Court Opinion

ID: 2817832
Source: CourtListenerOpinion
Date Created: 2015-07-16 20:01:35.554761+00
Date Added: 2024-06-11T12:28:25.762739
License: Public Domain

United States Court of Appeals
                     For the First Circuit

No. 14-2324

                         ARBORJET, INC.,

                      Plaintiff, Appellee,

                               v.

         RAINBOW TREECARE SCIENTIFIC ADVANCEMENTS, INC.,

                      Defendant, Appellant.

          APPEAL FROM THE UNITED STATES DISTRICT COURT
               FOR THE DISTRICT OF MASSACHUSSETTS

         [Hon. Nathaniel M. Gorton, U.S. District Judge]

                             Before

                      Selya, Circuit Judge,
                   Souter,* Associate Justice,
                      Lipez, Circuit Judge.

                          July 16, 2015

     * Hon. David H. Souter, Associate Justice (Ret.) of the
Supreme Court of the United States, sitting by designation.
     Scott P. Lopez, with whom Joshua M. D. Segal and Lawson &
Weitzen, LLP were on brief, for appellant.
     Kristen S. Scammon, with whom Michael S. Day and Torres,
Scammon & Day, LLP were on brief, for appellee.
             SOUTER, Associate Justice.       This appeal challenges a

preliminary injunction meant to enforce a contractual agreement

and prohibit a trademark violation.        We affirm in part and reverse

in part.

                                   I.

             Plaintiff-Appellee Arborjet, Inc. manufactures and sells

TREE-age, an emamectin benzoate solution used to protect trees

from various pests.       Through the period from August 2008 to

February     2013,   Arborjet   granted    Defendant-Appellant     Rainbow

Treecare   Scientific    Advancements,    Inc.   an   exclusive   right   to

distribute TREE-age.      Their sales agency contract included this

provision:

             [Rainbow] agrees, in view of the confidential
             information regarding Arborjet's business
             affairs,   plans,    and   necessities,   that
             [Rainbow] will not engage in affairs intended
             to   replicate    [A]rborjet's   products   or
             processes.

After the termination of this agreement, Rainbow began marketing

and   distributing      ArborMectin,      another     emamectin   benzoate

combination meant to compete directly with TREE-age.              Arborjet

sued Rainbow in Massachusetts trial court, seeking to enjoin

Rainbow's sales of ArborMectin and claiming breach of contract,

breach of implied covenant of good faith and fair dealing, false

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advertising under the Lanham Act and Massachusetts law, 15 U.S.C.

§ 1125(a)(1)(B); Mass. Gen. Laws ch. 266, § 91, false designation

of origin under the Lanham Act, 15 U.S.C. § 1125(a)(1)(A), and

common law unfair competition.          Rainbow removed the action to

federal court.

           In the preliminary injunction proceedings from which

this appeal comes, the district court did not find for Arborjet on

the prospects of its Lanham Act or state law tort and statutory

claims, but it did find likely success on those for breach of

contract and implied covenant of good faith and fair dealing.        The

court said that Arborjet had "demonstrated a likelihood that it

will be able to prove that [Rainbow] engaged in research and

development to create a product very similar to TREE-age," in

violation of the sales agency agreement.           In summarizing the

support   it   found   for   this   conclusion,   the   court   described

ArborMectin as the "defendant's own . . . product" and stated that

"Rainbow's website describes partnering with several institutions

and companies to conduct research studies regarding ArborMectin's

effectiveness," at least one of which "took place while Rainbow

was . . . subject to the terms of the [sales agency a]greement."

The district court accordingly granted Arborjet an injunction to

run during the litigation, with a principal order that "[Rainbow]
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and those acting in concert with it . . . immediately cease and

desist selling, distributing and/or marketing ArborMectin."

                               II.

          We start with the state law contract claims and a word

about the deferential standard of review: whether the district

court abused its discretion in issuing the preliminary injunction

addressing breach of those obligations.    See TEC Eng'g Corp. v.

Budget Molders Supply, Inc., 82 F.3d 542, 544–45 (1st Cir. 1996).

Thus, we may "set aside [the district court's] ruling only if . . .

persuaded that [it] mistook the law, clearly erred in its factual

assessments, or otherwise abused its discretion in granting the

interim relief."   McGuire v. Reilly, 260 F.3d 36, 42 (1st Cir.

2001).   Our review recognizes "the preliminary nature of the

proceeding; in the context of a preliminary injunction motion, the

district court's findings need not be overly detailed, and they do

not bind the court in subsequent proceedings."    TEC Eng'g Corp.,

82 F.3d at 545; see also Narragansett Indian Tribe v. Guilbert,

934 F.2d 4, 6 (1st Cir. 1991) ("[A] party losing the battle on

likelihood of success may nonetheless win the war at a succeeding

trial on the merits.").

          To grant a preliminary injunction, a district court must

find the following four elements satisfied: (1) a likelihood of
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success on the merits, (2) a likelihood of irreparable harm absent

interim relief, (3) a balance of equities in the plaintiff's favor,

and (4) service of the public interest.     See Voice of the Arab

World, Inc. v. MDTV Med. News Now, Inc., 645 F.3d 26, 32 (1st Cir.

2011) (citing Winter v. Natural Res. Def. Council, Inc., 555 U.S.

7, 20 (2008)).   The second through fourth considerations are not

disputed, so we focus solely on likelihood of success, and find no

abuse of discretion in the conclusion that Arborjet was likely to

succeed on its contract claims.1

          Rainbow argues first that it was clear error to find a

likely showing that it contributed to the creation of ArborMectin,

contending that the record undisputedly shows that a different

company, Rotam, created ArborMectin on its own.       The evidence

before the district court, however, was not nearly as one-sided as

Rainbow says.    To be sure, the Environmental Protection Agency

(EPA) lists Rotam as the approved creator of ArborMectin, but the

question is whether Rainbow contributed to its creation.   And, on

that point, the district court was presented with two e-mails from

     1 The district court treated claims based on the express terms
and the implied covenant of good faith dealing together, and none
of the authorities cited by Arborjet provide any basis for treating
them differently here.    We need not reach the implied covenant
claim because we affirm as to the written terms.
                              - 6 -
a Rainbow sales representative describing ArborMectin as Rainbow's

own product, and truly undisputed evidence that Rainbow conducted

at least ten studies across the United States on the effectiveness

of ArborMectin, some of them years before Rotam submitted its

formula to EPA for approval.     It was certainly plausible, then,

for the court to infer that Rainbow played a role in the product's

creation. Although Rainbow counters that the statements were false

and that its studies were merely the practices of a sensible

distributor, these arguments at best show only that, if the court

had accepted them, it could reasonably have reached the opposite

conclusion.   But "where the facts can support two plausible but

conflicting   interpretations    of     a   body   of   evidence,   the

factfinder's choice between them cannot be clearly erroneous."

deBenedictis v. Brady-Zell (In re Brady-Zell), 756 F.3d 69, 72

(1st Cir. 2014).

           Next, Rainbow argues that the district court fell into

legal error when it interpreted the contractual language quoted

earlier.   Rainbow cites a dictionary definition of "replicate" to

contend that "affairs intended to replicate" applies only to

efforts to produce a compound that would be an exact copy of TREE-

age.   Thus, Rainbow concludes, the contractual prohibition does

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not apply to the development of ArborMectin, which both parties

understand to differ from TREE-age in toxicity and other details.

             The     district     court    considered      and     rejected    this

argument, in faithfully applying Massachusetts contract law that

"[t]he words of a contract must be considered in the context of

the entire contract rather than in isolation."                  Brigade Leveraged

Capital Structures Fund Ltd. v. PIMCO Income Strategy Fund, 995

N.E.2d 64, 69 (Mass. 2013) (internal quotation marks omitted).

The phrase at issue here ("will not engage in affairs intended to

replicate     [A]rborjet's        products")       is   prefaced    by   language

indicating    Arborjet's        concern    about    guarding     information   not

available to the public and potentially damaging if disclosed to

competitors ("in view of the confidential information regarding

Arborjet's         business     affairs,      plans,      and      necessities").

Accordingly, the prohibition was probably aimed at preventing

efforts by Rainbow to place Arborjet at a competitive disadvantage,

reflecting a concern broader than the mere creation of an exact

copy.2   That said, we need not determine here the exact scope of

     2 Another point casts further doubt on Rainbow's reading: at
the date of the contract, the active agent in TREE-age was
apparently under patent protection. See Rainbow's Memorandum of
Law in Opposition to Motion for Preliminary Injunction at 1, No.
14-cv-14129 (D. Mass. filed Nov. 18, 2014), ECF No. 17 (stating
that ArborMectin was created after the patent on emamectin benzoate
                               - 8 -
the generally worded prohibition; for now it is enough to say

simply that the dictionaries do not confine "replicate" to exact

duplication, and Rainbow's claims of superiority for "our" product

(which Rainbow extensively tested) raise a likelihood that Rainbow

will be shown to have made efforts to develop ArborMectin as a

competing product in violation of the contractual restriction

during the contract period. For that matter, common sense suggests

that, if the parties had an object as narrow as Rainbow claims,

they would have written clearer language specific to that aim.

See id. at 70 ("Common sense is as much a part of contract

interpretation as is the dictionary or the arsenal of canons."

(internal quotation marks omitted)).   Thus the district court did

not abuse its discretion in entering the portion of the preliminary

injunction based on Arborjet's contract claim.3

expired). If that is true, it seems highly unlikely (albeit not
impossible) that Arborjet would include a contractual prohibition
on exact copies only, as the patent laws already saw to that.
     3Rainbow initially argued that the injunction must be vacated
because it has no limit on time. Rainbow appears to have wisely
backed away from that argument, as the preliminary nature of the
injunction ensures that it will be limited to the duration of the
present litigation.
                              - 9 -
                               III.

          Rainbow challenges a second term of the injunction, not

yet discussed:

          [Rainbow] and those acting in concert with it
          shall    properly     attribute    Arborjet's
          trademarks "Arborjet" and "TREE-age" by
          appending the ® symbol to those marks and a
          footnote stating "Registered Trademark of
          Arborjet, Inc."

Rainbow objects that ordering proper attribution of "Arborjet" and

"TREE-age" was improper given the district court's rulings on the

Lanham Act claims.

          Here we agree with Rainbow.   This provision apparently

responded to Arborjet's claim of "false designation of origin"

under the Lanham Act. 15 U.S.C. § 1125(a)(1)(A). Arborjet alleged

that Rainbow failed to attribute Arborjet trademarks properly in

Rainbow communications, that failure of proper attribution was

likely to cause consumer confusion, and that such likelihood of

confusion demonstrated Rainbow's violation of § 1125(a)(1)(A).

Rainbow's opposition papers disputed that any improper attribution

would cause consumer confusion.   Thus, according to the district

court filings, it would appear that the grant of preliminary

injunctive relief, so far as ordering Rainbow to attribute Arborjet

                              - 10 -
trademarks properly, responded to the allegedly false designation

of origin.

             The    problem,   however,   is   that    the   district   court

concluded that Arborjet was not likely to succeed on this claim.

Indeed, it said that the evidence on this point "weigh[ed] against

a finding of a likelihood of confusion."              This was fatal to the

request for an injunctive order for trademark designation.                In

this circuit, proving likelihood of success on the merits is the

"sine qua non" of a preliminary injunction.              New Comm Wireless

Servs., Inc. v. SprintCom, Inc., 287 F.3d 1, 9 (1st Cir. 2002).

"[I]f the moving party cannot demonstrate that he is likely to

succeed in his quest, the remaining factors become matters of idle

curiosity.”    Id.

             In its effort to defend this portion of the preliminary

injunction, Arborjet contends that the district court did not grant

such relief under the Lanham Act claim but rather to give effect

to a binding stipulation made by Rainbow in the course of the

proceedings.       The record is otherwise, however.

             As mentioned earlier, Arborjet's complaint contained

many claims.       To support its false advertising claims, it alleged

that Rainbow's representations of ArborMectin as "improved TREE-

age" may mislead customers into thinking that ArborMectin was
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produced by Arborjet.       At the November 2014 preliminary injunction

hearing, the district court appeared to share that concern, and it

ended the hearing by strongly encouraging the parties to "come to

some mutual middle ground."        Shortly after, Rainbow submitted a

letter indicating that it had "made an offer to Arborjet that [it]

will not make future advertising or marketing statements that

ArborMectin is 'improved TREE-age'" and that, even though the case

had not settled, Rainbow "agree[d] to voluntarily comply with its

proposal."        The district court treated that submission as a

"binding stipulation."

             As    this   procedural    recounting    demonstrates,   the

stipulation does not support the preliminary injunction.              The

stipulation appears to relate to the false advertising claim,         and

it was in the false advertising portion of its findings that the

district court mentioned the agreement and spoke of it as a binding

stipulation.        The   preliminary   injunction,   however,   probably

relates to the false designation of origin claim, for the reasons

explained earlier.        Yet, even as to the false advertising claim,

the court made no finding of likelihood of success, stipulation or

no stipulation.       What is more, even if we were to look to the

stipulation as authority for this provision of the injunction, the

support would come up short, for the stipulation is limited to the
                                   - 12 -
use of a two-word phrase in marketing materials, whereas the

preliminary injunction mandates Rainbow's attribution of Arborjet

trademarks across the board.        Hence, we do not believe this term

of   the   preliminary      injunction     merely   effectuates   Rainbow's

stipulation.       The upshot is that this portion of the order must be

vacated, being unsupported by a finding of likely success on a

relevant claim.       New Comm Wireless Servs., 287 F.3d at 9.

                                     IV.

             The    order   comprising   the   preliminary   injunction   is

affirmed in part, and reversed in part.         Each party shall bear its

own costs.

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