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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

HALCYON HORIZONS, 

INCORPORATED,

Plaintiff,

v.

DELPHI BEHAVIORAL HEALTH 

GROUP, LLC, et al.,

Defendants.

Case No.17-cv-00756-JST 

ORDER DENYING MOTION FOR 

PRELIMINARY INJUNCTION AND 

DISMISSING CASE WITHOUT 

PREJUDICE

Re: ECF No. 5

Before the Court is Plaintiff Halcyon Horizon, Inc., d/b/a Elevate Addiction Services‟ 

(“Elevate”) motion for preliminary injunction. The Court will deny the motion and dismiss the 

case without prejudice for lack of standing.

1

I. BACKGROUND

Elevate is a California company that operates addiction recovery centers. Specifically, 

Elevate is a “licensed, certified and accredited detoxification, residential and outpatient facility.” 

ECF No. 5 at 7; Nos. 5-5, 5-6. In September and November 2015, respectively, Elevate CEO and 

Chairman of the Board Daniel Manson filed applications for the “ELEVATE ADDICTION 

SERVICES” word mark and a related figurative mark. ECF Nos. 5-2 (word mark), 5-3 (figurative 

mark) (collectively, the “ELEVATE Marks”). Manson filed the applications as an individual, but 

now states that “[he] made that filing in [his] capacity as the President and Chairman of the Board 

for Halcyon Horizons, Incorporated, for use by the company.” ECF No 23 ¶ 5. Elevate claims to 

have used the ELEVATE Marks “in connection with addition recovery services since that date.” 

 

1

The Court finds the motion suitable for disposition without oral argument and VACATES the 

hearing set for April 4, 2017. Civ. L.R. 7-1(b). 

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The Elevate Marks were registered in early 2016. Id. 

On October 12, 2016, Manson and Halcyon entered into an Exclusive Trademark License 

Agreement. ECF No. 5-4. Under the licensing agreement, Manson “retains the right . . . to 

monitor the quality of the Services” provided using the ELEVATE Marks. Id. (Section 2(b)). 

Moreover, “[a]ll use of any Trademarks licensed by this Agreement and used in connection with 

any Services shall inure to the benefit of [Manson].” Id. (Section 2(d)). With respect to 

enforcement and protection of the marks, the licensing agreement provides that “Licensee shall 

have the right, at its own expense to prosecute actions against infringers and defend against 

infringement actions, subject to the prior written approval of the Licensor.” Id. (Section 3(b)). 

Manson also retains the option to “prosecute such actions independently” if he believes the marks 

are being infringed and Elevate declines to file suit. Id.

Elevate asserts that it has “established itself as a trusted and respected addiction recovery 

center, and has spent substantial resources establishing its brand under the ELEVATE Marks.” 

ECF No. 5 at 8. For example, Elevate obtained a license from the State of California‟s 

Department of Health Care Services to provide “individual sessions; recovery or treatment 

planning; group sessions; educational sessions and detoxification.” ECF No. 5-6. Elevate is also 

accredited by the Joint Commission as a Behavioral Health Care Program. ECF Nos. 5-7, 5-8, 5-

10.2 The California Consortium of Addiction Program and Professionals recognized Elevate as a 

“Program of Distinction.” ECF No. 5-10. Each of these licenses, accreditations, and awards 

occurred under the Elevate Addiction Services name. 

Elevate claims to have received positive reviews on various websites where customers can 

post comments. One person wrote, for example, “[t]his facility is your best chance if you have an 

addiction problem.” ECF No. 5-11 (screen shots of comments). Another stated, “Elevate saved 

my family, I would recommend it to anyone and everyone who is in need of treatment.” Id. Also 

to promote its brand, Elevate “participates in a number of community events,” including cohosting a sober grad night and sponsoring local women‟s shelters, all using the Elevate Marks. 

 

2

“The Joint Commission is an independent, not-for-profit national body that oversees the safety 

and quality of health care and other services provided in accredited organizations. ECF No. 5-7.

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ECF No. 23 at 3. Finally, Elevate has spent money “advertising, branding and marketing the 

Elevate Addiction Services name.” ECF No. 5 at 10. For example, Elevate spent several hundred 

thousand dollars on direct marketing, and several hundred thousand more for website branding 

and marketing, website maintenance and promotion, and television commercial advertising. ECF 

No. 23 at 3; see also ECF Nos. 23-1-23-5 (exhibits to Manson declaration). 

Defendant Delphi Behavioral Health Group, LLC, also operates addiction recovery 

centers, one of which it calls “Elevate Recovery Center.” ECF No. 5 at 10.3Like Elevate‟s 

facilities, the Elevate Recovery Center is located in California. Elevate Recovery Center 

registered to do business in California with the Secretary of State on November 24, 2014. ECF 

No. 27-1 ¶ 4, signed a lease with a May 15, 2015 effective date, id. ¶¶ 6, 8, employed over a dozen 

staff since June 2015, id. ¶¶ 5, 14, and claims to have served over 50 patients between June 2015 

and September 23, 2015, id. ¶ 16. According to both parties‟ websites, the facilities offer similar 

categories of service. ECF No. 5 at 11.

Despite these similarities, Elevate claims that compared with its own clinics, the Elevate 

Recovery Center has poor treatment services and bad business practices. Elevate Recovery Center 

is not licensed by the State of California to provide “detoxification or residential addiction 

treatment services,” despite advertising them on its website. ECF No. 5-13. Elevate also claims 

to have identified unfavorable reviews of Defendants‟ center on Facebook. ECF No. 5 at 11. 

Elevate claims that Defendants‟ use of the “Elevate” name has created confusion among its 

customers because both companies advertise similar services and operate facilities in California. 

Id. at 11. For example, consumers have called Elevate to complain about the poor business 

practices at Elevate Recovery Center, not realizing that Elevate Recovery Center is operated by 

Defendants, not Plaintiff. ECF No. 5-1 at 3. 

Seeking to prevent further confusion, Elevate contacted Defendants to inform them of their 

“infringement of the registered service mark–ELEVATE Addiction Services” and to demand that 

 

3

 Elevate states that “[o]n information and belief, „Elevate Recovery Center‟ is operated by 

Defendant Elevate Recovery LLC,” which is subsidiary of Defendant Delphi. ECF No. 5 at 7 n.1. 

For purposes of this motion, the Court refers to Delphi and Elevate Recovery jointly as 

“Defendants.”

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Defendants “cease and desist from using Elevate Recovery in public branding or promotion.” 

ECF No. 5-15. In spite of this warning, Defendants have continued to operate the Elevate 

Recovery Center under that name. ECF No. 5-1 at 4. Instead, Defendant Elevate Recovery LLC 

filed an application for trademark registration of the mark “ELEVATE” for “[a]ddiction treatment 

services, rehabilitation of drug, alcohol and narcotic addicted patients.” ECF No. 5-14 at 3. On 

December 28, 2016, the United States Patent and Trademark Office (“USPTO”) refused 

registration of Defendants‟ applied-for mark based on a likelihood of confusion with Plaintiff‟s 

ELEVATE Marks. Id.

On February 17, 2017, Elevate filed suit against Defendants alleging trademark 

infringement of the ELEVATE Marks under the Lanham Act, 15 U.S.C. § 1114, unfair 

competition in violation of California Business Code § 17200, and cybersquatting in violation of

15 U.S.C. § 1125. Then, on February 21, 2017, Elevate filed the present motion for preliminary 

injunction to stop Defendants “from further use of the „Elevate Recovery Center‟ name, and all 

similarly confusing names, in connection with its addiction recovery centers.” ECF No. 5 at 6.

II. LEGAL STANDARD

“A plaintiff seeking a preliminary injunction must establish that he is likely to succeed on 

the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the 

balance of equities tips in his favor, and that an injunction is in the public interest.” Winter v. 

Natural Resources Defense Council, Inc., 555 U.S. 7, 20 (2008). Courts use different 

formulations to describe the first factor, including “reasonable probability,” “fair prospect,” 

“substantial case on the merits,” and “serious legal questions . . . raised.” Lair v. Bullock, 697 

F.3d 1200, 1204 (9th Cir.2012). These formulations “are largely interchangeable,” and “indicate 

that, „at a minimum,‟ a petitioner must show that there is a „substantial case for relief on the 

merits.‟” Id. (quoting Leiva–Perez v. Holder, 640 F.3d 962, 968 (9th Cir. 2011). “The standard 

does not require the petitioners to show that „it is more likely than not that they will win on the 

merits.‟” Id. (quoting Leiva–Perez, 640 F.3d at 966). “[S]erious questions going to the merits 

and a balance of hardships that tips sharply towards the plaintiff can support issuance of a 

preliminary injunction, so long as the plaintiff also shows that there is a likelihood of irreparable 

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injury and that the injunction is in the public interest.” Alliance for the Wild Rockies v. Cottrell, 

632 F.3d 1127, 1135 (9th Cir. 2011) (internal quotation marks omitted). A preliminary injunction 

is an extraordinary remedy never awarded as of right.” Winter, 555 U.S. at 24. 

III. ANALYSIS

A. Validity of the ELEVATE Marks

Before responding to the merits of the preliminary injunction motion, Defendants claim 

that the ELEVATE Marks are void ab initio. ECF No. 27 at 14-18. This argument fails. 

Defendants assert that the owner of the ELEVATE Marks was not properly listed on the trademark 

applications. Id. They claim that Plaintiff, not Manson, should have been named as the owner of 

the two trademarks, because only Plaintiff had the intent to use the ELEVATE Marks. Id. 

As Elevate explains, however, Manson properly filed the applications based on “use of the 

mark solely by a related company whose use inures to the applicant‟s benefit.” TMEP 1201.01.

4

 

As the Manual explains, 

The essence of related-company use is the control exercised over the nature and 

quality of the goods or services on or in connection with which the mark is used. 

When a mark is used by a related company, use of the mark inures to the benefit 

of the party who controls the nature and quality of the goods or services. This 

party is the owner of the mark and, therefore, the only party who may apply to 

register the mark.

Id. Here, Manson retains control over the ELEVATE Marks through the licensing agreement. 

ECF No. 5-4. The licensing agreement also expressly states that “[a]ll use of any Trademarks 

licensed by this Agreement and used in connection with any Services shall inure to the benefit of 

the Licensor.” Id. Therefore, Manson properly applied to register the ELEVATE Marks for use 

by a related company.

5

Defendants‟ argument that the planned use by the related company must be disclosed in 

 

4

The parties agree that the Trademark Manual of Examining Procedure (“TMEP”) governs the 

application for trademark registrations. 

5 Nor were the ELEVATE Marks void because Manson is the CEO of a non-profit, rather than forprofit entity. See Estate of Coll-Monge v. Inner Peace Movement, 524 F.3d 1341, 1347 (D.C. Cir. 

2008) (“We conclude the court erred in holding that a non-profit corporation cannot be a related 

company whose use of the trademark is controlled by a mark‟s registrant.”)

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the application is outdated. As Elevate points out, although that requirement was a part of 

TMEP‟s 2008 edition, it was later removed. Both the version in use at the time Manson applied to 

register the ELEVATE Marks and the current version include the following language:

The USPTO does not require an application to specify if the applied-for mark is 

not being used by the applicant but is being used by one or more related 

companies whose use inures to the benefit of the applicant under §5 of the Act. 

Moreover, where the application states that use of the mark is by a related 

company or companies, the USPTO does not require an explanation of how the 

applicant controls the use of the mark.

TMEP 1201.03(a) (2017 ed.). The ELEVATE Marks were therefore not void ab initio.

B. Lanham Act Standing

Next, Defendants claim that Elevate lacks standing to assert its trademark claims. ECF 

No. 27 at 18. This is a closer question. 

Although the Ninth Circuit has yet to address the question, most district courts in this 

circuit have concluded that an exclusive licensee of a federal trademark can have standing to sue 

for trademark infringement under Section 32 of the Lanham Act.6 That said, even the courts 

taking this more lenient approach have stated that standing can only “exist where the licensing 

agreement both grants an exclusive license and grants to the exclusive licensee a property interest 

in the trademark, or rights that amount to those of an assignee.” Innovation Ventures, LLC v. 

Pittsburg Wholesale Grocers, Inc., No. C 12-05523 WHA, 2013 WL 1007666, at *6 (N.D. Cal. 

Mar. 13, 2013), at *26 (N.D. Cal. Mar. 11, 2013) (quoting Visa U.S.A., Inc. v. First Data Corp., 

No. C 02-01786, 2005 WL 6271242, at *3 (N.D. Cal. Aug. 16, 2005)). 

In Innovation Ventures, another court in this district concluded that it was a “close call” 

whether the licensing agreement granted „“all‟ significant rights” to the licensee, Innovation 

Ventures. Id. at *6. First, the Court noted that the licensor, International IP, retained “the right to 

inspect Innovation Ventures‟ use of the marks in order to maintain quality control,” but gave that 

fact little weight because “[t]his type of supervision clause . . . is a required feature of any valid 

trademark license.” Id. at *5. Second, the court explained that “International IP also retained a 

 

6 Courts in other jurisdictions have strictly construed the statute as applying to only to owners of 

federal trademarks. E.g., DEP Corp. v. Interstate Cigar Co., Inc., 622 F.2d 621, 622–23 (2d Cir.

1980).

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slice of control over litigation . . . because the agreement states that Innovation Ventures „may not 

settle [a] lawsuit/proceeding if the settlement includes admissions of patent invalidity or other 

matters that adversely affect the viability of any of the Intellectual Property unless previously 

agreed to by the Parties.‟” Id. But the court described this limitation as a “narrow” one, that did 

“not, as a practical matter, alter Innovation Ventures‟ status as the party that controls the 

exploitation of the intellectual property.” Id. at 6. Finally, the court found that “[t]he structure of 

the transaction executed between International IP and Innovation Ventures is also significant,” 

because “the validity of assignments and reciprocal license grant-backs is well-established.” Id. 

Overall, “[t]he rights retained by International IP were few.” Id. Given those facts, the court 

refused to resolve standing on a Rule 12 motion, reserving for trial “questions regarding how 

plaintiffs contractual arrangement has operated in practice, the extent of the control actually 

exercised by the licensor, and the intent of the parties at the time of the assignment and licenseback transaction.” Id.

Lasco Fittings, Inc. v. Lesso America, Inc., No. CV-1302015, 2014 WL 12601016 (C.D. 

Cal. Feb. 21, 2014), provides another example of this analysis. The Lasco court contrasted the 

licensing agreement before it with the one in Innovation Ventures and concluded it was “more 

limited in scope.” Id. at *4. First, the court explained that the “License is only for certain types of 

products and not for the trademark in its entirety.” Id. Second, “the license contains clauses 

explicitly stating that the licensor retains title and ownership of the mark and all rights not 

expressly granted in the exclusive license.” Id. Third, “the licensor retains control over the 

nature and quality of the products sold by LASCO using the mark, a requirement that is not

consistent with an assignment.” Id. And forth, “although the License gives LASCO the right to 

sue to enforce the mark for certain products covered under the License, LASCO must notify the 

licensor and may not enforce the trademark in relation to other products.” Id. The court also 

noted that “[u]nlike in Innovation Ventures, the License [was] not an assignment and license-back 

agreement.” Id. The “structure of the License agreement [therefore] [did] not suggest the parties 

intended the exclusive License to be equivalent to an assignment.” Id. Based on these facts, the 

court dismissed LASCO‟s trademark infringement claims for lack of standing. Id. at *5. 

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This case falls somewhere between LASCO and Innovation Ventures.

7

 Weighing in favor 

of standing, the license allows Elevate to use the ELEVATE Marks “in connection with providing 

addiction treatment and rehabilitation services for alcohol and substance-addicted individuals.” 

ECF No. 5-4. This, for all practical purposes, is a license for the trademarks in their entirety, not 

for “only certain types of [services].” Lasco, 2014 WL 12601016, at *4. Also pointing toward 

standing is the fact that the agreement contains no clause “explicitly stating that the licensor 

retains title and ownership of the mark and all rights not expressly granted in the exclusive 

license.” Id. On the other hand, Manson retains even greater control over the litigation than did 

the licensor in Innovation Ventures. There, as here, the agreement contained a provision requiring 

licensor approval of settlements that affect the trademarks. 2013 WL 1007666, at *6. But 

Manson‟s licensing agreement also requires his approval to “prosecute actions against infringers 

and defendant against infringement actions.” ECF No. 5-4 (Section 3(b)). And while Elevate can 

decide affirmatively to bring litigation, it cannot decide that such litigation will not be brought; if 

it declines to bring suit, Manson may then do so. Id. These latter two provisions constitute more 

than just “a slice of control over litigation.” 2013 WL 1007666, at *6. Finally, unlike in 

Innovation Ventures, Manson and Elevate did not enter into an assignment and license-back 

agreement, which the Lasco court found weighed against standing. 

Nor does Spin Master, LTD v. Zobmondo Entertainment, LLC, No. CV 06-3459 ABC, 

2011 U.S. Dist. LEXIS 94905 (C.D. Cal. Aug. 22, 2011), help Elevate‟s case. Elevate claims that 

in Spin Master, the licensor retained “sole discretion” over litigation decisions, and yet the court 

still found that the licensee had standing to enforce trademark rights. ECF No. 32 at 11 (quoting 

Spin Master, 2011 U.S. Dist. LEXIS 94905, at *22-23). Elevate gets its facts wrong. It was Spin 

Master, the licensee, who had „“sole discretion‟ to decide . . . whether to litigate, settle, or 

otherwise resolve the lawsuit.” Spin Master, 2011 U.S. Dist. LEXIS 94905, at *22-23. By 

contrast here, Elevate had to obtain Manson‟s written approval for all litigation decisions, and 

 

7 As an initial matter, there is no dispute that the licensing agreement gives Manson control over 

the quality of the services associated with the ELEVATE Marks, but the Court agrees with the 

reasoning in Innovate Ventures that this fact is not particularly helpful. This type of supervision 

clause is a required feature of any valid trademark license. Innovation Ventures, 2013 WL 

1007666, at *5. 

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Manson could decide to bring suit even when Elevate would not. Given the factual dissimilarities, 

the fact that standing existed in Spin Master in no way supports Elevate‟s standing argument here. 

There is no question that the licensing agreement between Manson and Elevate grants

Elevate an exclusive license to the ELEVATE Marks. ECF No. 5-4 (Section 1). Based on the text 

of the licensing agreement, however, the Court cannot conclude that it “grants to the exclusive

licensee a property interest in the trademark, or rights that amount to those of an assignee.”

Innovation Ventures, 2013 U.S. Dist. LEXIS 34937, at *26 (quoting Visa, 2005 WL 6271242, at 

*3). Most importantly, Manson retains too much control over Elevate‟s litigation decisions 

through the licensing agreement‟s written approval requirement. If the agreement were the 

assignment and license-back variety, the Court might have concluded, like in Innovation Ventures, 

that sufficient factual disputes remained about standing to proceed to trial. But here, the Court 

concludes as a matter of law that Elevate lacks standing to bring trademark infringement claims 

over the ELEVATE Marks.8 

C. UCL Standing

Elevate also moves for a preliminary injunction based on a UCL violation. To the extent 

the UCL claim is predicated on its trademark infringement claim, that claim fails. Elevate 

separately argues, however, that Defendants violated the UCL by “offering recovery services 

without a license as required by under California law.” ECF No. 5 at 17. But as Defendants point 

out, Elevate does not explain how that practice, even if true, has harmed Elevate separate and apart 

from the alleged trademark infringement. Without a showing of injury in fact, Elevate lacks 

standing to pursue its UCL claim as well. Hall v. Time Inc., 158 Cal. App. 4th 847, 854 (2008) 

(explaining that “a plaintiff suffers an injury in fact for purposes of standing under the UCL when 

he or she has: (1) expended money due to the defendant‟s acts of unfair competition; (2) lost 

money or property; or (3) been denied money to which he or she has a cognizable claim.”) 

(internal citations omitted). 

CONCLUSION

The Court denies Elevate‟s motion for preliminary approval. Although Defendants‟ 

 

8

The Court does not reach the arguments about prior use or the merits of Elevate‟s trademark 

claim.

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motion to dismiss, ECF No. 28, is not fully briefed, the Court dismisses Plaintiff‟s Lanham Act 

and UCL claims without prejudice for lack of standing based on the analysis above.

9

 The Court 

grants Elevate leave to amend its complaint to allege additional facts that might show that 

Elevate‟s exclusive license amounted to an assignment or that Elevate suffered an injury in fact 

from Defendants‟ failure to obtain a license. To the extent Elevate re-pleads its UCL claim, the 

Court also suggests that Elevate explain more clearly which prong of the UCL it claims has been 

violated. Any amended complaint must be filed on or before April 18, 2017. 

IT IS SO ORDERED.

Dated: March 30, 2017

______________________________________

JON S. TIGAR

United States District Judge

 

9

The Court does not address Plaintiff‟s cybersquatting claim, which was not raised in the motion 

for preliminary injunction.

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