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Gross v. Bare Escentuals Beauty

September 3, 2008

DENNIS F. GROSS, M.D., AND M/D SKIN CARE LLC, PLAINTIFFS,
v.
BARE ESCENTUALS BEAUTY, INC., MD FORMULATIONS, INC. F/K/A BIOCEUTIX, INC., AND BARE ESCENTUALS BEAUTY, INC. F/K/A MD BEAUTY, INC., DEFENDANTS.
BARE ESCENTUALS BEAUTY, INC. AND MD FORMULATIONS, INC., COUNTERCLAIMANTS,
v.
DENNIS F. GROSS, M.D., AND M/D SKIN CARE LLC, COUNTERDEFENDANTS.



The opinion of the court was delivered by: Robert L. Carter

OPINION

Currently before the court is defendants' motion for partial summary judgment on plaintiffs' fifth and sixth claims for relief. For the reasons herein, the court denies defendants' motion for partial summary judgment on plaintiffs' fifth claim, as it pertains to the claims involving the Alpha Beta trademark, and grants it as it pertains to plaintiffs' other claims. The court grants defendants' motion for partial summary judgment on plaintiffs' sixth claim for relief.

BACKGROUND

MD Skincare Line

Dennis F. Gross is a well-known dermatologist based in New York City. See Second Am. Compl. ¶ 1. He is the principal founder and co-owner of MD Skincare LLC, a New York limited liability company with its principal place of business in New York City. Id. at ¶¶ 2-3. MD Skincare formulates, sells, and markets skin treatment products in the United States and internationally. Id. at ¶ 2. Dr. Gross owns, and MD Skincare uses the following trademarks:

1) M.D. Skincare, 2) M.D. Skin Care, and 3) MD Skincare Dr Dennis Gross. Id. at ¶ 3.

The original packaging for the MD Skincare logo consisted of "M.D." in a green circle with the words "Skin Care" underneath the circle and terracotta accents. See Barry Decl. ¶ 4, 6, Exh. 3, 6 at 85: 9-20. In 2003, MD Skincare underwent a rebranding, and the package was changed. Id. at ¶ 6, Exh. 6 at 128: 21-25. The new package was white and metallic gray with orange. Orange was featured prominently in certain packages and used as an accent color in other packages. The logo was also redesigned to all lowercase letters with no periods in the bolded "md." The products are currently sold through several retailers, including Sephora, Ulta, and Nordstrom.

Gross is also the creator of Alpha Beta peel products, and he is the owner of the "Alpha Beta" trademark in the United States. See Second Am. Compl. ¶ at 93. Dr. Gross was issued a federal trademark registration for "Alpha Beta" on August 1, 2000, id. at ¶ 93, and sold products using this trademark through MD Skincare, id. at ¶ 96. The Alpha Beta products were first introduced in 1996, and have been distributed "widely through spa channels for use as a professional product administered by licensed estheticians." Id. at ¶ 97. Since 2002, Alpha Beta products have also been distributed through retail channels. Id. at ¶ 98. The primary ingredients in the products are alpha and beta hydroxy acids. These acids peel off a layer of one's skin to aid in the exfoliation of dead skin cells. See Barry Decl. ¶ 12, Ex. R.

MD Formulations Line

The MD Formulations line is a skincare system that includes cleansers, moisturizers, toners, sunscreens, anti-aging lotions, and acne products owned by defendants. See Miles Decl. ¶ 3. The complete line is sold in retail outlets such as Sephora, SkinStore, Ulta, the mdformulations.com website, and Bare Escentuals boutiques.

MDF Acquisition Corp. (which subsequently changed its name to Bioceutix, Inc., and then to MD Formulations, Inc.) acquired the MD Formulations product line and trademarks from Allergan, Inc., in May 1999. Hansen Decl. ¶ 2. MDF Acquisition Corp. (hereinafter "MDF") and Allergan entered into a purchase and sale agreement ("P&S") that transferred ownership of the MD Formulations product line and all related intellectual property rights to MDF. The P&S includes a provision that defined the field of use for sale of the MD Formulations products as follows:

"1.15 'Field of Use' shall mean the research, development, manufacture, marketing, and sale of AHA development skin care products, (1) to skin care aestheticians worldwide and (2) to Physicians outside of the United States but expressly excluding the manufacturing, marketing, selling or distribution of such products to Physicians in the United States." Hansen Decl. ¶ 2, Exh. 1. The P&S Agreement further provides:

"5.9 Limitation to Territory and the Field of Use. Buyer and its Affiliates shall not at any time after the Closing use Acquired Assets or rights under the Sublicense Agreement outside the Territory or outside the scope of the Field of Use. . . . By way of example, Buyer shall not sell any of the Products to Physicians in the United ...


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