`
`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,
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`Defendants and Counter-Claimants, and
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`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.1
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`ORDER DENYING MOTION FOR TEMPORARY RESTRAINING ORDER
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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]2 filed December 13, 2013. The defendants filed
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`a response [#56], and the plaintiffs filed a reply [#57]. On January 6, 2014, I conducted
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`a hearing on the motion at which I received evidence and argument. Because the
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`motion was heard on an expedited basis, the evidence in the record may not present
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`1 These defendants are named in the caption as a result of the Order Granting Motion To
`Amend Complaint [#61] entered January 13, 2014.
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`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.
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`
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`a comprehensive and complete picture of the relevant evidence. Therefore, I
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`address in this order only the request of the plaintiffs for a temporary restraining
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`order. The motion for preliminary injunction will be resolved after the parties have had
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`an opportunity to present any additional relevant evidence. I deny the motion for
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`temporary restraining order.
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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). In addition, a party seeking a temporary
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`restraining order also must demonstrate clearly, with specific factual allegations, that
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`immediate and irreparable injury will result absent a temporary restraining order. FED.
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`R. CIV. P. 65(b).
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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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`2
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`the movant need only show questions going to the merits so serious, substantial,
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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 temporary restraining order
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`addressed in this order, I conclude that neither the relaxed nor the heightened burden of
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`proof is 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 of 2013, executed a settlement agreement.
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`3
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`Now, the plaintiffs contend that X Factor Holdings, LLC and Ancient Naturals,
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`LLC have violated the settlement agreement by continuing to use the Salba
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`trademarks owned by the defendants and by using packaging that is illicitly similar to
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`packaging used by the plaintiffs to sell products under the Salba name. As named
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`defendants, X Factor Holdings, LLC and Ancient Naturals, LLC signed the
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`settlement agreement. In addition, the settlement agreement was signed by Mitchell
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`Propster, an individual closely related to these two defendant entities, and two other
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`entities tied to Mr. Propster, Core Naturals, LLC and Natural Guidance, LLC. Mr.
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`Propster, Core Naturals, LLC, and Natural Guidance, LLC were not named as
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`defendants in the original complaint [#1].
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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 temporary restraining order
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`prohibiting Mr. Propster and the four LLC entities from violating the settlement
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`agreement. In an order entered concurrently with this order, I granted the motion
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`[#44] filed by the plaintiffs seeking permission to file an amended complaint. In the
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`amended complaint, the plaintiffs assert new claims based on the alleged violation
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`of the settlement agreement, and the plaintiffs name Mr. Propster, Core Naturals,
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`LLC and Natural Guidance, LLC as additional defendants.
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`IV. FACTS3
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`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.
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`4
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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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`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) agreed to by the
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`parties when they agreed to settle this case. The Settlement Agreement can be
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`found also at [#45-9], CM/ECF pp. 2 - 67. The Settlement Agreement includes
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`exhibits with letter designations. Exhibit B to the Settlement Agreement is a
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`Trademark Assignment and Copyright License. In the Trademark Assignment and
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`Copyright License, the defendants agreed to transfer the “SALBA Works” to plaintiff
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`Salba Smart Natural Products, LLC. Trademark Assignment and Copyright License
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`[#45-9], CM/ECF pages 27 - 39. The “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], CM/ECF p. 27. Under this
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`definition, the key feature that defines the SALBA Works is the use of the word
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`Salba or a 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’
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`6
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`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 2013. The similarity of these label graphics is
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`demonstrated by comparing Exhibits 6 and 15, showing examples label graphics
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`used by the plaintiffs prior to September 2013, 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 the defendants used the name Salba or any derivative
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`word on their labels after the Settlement Agreement was executed. At the January
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`6, 2014, hearing, Mr. Propster testified that he became aware recently that the word
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`Salba was used as an intrawebsite key word on one or more websites operated by
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`his company. That intrawebsite key word has been removed from the websites
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`controlled by Mr. Propster.
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`In September 2013, the plaintiffs changed the graphics used on the labels
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`they place on jars and other containers in which they sell products under the Salba
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`name. The new label graphics adopted by the plaintiffs are shown in Exhibit 57.
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`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. There is no
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`evidence in the record showing that the plaintiffs continue to market any Salba
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`products using the label graphics used by the plaintiffs prior to September 2013.
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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 temporary restraining order solely on the
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`breach of contract claim asserted in their amended complaint. In this claim, the
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`plaintiffs allege that the defendants have violated the Settlement Agreement by using
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`forms of the word Salba in the sales, distribution, and advertising materials used by the
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`defendants and by using trademarks, symbols, imagery, and slogans similar to those of
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`the plaintiffs in marketing the Salvia and Chiajoy products sold by the defendants. I
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`conclude that the plaintiffs have presented evidence that demonstrates a substantial
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`likelihood of eventual success on the merits of their breach of contract claim against the
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`defendants. However, the scope of the breach of contract claim on which the plaintiffs
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`have demonstrated a substantial likelihood of eventual success is narrow.
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`At the January 6, 2014, hearing, no evidence was presented indicating that any
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`of the defendants currently are using the word Salba, or any derivative form of that
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`word, or are likely to do so in the foreseeable future. Thus, there is no evidence in the
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`record that any of the defendants are using, or are likely to use in the future, the
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`“SALBA Works,” as that term is defined in the Settlement Agreement. To the extent the
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`plaintiffs base their breach of contract claim on an alleged use by the defendants of the
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`“SALBA Works,” the plaintiffs have not shown a substantial likelihood of success on the
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`merits of their breach of contract claim.
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`As noted above, paragraph 3(D) of the Settlement Agreement prohibits the
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`defendants form using any trademark, symbol, or imagery that is likely to cause
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`confusion or mistake or lead the public or the trade into believing that the plaintiffs are
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`the sponsor of the products of the defendants, that the plaintiffs are affiliated with the
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`defendants, or that Salba products and the common species of chia, Salvia Hispanica L,
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`are one and the same. The similarity between the label graphics used by the
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`defendants after the Settlement Agreement and the label graphics used by the plaintiffs
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`until September 2013 is very close. That similarity is close enough that it is likely to
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`cause the type of confusion or mistake addressed in paragraph 3(D) of the Settlement
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`Agreement. Thus, the plaintiffs have shown a substantial likelihood of success on the
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`merits of their breach of contract claim based on this alleged violation of paragraph 3(D)
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`of the Settlement Agreement, but only for the period between execution of the
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`Settlement Agreement and September 2013.
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`B. Irreparable Injury
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`To establish irreparable injury for the purpose of a temporary restraining order,
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`the plaintiffs must show that they will suffer irreparable injury and that the irreparable
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`injury 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). An temporary restraining order of preliminary injunction cannot
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`prevent harm that occurred in the past.
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`In this case, the only claim on which the plaintiffs have shown a substantial
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`likelihood of success on the merits is the breach of contract claim based on paragraph
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`3(D) of the Settlement Agreement and the previously existing similarity between the
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`label graphics of the plaintiffs and the label graphics of the defendants. The evidence
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`currently in the record does not show that this similarity continues to exist. As a result,
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`the plaintiffs have not shown that there is a threat of future injury to the plaintiffs which
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`will be caused by this similarity. Focusing on the claim on which the plaintiffs have
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`shown a substantial likelihood of success on the merits, the plaintiffs have not shown
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`that they will suffer irreparable injury absent a temporary restraining order.
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`C. Other Factors
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`Given the failure of the plaintiffs to establish that they will suffer immediate and
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`irreparable injury absent a temporary restraining order, I decline to address the other
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`relevant factors. The plaintiffs would not be entitled to a temporary restraining order
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`even if they had shown that the balance of harms and public interest factors weigh in
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`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 the Plaintiffs’ Motion for Temporary Restraining Order /
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`Preliminary Injunction [#45] filed December 13, 2013, the defendants response [#56],
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`and the plaintiffs reply [#57], together with the evidence submitted, arguments
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`advanced, and authorities cited at the January 6, 2014, hearing, I find and conclude that
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`the plaintiffs have not demonstrated that they are entitled to a temporary restraining
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`order.
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`THEREFORE, IT IS ORDERED as follows:
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`1. That to the extent the plaintiffs seek a temporary restraining order in the
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`Plaintiffs’ Motion for Temporary Restraining Order / Preliminary Injunction [#45]
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`filed December 13, 2013, that portion of the motion is DENIED; and
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`2. That the request for issuance of 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, REMAINS pending.
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`Dated January 14, 2014, at Denver, Colorado.
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`BY THE COURT:
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`11