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POLYMER TECH. CORP. v. MIMRAN

January 6, 1994

POLYMER TECHNOLOGY CORPORATION, Plaintiff,
v.
EMILE MIMRAN a/k/a/ ALAN FRANCO, U.D.S. EXPORT & IMPORT a/k/a USER DEFINED SOFTWARE, OPTIC EXPRESS, INC., AMERICAN CONTACT LENS ASSOCIATION, INTERNATIONAL CONTACT LENS LAB I, MARTIN POWERS SALES, INC., WORLDWIDE SCENTS, INC., JULIO MORENO, CARLOS SANCHEZ d/b/a ALPHA OMEGA, AND VARIOUS JOHN DOES, JANE DOES AND XYZ COMPANIES, Defendants.



The opinion of the court was delivered by: WHITMAN KNAPP

 WHITMAN KNAPP, SENIOR D.J.

 On December 4, 1991, plaintiff Polymer Technology Corporation ("plaintiff"), a manufacturer of contact lens products, filed a complaint alleging trademark infringement, trademark counterfeiting, fraud, false designation of origin and unfair competition against several defendants, including Emile Mimran ("defendant"), who buys, sells and distributes such products and owns several entities, also named in the complaint, which sell such products by mail order and to retail outlets. Plaintiff sought a preliminary injunction against all defendants, contending that they were violating its trademark rights by purchasing from plaintiff's distributors a line of products which it had intended solely to be distributed to doctors. All defendants, except for Mimran and corporations owned by him, and a defendant named Alpha Omega, which defaulted, stipulated to a preliminary injunction. Among the defendants so stipulating was Worldwide Scents ("Worldwide"), a wholesaler of health and beauty products and over the counter drugs, whose president has admitted in a deposition that over the course of two years Worldwide had bought plaintiff's products from defendant Mimran and divided and repackaged those products in its warehouse using counterfeit packaging provided by Alpha Omega. On March 17, 1993, we granted plaintiff's motion for partial summary judgment and a permanent injunction against Worldwide. In a Memorandum and Order dated February 4, 1992, we denied a preliminary injunction against defendant Mimran, finding that plaintiff's failure to have restricted by contract "the population of entities to which defendants could sell its product" defeated its claim that the sales in question were unauthorized. On appeal a divided panel of the Second Circuit vacated our decision and remanded the matter for reconsideration of certain evidence relevant to plaintiff's claim of trademark infringement, Polymer Technology Corp v. Mimran (2d Cir. 1992) 975 F.2d 58, 61. Plaintiff now makes a Renewed Motion for a Preliminary Injunction based upon the trademark theories previously advanced as well as several new theories. For the reasons that follow, the motion is denied.

 BACKGROUND

 Plaintiff manufactures a range of contact lens and lens care solutions under its registered trademarks, "BOSTON" and "BOSTON ADVANCE." These solutions are marketed through two distinct channels of trade: (1) retail sales; and (2) sales directed through authorized distributors to professional eye care practitioners ("the professional solutions"). According to plaintiff, most users of lens care products remain loyal to the brand initially recommended by their doctor (Pl Mem. at 8). Therefore, its program of supplying doctors with professional samples to give to their patients is its "most important promotional program" which is "crucial to the success of Polymer's care solutions in the marketplace." Id. As of October of 1992, Boston Solutions products dominated the lens care solution market, having 80.5% of the professional market and 74.2% of the retail market (Pl. Ex.6).

 In its original motion for a preliminary injunction, plaintiff alleged that defendant was engaged in practices which infringed its trademark rights, claiming that: (1) defendant obtains the professional kits and resells them for retail trade, and (2) defendant breaks down the kits and sells at retail individual bottles of the professional solution. Defendant admitted the first allegation, but denied the second.

 A. The FDA Labelling Requirements

 Labelling and packaging of retail solutions such as these must receive pre-market approval from the Food and Drug Administration ("FDA") and comply with its regulations; plaintiff claims that the professional samples are exempt from FDA labelling requirements. The regulations require that labelling for products intended for retail sale include a warning as to sterility, adequate warnings regarding contamination and a tamper-evident seal. See 21 C.F.R. §§ 200.50(a)(3), 200.50(b)(2), 211.132(b) (1991). The solutions intended for retail sale are generally sold in individually packaged boxes which contain warnings concerning contamination, contraindications and shelf life, as well as a list of active ingredients and preservatives, a notice that the contents are sterile, and tamper-evident seals on the top and bottom flaps. The professional solutions, for which plaintiff does not seek pre-market FDA approval, do not include such information on their outer packaging, but bear a message to "see package insert for directions and important safety information." (Def. Ex. 8). One type of the professional solutions, the Advance Starter Kit, does not include a tamper-evident seal. Labels which say "Not for Sale," "For Dispensing by An Eye Care Professional Only or for Professional Dispensing Only" are affixed to most of the professional solutions. The parties differ as to exactly what information is required by the FDA to appear on the exterior packaging of the retail products. Plaintiff asserts that the FDA requires, inter alia, a list of active ingredients and preservatives. See 21 U.S.C. § 321(k)(n) (1988). *fn1" Defendant contends that the inclusion of all of the above-mentioned information in package inserts and on the bottles of professional solutions is sufficient for compliance with the regulations, see 21 C.F.R. §§ 801.1; 800.12(a) and (c); and 801.62.

 A subsection of the pertinent regulations, entitled "Meaning of 'Intended Uses,'" includes the following language (21 C.F.R. § 801.4, emphasis supplied):

 B. Limitations Which Plaintiff Placed on the Sale of the Professional Samples

 Plaintiff distributes its professional samples through selected distributors, all of whom have entered into essentially the same contract with it. This contract contains no explicit restriction on the resale of the solutions (Pl. Mem. at 9, 44, 55; Pl. Exh. K). It does, however, contain an explicit restriction on the resale of contact lens, entitled "Limitations on Resale or Transfer" which states in pertinent part (Pl. Exh.K, Schedule A, P F):

 
As a condition to the continued authorization of [distributor] hereunder . . . [distributor] agrees not to sell or transfer without the written approval from Polymer Technology Corporation . . . the Boston Lens Contact Lens materials to any manufacturing lens laboratory, or lens distributor or reseller, that is not currently an authorized manufacturer and distributor of The BOSTON LENS Contact Lens, and acknowledges that any such resale is in contravention with this Agreement . . . Any transfer . . . in violation of this provision shall result in the immediate termination of this Agreement by PTC, and the [distributor] shall be liable to PTC for any and all damages resulting from any such transfer.

 The record includes the following evidence suggesting that plaintiff was aware that its distributors were selling professional solutions to "non-professional" accounts. A document entitled "Promotional Money/Prize Point Record Form" (Def. Exh. 6) which describes the terms of an incentive plan designed to encourage plaintiff's distributors to promote its products, contains a warning that "P.M.'s/Prize Points are not paid on purchases by nondispensing or nonpractitioner accounts." Thus, far from threatening reprisals for sales by distributors to nonpractitioners, the document merely announced that no bonus would be awarded for such sales. ...


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