Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_15-cv-00595/USCOURTS-casd-3_15-cv-00595-2/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 

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UNITED STATES DISTRICT COURT 

SOUTHERN DISTRICT OF CALIFORNIA 

OBESITY RESEARCH INSTITUTE, 

LLC,

 Plaintiff, 

Case No. 15-cv-00595-BAS(MDD) 

ORDER GRANTING IN PART 

AND DENYING IN PART 

PLAINTIFF AND 

COUNTERDEFENDANT 

OBESITY RESEARCH 

INSTITUTE’S MOTION TO 

DISMISS DEFENDANT’S FIRST 

AMENDED COUNTERCLAIMS 

(ECF No. 43) 

 v. 

FIBER RESEARCH 

INTERNATIONAL, LLC, 

 Defendant. 

AND RELATED COUNTERCLAIM 

 

 On March 16, 2015, Obesity Research Institute, LLC (“Obesity Research”) 

filed a Complaint for Declaratory Judgment against Fiber Research International, 

LLC (“Fiber Research”) asking the Court to declare that it has no liability under either 

the Lanham Act, 15 U.S.C. §§ 1125 et seq., or the Federal Food, Drug, and Cosmetic 

Act (“FFDCA”), 21 U.S.C. §§ 301 et seq. (ECF No. 1.) On May 28, 2015, Fiber 

Research filed an Answer, in which it asserts the affirmative defense of unclean 

hands, and a First Amended Counterclaims. (ECF No. 41 (“FACC”).) The FACC 

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alleges a violation of the Lanham Act (false advertising, unfair competition and false 

designation in violation of section 1125(a)(1)), a violation of California’s unfair 

competition law (“UCL”), Cal. Bus. & Prof. Code §§17200 et seq., and a violation 

of California’s false advertising law (“FAL”), Cal. Bus. & Prof. Code §§ 17500 et 

seq. (Id.) 

 Presently before this Court is a Motion to Dismiss the FACC filed by Obesity 

Research pursuant to Federal Rule of Civil Procedure 12(b)(6). (ECF No. 43.) 

Obesity Research argues the FACC should be dismissed because: (1) Fiber Research 

lacks statutory standing to bring the claims; (2) the FACC fails to state a claim for a 

violation of the Lanham Act and for a violation of the UCL; (3) the FACC fails to 

allege sufficient particularity under Federal Rule of Civil Procedure 9(b); and (4) the 

allegations in the FACC are barred by laches. Fiber Research opposes. (ECF No. 

48.) 

The Court finds this motion suitable for determination on the papers submitted 

and without oral argument. See Civ. L.R. 7.1(d)(1). For the reasons set forth below, 

Court GRANTS IN PART and DENIES IN PART Obesity Research’s Motion to 

Dismiss (ECF No. 43). 

I. BACKGROUND 

As alleged in Fiber Research’s FACC, “Glucomannan is a dietary fiber derived 

from Konjac, a root vegetable.” (FACC at ¶ 24.) Shimizu Chemical Corporation 

(“Shimizu”) “has developed a proprietary, patented process for extracting and 

refining Konjac root to produce the highest-quality glucomannan available in the 

world, called ‘Propol.’” (Id.) “Numerous clinical studies support the efficacy of 

Propol glucomannan in assisting weight loss.” (Id.) 

 “In 2006, Obesity Research introduced a weight loss product called Lipozene.” 

(Id. at ¶ 25.) Although Obesity Research’s marketing campaign highlights Propol’s 

strong clinical testing results, “Lipozene contains neither Propol glucomannan, nor 

any substantially equivalent glucomannan that would justify Obesity Research 

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relying on Propol clinical studies to support its Lipozene weight loss claims.” (Id. at 

¶¶ 25, 26.) 

 Specifically, Fiber Research alleges that Obesity Research repeatedly says 

Lipozene is “clinically proven,” when, in fact, the clinical studies it relies on are those 

using Shimizu’s Propol. (Id. at ¶¶ 50, 55, 57, 58-61.) Lipozene, to the contrary, 

“contains poor-quality, cheap ingredients and adulterants that do not have the same 

functional chemical profile as Propol. Hence, Lipozene does not have the weight loss 

benefits of Propol as demonstrated by Propol’s clinical testing.” (Id. at ¶ 65.) 

“Instead, there is no reliable clinical data supporting Lipozene’s efficacy in . . . 

promoting weigh loss.” (Id. at ¶ 66.) Additionally, Fiber Research alleges that 

Obesity Research falsely represents that at least one of the clinical studies is 

“sponsored by [Obesity Research]” and that Obesity Research falsely refers to one of 

the clinical studies of Propol as a “Lipozene Clinical Study,” when in fact Lipozene 

was not involved in the study at all. (Id. at ¶¶ 70-71.) Finally, Fiber Research claims 

that Obesity Research falsely represents on its label that there are “[n]o known 

allergens in this product” when, in fact, there are quantities of sulfites in Lipozene 

such that an allergen warning is warranted. (Id. at ¶ 67.) 

 “Pursuant to an exclusive sales contract with Shimizu, Fiber Research markets 

Propol in the United States.” (Id. at ¶ 28.) Fiber Research is also “the assignee of 

Shimizu’s legal rights of action in the United States for any damages incurred by 

Shimizu by virtue of any unlawful selling or marketing of products in unfair or 

unlawful competition with Propol.” (Id. at ¶ 29.) Fiber Research brings this action 

for injuries both “sustained directly, and as the legal assignee for injuries sustained 

by Shimizu.” (Id. at ¶ 30.) “Fiber Research has been injured in its efforts to sell 

Propol as a result of Obesity Research’s unfairly passing off its sub-standard, 

adulterated, unrefined Konjac root product as the same or substantially the same as 

that studied in clinical trials of Shimizu’s Propol glucomannan (even going so far as 

to call these the ‘Lipozene Clinical Studies.’) Fiber Research is also injured by the 

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loss of good will to Propol caused by Obesity Research’s passing off an inferior 

product as Propol.” (Id. at ¶ 28.) 

 Fiber Research seeks: (1) a permanent injunction against Obesity Research 

from falsely advertising, marketing, packaging, labeling, and/or selling Lipozene 

using any false representations; (2) damages suffered by Fiber Research (directly and 

as Shimizu’s assignee) “as measured by Shimizu’s lost sales to Obesity Research and 

by Obestity [sic] Research’s Lipozene profits”; (3) Obesity Research’s profits 

“attributable to its willful false advertising, unfair competition, and deceptive acts or 

practices”; (4) treble damages under 15 U.S.C. §1117; and (5) attorney’s fees and 

costs. (Id. at ¶ 106.) 

II. LEGAL STANDARD 

A motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil 

Procedure tests the legal sufficiency of the claims asserted in the complaint. Fed. R. 

Civ. P. 12(b)(6); Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). The court 

must accept all factual allegations pleaded in the complaint as true and must construe 

them and draw all reasonable inferences from them in favor of the nonmoving party. 

Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). To avoid a Rule 

12(b)(6) dismissal, a complaint need not contain detailed factual allegations, rather, 

it must plead “enough facts to state a claim to relief that is plausible on its face.” Bell 

Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim has facial plausibility 

when the plaintiff pleads factual content that allows the court to draw the reasonable 

inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 

556 U.S. 662, 678 (2009) (citing Twombly, 550 U.S. at 556). “Where a complaint 

pleads facts that are merely consistent with a defendant’s liability, it stops short of 

the line between possibility and plausibility of entitlement to relief.” Id. (quoting 

Twombly, 550 U.S. at 557) (internal quotations omitted). 

“[A] plaintiff’s obligation to provide the ‘grounds’ of his ‘entitle[ment] to 

relief’ requires more than labels and conclusions, and a formulaic recitation of the 

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elements of a cause of action will not do.” Twombly, 550 U.S. at 555 (quoting 

Papasan v. Allain, 478 U.S. 265, 286 (1986) (alteration in original)). A court need 

not accept “legal conclusions” as true. Iqbal, 556 U.S. at 678. Despite the deference 

the court must pay to the plaintiff’s allegations, it is not proper for the court to assume 

that “the [plaintiff] can prove facts that it has not alleged or that the defendants have 

violated the . . . law[] in ways that have not been alleged.” Associated Gen. 

Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 

(1983). 

When a claim is based on fraud or mistake, the circumstances surrounding the 

fraud or mistake must be alleged with particularity. Fed. R. Civ. P. 9(b). If the 

allegations fail to satisfy the heightened pleading requirements of Rule 9(b), a district 

court may dismiss the claim. Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1107 

(9th Cir. 2003). To satisfy the particularity requirement of Rule 9(b), “[a]verments 

of fraud must be accompanied by ‘the who, what, when, where, and how’ of the 

misconduct charged.” Vess, 317 F.3d at 1106 (quoting Cooper v. Pickett, 137 F.3d 

616, 627 (9th Cir. 1997)). Plaintiffs must plead enough facts to give defendants 

notice of the time, place, and nature of the alleged fraud, together with the content of 

any alleged misrepresentation and explain why it is false or misleading. See id. at 

1107. The circumstances constituting the alleged fraud must “be specific enough to 

give defendants notice of the particular misconduct . . . so that they can defend against 

the charge and not just deny that they have done anything wrong.” Vess, 317 F.3d at 

1106 (quoting Bly-Magee v. California, 236 F.3d 1014, 1019 (9th Cir. 2001) (internal 

quotation marks omitted)); see also In re GlenFed, Inc. Sec. Litig., 42 F.3d 1541, 

1547 (9th Cir. 1994), superseded by statute on other grounds as stated in Ronconi v. 

Larkin, 253 F.3d 423, 429 n. 6 (9th Cir. 2001). “Malice, intent, knowledge, and 

other conditions of a person’s mind may be alleged generally.” Fed. R. Civ. P. 9(b). 

/// 

/// 

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III. DISCUSSION 

 A. Standing 

 1. Lanham Act 

Failure to allege sufficient statutory standing requires dismissal under Federal 

Rules of Civil Procedure 12(b)(6) for failure to state a claim. Maya v. Centex Corp., 

658 F.3d 1060, 1067 (9th Cir. 2011). “‘For purposes of ruling on a motion to dismiss 

for want of standing, [the court] must accept as true all material allegations of the 

complaint and must construe the complaint in favor of the complaining party.’” Id. 

at 1068 (quoting Warth v. Seldin, 422 U.S. 490, 501 (1975)); see also Vaughn v. Bay 

Envtl. Mgmt., Inc., 567 F.3d 1021, 1024 (9th Cir. 2009). 

The Lanham Act “authorizes suit by ‘any person who believes that he or she is 

likely to be damaged’ by a defendant’s false advertising.” Lexmark Int’l, Inc. v. Static 

Control Components, Inc., 134 S. Ct. 1377, 1388 (2014) (quoting 15 U.S.C. § 

1125(a)(1)). The Supreme Court has determined that a statutory cause of action under 

the Act extends only to plaintiffs “whose interests ‘fall within the zone of interests 

protected by the law invoked,’” id. (quoting Allen v. Wright, 468 U.S. 737, 751 

(1984)), and “whose injuries are proximately caused by violations of the statute, id. 

at 1390. Therefore, to allege statutory standing under the Lanham Act, Fiber 

Research’s Counterclaims must first meet the “zone of interest” test. Id. Second, 

Fiber Research must sufficiently allege that the injuries were proximately caused by 

a violation of the statute. Id. 

 The “zone of interest” test is not a particularly demanding one, and the benefit 

of the doubt goes to the one alleging the cause of action. Id. at 1389. “[T]he test 

forecloses suit only when a plaintiff’s interests are so marginally related to or 

inconsistent with the purposes implicit in the statute that it cannot reasonably be 

assumed that Congress authorized the plaintiff to sue.” Id. (citation and quotations 

omitted). In the false advertising context, Congress’ goal was to protect persons 

engaged in commerce against unfair competition. Id. Thus, “to come within the zone 

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of interests in a suit for false advertising under §1125(a), a plaintiff must allege an 

injury to a commercial interest in reputation or sales” as opposed to an allegation a 

consumer or business was misled into purchasing disappointing or inferior products. 

Id. at 1390. 

 To establish proximate cause under section 1125(a), a plaintiff “ordinarily 

must show economic or reputational injury flowing directly from the deception 

wrought by the defendant’s advertising; and that that occurs when deception of 

consumers causes them to withhold trade from the plaintiff.” Id. at 1391. “That 

showing is generally not made when the deception produces injuries to a fellow 

commercial actor that in turn affect the plaintiff.” Id. Although it may be more 

difficult to establish proximate causation when the parties do not directly compete, 

there need not be an allegation that the parties are in direct competition with each 

other. Id. at 1392; see also Merck Eprova AG v. Brookstone Pharm., LLC, 920 F. 

Supp. 2d 404, 416 (S.D.N.Y. 2013) (finding that Merck had standing to bring a 

Lanham Act claim “[a]lthough Merck and Acella are not direct competitors, insofar 

as Merck does not produce finished consumer products, [where] Merck and Acella 

both produce competing sources of folate for use in dietary supplements”); Luxul 

Tech. Inc. v. Nectarlux, LLC, 78 F. Supp. 3d 1156, 1170 (N.D. Cal. 2015). 

 “At the pleading stage, general factual allegations of injury resulting from the 

defendant’s conduct may suffice, for on a motion to dismiss we presume that general 

allegations embrace those specific facts that are necessary to support the claim.” 

Maya, 658 F.3d at 1068 (citation and quotations omitted); see also Luxul Tech. Inc., 

78 F. Supp. 3d at 1170 (“At the pleading stage, plaintiff must allege an injury to a 

commercial interest in sales or business reputation proximately caused by the 

defendant’s misrepresentations.” (citation omitted)). 

 In its FACC, Fiber Research alleges that it has an exclusive sales contract to 

sell Propol in the United States. (FACC at ¶ 28.) It alleges it has been injured in its 

efforts to sell Propol because Obesity Research is “unfairly passing off its subCase 3:15-cv-00595-BAS-MDD Document 120 Filed 02/25/16 PageID.<pageID> Page 7 of

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standard, adulterated, unrefined Konjac root product as the same or substantially the 

same as that studied in clinical trials of . . . Propol.” (Id. at ¶ 28.) Thus, Fiber 

Research has sufficiently alleged that its commercial interests in reputation or sales 

have been damaged by Obesity Research’s conduct, and its injuries fall with the zone 

of interest protected by the Lanham Act. Additionally, Fiber Research claims that it 

has “been injured by the loss of good will to Propol caused by Obesity Research’s 

passing off an inferior product as Propol.” (Id.) Thus, it has sufficiently alleged 

economic or reputation injury proximately caused by Obesity Research’s deception. 

 Obesity Research argues that it is not in direct competition with Fiber Research 

because Propol is sold to manufacturers only as an ingredient, whereas Obesity 

Research sells directly to consumers. However, as discussed above, there is no 

requirement that the parties be in direct competition with one another. Fiber Research 

alleges its ability to sell Propol has been injured because of Obesity Research’s 

allegedly false representations. Therefore, the Court finds Fiber Research has alleged 

sufficient facts to establish standing under the Lanham Act. 

 2. UCL and FAL 

Proposition 64, passed in November 2004, narrowed the standing in California 

for either an unfair competition or a false advertising cause of action to those actually 

injured by a defendant’s unlawful business practice. See Clayworth v. Pfizer, Inc., 

49 Cal. 4th 758, 788 (2010). Pursuant to section 17204 of the California Business 

and Professions Code, only a “person who has suffered injury in fact and has lost 

money or property as a result of the unfair competition” may seek relief under the 

UCL.” Cal. Bus. & Prof. Code § 17204. Similarly, pursuant to section 17535 of the 

California Business and Professions Code, only a person “who has suffered injury in 

fact and has lost money or property as a result of a violation of” the FAL. Cal. Bus. 

& Prof. Code § 17535. Therefore, in order to bring a claim under the UCL or FAL, 

a plaintiff must “(1) establish a loss or deprivation of money or property sufficient to 

qualify as injury in fact, i.e., economic injury, and (2) show that the economic injury 

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was the result of, i.e., caused by, the unfair business practice or false advertising that 

is the gravamen of the claim.” Kwikset Corp. v. Super. Ct., 51 Cal. 4th 310, 322 

(2011). A plaintiff must also establish that it has “personally suffered such harm.” 

Id. at 323. 

The economic injury must be an invasion of a legally protected interest which 

is “concrete and particularized” and “actual or imminent,” not “conjectural or 

hypothetical.” Id. at 322. The causation requirement does not require a plaintiff “to 

allege that the challenged misrepresentations were the sole or even the decisive cause 

of the injury-producing conduct.” Id. at 327. (citation and quotations omitted). “At 

the pleading stage, general factual allegations of injury resulting from the defendant’s 

conduct may suffice.” Id. (citation omitted). 

There are innumerable ways a plaintiff may demonstrate economic injury, 

including the following: “[a] plaintiff may (1) surrender in a transaction more, or 

acquire in a transaction less, than he or she otherwise would have; (2) have a present 

or future property interest diminished; (3) be deprived of money or property to which 

he or she has a cognizable claim; or (4) be required to enter into a transaction, costing 

money or property, that would otherwise have been unnecessary.” Id. at 323. Courts 

have also found “lost sales, revenue, market share, and asset value” sufficient to 

allege an economic injury. Allergan, Inc., v. Athena Cosmetics, 640 F.3d 1377, 1381, 

1382 (Fed. Cir. 2011); see also AngioScore, Inc. v. TriReme Medical, LLC, 70 F. 

Supp. 3d 951, 962 (N.D. Cal. 2014) (finding an alleged “injury to market share 

suffered as a result of a competitor’s unfair business practice” to be a cognizable 

injury under the UCL); Overstock.com v. Gradient Analytics, Inc., 151 Cal. App. 4th 

688, 716 (2007) (finding allegations of “diminution of value of . . . assets and decline 

in market capitalization and other vested interests” to satisfy the UCL injury in fact 

requirement). There is no requirement that there be allegations of business dealings 

between the parties. See Allergan, Inc., 640 F.3d at 1383. 

Obesity Research first argues that Fiber Research lacks standing to assert either 

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a UCL or FAL claim because it seeks, in part, a non-restitutionary remedy. Citing 

Buckland v. Threshold Enters., 155 Cal. App. 4th 798 (2007) and Citizens of 

Humanity v. Costco Wholesale Corp., 171 Cal. App. 4th 22 (2009), Obesity Research 

argues standing for UCL or FAL claims is limited to those who suffer losses of money 

or property entitling them to restitution. However, ineligibility for restitution is not 

a basis for denying standing under either the UCL or FAL. See Kwikset Corp., 51 

Cal. 4th at 335-36; Clayworth, 49 Cal. 4th at 789; see also Allergan, Inc., 640 F.3d 

at 1381-82 (stating that Kwikset and Clayworth found that ineligibility for restitution 

is not a basis for denying standing and to the extent Citizens and Buckland concluded 

otherwise, they have been disapproved by the California Supreme Court). Obesity 

Research’s “argument conflates the issue of standing with the issue of the remedies 

to which a party may be entitled. That a party may ultimately be unable to prove a 

right to . . . restitution . . . does not demonstrate that it lacks standing to argue for its 

entitlement to them.” Clayworth, 49 Cal. 4th at 789. 

Therefore, to the extent Fiber Research alleges it has been directly injured in 

its efforts to sell Propol, in that it lost sales, market share, and goodwill,1

 because of 

Obesity Research’s “unfairly passing off its sub-standard, adulterated, unrefined 

Konjac root product as the same or substantially the same as that studied in clinical 

trials of . . . Propol,” the Court finds it has sufficiently alleged standing. 

Obesity Research next argues that Fiber Research lacks standing to prosecute 

the UCL and FAL claims on behalf of Shimizu, who is not a party to this action. The 

Court agrees. An uninjured assignee does not have standing to sue in a representative 

capacity. Amalgamated Transit Union, Local 1756, AFL-CIO v. Super. Ct., 46 Cal. 

4th 993, 1002 (2009) (“To allow a noninjured assignee of an unfair competition claim 

to stand in the shoes of the original, injured claimant would confer standing on the 

 1

 Goodwill is a protected property interest and harm to goodwill is a 

cognizable injury. See Sorrano’s Gasco, Inc. v. Morgan, 874 F.2d 1310, 1316 (9th 

Cir. 1989). 

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assignee in direct violation of the express statutory requirement in the unfair 

competition law.” (emphasis in original)); see also In re WellPoint, Inc. Out-ofNetwork UCR Rates Litig., 903 F. Supp. 2d 880, 898-99 (C.D. Cal. 2012) (to the 

extent assignees suffered their own independent and direct injuries as a result of the 

unfair competition or false advertising, they may pursue their own UCL/FAL claims). 

Therefore, to the extent that Fiber Research alleges it was injured indirectly as an 

assignee of Shimizu, the Court finds it lacks standing. Fiber Research may only 

pursue claims under the UCL and FAL with respect to injuries it has suffered directly 

as the exclusive seller of Propol in the United States. 

 B. Failure to State a Claim 

 1. Lanham Act 

Fiber Research’s first cause of action alleges a violation of the Lanham Act, 

15 U.S.C. §1125(a)(1), including false advertising, unfair competition, and false 

designation. (FACC at ¶¶ 79-86.) Section 43(a) of the Lanham Act, 15 U.S.C. § 

1125(a), prohibits the use of false designations of origin, false descriptions, and false 

representations in the advertising and sale of goods and services. See Cleary v. News 

Corp., 30 F.3d 1255, 1259 (9th Cir. 1994); 15 U.S.C. § 1125(a). To establish a false 

advertising claim under the Lanham Act, a plaintiff must allege: “(1) a false statement 

of fact by the defendant in a commercial advertisement about its own or another’s 

product; (2) the statement actually deceived or has the tendency to deceive a 

substantial segment of its audience; (3) the deception is material, in that it is likely to 

influence the purchasing decision; (4) the defendant caused its false statement to enter 

interstate commerce; and (5) the plaintiff has been or is likely to be injured as a result 

of the false statement, either by direct diversion of sales from itself to defendant or 

by a lessening of the goodwill associated with its products.” Southland Sod Farms 

v. Stover Seed Co., 108 F.3d 1134, 1139 (9th Cir. 1997); see also Newcal Indus., Inc. 

v. Ikon Office Solution, 513 F.3d 1038, 1052 (9th Cir. 2008). “To demonstrate falsity 

within the meaning of the Lanham Act, a plaintiff may show that the statement was 

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literally false, either on its face or by necessary implication, or that the statement was 

literally true but likely to mislead or confuse consumers.” Id. 

 In order to succeed on a false designation of origin claim under the Lanham 

Act, a plaintiff must show: “(1) defendant uses a designation (any word, term, name, 

device, or any combination thereof) or false designation of origin; (2) the use was in 

interstate commerce; (3) the use was in connection with goods or services; (4) the 

designation or false designation is likely to cause confusion, mistake, or deception as 

to (a) the affiliation, connection, or association of defendant with another person, or 

(b) as to the origin, sponsorship, or approval of defendant’s goods, services, or 

commercial activities by another person; and (5) plaintiff has been or is likely to be 

damaged by these acts.” Summit Tech., Inc. v. High-Line Med. Instruments, Co., 933 

F. Supp. 918, 928 (C.D. Cal. 1996); see also Freecycle Network, Inc. v. Oey, 505 

F.3d 898, 902 (9th Cir. 2007); Luxul Tech. Inc., 78 F. Supp. 3d at 1170. “The test for 

likelihood of confusion is whether a ‘reasonably prudent consumer’ in the 

marketplace is likely to be confused as to the origin of the good or service.” 

Dreamwerks Prod. Grp., Inc. v. SKG Studio, 142 F.3d 1127, 1129 (9th Cir. 1998). 

The likelihood of confusion must be probable, not just possible. Murray v. Cable 

Nat. Broad. Co., 86 F.3d 858, 861 (9th Cir. 1996). 

 Even though the allegations in this case do not involve trademark infringement, 

in order to determine the likelihood of confusion, courts use the trademark 

infringement analysis. See Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 781 

(1992) (Stevens, J., concurring) (“Whether we call the violation infringement, unfair 

competition or false designation of origin, the test is identical—is there a likelihood 

of confusion?”); Spearmint Rhino Cos. Worldwide, Inc. v. Chiappa Firearms, Ltd., 

No. CV 11-05682-R-MAN, 2012 WL 8962882, at *2 (C.D. Cal. Jan. 20, 2012) (citing 

Walter v. Mattel, 210 F.3d 1108 (9th Cir. 2000)); Celebrity Chefs Tour, LLC v. 

Macy’s Inc., 16 F. Supp. 3d 1141, 1153 (S.D. Cal. 2014) (citing Brookfield 

Commc’ns, Inc. v. W. Coast Ent. Corp., 174 F.3d 1036, 1046 n. 6 (9th Cir. 1999)) (a 

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claim for false designation of origin is subject to the same standard as trademark 

infringement but does not require the mark to be registered). 

Thus, the Court may look to the Sleekcraft factors in its analysis: (1) strength 

of the mark, (2) relatedness of the goods, (3) similarity of sight, sound and meaning, 

(4) evidence of actual confusion, (5) marketing channels, (6) type of goods and 

purchaser care, (7) intent and (8) likelihood of expansion. AMF, Inc. v. Sleekcraft 

Boats, 599 F.2d 341, 348-49 (9th Cir. 1979), abrogated on other grounds by Mattel, 

Inc. v. Walking Mountain Prods., 353 F.3d 792, 810, n. 19 (9th Cir. 2003). As Fiber 

Research points out, several of these factors are uniquely applicable to trademark 

infringement and, thus, are not helpful here, but the overall framework is helpful to 

the analysis. See E & J Gallo Winery v. Gallo Cattle Co., 967 F.2d 1280, 1290 (9th 

Cir. 1992) (“This list of factors . . . is neither exhaustive nor exclusive. Rather, the 

factors are intended to guide the court in assessing the basic question of likelihood of 

confusion.”); Entrepreneur Media, Inc., v. Smith, 279 F.3d 1135, 1140 (9th Cir. 2002) 

(“Although the Sleekcraft test plays an important role in the analysis of whether a 

likelihood of confusion exists, it is the totality of facts in a given case that is 

dispositive.” (citation and internal quotations omitted)). 

 Obesity Research argues the Lanham Act cause of action should be dismissed 

for failure to state a claim because: (1) the allegations regarding likelihood of 

confusion are conclusory; (2) the cause of action fails to allege Propol is used in U.S. 

commerce; (3) the FACC fails to allege the notice required for treble damages under 

15 U.S.C. §1111; (4) the alleged false statements are not false or misleading; and (5) 

the FACC fails to allege plausible facts showing Fiber Research suffered economic 

injury. 

With respect to likelihood of confusion, the Court finds Fiber Research alleges 

sufficient relation and similarity between Propol and Lipozene to justify the 

conclusion that confusion is likely. Fiber Research alleges that Lipozene specifically 

uses the Propol research studies to bolster its claims, without justification. 

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Furthermore, the type of purchaser, those buying weight loss supplements, is not 

likely to have the resources to analyze whether the content of the supplements are as 

represented or not. Fiber Research alleges that Obesity Research makes these 

misleading statements intentionally to encourage customer confusion. Therefore, the 

allegations of “likelihood of confusion” are sufficient to support Fiber Research’s 

Lanham Act claims at this stage. 

 Furthermore, the Court finds Fiber Research sufficiently alleges both Lipozene 

and Propol are used in commerce in the United States. (See FACC at ¶ 25 (“Lipozene 

has become the United States’ best-selling weight loss product.”); and ¶ 28 (“Fiber 

Research markets Propol in the United States.”).) This is sufficient to meet the 

requirement under 15 U.S.C. §1125(a)(1) that the goods or services at issue be used 

“in commerce.” Fiber Research need not allege that Obesity Research uses the Propol 

trademark in commerce in a false designation of origin claim. See Summit Tech., 

Inc., 933 F. Supp. at 928; Luxul Tech. Inc., 78 F. Supp. 3d at 1170. 

 Obesity Research’s argument that Fiber Research failed to allege notice under 

15 U.S.C. §11112

 is not well-founded. First, this section, by its terms, applies to an 

action for trademark infringement, which is not the case here. Second, Obesity 

Research, in its Complaint, alleges Propol was listed, with the letter R enclosed within 

a circle, in the letter sent to Obesity Research on March 10, 2015 prior to this suit 

being initiated. (Compl. at ¶¶ 4, 10.) Therefore, Obesity Research’s argument on 

this ground must fail. 

 The Court further finds that Fiber Research has sufficiently alleged that the 

purported false statements are false or misleading under its false advertising claim. 

 2

 Section 1111 requires that “a registrant of a mark registered in the Patent 

and Trademark Office . . . give notice that his mark is registered by ... the letter R 

enclosed within a circle” prior to bringing any “suit for infringement.” 15 U.S.C. § 

1111. However, “section 1111 is not a defense to infringement, but a limitation on 

remedies.” mophie, Inc. v. Shah, No. SA CV 13-01321-DMG(JEMx), 2014 WL 

10988347, at *22 (C.D. Cal. Nov. 12, 2014) (citing United States v. Sung, 51 F.3d 

92, 94 (7th Cir. 1995)). 

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The FACC alleges that since late 2006, Obesity Research has been marketing and 

advertising Lipozene as being “clinically proven” to help reduce body fat and weight, 

in reliance on studies that tested Propol, and not Lipozene, which does not have “the 

same functional chemical profile as Propol.” (See FACC at ¶¶ 44-73.) One of the 

studies the FACC alleges Lipozene relies on is a 2004 study entitled “A Randomized 

Double-Blinded Placebo-Controlled Study of Overweight Adults Comparing the 

Safety and Efficacy of a Highly Viscous Glucomannan Dietary Supplement 

(PropolTM)” (“Kaats Study”). (See FACC at ¶ 46, Exh. 2.) The other is a 1984 study 

entitled “Effect of Glucomannan on Obese Patients: A Clinical Study,” which tested 

“Glucomannan fiber (from konjac root)” (“Walsh Study”). (See FACC at ¶ 45, Exh. 

1.) Among the allegations in the FACC is that Obesity Research’s Lipozene website 

has been falsely characterizing the Walsh Study as a “Lipozene Clinical Study.” (Id. 

at ¶ 71.) 

Obesity Research argues that the alleged false statements are not false and 

misleading because the Walsh Study does not explicitly say it used Propol in its 

testing, and the FACC insufficiently alleges it advertised using the Kaats Study. 

However, the FACC alleges that the Walsh Study tested Propol, which Fiber 

Research defines as glucomannan extracted from Konjac, a root vegetable, by means 

of a propriety, patented process. (FACC at ¶¶ 24, 45, 60-61.) At this stage, the Court 

finds these allegations sufficient. Furthermore, with respect to the Kaats Study, the 

FACC alleges that many Lipozene commercials “contain textual, small-print 

sentences stating that participants in the clinical study to which the commercials refer 

lost 4.93 pounds, of which 3.86 was body fat (thus forming Obesity Research’s ‘78% 

was body fat’ figure: 3.86 ÷ 4.93 = 0.78296)” and this was the exact finding in the 

Kaats Study. (FACC at ¶ 54; see also FACC at ¶ 55 (“Obesity Research highlighted 

the fact that the study on which it relies was conducted during the holiday season, as 

was the Kaats [S]tudy”); ¶ 56 (Obesity Research commercials state “[c]linical data 

shows that the amount of weight loss experienced between the active and placebo 

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group was 4.93 lbs. and of the 4.93 lbs of weight loss experienced by the active group 

3.86 lbs was body fat.”) The Court also finds these allegations sufficient at this stage. 

Obesity Research further argues that there is nothing false or misleading about 

its statement on its website that “[n]umerous clinical studies confirm Lipozene’s 

active ingredient, Glucomannan, is safe and effective for weight loss and body fat 

loss.” In other words, Obesity Research is claiming that the Glucomannan used in its 

product is safe and effective for weight loss and body fat loss. Fiber Research alleges 

that a chemical analysis of Lipozene by Japan Food Research Laboratories, which it 

attaches to its FACC, “demonstrates that Lipozene, unlike Propol glucomannan or a 

substantial equivalent, contains poor-quality, cheap ingredients and adulterants that 

do not have the same functional chemical profile as Propol. Hence, Lipozene does 

not have the weight loss benefits of Propol as demonstrated by Propol’s clinical 

testing,” which Fiber Research is relying on in making its statement. (See FACC at 

¶¶ 64-66.) Accordingly, the Court finds these allegations sufficient to plausibly 

allege this statement is false or misleading. 

Lastly, as discussed above under the Court’s standing discussion, the Court 

finds the FACC alleges plausible facts showing Fiber Research has been or is likely 

to suffer economic injury. 

2. UCL 

The UCL prohibits, and provides civil remedies for, unfair competition, which 

it defines as “any unlawful, unfair or fraudulent business act or practice and unfair, 

deceptive, untrue or misleading advertising.” Kwikset Corp., 51 Cal. 4th at 322 

(quoting Cal. Bus. & Prof. Code § 17200). “Because the statute is written in the 

disjunctive, it is violated where a defendant’s act or practice is (1) unlawful, (2) 

unfair, (3) fraudulent, or (4) in violation of section 17500,” i.e., the FAL. Lozano v. 

AT&T Wireless Servs., Inc., 504 F.3d 718, 731 (9th Cir. 2007). Obesity Research 

moves to dismiss Fiber Research’s UCL claim to the extent Fiber Research alleges a 

violation of the “unfair” prong, arguing that it relies on an outdated definition of 

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“unfair,” and the “unlawful” and “fraudulent” prongs, arguing that the FACC’s 

allegations are insufficiently specific to pass muster under Rule 9(b) of the Federal 

Rules of Civil Procedure. 

a. Fraudulent prong

 To state a claim under the UCL’s “fraudulent” prong, Fiber Research must 

plead that Obesity Research’s allegedly fraudulent business practice is one in which 

“members of the public are likely to be deceived.” Schnall v. Hertz Corp., 78 Cal. 

App. 4th 1144, 1167 (2000). “Unless the challenged conduct targets a particular 

disadvantaged or vulnerable group, it is judged by the effect it would have on a 

reasonable consumer.” Puentes v. Wells Fargo Home Mortg., Inc., 160 Cal. App. 4th 

638, 645 (2008) (quotations and citation omitted). 

 Obesity Research argues the Counterclaims are pled with insufficient 

specificity under Rule 9(b). Because this claim is based on fraud, the circumstances 

surrounding the fraud must be alleged with particularity. Fed. R. Civ. P. 9(b); see 

also Kearns v. Ford Motor Co., 567 F.3d 1120, 1125 (9th Cir. 2009) (Rule 9(b) 

applies to UCL claims based on fraud). The FACC goes into great detail as to who, 

what, and when the fraudulent conduct was allegedly committed, even attaching 

copies of the allegedly fraudulent marketing materials. Obesity Research’s argument 

on this ground must fail. 

b. Unlawful prong

 The UCL’s “unlawful” prong is essentially an incorporation-by-reference 

provision. See Cel-Tech, 20 Cal. 4th at 180 (“By proscribing any unlawful business 

practice, section 17200 borrows violations of other laws and treats them as unlawful 

practices that the [UCL] makes independently actionable.” (citations and internal 

quotation marks omitted)). “Violation of almost any federal, state, or local law may 

serve as the basis for a UCL claim.” Plaxcencia v. Lending 1st Mortg., 583 F. Supp. 

2d 1090, 1098 (N.D. Cal. 2008) (citing Saunders v. Super. Ct., 27 Cal. App. 4th 832, 

838-39 (1994)). “When a statutory claim fails, a derivative UCL claim also fails.” 

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Aleksick v. 7-Eleven, Inc., 205 Cal. App. 4th 1176, 1185 (2012). 

 Fiber Research alleges Obesity Research’s conduct was “unlawful” because it 

violates the Lanham Act, the FFDCA Act, the FAL, and the Sherman Act. (FFAC at 

¶ 90.) Again, Obesity Research argues this is insufficient particularity under Rule 

9(b). The Court disagrees. As discussed above, the FACC lays out in great detail 

how each of these Acts were allegedly violated. Furthermore, this Court has already 

found the allegations are sufficient to constitute a violation of the Lanham Act. 

Hence Obesity Research’s motion on this ground must also fail. 

c. Unfair prong

 Under the UCL, “[w]hen a plaintiff who claims to have suffered injury from a 

direct competitor’s ‘unfair’ act or practice invokes section 17200, the word ‘unfair’ 

in that section means conduct that threatens an incipient violation of an antitrust law, 

or violates the policy or spirit of one of those laws because its effects are comparable 

to or the same as a violation of the law, or otherwise significantly threatens or harms 

competition.” Cel-Tech, 20 Cal. 4th at 187.3

 Thus, Fiber Research must allege that 

Obesity Research’s conduct “(1) violates the policy or spirit of the antitrust laws 

because the effect of the conduct is comparable to or the same as a violation of the 

antitrust laws, or (2) it otherwise significantly threatens or harms competition.” 

People’s Choice Wireless, Inc. v. Verizon Wireless, 131 Cal. App. 4th 656, 662 

(2005) (citing Cel-Tech, 20 Cal. 4th at 187). Notably, “[i]njury to a competitor is not 

equivalent to injury to competition; only the latter is the proper focus of antitrust 

laws.” Cel-Tech, 20 Cal. 4th at 186. Acts that violate the spirit of the antitrust laws 

include “horizontal price fixing, exclusive dealing, or monopolization.” See

 3

 Fiber Research argues this test does not apply, relying on a footnote in 

Cel-Tech, which states this test does not apply to “actions by consumers or by 

competitors alleging other kinds of violations of the unfair competition law such as 

“fraudulent” or “unlawful” business practices or “unfair, deceptive, untrue or 

misleading advertising.” Cel-Tech, 20 Cal. 4th at 187, n. 12. The Court disagrees. 

This is not an action by a consumer and the Court is not applying this test to the other 

prongs of the UCL. 

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Celebrity Chefs Tour, LLC v. Macy’s Inc., 16 F. Supp. 3d 1141, 1156 (S.D. Cal. 

2014). 

In its opposition to the motion, Fiber Research states that the FACC “does not 

allege ‘anticompetitive practices.’” (Opp. at p. 18.) The Court agrees. Although the 

purpose of the Lanham Act is to protect persons engaged in commerce against unfair 

competition, POM Wonderful LLC v. Coca-Cola Co., 134 S. Ct. 2228, 2234 (2014), 

Plaintiff only alleges harm to its own commercial interests, rather than harm to 

competition. See Watson Labs., Inc. v. Rhone-Poulenc Rorer, Inc., 178 F. Supp. 2d 

1099, 1117 (C.D. Cal. 2001) (finding the plaintiff could not prevail where the 

evidence merely indicated harm to its commercial interests rather than harm to 

competition). Accordingly, the Court grants Obesity Research’s motion to dismiss 

Fiber Research’s claim under the “unfair” prong of the UCL. 

C. Laches 

 Obesity Research argues that all of Fiber Research’s Counterclaims are barred 

by laches because they allege Obesity Research began marketing Lipozene in 2006, 

and many of the advertisements complained of aired in 2006 and 2007, and this suit 

was not filed until 2015. “Laches is an equitable defense that prevents a plaintiff, 

who with full knowledge of the facts, acquiesces in a transaction and sleeps upon his 

rights.” Danjaq, LLC v. Sony Corp., 263 F.3d 942, 950-51 (9th Cir. 2001) (internal 

quotations and citation omitted). Laches is a valid defense to Lanham Act claims, 

including those for false advertising. Jarrow Formulas, Inc., v Nutrition Now, Inc., 

304 F.3d 829, 835 (9th Cir. 2002). 

“To demonstrate laches, the defendant must prove both an unreasonable delay 

by the plaintiff and prejudice to itself.” Danjaq, 263 F. 3d at 951 (quotations 

omitted). The delay is measured from the time a plaintiff knew, or should have 

known, about a cause of action. Jarrow, 304 F.3d at 838; see also Danjaq, 263 F. 3d 

at 952. “[I]f the plaintiff legitimately was unaware of the defendant’s conduct, laches 

is no bar to suit.” Id. When determining reasonableness, courts look at the cause of 

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delay. Danjaq, 263 F. 3d at 954. A defendant can demonstrate prejudice in two 

ways: either evidentiary, showing that evidence has been lost or memories have 

faded, or expectations-based, showing that the defendant has taken actions or suffered 

consequences it would not have had plaintiff brought timely suit. Id. at 955. 

“Because laches is an equitable remedy, laches will not apply if the public has 

a strong interest in having the suit proceed.” Jarrow, 304 F.3d at 840. However, 

“[t]he public’s interest will trump laches only when the suit concerns allegations that 

the product is harmful or otherwise a threat to public safety and well being.” Id. at 

841. Furthermore, a party with unclean hands may not assert laches. Id. This bar to 

laches for unclean hands applies “only if the court is left with a firm conviction that 

the defendant acted with a fraudulent intent in making the challenged claims.” Id. at 

842. 

 A quick review of this law makes it obvious how inappropriate the motion is 

at this stage of the proceedings. The issue is primarily a fact-based issue. See Dirk 

Ter Haar v. Seaboard Oil Co. of Del., 1 F.R.D. 598, 598 (S.D. Cal. 1940) (“The 

defense of laches . . . may not be asserted by motion to dismiss, but should be set 

forth affirmatively in defendant’s answer”); 24/7 Customer, Inc. v. 24-7 Intouch, No. 

5:14-cv-02561-EJD, 2015 WL 1522236, at *4 (N.D. Cal. Mar. 31, 2015) (“laches 

and statute of limitations defenses often require a fact-intensive investigation that is 

inappropriate on a motion to dismiss.”) Looking at the FACC and assuming 

everything in it is true, there are no allegations that support Obesity Research’s claim 

of laches. There is no allegation as to when Fiber Research knew or should have 

known of the cause of action. If there was a delay, there is no information as to the 

cause of delay. There is no evidence or allegation that Obesity Research has been in 

any way prejudiced by any delay. Finally, Fiber Research has alleged an affirmative 

defense of unclean hands. It will require fact-based discovery to determine whether 

evidence supports either a public interest that trumps the defense of laches or 

fraudulent intent on the part of Obesity Research. The Court agrees with Fiber 

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Research. The motion to dismiss based on laches is premature. 

IV. CONCLUSION 

For the foregoing reasons, the Court GRANTS IN PART and DENIES IN 

PART Obesity Research’s Motion to Dismiss the First Amended Counterclaims 

(ECF No. 43). The Court GRANTS Obesity Research’s motion to the extent it 

moves to limit Fiber Research’s claims under the UCL and FAL to damages it 

suffered directly, as opposed to indirectly as an assignee of Shimizu, and to the extent 

it moves to dismiss Fiber Research’s claim under the “unfair” prong of the UCL. 

However, in all other respects, Obesity Research’s motion is DENIED. 

IT IS SO ORDERED.

DATED: February 25, 2016 

 

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