (Settlement Agreement) agreed to by the
`
`parties when they agreed to settle this case. The Settlement Agreement can be
`
`found also at [#45-9], CM/ECF pp. 2 - 67. The Settlement Agreement includes
`
`exhibits with letter designations. Exhibit B to the Settlement Agreement is a
`
`Trademark Assignment and Copyright License. In the Trademark Assignment and
`
`Copyright License, the defendants agreed to transfer the “SALBA Works” to plaintiff
`
`Salba Smart Natural Products, LLC. Trademark Assignment and Copyright License
`
`[#45-9], CM/ECF pages 27 - 39. The “SALBA Works” are defined as
`
`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”).
`
`Trademark Assignment and Copyright License [#45-9], CM/ECF p. 27. Under this
`
`definition, the key feature that defines the SALBA Works is the use of the word
`
`5
`
`

`
`Case 1:12-cv-01306-REB-KLM Document 63 Filed 01/14/14 USDC Colorado Page 6 of 11
`
`Salba or a derivative form of that word.
`
`In addition, the defendants granted a copyright license to plaintiff Salba Smart
`
`Natural Products, LLC. The copyright license provides for
`
`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.
`
`Id., ¶ 2.A. In addition, the copyright license provides:
`
`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 . . . .
`
`Id.
`
`The Settlement Agreement and Release includes a paragraph titled
`
`“Permanent Cessation of Use,” which is paragraph number three of the Settlement
`
`Agreement. In this paragraph, the defendants agreed to cease using the word
`
`SALBA and any SALBA-formative mark in the various ways specified in the lettered
`
`sub-paragraphs of paragraph three. Most of these sub-paragraphs limit the actions
`
`of the defendants only insofar as the defendants might use the “SALBA Works,”
`
`which are defined primarily by use of the word Salba or any Salba formative marks.
`
`However, sub-paragraph D of paragraph three includes a broader prohibition.
`
`Subparagraph D provides that the defendants shall permanently cease and desist
`
`from
`
`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’
`
`6
`
`

`
`Case 1:12-cv-01306-REB-KLM Document 63 Filed 01/14/14 USDC Colorado Page 7 of 11
`
`products originate with Plaintiffs’ SALBA or are connected or offered
`with the approval, consent, authorization or under the supervision of
`Plaintiffs.
`
`Settlement Agreement and Release, ¶ 3(D).
`
`Before the Settlement Agreement, one or more of the defendants sold chia
`
`seeds using the Salba name. After the Settlement Agreement, one or more of the
`
`defendants sold chia seeds under the names Salvia and Chiajoy. The graphics
`
`used on the Salvia and Chiajoy labels produced by the defendants after the
`
`Settlement Agreement are very similar to the graphics used on the labels used by
`
`the plaintiffs prior to September 2013. The similarity of these label graphics is
`
`demonstrated by comparing Exhibits 6 and 15, showing examples label graphics
`
`used by the plaintiffs prior to September 2013, with Exhibits 7 and 24, showing
`
`examples of label graphics used by the defendants after the Settlement Agreement.
`
`There is no evidence that the defendants used the name Salba or any derivative
`
`word on their labels after the Settlement Agreement was executed. At the January
`
`6, 2014, hearing, Mr. Propster testified that he became aware recently that the word
`
`Salba was used as an intrawebsite key word on one or more websites operated by
`
`his company. That intrawebsite key word has been removed from the websites
`
`controlled by Mr. Propster.
`
`In September 2013, the plaintiffs changed the graphics used on the labels
`
`they place on jars and other containers in which they sell products under the Salba
`
`name. The new label graphics adopted by the plaintiffs are shown in Exhibit 57.
`
`The new label graphics used by the plaintiffs differ significantly from the label
`
`graphics used by the defendants after the Settlement Agreement. There is no
`
`evidence in the record showing that the plaintiffs continue to market any Salba
`
`7
`
`

`
`Case 1:12-cv-01306-REB-KLM Document 63 Filed 01/14/14 USDC Colorado Page 8 of 11
`
`products using the label graphics used by the plaintiffs prior to September 2013.
`
`V. ANALYSIS
`
`A. Likelihood of Success on the Merits
`
`The plaintiffs base their request for a temporary restraining order solely on the
`
`breach of contract claim asserted in their amended complaint. In this claim, the
`
`plaintiffs allege that the defendants have violated the Settlement Agreement by using
`
`forms of the word Salba in the sales, distribution, and advertising materials used by the
`
`defendants and by using trademarks, symbols, imagery, and slogans similar to those of
`
`the plaintiffs in marketing the Salvia and Chiajoy products sold by the defendants. I
`
`conclude that the plaintiffs have presented evidence that demonstrates a substantial
`
`likelihood of eventual success on the merits of their breach of contract claim against the
`
`defendants. However, the scope of the breach of contract claim on which the plaintiffs
`
`have demonstrated a substantial likelihood of eventual success is narrow.
`
`At the January 6, 2014, hearing, no evidence was presented indicating that any
`
`of the defendants currently are using the word Salba, or any derivative form of that
`
`word, or are likely to do so in the foreseeable future. Thus, there is no evidence in the
`
`record that any of the defendants are using, or are likely to use in the future, the
`
`“SALBA Works,” as that term is defined in the Settlement Agreement. To the extent the
`
`plaintiffs base their breach of contract claim on an alleged use by the defendants of the
`
`“SALBA Works,” the plaintiffs have not shown a substantial likelihood of success on the
`
`merits of their breach of contract claim.
`
`As noted above, paragraph 3(D) of the Settlement Agreement prohibits the
`
`defendants form using any trademark, symbol, or imagery that is likely to cause
`
`confusion or mistake or lead the public or the trade into believing that the plaintiffs are
`
`8
`
`

`
`Case 1:12-cv-01306-REB-KLM Document 63 Filed 01/14/14 USDC Colorado Page 9 of 11
`
`the sponsor of the products of the defendants, that the plaintiffs are affiliated with the
`
`defendants, or that Salba products and the common species of chia, Salvia Hispanica L,
`
`are one and the same. The similarity between the label graphics used by the
`
`defendants after the Settlement Agreement and the label graphics used by the plaintiffs
`
`until September 2013 is very close. That similarity is close enough that it is likely to
`
`cause the type of confusion or mistake addressed in paragraph 3(D) of the Settlement
`
`Agreement. Thus, the plaintiffs have shown a substantial likelihood of success on the
`
`merits of their breach of contract claim based on this alleged violation of paragraph 3(D)
`
`of the Settlement Agreement, but only for the period between execution of the
`
`Settlement Agreement and September 2013.
`
`B. Irreparable Injury
`
`To establish irreparable injury for the purpose of a temporary restraining order,
`
`the plaintiffs must show that they will suffer irreparable injury and that the irreparable
`
`injury is of such imminence that there is a clear and present need for equitable relief to
`
`prevent the harm. Heideman v. S. Salt Lake City, 348 F.3d 1182, 1189 (10th Cir.
`
`2003). Generally, an injury is considered to be irreparable when it is incapable of being
`
`fully compensated for in damages or where the measure of damages is so speculative
`
`that it would be difficult if not impossible to correctly arrive at the amount of the
`
`damages. “To constitute irreparable harm, an injury must be certain, great, actual and
`
`not theoretical.” Heideman v. S. Salt Lake City, 348 F.3d 1182, 1189 (10th Cir. 2003)
`
`(quotation and citation omitted). See also Gitlitz v. Bellock, 171 P.3d 1274, 1279
`
`(Colo. App. 2007). Further, irreparable injury cannot be established absent a showing
`
`that harm in the future is threatened. See, e.g., City of Los Angeles v. Lyons, 461
`
`U.S. 95, 111, (1983). An temporary restraining order of preliminary injunction cannot
`
`9
`
`

`
`Case 1:12-cv-01306-REB-KLM Document 63 Filed 01/14/14 USDC Colorado Page 10 of 11
`
`prevent harm that occurred in the past.
`
`In this case, the only claim on which the plaintiffs have shown a substantial
`
`likelihood of success on the merits is the breach of contract claim based on paragraph
`
`3(D) of the Settlement Agreement and the previously existing similarity between the
`
`label graphics of the plaintiffs and the label graphics of the defendants. The evidence
`
`currently in the record does not show that this similarity continues to exist. As a result,
`
`the plaintiffs have not shown that there is a threat of future injury to the plaintiffs which
`
`will be caused by this similarity. Focusing on the claim on which the plaintiffs have
`
`shown a substantial likelihood of success on the merits, the plaintiffs have not shown
`
`that they will suffer irreparable injury absent a temporary restraining order.
`
`C. Other Factors
`
`Given the failure of the plaintiffs to establish that they will suffer immediate and
`
`irreparable injury absent a temporary restraining order, I decline to address the other
`
`relevant factors. The plaintiffs would not be entitled to a temporary restraining order
`
`even if they had shown that the balance of harms and public interest factors weigh in
`
`their favor.
`
`VI. CONCLUSION & ORDERS
`
`Having considered the evidence presented, arguments advanced, and authorities
`
`cited by the parties in the Plaintiffs’ Motion for Temporary Restraining Order /
`
`Preliminary Injunction [#45] filed December 13, 2013, the defendants response [#56],
`
`and the plaintiffs reply [#57], together with the evidence submitted, arguments
`
`advanced, and authorities cited at the January 6, 2014, hearing, I find and conclude that
`
`the plaintiffs have not demonstrated that they are entitled to a temporary restraining
`
`order.
`
`10
`
`

`
`Case 1:12-cv-01306-REB-KLM Document 63 Filed 01/14/14 USDC Colorado Page 11 of 11
`
`THEREFORE, IT IS ORDERED as follows:
`
`1. That to the extent the plaintiffs seek a temporary restraining order in the
`
`Plaintiffs’ Motion for Temporary Restraining Order / Preliminary Injunction [#45]
`
`filed December 13, 2013, that portion of the motion is DENIED; and
`
`2. That the request for issuance of a preliminary injunction in the Plaintiffs’
`
`Motion for Temporary Restraining Order / Preliminary Injunction [#45] filed
`
`December 13, 2013, REMAINS pending.
`
`Dated January 14, 2014, at Denver, Colorado.
`
`BY THE COURT:
`
`11