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De Simone v. VSL Pharmaceuticals, Inc.

United States District Court, D. Maryland

September 24, 2018

CLAUDIO DE SIMONE and EXEGIPHARMA, LLC, Plaintiffs/Counterclaim Defendants,
v.
VSL PHARMACEUTICALS, INC., LEADIANT BIOSCIENCES, INC. and ALFASIGMA USA, INC., Defendants/Counterclaim Plaintiffs,
v.
DANISCO USA, INC., Counterclaim Defendants.

          MEMORANDUM ORDER

          THEODORE D. CHUANG, JUDGE

         Plaintiffs Claudio De Simone and ExeGi Pharma, LLC (collectively, "the De Simone Parties") have filed a Motion to Modify Preliminary Injunction in which they seek modifications to two Orders issued by this Court: a February 4, 2016 Order (the "February 2016 Order") and a June 20, 2016 Preliminary Injunction (the "June 2016 Order"). Specifically, the De Simone Parties seek a modification to the February 2016 Order to allow them to make statements about the present composition of VSL#3 and the current status of the license agreement between VSL Pharmaceuticals, Inc. ("VSL") and De Simone. They also seek a change to the June 2016 Order to allow them (1) to state in advertising that ExeGi Pharma, LLC ("ExeGi") is the exclusive provider of the "De Simone Formulation," the term they have coined for the combination of probiotic strains developed by De Simone and first commercialized in the United States as VSL#3; (2) to cite to clinical studies with the term "VSL#3" in the title as part of their promotional materials; and (3) to engage in other speech critical of VSL#3. The De Simone Parties also seek, without objection, to have any injunctions as to Defendant Leadiant Biosciences, Inc. ("Leadiant"), formerly known as Sigma-Tau Pharmaceuticals, Inc. ("Sigma-Tau"), rescinded because, during the course of this litigation, Leadiant transferred its rights to distribute VSL#3 in the United States and thus no longer has a stake in claims arising from any future false advertising or trademark infringement relating to VSL#3. The parties have fully briefed the Motion. Having reviewed the submitted materials, the Court finds no hearing necessary. See D. Md. Local R. 105.6. For the following reasons, the Motion to Modify is GRANTED IN PART and DENIED IN PART.

         BACKGROUND

         The February 2016 Order was entered by consent of the parties in response to VSL's stated intent to file a Motion for a Preliminary Injunction based on VSL's contention that the De Simone Parties were engaged in false advertising in violation of the Lanham Act. In support of that contention, VSL provided the Court with Visbiome promotional materials that, it argued, suggested that VSL#3 had been re-branded as Visbiome or that Visbiome was the generic version of VSL#3. As relevant here, the February 2016 Order required ExeGi to refrain from "stating or suggesting that the license agreement" between De Simone and VSL had "expired," or asserting that "VSL#3 will no longer be on the market." Feb. 2016 Order at 1, ECF No. 126.

         The June 2016 Order was issued after full briefing and a hearing on VSL's Second Motion for a Preliminary Injunction, in which VSL sought preliminary injunctive relief based on its Lanham Act false advertising and trademark claims. In relevant part, VSL asserted that the claim on the Visbiome website that ExeGi was the "exclusive provider" of the De Simone Formulation was false advertising. VSL 2d Mot. Prelim. Inj. at 32-35, ECF No. 144-1. At the time the Motion was litigated, the parties agreed, and the evidence on the Motion established, that the VSL#3 product then sold in the U.S. market was manufactured by Danisco using the De Simone Formulation, such that Visbiome and VSL#3, though differently branded, were the exact same product. As a result, the Court found that VSL was likely to succeed on its claim that Visbiomess exclusivity statements were false advertising and enjoined the De Simone Parties from making statements that suggested that they were the exclusive supplier of the De Simone Formulation. De Simone v. VSL, No. TDC-15-1356, 2016 WL 3466033 at *18-20, *27 (D. Md. June 20, 2016). VSL further asserted, as part of its trademark claim, that the inclusion on the Visbiome website of citations to scientific studies with the term "VSL#3" in the title created confusion about whether VSL#3 and Visbiome were the same product. In light of the extensive use of the VSL#3 mark on the Visbiome website and in other promotional materials, the Court found VSL likely to succeed on this claim and enjoined, among other activities, the inclusion on the Visbiome website of statements that studies with "VSL#3" in the title constituted studies relating to the "De Simone Formulation"" Id. at *24-27.

         DISCUSSION

         The DeSimone Parties now assert that VSL is no longer selling product manufactured by Danisco pursuant to instructions originally provided by De Simone and that consequenlly the composition of VSL#3 sold in the U.S. market is clinically different from that of Visbiome. Based on this assertion, they argue that they should be permitted to advertise Visbiome as the "exclusive provider" of the De Simone Formulation and to cite prior studies with VSL#3 in the title. VSL, which now manufactures VSL#3 at a production facility in Italy, asserts that no changes to the existing Orders are warranted because any changes to VSL#3 are not clinically significant. Alternatively, VSL asserts that no modifications should be made to the Orders because any changes to VSL#3 have been the result of De Simone's breach of his fiduciary duty to VSL. Both sides marshal various scientific experts and articles in support of their arguments.

         I. Legal Standard

         To obtain a preliminary injunction, moving parties must establish that (1) they are likely to succeed on the merits, (2) they are likely to suffer irreparable harm in the absence of preliminary relief, (3) the balance of equities tips in their favor, and (4) an injunction is in the public interest. Winter v. Natural Res. Defense Council, Inc., 555 U.S. 7, 20 (2008); see Dewhurst v. Century Aluminum Co., 649 F.3d 287, 290 (4th Cir. 2011). A moving party must satisfy each requirement as articulated. Real Truth About Obama, Inc. v. Fed. Election Comm'n, 575 F.3d 342, 347 (4th Cir. 2009), judgment vacated on other grounds, 559 U.S. 1089 (2010). Because a preliminary injunction is "an extraordinary remedy," it "may only be awarded upon a clear showing that the plaintiff is entitled to such relief." Winter, 555 U.S. at 22.

         Although the Court granted a preliminary injunction in the June 2016 Order, a court has the power "to modify an injunction in adaptation to changed conditions." United States v. Swift & Co., 286 U.S. 106, 114 (1932) (noting that this power extends to injunctions entered into by consent); see also Fed. R. Civ. P. 54(b) (permitting "any order or other decision . . . that adjudicates fewer than all the claims" to be "revised at any time before the entry of judgment"). For example, a court may order such a modification if the injunction "has been turned through changing circumstances into an instrument of wrong." Swift & Co., 286 U.S. at 115. Because a preliminary injunction is not a final judgment,, the Court will not require the De Simone Parties to meet the requirements of Federal Rule of Civil Procedure 60(b). K.c. ex rel. Africa H. v. Shipman, 716 F.3d 107, 117 n.3 (4th Cir. 2013) (stating that a "preliminary injunction is not a 'final judgment,, order, or proceeding' that may be addressed by a motion under Rule 60(b)").

         II. Leadiant

         Turning first to the De Simone Parties' request that the Court rescind the injunctions as they relate to Leadiant because Leadiant no longer has an interest in VSL#3, no party objects to that request, so that portion of the De Simone Parties' Motion will be granted.

         III. VSL#3 Studies

         The De Simone Parties also seek to have the June 2016 Order altered to allow them to cite to studies that use the term VSL#3 in the title. The June 2016 Order enjoined those citations because the Court found that the manner in which the De Simone Parties used those citations created "confusion" and concluded that "[e]ven if ExeGi has a reason to refer to those studies because Visbiome is, as a scientific matter, the same formulation that was subjected to those trials, that scientific equivalence cannot be used as an opportunity or excuse to erode VSL's trademark." De Simone, 2016 WL 3466033 at *25. On the present Motion, the evidence submitted by the De Simone Parties is directed at establishing that VSL#3 and Visbiome are now clinically distinct products. Such evidence is relevant to the VSL Parties' argument that they may now claim they are the exclusive supplier of a probiotic using the De Simone Formulation, but that evidence does not speak to the significant trademark confusion that the De Simone Parties created through their references to studies with "VSL#3" in the title. The De Simone Parties have failed to establish changed conditions relevant to the trademark claim because they have not shown that the alleged alteration to the formulation of VSL#3 obviates VSL's need for trademark protection. Moreover, such information does nothing to dispel the Court's concern, which underlay the relevant part of the June 2016 Order, that the De Simone Parties' history of "aggressive and ...


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