BEFORE THE INTERNATIONAL COURT OF ARBITRATION OF THE INTERNATIONAL CHAMBER OF COMMERCE Case No. 23464 Trividia Health, Inc., Claimant, v. Nipro Corporation, Respondent. CLAIMANT’S STATEMENT OF REPLY PURSUANT TO APRIL 9, 2019 ORDER November 1, 2019 Sigrid McCawley BOIES SCHILLER FLEXNER LLP 401 East Las Olas Blvd Suite 1200 Fort Lauderdale, FL 33316 Tel: (954) 356-0011 Facsimile: (954) 356-0022 Email: [email protected]Counsel for Claimant Trividia Health, Inc. Case 1:20-cv-08450-VEC Document 20-20 Filed 05/11/21 Page 2 of 201
Transcript
BEFORE THE INTERNATIONAL COURT OF ARBITRATION OF THE INTERNATIONAL CHAMBER OF COMMERCE
Case No. 23464
Trividia Health, Inc.,
Claimant,
v.
Nipro Corporation,
Respondent.
CLAIMANT’S STATEMENT OF REPLY PURSUANT TO APRIL 9, 2019 ORDER
November 1, 2019
Sigrid McCawleyBOIES SCHILLER FLEXNER LLP401 East Las Olas Blvd Suite 1200Fort Lauderdale, FL 33316Tel: (954) 356-0011Facsimile: (954) 356-0022Email: [email protected]
Counsel for ClaimantTrividia Health, Inc.
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TABLE OF CONTENTS
TABLE OF AUTHORITIES .......................................................................................................... v
I. PROCEDURAL HISTORY................................................................................................ 6
II. NIPRO BREACHED THE IDA BY INTENTIONALLY REFUSING TO MEET THE ANNUAL MINIMUM PURCHASE FOR CONTRACT YEAR THREE THEREBY FORCING A TERMINATION AND RESULTING IN DAMAGES FOR CONTRACT YEARS THREE THROUGH FIVE. .................................................................................. 7
III. TRIVIDIA WAS ENTITLED TO IMMEDIATELY TERMINATE THE IDA AND SEEK FULL DAMAGES BASED ON NIPRO’S “FAILURE TO PERFORM ITSOBLIGATIONS” UNDER THE IDA ................................................................................ 9
IV. THE FACT THAT NIPRO COULD “COMPETE” AFTER CONTRACT YEAR TWO DID NOT GIVE NIPRO A LICENSE TO STEAL TRIVIDIA’S INTERNATIONAL CUSTOMER BASE NOR RELIEVE NIPRO OF ITS OBLIGATION TO MEET THE ANNUAL MINIMUM PURCHASE IN CONTRACT YEARS THREE THROUGH FIVE.................................................................................................................................. 10
V. NIPRO EFFECTUATED A PLAN TO MISUSE TRIVIDIA’S TRADEMARKS IN BREACH OF THE IDA AND IN VIOLATION OF TRADEMARK LAW TO STEAL TRIVIDIA’S INTERNATIONAL CUSTOMER BASE.................................................. 11
I. NIPRO MATERIALLY BREACHED THE IDA ............................................................ 39
A. Nipro Materially Breached the IDA by Failing to Make Its Annual Minimum Purchase for Year Three ....................................................................................... 39
1. Trividia Negotiated Year Three in Good Faith......................................... 40
2. Neither the IDA nor Good Faith Require Reduction of the Carryover Minimum................................................................................................... 44
3. Nipro Cannot Establish a Frustration of Purpose Defense ....................... 48
4. The Force Majeure Clause Does Not Excuse Nipro’s Underperformance nor Its Scheme to Steal Customers and “Switch” them to Nipro’s New Product ...................................................................................................... 53
5. Amendment No. 2 Is Irrelevant to the Breach Claim ............................... 55
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B. Nipro Materially Breached the IDA by Failing to Provide Forecasts .................. 56
C. Nipro Materially Breached the IDA by Misusing Trividia’s LicensedTrademarks ........................................................................................................... 59
II. TRIVIDIA’S TERMINATION OF THE IDA WAS PROPER AND ENTITLES TRIVIDIA TO DAMAGES.............................................................................................. 65
A. Trividia Properly Followed the IDA’s Termination Procedures .......................... 65
1. Trividia’s Notice of Breach Letter Provided Adequate Notice ofNipro’s Breaching Conduct ...................................................................... 67
2. Nipro Failed to Cure Its Breach and Continued to Engage in Breaching Conduct After the Notice and Cure Period Ran........................................ 70
3. Trividia Was Entitled to Immediately Terminate the AgreementPursuant To Section 2.4(iv) ...................................................................... 73
B. Trividia Is Entitled to Terminate and Sue for Total Breach DamagesFollowing Nipro’s Material Breaches................................................................... 75
III. TRIVIDIA IS ENTITLED TO DAMAGES FOR YEAR THREE .................................. 77
IV. TRIVIDIA IS ENTITLED TO DAMAGES FOR YEARS FOUR AND FIVE............... 78
A. The IDA Creates a Guaranteed Yearly Payment Obligation for Five Years ........ 78
B. Nipro’s Attempt to Distinguish Trividia’s Cases Misses the Mark...................... 84
C. Nipro’s Causation Argument Is Simply Illogical ................................................. 86
D. Nipro’s Position that the IDA Bars Damages Relating to Termination Is a Red Herring .................................................................................................................. 88
E. Trividia Complied with any Duty to Mitigate ...................................................... 89
1. New York Law Requires Only Reasonable Mitigation Efforts ................ 90
2. Trividia’s Mitigation Efforts Were More than Reasonable Under the Circumstances ........................................................................................... 92
3. Trividia’s Mitigation Requirements Are Excused Under the LostVolume Seller Doctrine ............................................................................ 95
F. Trividia’s Lost Profits Are Neither Speculative Nor Unsubstantiated ................. 99
V. NIPRO’S RESCISSION AND REFORMATION CLAIMS SHOULD BE DEEMED WITHDRAWN WITH PREJUDICE ............................................................................. 100
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VI. THE TRIBUNAL HAS AUTHORIZED, AND HAS AUTHORITY TOADJUDICATE, TRIVIDIA’S NON-CONTRACTUAL CLAIMS ............................... 104
A. The Status of Trividia’s Claims Has Been Resolved (Repeatedly) .................... 104
B. The IDA Grants the Tribunal Broad Jurisdiction over Trividia’s Statutory and Common Law Claims ......................................................................................... 105
1. The Arbitration Clause Is Broad in Scope .............................................. 105
2. Trividia’s Statutory and Common Law Claims Are Arbitrable Under a Broad Clause........................................................................................... 112
VII. TRIVIDIA’S STATUTORY AND COMMON LAW CLAIMS REQUIRE NONOTICE AND CURE PERIOD ..................................................................................... 116
VIII. TRIVIDIA IS ENTITLED TO EXCLUDE TESTIMONY AND OBTAIN AN ADVERSE INFERENCE BASED ON NIPRO’S REFUSAL TO PRODUCEE-MAILS FROM EUROPE ........................................................................................... 117
IX. EXTRATERRITORIAL APPLICATION OF THE LANHAM ACT ISAPPROPRIATE HERE .................................................................................................. 119
A. The Case Law Supports Extraterritorial Application.......................................... 119
B. The Facts Support Extraterritorial Application................................................... 126
C. Nipro Misreads the Case Law............................................................................. 127
D. Nipro’s Cases Are Not to the Contrary............................................................... 130
E. Trividia Is Not Relying on Websites for Lanham Act Jurisdiction .................... 131
X. THE EVIDENCE ESTABLISHES NIPRO’S INFRINGEMENTS CREATE A LIKELIHOOD OF CONFUSION .................................................................................. 131
A. Nipro Indisputably Infringed Trividia’s Marks Intentionally and in Bad Faith . 133
B. Nipro Mischaracterizes the Strength-of-Mark Analysis; Trividia’s Marks Are Strong.................................................................................................................. 139
C. The Evidence Demonstrates Actual Confusion .................................................. 144
D. Nipro Is Using Trividia’s Actual Marks ............................................................. 145
E. Competitive Proximity of Nipro’s and Trividia’s Diabetes Products Favors a Likelihood of Confusion ..................................................................................... 146
F. Remaining Factors Tilt Toward Finding a Likelihood of Confusion ................. 147
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G. Nipro’s “Family” Arguments Are Irrelevant ...................................................... 148
H. Trividia’s Infringement and Unfair Competition Claims are Meritorious.......... 149
XI. TRIVIDIA’S FALSE ADVERTISING CLAIM IS MERITORIOUS ........................... 149
A. Nipro’s Infringing Advertising Is Literally False ............................................... 149
B. Nipro’s Falsehoods Were Material and Injurious............................................... 152
XII. TRIVIDIA’S CLAIMS ARE NOT DUPLICATIVE AND TRIVIDIA IS NOTSEEKING DUPLICATIVE REMEDIES....................................................................... 154
XIII. TRIVIDIA’S STATE LAW CLAIMS ARE MERITORIOUS ...................................... 158
A. Nipro’s Trademark Diluting Behavior Should Be Enjoined Under N.Y.G.B.L.§ 360-l ................................................................................................................. 158
B. Nipro’s Deceptive Practices Should Be Enjoined under N.Y.G.B.L. § 133....... 161
C. Trividia Is Entitled to Damages and Injunctive Relief Under New YorkCommon Law...................................................................................................... 162
XIV. TRIVIDIA IS ENTITLED TO DAMAGES AND INJUNCTIVE RELIEFRESULTING FROM NIPRO’S MISUSE OF TRIVIDIA’S TRADEMARKS............. 163
A. Trividia Is Entitled to Treble Trademark Damages ............................................ 163
B. Trividia Is Entitled to a Permanent Injunction.................................................... 168
1. The IDA Entitles Trividia to an Injunction............................................. 168
2. Trividia Meets the Standard for a Permanent Injunction........................ 169
3. An Injunction Is Warranted Because Nipro Is Likely to Continue Infringing ................................................................................................ 173
XV. REQUESTED RELIEF................................................................................................... 175
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TABLE OF AUTHORITIES
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Arrow Fastener Co. v. Stanley Works,59 F.3d 384 (2d Cir. 1995)...................................................................................................... 127
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xiv
Kraft Gen. Foods, Inc. v. Allied Old English, Inc.,831 F. Supp. 123 (S.D.N.Y. 1993) .................................................................................... passim
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Lehman v. Sage Metal Trading Corp.,503 N.Y.S.2d 804 (N.Y. App. Div. 1986) .............................................................................. 106
Lobo Enters., Inc. v. Tunnel Inc.,822 F.2d 331 (2d Cir. 1987)............................................................................................ 162, 163
Lois Sportswear, U.S.A. v. Levi Strauss & Co.,799 F.2d 867 (2d Cir. 1986).................................................................................................... 140
Lopez v. Gap, Inc.,883 F. Supp. 2d 400 (S.D.N.Y. 2012)..................................................................................... 127
Louis Dreyfus Negoce S.A. v. Blystad Shipping & Trading Inc.,252 F.3d 218 (2d Cir. 2001)............................................................................................... passim
Lowenschuss v. Kane,520 F.2d 255 (2d Cir. 1975)...................................................................................................... 47
Mann v. N.A.S.A. Int’l, Inc.,No. 99CIV.11936(AGS), 2000 WL 1182823 (S.D.N.Y. Aug. 21, 2000) .............................. 109
Marks v. Prisant,567 N.Y.S.2d 146 (N.Y. App. Div. 1991) .............................................................................. 106
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xv
Matsushita Elec. Corp. of Am. v. Gottlieb,No. 90 CIV. 3010 (CES), 1991 WL 152615 (S.D.N.Y. Aug. 1, 1991) .................................... 88
Matter of Coastal Power Production Co. v. New York State Pub. Serv. Commn.,551 N.Y.S.2d 354 (N.Y. App. Div. 1990) ............................................................................... 52
Mead Data Cent., Inc. v. Toyota Motor Sales, U.S.A., Inc.,875 F.2d 1026 (2d Cir. 1989).................................................................................................. 127
Merck & Co. v. Mediplan Health Consulting, Inc.,425 F. Supp. 2d 402 (S.D.N.Y. 2006)....................................................................................... 58
Merck Eprova AG v. Gnosis S.p.A.,901 F. Supp. 2d 436 (S.D.N.Y. 2012)............................................................................... 70, 161
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Mobius Management Systems, Inc. v. Fourth Dimension Software, Inc.,880 F. Supp. 1005 (S.D.N.Y. 1994)................................................................................ 160, 166
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Case 1:20-cv-08450-VEC Document 20-20 Filed 05/11/21 Page 17 of 201
xvi
Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp.,460 U.S. 1 (1983).................................................................................................................... 102
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New York City Triathlon, LLC v. NYC Triathlon Club, Inc.,704 F. Supp. 2d 305 (S.D.N.Y. 2010)..................................................................... 129, 161, 164
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Norcom Electronics Corp. v. CIM USA Inc.,104 F. Supp. 2d 198 (S.D.N.Y. 2000)..................................................................................... 110
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xvii
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xviii
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Case 1:20-cv-08450-VEC Document 20-20 Filed 05/11/21 Page 20 of 201
Steele v. Bulova Watch Co.,344 U.S. 280 (1952)........................................................................................................ 115, 120
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Time Warner Cable, Inc. v. DIRECTV, Inc.,497 F.3d 144 (2d Cir. 2007).................................................................................... 144, 145, 146
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Case 1:20-cv-08450-VEC Document 20-20 Filed 05/11/21 Page 21 of 201
U.S. Bank Nat’l Ass’n v. Ables & Hall Builders,696 F. Supp. 2d 428 (S.D.N.Y. 2010)....................................................................................... 91
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Vanity Fair Mills v. T. Eaton Co.,234 F.2d 633 (2d Cir. 1956)............................................................................................ 115, 117
Verizon Directories Corp. v. Yellow Book USA, Inc.,309 F. Supp. 2d 401 (E.D.N.Y. 2004) .................................................................................... 143
Victoria Cruises, Inc. v. Changjian Cruise Overseas Travel Co.,630 F. Supp. 2d 255 (E.D.N.Y. 2008) ............................................................................ 157, 158
VJK Productions, Inc. v. Friedman/Meyer Productions, Inc.,565 F. Supp. 916 (S.D.N.Y. 1983) ........................................................................................... 47
Volt Sys. Dev. Corp. v. Raytheon Co.,547 N.Y.S.2d 280 (N.Y. App. Div. 1989) .............................................................................. 149
Warnaco, Inc. v. VF Corp.,844 F. Supp. 940 (S.D.N.Y.1994) ..................................................................................... passim
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Wisser Co. v. Mobile Oil Corp.,730 F.2d 54 (2d Cir. 1984).................................................................................................. 70, 71
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WorldCrisa Corp. v. Armstrong,129 F.3d 71 (2d Cir. 1997)...................................................................................................... 107
WPIX, Inc. v. ivi, Inc.,691 F.3d 275 (2d Cir. 2012)............................................................................................ 161, 163
Zagano v. Fordham Univ.,900 F.2d 12 (2d Cir. 1990)........................................................................................................ 97
Zilg v. Prentice-Hall, Inc.,717 F.2d 671 (2d Cir. 1983)...................................................................................................... 43
4 J. Thomas McCarthy, McCarthy on Trademarks & Unfair Competition § 23:61 (5th ed.) .... 142
5 J. Thomas McCarthy, McCarthy on Trademarks & Unfair Competition § 30:79 (5th ed.) .... 158
5 J. Thomas McCarthy, McCarthy on Trademarks & Unfair Competition § 30:11 (5th ed.) .... 166
28 N.Y. Prac. Contract Law § 17:14............................................................................................. 71
Black’s Law Dictionary (11th ed. 2019)....................................................................................... 76
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Collins Entertainment Corp. v. Coats & Coats Rental Amusement Opens the Door for Lost Volume Sellers, but Does Not Fully Invite Them In: An Examination of the Adoption of the Lost Volume Seller Doctrine in South Carolina,56 S.C. L.Rev. 693 (2005) ........................................................................................................ 92
Measuring Seller’s Damages for Breach of Long-Term Gas Purchase Contracts,14 E. Min. L. Found., § 23.03................................................................................................... 93
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INTRODUCTION
“I would estimate that approximately 40,000 diabetics use a True Meter at the moment. We believe that we could replace 75% of those in the first 6 months. We keep warranty cards of all our customers - so as soon as we have success in the Tender we will begin a calling and postal campaign to convince them to switch to a free ‘latest technology’ meter etc and bring them across.”
—Michael McMaugh, Nipro Australia Business Unit Manager, in Contract Year Two (August 24, 2017)1
“Please be advised that we got green light from HQ for the registration of Glucoway Plus (blue tooth) under our brand name “Premier.” Please kindly initiate its product registration in Australia. Please make sure the registration to be done behind TRIVIDIA’s back.”
—Tsuchiya Seigo, Nipro Executive, in Contract Year Two (March 31, 2017)2
“Brand name for new BGM is Nipro ‘Premier.’ . . . . We can start this business only from Jan 2018 onward. Till then this is confidential due to the contract with Trividia. Please make sure this point.”
—Iwasaki Noriyoshi, Nipro Executive, in Contract Year Two (May 16, 2017)3 (bolding and underline emphasis in original)
“The Next Steps: 60,000 consumers to be switched from TRUEresult to GlucoKey”“Launch Plan: Switch out of current patients [via] email, phone, and post.Switch out test strips in 5,000 pharmacies.”
—Nipro 2018 Sales Presentation, “Diabetes Care Australia”4
1. The truth that Trividia has long suspected has finally been exposed: Nipro, since
the inception of the parties’ International Distribution Agreement (“IDA”), has never intended to
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honor the five-year commitment it made under that agreement. Instead, it planned at the earliest
opportunity to avoid its obligation and to exploit Trividia’s goodwill and reputation to steal
customers from Trividia. It failed to meet its required Annual Minimum Purchases, manufacturing
excuse after excuse for why it could satisfy its purchase obligations under the IDA. It has refused
to cooperate with Trividia in planning and forecasting. And most egregiously, it has intentionally
and willfully misused Trividia’s trademarks in violation of both the IDA and trademark law to
accomplish its scheme. Nipro would have this Tribunal believe that it was simply “competing,”
but actively using Trividia’s trademarks to contact Trividia’s customers and “switch” them to a
different product is not fair competition—it is stealing.
2. Trividia first came to this Tribunal in the beginning of Contract Year Three when
Nipro began asserting, incredibly, that it had absolutely no purchase obligations during the final
three years of the IDA’s term. Trividia sought a declaration that Nipro indeed had obligations
during those years and that, if Nipro failed to meet them, it could be liable for damages. The
Tribunal agreed, holding in its Partial Final Award of October 16, 2018, that the IDA “does not
confine the Claimant to a right to terminate (with no other remedy available, specifically no remedy
in damages) in the event that the Respondent does not purchase the Annual Minimum Purchase
for any of Years 3, 4 or 5.” Yet, despite this holding that it clearly risked liability if it failed to
meet its contractual obligations, by the close of Contract Year Three in early 2019, Nipro did not
purchase the minimum amount required for Contract Year Three.
3. Nipro’s scheming was also evident in its lack of cooperation and good faith in
negotiating the minimum purchase amount for Year Three and providing forecasts for Year Four.
Despite the guaranteed floor set by the IDA of 180,000,000 strips per year in each year from Two
through Five, Nipro unreasonably demanded that its Year Three amount be set at just 27 million
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strips—a reduction of 85%. The absurdity of Nipro’s bad-faith offer is underscored by the fact
that it eventually purchased 67 million strips and conceded that it was required to purchase 180
million. Nipro clearly never intended to meets its obligations in the latter three years of the IDA,
a point highlighted by Nipro’s abject refusal to even provide forecasts or otherwise address its
Year Four obligations.
4. During the course of the initial declaratory judgment action, Trividia began to
receive information from customers that were being told by Nipro that Trividia’s TRUE products
were being “discontinued” or where no longer available. (C-013, C-016) Evidence of this
misconduct kept pouring in, and eventually Trividia discovered Nipro was sending out
advertisements and communications clearly displaying Trividia’s trademarks but falsely claiming
that Trividia’s products were outdated or no longer available. This conduct caused Trividia great
concern and it immediately demanded that Nipro cease and desist this conduct, which not only
breaches the terms of the IDA but also violates federal and state trademark and competition law.
(C-065) Nipro falsely informed Trividia that the issue was “resolved.” (C-066) In reality, various
infringing conduct continued, including up to a week ago. Plainly, Nipro had no intention of
ceasing its conduct and instead was continuing to execute its plan to misuse Trividia’s marks to
surreptitiously steal Trividia’s international customer base.
5. Faced with these egregious breaches that materially undermined the IDA, Trividia
was left with no realistic option but to terminate the IDA and seek to vindicate its rights by seeking
damages in this proceeding. As the facts and law set forth by Trividia explain, Trividia is now
entitled to recover its full expectancy interest in the IDA, which it lost as a result of Nipro’s
breaching conduct. Nipro’s wrongful conduct has deprived Trividia of the full five years of
guaranteed minimum purchases under the IDA.
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6. Trividia is also entitled to vindicate its intellectual property interests, which are
protected under U.S. and New York law. Nipro, in executing the IDA, acknowledged both
Trividia’s ownership of the TRUE family of trademarks and the significant value and vital role
those trademarks play in Trividia’s business. Nevertheless, despite the clear and unambiguous
language of the IDA, which limits Nipro’s use of the trademarks solely to promoting Trividia’s
products and prohibits Nipro from using the marks in connection with any other products, Nipro
brazenly used Trividia’s marks to promote and sell Nipro’s competing products. This not a
situation where a company innocently uses a similar mark unaware of another company’s
trademark. Nipro’s conduct can only be explained as an intentional and willful exploitation of
Trividia’s actual trademarks to capitalize on Trividia’s reputation and confuse Trividia’s customers
into switching from Trividia’s products to Nipro’s products. Nipro’s conduct is the quintessential
example of bad-faith trademark infringement.
7. Nipro’s defenses are both shameless and absurd. Despite the clear language of the
IDA setting the guaranteed minimum at 180 million strips for Year Three, and despite Nipro’s
own concession of that minimum amount (C-097), Nipro clings to this notion that it negotiated in
good faith by proposing a purchase quantity 85% below what the IDA guaranteed Trividia and
accusing Trividia of “bad faith” for not accepting such a ridiculously low amount. Nipro’s view
of “bad faith” finds no support in the law, and its attempt to condition its obligations on this view
should be rejected.
8. Ignoring the language of IDA yet again, Nipro further complains that Trividia
frustrated Nipro’s ability to make its required purchases from Trividia because Trividia “refused”
to sell Nipro a product that is not covered by the IDA. Moreover, Nipro’s contention that Trividia’s
“competition” with Nipro are the cause of its Year Three breach is both factually and logically
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meritless. As Nipro held the product registrations in most relevant countries, Trividia was
precluded by law from selling products in competition with Nipro. And, in any event, the IDA
expressly contemplates that Trividia will compete with Nipro, even going so far as to provide for
a reduction in Nipro’s purchase requirements when Trividia sells directly to a customer previously
serviced by Nipro, in order to ensure that Nipro does not suffer a loss from such sales. This is
precisely the bargain Nipro executed.
9. But Nipro’s boldest contention is that the IDA does not even contain a guaranteed
minimum purchase requirement. Nipro’s argument cannot withstand the plain language of the
IDA, which requires Nipro to purchase minimum quantities of product in each Contract Year.
The IDA, recognizing that the parties may not agree on new annual minimums, even contains a
carryover provision to set the minimum each year and preserve the stream of revenue guaranteed
to Trividia under the contract. The carryover provision only makes sense in the context of an
agreement that requires annual minimum purchases. Yet, instead of recognizing and engaging
with this plain language, Nipro has chosen to ignore the text of the agreement. The obligation that
Nipro breached is spelled out in the contract, clear as day.
10. Nipro’s trademark defenses fare no better. Nipro first purports to have “cured” any
trademark infringement by merely ceasing certain instances of infringing conduct, incorrectly
claiming that it has no responsibility to cease its other instances of misconduct unless Trividia can
somehow uncover and identify each and every one. Nipro essentially claims an unrestrained
license to infringe trademarks and wants to force Trividia to engage in an interminable game of
“whack-a-mole” to vindicate its trademark rights. This Tribunal should end Nipro’s game.
11. Nipro then claims that it has done nothing wrong because the IDA permits Nipro
to use Trividia’s trademarks to sell Trividia’s products. Nipro repeats this non sequitur throughout
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its Corrected Statement of Defense, all the while either willfully or ineptly ignoring the fact that
Nipro’s misconduct stems from its use of Trividia’s products to sell Nipro’s products. Of course,
the absurdity of Nipro’s defense makes sense when it is understood that Nipro has no reasonable
explanation for intentionally misusing Trividia’s trademarks in this way. When you can’t answer
the question, ignore it.
12. At the end of the day, what is clear from the documents Nipro has produced and
the positions it has taken in this proceeding, is that from the beginning Nipro, with its deep
corporate pockets, has gambled that it could make more money long term by stealing Trividia’s
international customer base, disregarding its obligations under the IDA, and tying Trividia up in
endless arbitration and litigation, rather than by honoring its legal commitments. Nipro has no
desire to compete with Trividia on a level playing field. It seizes every unfair and illicit advantage
that it can, severely damaging Trividia’s business and reputation in the process. Enough is enough.
Nipro must be held to account. This Tribunal should award the correct damages due Trividia for
the full five-year term of the IDA, the damages sustained by Trividia due to Nipro’s trademark
infringements, trebled because of Nipro’s willful misconduct, and issue a permanent injunction
enjoining Nipro from misusing Trividia’s trademarks for any purpose other than solely and
exclusively selling Trividia’s products. The Tribunal should also award attorneys’ fees and costs
as required by the IDA and law.
FACTUAL BACKGROUND
I. PROCEDURAL HISTORY
13. Nipro’s bad faith conduct in this matter as set forth in the statement of facts, is
illuminated when put in context of its positions in this arbitration.
x In the first phase of this proceeding, Nipro devoted its efforts to advancing theproposition that it could breach the IDA during years Three-Five with impunity.That it could fail to comply with its principal obligation under the IDA—to sell
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Trividia's products—without being held accountable to Trividia. The Panel rejected that wrongheaded proposition and held that Trividia has the right to recover damages for Nipro’s breaches relative to the last three years of the IDA.
x As a back-up argument, Nipro next argued that, even if damages were recoverable under the IDA, Trividia’s claim was foreclosed because it had failed to negotiate “in good faith” the Annual Minimum Purchase amount for Year Three. It also tried to inject meritless reformation and rescission claims. Literally on the eve of the hearing where it knew it would lose those argument, Nipro abandoned them.It conceded, without qualification—that the Contract Year Three Annual Minimum Purchase amount advocated by Trividia, and set forth in the IDA, was correct.
x Nipro also represented to this Panel that it had not misused the TRUE trademark—which it has conceded is “vital” to Trividia’s business—but that, in any event, it had ceased the challenged use of the mark. It was wrong on both counts. Discovery has confirmed that Nipro set out on an intentional scheme to “switch” customers from Trividia’s products to competing products, and that it did so behind Trividia’s back and through the disparagement and misuse of the TRUE mark. In the face of these uncovered facts, Nipro euphemistically refers to its actions as “competition.” In truth, Nipro’s conduct constituted theft of the Trividia marks it had been entrusted to use only for the benefit of Trividia.
x Nipro should finally be held responsible for the significant damage it has caused Trividia.
II. NIPRO BREACHED THE IDA BY INTENTIONALLY REFUSING TO MEET THE ANNUAL MINIMUM PURCHASE FOR CONTRACT YEAR THREE THEREBY FORCING A TERMINATION AND RESULTING IN DAMAGES FOR CONTRACT YEARS THREE THROUGH FIVE.
14. Nothing Nipro asserts in its Corrected Statement of Defense (“CSOD”) changes the
fact that the plain language of the IDA provides that the agreement is for a five-year period and
requires Nipro to make an Annual Minimum Purchase in each of the five years. The IDA makes
very clear that the Annual Minimum Purchase will be “the same as the prior Contract Year” if the
parties have not mutually agreed on the Annual Minimum Purchase for any Contract year:
Contract Year One – 3,400,000 fifty (50) count vials of strips (170,000,000 strips) Contract Year Two – 3,600,000 fifty (50) count vials of strips (180,000,000 strips).
The Annual Minimum Purchase for each subsequent Contract year shall be agreed to in writing by the parties ninety (90) days prior to the end of the then current
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Contract Year. In the event the Parties have not mutually agreed on the Annual Minimum Purchase for any Contract year, the Annual Minimum Purchase for such Contract Year will be the same as the prior Contract Year.
IDA Schedule C (emphasis added) (C-001 at p. 20.). Section 2.2 similarly provides that if the
parties are unable to agree, then the amount for Contract Year Three will be the same as Contract
Year Two:
Commencing from the second Contract Year, in the event that the parties have not agreed on the Annual Minimum Purchase for the next Contract Year during the initial or any renewal term, then the parties shall use good faith efforts to mutually agree on the Annual Minimum Purchase for the next Contract Year prior to the end of the then current Contract Year; provided, however, that in the event the parties are unable to agree on the Annual Minimum Purchase for the next Contract Year prior to the end of the then current Contract Year, then the Annual Minimum Purchase for the next Contract Year shall be the same as that of the then current Contract Year.
15. As the parties were unable to agree on the Annual Minimum Purchase for Contract
Year Three, it was set at the same level as the “prior Contract Year,” which was Contract Year
Two. Nipro had no basis to contest this plain language, which is why it ultimately conceded—in
order to try to get out of the March 2019 hearing—that the Annual Minimum Purchase for Contract
Year Three is the same as the Annual Minimum Purchase for Contract Year Two.5
16. On January 16, 2019, Trividia provided Notice to Nipro that it had failed to meet
the Annual Minimum Purchase for Contract Year Three, was misusing Trividia’s trademarks, and
had failed to provide forecasts for Contract Year Four. (C-065) Nipro failed to cure these
breaches, and therefore, on March 8, 2019, Trividia terminated the IDA and instituted this
5 To avoid unnecessary repetition, the facts relating to Trividia’s good faith efforts to negotiate the Annual Minimum Purchase amount for Contract Year Three are set forth in Section I.A.1 of the Argument and the referenced witness statements.
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proceeding to recover all its damages due under the IDA for Contract Years Three through Five.
(C -074).
III. TRIVIDIA WAS ENTITLED TO IMMEDIATELY TERMINATE THE IDA AND SEEK FULL DAMAGES BASED ON NIPRO’S “FAILURE TO PERFORM ITS OBLIGATIONS” UNDER THE IDA
17. As explained in more detail below, Nipro materially breached the parties’ IDA in
multiple ways, including by completely disregarding the need to meet the Annual Minimum
Purchase for Contract Year Three and blatantly misusing Trividia’s trademarks in an effort to steal
Trividia’s international customer base and “switch” the customers to Nipro’s new products.
Section 2.4 of the IDA allows Trividia to terminate the IDA in light of Nipro’s failure to meet
these obligations. Despite Nipro spilling a lot of ink attempting to claim that it “cured” the
trademark breaches after receiving notice of the misuses from Trividia, nothing in Section 2.4
requires that Trividia provide a notice-and-cure period for egregious trademark breaches (or, for
that matter, breaches of Annual Minimum Purchase requirements). The IDA acknowledges that
substantial harm can arise from a misuse of its trademarks, which the IDA makes clear “constitute
valuable business assets and rights of [Trividia], the willfully unauthorized use, disclosure or
breach of which may irreparably damage [Trividia].” (C-001 at 16.5)
18. More specifically, Section 2.4 provides in relevant part:
NDI [Trividia] shall have the right at any time during the initial term or any renewal period hereof, by giving notice in writing to [Nipro], to terminate this Agreement without judicial action upon the occurrence of any of the following events:
(i) [Nipro]’s failure to purchase the applicable Annual Minimum Purchase during any Contract Year as set for on Schedule C, and, as it applies to the first two (2) Contract Years, failure of the Distributor to cure the Purchase Shortfall in accordance with Section 3.2, below;
(ii) any breach of this Agreement by [Nipro] not cured within thirty (30) days after written notice thereof including breach of any open account payment terms which may be negotiated by the parties (timely payments there under being of the essence);
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. . .
(iv) inability or failure of Distributor to make payments under this Agreement and any inability or failure of [Nipro] to perform its obligations hereunder;
. . . .
IDA § 2.4 (emphasis added) (C-001 p.2) Thus, Section 2.4(iv) permitted Trividia to immediately
terminate the IDA upon Nipro’s failure to perform its trademark obligations under Section 3.10.
In any event, though, as explained in Section II.A.2 below, even if compliance with subsection (ii)
was required prior to termination based on trademark misuse, which it is not, Nipro did not cure
its trademark misuses within the 30-day cure period.
19. Nipro also admittedly failed to meet the Annual Minimum Purchase requirement
for Contract Year Three during Contract Year Three, even though this Tribunal issued a Partial
Final Award explaining that Trividia could seek damages for Nipro’s failure to meet its annual
minimum obligations. Nipro disregarded the IDA because its plan was to “switch” customers over
to its new product, and, even if it were sued by Trividia, the long-term play of stealing the
international customer base and switching them to Nipro’s new meters would eventually pay off
significantly more than any risk it faced from an arbitration by Trividia. As a result of Nipro’s
multiple breaches, Trividia was forced to terminate the IDA and bring this action to recover its
damages.
IV. THE FACT THAT NIPRO COULD “COMPETE” AFTER CONTRACT YEAR TWO DID NOT GIVE NIPRO A LICENSE TO STEAL TRIVIDIA’S INTERNATIONAL CUSTOMER BASE NOR RELIEVE NIPRO OF ITSOBLIGATION TO MEET THE ANNUAL MINIMUM PURCHASE IN CONTRACT YEARS THREE THROUGH FIVE
20. Nipro attempts to justify its active campaign to steal Trividia’s international
customer base through misuse of Trividia’s trademarks by asserting that it was allowed to
“compete” after Contract Year Two. Absent from Nipro’s argument is any recognition of its
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obligations to comply with the terms of the IDA which include for example, Nipro’s obligation to
meet the Annual Minimum Purchase; Nipro’s obligation to not misuses Trividia’s trademarks and
Nipro’s obligation to act in good faith:
Distributor shall promote the goodwill and good name of [Trividia] and otherwise act reasonably in its capacity to further the best interest of [Trividia] and to establish and maintain [Trividia’s] good reputation in the Territory.
(C-001 Sec. 3.1 Goodwill) (emphasis added).
21. The IDA clearly contemplates that there will eventually be (fair) competition
between Nipro and Trividia. (See, e.g., C-001 § 2.4(vii); Schedule C) Yet Nipro executed an
agreement to purchase five years of annual minimums anyway. Nipro’s actions violated numerous
provisions of the IDA and it can’t hide behind its claim that it was entitled to “compete” to
disregard its IDA obligations.
V. NIPRO EFFECTUATED A PLAN TO MISUSE TRIVIDIA’S TRADEMARKS IN BREACH OF THE IDA AND IN VIOLATION OF TRADEMARK LAW TO STEAL TRIVIDIA’S INTERNATIONAL CUSTOMER BASE.
22. Nipro’s scheme to steal customers away from Trividia by using Trividia’s marks
on its advertisements to convince customers that its new product was affiliated with Trividia’s
TRUE brand and then “switch” the customers to Nipro’s new product is well documented in the
e-mails produced in this matter and the advertisements that Trividia was able to uncover during its
investigation. Indeed, Nipro even directed an employee to register a new product in Australia
23. Nipro misrepresented that Trividia’s products were “discontinued” to a customer
in the beginning of Contract Year Two, and despite Trividia writing Nipro a cease-and-desist letter
and despite Nipro claiming it was an “isolated incident,” as recently as May 15, 2019, Nipro again
went back to this customer to encourage the customer to purchase Nipro’s new brand “from Korea”
rather than continue with the True Result products, blatantly lying to the customer saying “many
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other countries will also discontinue the True Result.” (C-100) While Nipro would have this
Tribunal believe that it was “forced” to move to a competing product, that is not the case as this
customer communication reflects. As recently as May of this year this customer, Pharmaforte,
was still seeking to purchase the True Result product from Nipro, but Nipro was lying and telling
Pharmaforte that the True Result product was “discontinued” in an effort to switch the customer
over to its “Korea” brand. While Nipro only produced a fraction of the emails Trividia requested,
and did so primarily for Australia,6 those emails prove active stealing of Trividia’s international
customer base by Nipro.
24. For example during Contract Year Two on August 24, 2017, Nipro’s Business
Manager for Australia was effectuating its plan to “switch” Trividia’s customers over to Nipro’s
new GlucoKey product:
I would estimate that approximately 40,000 diabetics use a True Meter at the moment.
We believe that we could replace 75% of those in the first 6 months.We keep warranty cards of all our customers - so as soon as we have success in the Tender we will begin a calling and postal campaign to convince them to switch to a free 'latest technology' meter etc and bring them across.
(NIPRO0002016-2017) (C-102).
25. The e-mails set forth here demonstrate that Nipro’s failure to meet the Annual
Minimum Purchase for Contract Year Three was not due to its inability to sell Trividia’s TRUE
6 As the Tribunal knows, Trividia asked for all e-mails for the entire territory because it is apparent that Nipro Corporation was actively promoting the plan to steal Trividia’s international customer base. However Trividia was denied discovery for the whole territory. The Tribunal did grant Trividia with discovery for the UK and Germany, yet Nipro has refused to produce any e-mails from Nipro Europe’s server, the most likely and abundant source of responsive documents. As explained in Section VIII, Nipro’s failure to produce documents from its European server warrants exclusion of the testimony of its European witnesses including Tom Rosseel, and an adverse inference on the issue of actual customer confusion.
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products, but was instead due to Nipro’s desire to get out of the five-year deal and start selling
26. As early as January 2017, the beginning of Contract Year Two, Nipro Corporate
representative Iwasaki Noriyoshi was discussing with Nipro Europe’s Tomohiro Somekawa
“switching” Trividia’s European customers to a new product. In the “Plan on alternative BGM,”
he states: “When we talked about this in Japan with Mr. Kurt and Mr. Serge, the[y] mentioned
that all Trividia will be replaced in one year time to new supplier products.” (AEO
NIPRO0010120 – 0121) (C-104) Earlier in the email exchange, Tomohiro wrote: “Assume transfer
price of meters and test strips generate significant profit allowing an aggressive switch (actively
switching meters will bring significant investments nevertheless). The timing of cease of
Trividia products shall be depending on the product cost. If Trividia will increase their price,
we should discontinue their products earlier with more aggressive [Nipro] meter placement.” Id.
In a January 5, 2017, email between Mr. Iwasaki and Mr. Miyazami he states:
As mentioned previously, the price will be lower than the current model and we would like to phase in this current model gradually starting in 2018. Please review the transfer plans by country. Also included is an Excel sheet with a current list of countries designated as distribution territories through the Trividia contract…. The plan is that, if a Trividia business territory is not actually making Trividia product sales, to remove them from the territory and, if possible, gain market freedom in that area.
(AEO NIPRO0010073) (C-107)
27. On July 9, 2017, Nipro did a Diabetes Care presentation in which it discussed
actively switching Trividia’s TRUE patients to ForaCare and also discussed continuing to
disregard the IDA as follows:
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(AEO 0015345 – 0015372) (C-108).
28. Shockingly, Nipro admits above that as of July, 2017 in Contract Year Two it was
“ceasing” the IDA. In the same document Nipro calls for “Huge push to switch out remainder of
patients from Trividia to ForaCare.”
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29. On July 20, 2017, contrary to Nipro’s current claims in this proceeding, a Nipro
corporate representative confirmed to Trividia that Nipro “would like to continue” selling
Trividia’s existing non-Bluetooth products in Australia alongside Trividia’s own sales of its
Bluetooth product. As the Nipro representative acknowledged: “As for Australia market, we
discussed and agreed that Trividia can take care of selling products with Blue Tooth, but we
expressed that we would like to continue serve current products to existing customers.” (AEO
NIPRO0010748- 10750) (C-109)
30. In August 2017, Nipro is discussing how to switch its Spanish customers from the
TRUE products to ForaCare: “Also [there are] slower results for Nipro Spain where we are looking
for a country manager to prepare a switch plan to ForaCare.” (AEO NIPRO0010780-83) (C-110)
31. On August 1, 2017, Tsuchiya Seigo from Nipro Asia emails Nipro Australia stating:
“NAU will be making a provision of almost 40,000 meters for replacement. I have been
discussion with Jon san that we should quickly access all of our users and replace old ones with
the new meters so as NOT to give any advantage to Trividia in case True [R]esults under Trividia
being registered.” (AEO NIPRO0012805); see also (AEO NIPRO0012807-809). (C-111; C-112)
32. On December 15, 2017, Nipro corporate representative is emailing a Nipro
Australia representative stating: “We should complete the replacement of existing TRUE kit with
Gluco key within 2018 so that NAU will be able to recover this investment from 2019.” The
subject line of that email discusses “replacement of about 40,000 units of TRUE brand to Gluco
key.” (AEO NIPRO0011877) (C-113)7
7 Nipro improperly marked the lion’s share of its production as “Attorney’s Eyes Only” (“AEO”)to prevent Trividia’s lawyers from being able to consult about this information with Trividia’s executives. Trividia challenges all of Nipro’s AEO designations for the documents set forth in this brief. Nipro also failed until midnight of the day of this filing is due, to re-designate its prior
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33. On May 15, 2018, Nipro was discussing its launch of its competing products from
Foracare in Europe: “Foracare - We launched in Germany (full product range) last week. UK will
follow later this year (Sept. Oct. upon finalization of registration).” (AEO NIPRO018518) (C-
114)
34. On June 18, 2018, at a sales meeting, Nipro did a diabetes presentation which
provided that: “The Next Steps” “60,000 consumers to be switched from TRUEresult to
GlucoKey” “Launch Plan” “Switch out our current patients *email *phone *post” “Switch
out test strips in 5,000 pharmacies” (AEO NIPRO0013001 – 0013025) (C-115)
35. On September 14, 2018, there is an email chain between Nipro Corporation and
Nipro Australia discussing how to “swap” out customers from TRUE products to GlucoKey as
follows: “As soon as strips arrive in AUS and near the Dec.1 date the reps will swap out result
strips in pharmacy for the GlucoKey. Starting with the Metro pharmacies and moving outwards
into reginal. Customers will be called, emailed etc (starting with metro). They will be send a
wholesale AEO designations of its July 31, 2019 witness statements and brief, giving insufficient time to evaluate its changes. Nipro has abused the AEO designation in its recent document production which is defined in the parties’ order of Confidentiality as follows:
“(a) A producing Party may, at the time of producing any Confidential Material, designate such material as “Attorney’s Eyes Only” if the producing Party reasonably and in good faith believes that the Confidential Material contains highly sensitive business or personal information, the disclosure of which is highly likely to cause material harm to an individual or to the business or competitive position of the producing Party, such as, for example, trade secret information, pricing, sales or customer information. It is understood by the Parties and the Tribunal that the information or documents (or portion thereof) that legitimately would qualify for designation as “Attorney’s Eyes Only” is limited, and the Tribunal expects that the Parties will use that designation only when necessary and appropriate.”
In an abundance of caution, until the Tribunal is able to rule on the issue, Trividia temporarily designates the portions of this filing referencing AEO documents as “AEO”.
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new meter and when they walk into the pharmacy there will be strips available.” (AEO
NIPRO0012782; 0012779 - 0012786) (C-116)
36. On October 23, 2018, Nipro corporate representative Iwasaki received an email
from his staff informing him that Nipro had won the bid with the Australian Department of Health
and that:
Distribution will start on December 1st of this year, and we will start contacting our current list of 400,000 customers by mail, phone and letter to introduce the new GlucoKey device and also changing to a True Result meter.
(AEO 0018676). (C-117) (See also C-118, Trividia 019790, dated January 7, 2019, “Access to the
TRUE database- Nipro contacted 60,000 customers prior to December.”)
37. On November 20, 2018, Nipro representatives were still discussing the strategy for
“swapping out” the TRUE customers to the new GlucoKey meters.
In reality even though purchased NDSS stock is not meant to be returned we well know that a pharmacist would refuse to place GlucoKey (or any product) if we didn't so it getting purchased through the channel is a good outcome. Downside is that the few months stock we sell in advance (just like any normal sales situation from warehouse to pharmacy shelf) is now going to be run down so we wont be seeing any more sales of the result and wholesalers will want to clear out what's in the channel in the next few months. It also means there is no rush for a new GlucoKey meter user to get strips as they will have their reimbursed result strips to use first. That's OK too as it gives us more time to contact them.
The reps have started swapping out aged care and we have already done a few Diabetic Educator conferences. A regional DE meeting in VIC and one in QLD over the weekend. As an aside Trividia wasn't at either one. The general consensus from customers (and the reps) is it's a good product (at sadly a less than good margin). The reps are now firmly focused on swapping out aged care facilities and will focus on this through December.
The email contacts to our customer base are starting now and will accelerate once we know the strips are in position. In the meantime through our regular support calls we are notifying customers (about 50x day).
(NIPRO012776-012778 AEO) (C-119).
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38. On November 5, 2018, a representative from Nipro Japan’s Global Strategy
Group—Takuya Miyatake—had an email exchange with Nipro Medical Europe’s director Tom
Rosseel communicating: “We launched ForaCare just recently and will fade out Trividia over the
coming years” and “[I] got your presentation in Y2017 on ForaCare switch plan from Goto san
and if it remains the same, I will use the same number.” (AEO NIPRO0019850 – 19852) (C-120)
39. During Contract Year Two, as early as March 2017, Nipro Asia was entering into
a Material Transfer Agreement with ForaCare Global Corp. relating to its GlucoKey product, and
this agreement included an annual minimum purchase requirement. Therefore, at the same time
Nipro was claiming it could not meet Trividia’s Annual Minimum Purchase requirement because
of “market forces,” it was nevertheless entering into competing agreements that contained yearly
minimum purchase requirements. This is clear proof that no force beyond Nipro’s control made
Nipro unable to meet the Annual Minimum Purchase for Year Three, but rather it was Nipro’s own
choice to instead purchase and sell a competitor’s product and meet the competitor’s minimums
with purchases that should have been routed to meet Trividia’s Annual Minimum requirement.
(AEO NIPRO0013962 – 13965) (C-121)
40. Another example of Nipro’s efforts to steal Trividia’s international customer base
is set forth in an email dated January 4, 2019, from a Nipro representative to a representative of
Diamedica Pty Ltd. The Nipro representative states:
Thanks for taking the time to discuss working with Nipro to bring across the GE strips and to service nursing homes. As we discussed – the broad intent is to bring all your currently serviced Nursing Homes across to the GlucoKey. Nipro will provide the meters for free and will organize stock via Qld shed and H/O in Sydney. And to use the GlucoKey when you acquire new nursing homes…I will also organize for your CH2 account to be able to buy all True Plus glucose products for 20% less than the wholesalers…Nipro will pay you $18,950.00 a month to have your reps do this. Nipro expects to be updated regularly with a list of all Aged Care facilities switched over to the GlucoKey and to be returned the warranty cards from the Aged Care facilities where the meters have been left…
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(AEO NIPRO00110892 – 0893) (C-122).
41. On November 9, 2018, Nipro was communicating with the Australian Government
Authority NDSS that their new “GlucoKey” meter could be obtained for “free” at the following
website using the “True” branding to promote the GlucoKey product and cause customer
confusion. The web address clearly uses “true” to promote the “glucokey upgrade.” “Avenues to
upgrade/ to acquire a free meter. This information will be published on the NDSS website on
November 14 to assist NDSS registrants and health care professionals.” (NIPRO0011668) (C-123)
42. Another clear example of how Nipro wrongfully used the TRUE marks and
products to create actual customer confusion and provide the false impression that its competing
brands were affiliated with the TRUE mark is an email dated February 17, 2019, from a pharmacy
to a Nipro representative where the subject of the email was “GlucoKey lancets” and the email
from the pharmacy customer reads:
I need to know exactly what the lancets are that go in your lancing devices? Are they the TrueUniversal? Also –can we buy lancing devices of yours or how do we tell customers to access a new lancing device if required?
Nipro’s response is:
Yeah, the TrueUniversal is our brand – but any universal lancet will work (which means any bar a Roche lancet). And if you let us know your mailing address I’ll send you a few lancing devices for free.
(NIPRO0018470). (C-124)
43. On December 5, 2018, after visiting with pharmacists, a Trividia employee reported
to Vanessa Perez as follows:
Today we had evidence that the Glucokey test strips were sent out to all Australian pharmacies. No meters were sent and some pharmacies are not happy and through them in the bin as they would rather have a rep tell them about the meters and test
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strips. We also saw some disappointing things in pharmacy with many pharmacies having TRUEresult rep advising that the replacement is Glucokey. The Nipro rep have been calling themselves the TRUE reps and have been promoting their meteras the TRUE replacement meter.
Trividia 019792-93. (C-125) On March 28, 2019, Nipro is discussing in emails how it has
maintained a “full team” to “convert as many as possible, and as fast as possible” away from the
TRUE products to their competing product. (NIPRO0011842) (C-126).
44. In a recent e-mail dated June 6, 2019, a Nipro Australia employee explained that
communications went out by text to 29 thousand customers but she could not find the letter that
she also sent out to customers: (“I couldn’t find a copy of the letter we sent out sorry”).
NIPRO0002557 (C-132).
45. Nipro’s pattern of deceit and efforts to steal Trividia international customer base
are also clear from the customer reports Trividia has received and the damning documents it has
been able to uncover. Back in early 2018, Trividia started receiving reports from customers that
Nipro was incorrectly informing customers that Trividia’s TRUE products were being
“discontinued” in the international market. On February 27, 2018, Trividia wrote to Nipro a cease-
and-desist letter informing Nipro that Trividia’s employee had received information from a
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customer indicating that Nipro was wrongfully informing customers that Trividia’s TRUEresult
products were no longer available and sought to switch the customer to a competitor’s product.
(C-011)
46. On March 16, 2018, Trividia sent a follow up letter to Nipro providing additional
information regarding the customer complaints Trividia had received. (C-012)
47. For example, Trividia received customer correspondence from Abeer Bdeir of
Kuwaiti Canadian Pharmaceutical & Medical Devices Co., evidencing an e-mail exchange with
Mheg Granda of Nipro Middle East in which Granda (Nipro’s employee) wrongly informs the
customer that the contract with Trividia has been discontinued and he is no longer selling Trividia’s
TRUEresult products:
However, from the previous month, I have informed you that we will be switching to a new glucometers come January 2018 and the contract with Trividia Healthcare (TRUEresult systems) will be finished by that time. Hence, we can start registering the new NIPRO glucometers so to proceed.
Later in the e-mail chain Mheg Granda wrongly states:
As informed, since the production will only start in January and the contract between the supplier and Nipro will be expired on the same month, we are not allowed to place PO for TRUEresults Systems anymore. Hence we can only provide the new NIPRO meters and strips come January 2018…We hope you can switch the current TRUEresult Systems users to our new meters.
(C-013)
48. On April 27, 2018, after not hearing back from Nipro as to whether it was actively
investigating the issue, Trividia’s attorney sent a follow up letter. (C-014)
49. Again on June 13, 2018, after still not hearing back from Nipro’s counsel, Trividia’s
attorney sent another letter which included information regarding a new allegation that Nipro had
again incorrectly informed a customer from Pharmaforte Malaysia that the TRUEresult product
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had been discontinued and tried to get the customer to switch to a different Korean product. (C-
015)
50. More specifically, Trividia’s counsel learned that Nipro had wrongly informed Dr.
TW Yeo, Medical Director of Pharmaforte Malaysia, who had been selling the TRUEresult
products for several years that the TRUEresult product will no longer be available and attempted
to get them to switch to a Korean product:
During the course of our discussion, I hope you understand the importance for us to maintain a revenue stream from the True Result meter and strips, currently manufactured by your subsidiary Trividia. As mentioned previously, we have invested a lot of time and effort over the last 5 years to build this business from scratch and it will not make sense for us to just drop the business simply because we do not have a direct relationship with Trividia. As you know, we have been appointed by Nipro as an exclusive distributor for True Results in Malaysia and they have indicated that the True Result will no longer be offered in the near future (much to our disappointment). (C-016)
51. This e-mail reveals that Nipro wrongly informed this customer that: “their ‘license
agreement’ with Sinocare (Trividia’s parent company) will expire soon and they wanted us to
switch to another product from Korea.” (emphasis added). (C-016) In its June 13, 2018,
correspondence, Trividia again requested that Nipro immediately investigate the issue. (C-015)
In its August 8, 2018 Defensive Submission to this Tribunal, Nipro claimed these were merely
“isolated” instances. See Respondent’s Defensive Submission at 50.
52. It is now clear that Nipro’s statement was patently false. Nipro represented to this
Tribunal this was an “isolated” incident and informed Trividia that it would cease such conduct.
Yet as recently as May 15, 2019, Trividia received an email from Dr. TW Yeo that Nipro was,
again, falsely stating that True Result product was “discontinued” and that Nipro was encouraging
Trividia’s customers to switch to its competing brand:
While Nipro has provided is with the ample notice, which prompted our initial email to you back in 2018, we took comfort from your reply that it will be business
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as usual and to continue working confidently with Nipro. However, it is clear at this moment that we will not expect future supplies of True Result through Nipro and they have encouraged us to launch another brand from Korea. If you wish, you can verify this information with Nipro as they have alleged that many other countries will also discontinued the True Result.
(C-100) See also (C-127) (Trividia 020358-61, Customer informing Trividia that Nipro was
refusing to return calls or emails relating to the TRUE product in May 2018.)
53. On January 23, 2018, at the start of Contract Year Three, Mian Scientific Corp.
informed Trividia that Nipro was making it very difficult to get product and was going to terminate
the distribution agreement explaining:
I would like to update your kind office that NIPRO Singapore almost refused to supply the Glucose Strips for True Result. They are going [to] terminate our distribution agreement being not able to supply the said material. Therefore, we request you again to re-establish our supply chain by your direct channel for the sake of business and end-users who purchased True Result units.
(Trividia 020535) (C-128)
54. Finally, as to Nipro’s statement that “the IDA did not prohibit Nipro’s use of
Trividia’s marks alongside other product marks,” that assertion is incorrect. In fact the IDA
specifically prohibits that conduct. The IDA defines the marks as those listed in Schedule F to the
agreement. Schedule F includes the TRUE mark, along with its uses in connection with Trividia’s
products, such as TRUEresult. Exhibit F further provides that Nipro “will not use the ‘True’ in
the marketing or distribution of any products other than the Products included in the
Agreement.” (IDA at Schedule F.). In the IDA, Nipro was granted a “limited, non-transferrable,
non-exclusive, fully paid up license to the [Trividia] Marks, during the term of this Agreement,
solely for such packaging and labeling and promotional materials…to be used solely with the
Products.” (IDA § 3.10.) The IDA defines Products as those listed in Schedule A to the agreement.
The listed products include only those sold by Trividia under various trademarks incorporating the
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TRUE line of marks, such as the TRUEresult, TRUEbalance, and TRUE Metrix lines of blood
glucose monitors. (Id. at Schedule A.) In addition, Section 3.10 further elaborates that:
Nothing set forth herein shall constitute any grant of license or right to use the [Trividia] Marks other than in connection with the Products and their packagingin accordance with the terms of this Agreement. [Nipro] shall not use . . . any of the NDI Marks in connection with any corporate or business name of [Nipro].
Nipro at all times thus clearly understood that its use of the Trividia marks including the TRUE
mark, was expressly limited to their use in the distribution solely of Trividia’s products. In that
same section, Nipro acknowledged that the marks are “vital” to Trividia’s business. Nipro was
fully aware of the importance of Trividia’s marks and contractually agreed not to use the marks in
conjunction with its products or otherwise to misuse the marks.
55. Nipro’s infringing conduct and misuse of Trividia’s TRUE mark is devastating to
Trividia’s brand and will harm Trividia for years to come because once Trividia loses a patient
and the patient starts using a different meter, it is exceedingly difficult to transition that patient
back. (CWS-4 Suppl. Sorrentino ¶ 31). Nipro’s blatant misuse of Trividia’s TRUE mark is
reflected in the United Kingdom advertisement below that went out to thousands of True customers
in an effort to get them to “switch” to Nipro’s new product 4Sure. This advertisement also
incorrectly gives the false impression that the 4Sure is an “upgrade” from the former TRUE
products harming Trividia’s TRUE products that are in the marketplace.
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(NIPRO0000562; NIPRO000561-562) (C-129)
56. Trividia also learned that Nipro used the TRUE trademark on a letter to customers
of Trividia’s products in an effort to mislead them into “upgrading” to Nipro’s new “GlucoKey”
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product. Specifically the correspondence reads as follows and is on “GlucoKey” letterhead (C-
071):
57. It is devastating to Trividia business to have its distributor Nipro, using Trividia’s
TRUE mark to contact Trividia’s customer base and switch them to a competing product. This
type of letter is highly damaging because it is being sent directly to Trividia’s “TRUE” customer
base and demonstrates that Nipro is actively converting TRUE customers to its competing product.
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58. Moreover Trividia learned that, the FAQ section of the website located at
www.glucokey.com.au, which is Nipro’s website for its GlucoKey product, contained the
following putative question and answer that also improperly uses Trividia’s trademark in an effort
to mislead customers:
(C-153) The website contains additional instances of Nipro’s infringement of Trividia’s
trademarks and its “TRUE” mark to promote competitive products.
59. The below screenshot from Nipro’s internet website is another example of Nipro’s
misuse and infringement of the TRUE mark to misleadingly market its products as associated or
affiliated with Trividia. The use of the highly stylized and highly distinctive TRUE mark on this
internet webpage falsely connotes a connection or association between the GlucoKey glucose
meter and the products sold by Trividia under the TRUE mark.
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(C-070)
60. Nipro has wrongly informed this Tribunal that upon receipt of Trividia’s January
16, 2019 Notice, it “cured” its infringing conduct by February 15, 2019. This is false. Nipro
continued after February 15, 2019, to encourage Trividia’s patients to “switch” to its competing
products like GlucoKey by actively misusing Trividia’s well recognized and valuable TRUE
brand. For example on February 28, 2019, Nipro was continuing to post the following
advertisement on its website:
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(C-087)
61. As explained above, the parties’ Agreement specifically precludes Nipro from
using the word “True” in “the marketing or distribution of any products other than the products
included in the Agreement.” Nonetheless, Nipro formed a website link that uses the word “True”
to route customers to purchase its competing GlucoKey product in direct violation of the
Agreement:
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(C-130)
62. Vanessa Perez Lopez, Trividia’s International Sales Vice President, was provided
with a flyer that was distributed by Nipro to TRUE customers evidencing that Nipro Medical UK’s
division is misusing Trividia’s TRUE mark in violation of the IDA to promote Nipro’s competing
product. The flyer, reproduced below, was distributed at a tradeshow in the UK. In that flyer, after
listing all of the TRUE products with creation date years, the list culminates in a “SURE” product
for “2018” and it says: “Call Nipro Customer Service for more information on products for help
in switching patients to the 4SURE portfolio” and it says “easy to switch” and points from the
“TRUE” product line to the competing “SURE” product (C-032).
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(C-069)
63. This flyer further misleads patients who have a long history with Trividia’s
products by highlighting products that Trividia manufactured prior to Nipro acquiring Trividia in
2010. It specifically targets patients who have been using Trividia products since 2000 and
misrepresents that Nipro’s new 4SURE product is made and manufactured in the USA by Trividia
in its U.S. FDA-cleared manufacturing facility.
64. In addition to the blatant example above, Nipro continued to use Trividia’s TRUE
mark in conjunction with the sale of competing products in direct violation of the parties’ IDA
which provides: “will not use the ‘True’ in the marketing or distribution of any products other
than the Products included in the Agreement.” (IDA at Schedule F.). The image below shows
Trividia’s TRUEplus registered mark being misused on Nipro’s GlucoKey website as recently as
last week, October 23, 2019. This picture creates the false and misleading impression that
Trividia’s TRUEplus registered mark is affiliated with GlucoKey, which it is not. This continued
advertisement is even more egregious because Nipro flooded the market with its false “upgrade”
and “switch” advertisement falsely using the TRUE branding to convince customers to trust
GlucoKey. Nipro is intentionally and in bad faith using Trividia’s U.S.-based brand, which has
significant international recognition as covering products of exceptional quality and reliability, to
falsely communicate to customers that its GlucoKey product is affiliated with the TRUE line of
products.
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(C-131)
65. Here again, as recent as May 23, 2019, Nipro is using Trividia’s TRUEuniversal
lancet package to give customers the false impression that Trividia’s product is affiliated with
GlucoKey.
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(C-067) (C-148) Again on October 23, 2019—just last week—Nipro’s website continued the
following advertisement mixing the Glucokey with TRUE products after falsely flooding the
customer base with letters and text messages giving the false impression that GlucoKey was an
“upgrade” from the TRUE line of products.
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(C-149)
66. Nipro has also sent mass text messages to Trividia’s TRUEResult customers
(TRUEResult being a registered trademark), encouraging the customer to “Reply back yes for a
free GluckoKey upgrade.” Even though the message was sent by Nipro it is falsely signed
“TrueResult Team.”
(C-073)
67. On Nipro’s Japan website, as recently as May 23, 2019, Nipro used the Trividia’s
registered TRUEpico mark to promote its other products and give the international customers the
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false impression that CareFast and FreeStyle are affiliated with Trividia’s products when they are
not.
(C-072)
68. The next images were posted on Nipro’s German website as recently as May 23,
2019, and depict on multiple pages Nipro’s “4SURE” logo and 4SURE products alongside
Trividia’s TRUEyou and TRUEyou mini products.
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(C-078)
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(C-079 & C-080)
69. In addition to the above images, the website located at https://www.nipro-
diagnositcs.co.uk/patients/true-products also misleadingly uses the TRUE trademark to advertise
the 4SURE products.
(C-077)
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70. As displayed in the picture below, Trividia was informed by one of its employees
that Nipro is sending out its GlucoKey meters in a box that also includes Trividia’s TRUE lancets
giving the false impression that the GlucoKey product is made by the same manufacturer as
Trividia’s TRUE line of products.
(C-101)
71. This type of packaging gives the customer the false impression that the GlucoKey
is affiliated with Trividia’s TRUE products that customers have been faithfully purchasing for
years.
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ARGUMENT
I. NIPRO MATERIALLY BREACHED THE IDA
A. Nipro Materially Breached the IDA by Failing to Make Its Annual Minimum Purchase for Year Three
72. Nipro’s most fundamental and egregious breach of the IDA was its failure to
purchase the required Annual Minimum Purchase in Contract Year Three. By the terms of the
IDA, because the parties were unable to agree to a new purchase amount prior to the end of
Contract Year Two, Nipro was obligated to purchase from Trividia 180,000,000 strips in 3.6
million 50-count equivalent vials during Contract Year Three. See IDA § 2.2 & Schedule C.
Indeed, Nipro has already conceded to this Tribunal that it was required to purchase the Year Two
amount in Contract Year Three. (C-097) (“Further, with the remainder of the Agreement
terminated, Nipro is now willing and has informed Trividia that it agrees that the Contract Year
Three Annual Minimum Purchase quantity shall be the same as Contract Year Two (see
attached).”). Nipro nowhere explains why it should not be held to this concession. Yet, despite
acknowledging its obligation to purchase that amount in Year Three, Nipro failed to do so. And,
in fact, Nipro has never denied that it failed to make that minimum purchase. Accordingly, Nipro
materially breached its obligations under the IDA. See, e.g., Jafari v. Wally Findlay Galleries,
741 F. Supp. 64, 67 (S.D.N.Y. 1990) (“The failure to tender payment is a material breach of a
contract.”). (CLA-173)
73. Instead of contesting the uncontestable fact of its breach, Nipro offers a series of
irrelevant and meritless arguments for why its breach should be excused. Trividia will dispose of
each argument in turn.
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1. Trividia Negotiated Year Three in Good Faith
74. Resurrecting old arguments, despite the Tribunal’s clear instructions not to revisit
previously briefed topics, Nipro again tries to argue that Trividia did not negotiate Contract Year
Three in good faith. Nipro’s argument fails for several reasons. On its face it fails because
Trividia, in an exceptional and unrequired act of good faith, offered Nipro to revert back to the
lower minimum amount of Contract Year One rather than carrying over the Year Two amount.
Nipro refused to accept the generous offer and blew off its obligations relating to Contract Year
Three. As the evidence clearly establishes, Trividia’s good faith was met with unreasonable, bad
faith demands from Nipro.
75. As explained in the multiple witness statements of Vanessa Perez and Dean
Sorrentino, Trividia repeatedly engaged in good faith discussions with Nipro in an attempt to arrive
at an agreeable Annual Minimum Purchase for Contract Year Three. (See CWS-4 Suppl.
Sorrentino ¶ 2-4 ; CWS-Suppl. Lopez ¶ 12-19.) The course of events is not what Nipro pretends
it to be; the documents don’t lie and they demonstrate that Trividia made an offer to Nipro that
was beyond that required by good faith and below what the IDA required (i.e., carryover of the
Year Two minimums).
76. During Contract Year Two, Trividia’s business representative asked Nipro to
provide its projections for the Annual Minimum Purchase amount for Contract Year Three. Nipro
initially refused to provide any projections and asserted that it was Nipro’s position that Trividia
had no remedy for damages if Nipro failed to purchase the Annual Minimum Purchase for Contract
Year Three. Rather, Nipro wrongly claimed that Trividia’s only recourse would be to terminate
the Agreement. (CWS-001 Sorrentino ¶¶6; 8; C-002; C-004) Despite the clear language of the
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parties’ Agreement, Nipro demanded an Annual Minimum Purchase amount that was 85% lower
than Year Two and also demanded lower pricing on products. (CWS-01 Sorrentino ¶ 9; C-005)
As explained previously, Nipro had already made the decision to discontinue selling the TRUE
product and to actively steal Trividia’s TRUE customers and switch them to Nipro’s product.
77. On multiple occasions, Trividia engaged in good-faith discussions with Nipro to
explain to Nipro why, under the plain language of the Agreement, Nipro’s position was incorrect
and why Nipro was responsible for meeting the Annual Minimum Purchase amounts for Contract
Years Three through Five. (CWS-01 Sorrentino ¶¶ 6; 12; 15; C-002 and C-008) Moreover,
Trividia engaged in good-faith discussions in an effort to have the parties agree to an Annual
Minimum Purchase amount for Contract Year Three, as fully set forth in Mr. Sorrentino’s Witness
Statement and related exhibits. These efforts included repeated communications, an in-person
meeting, and an extreme showing of good faith by Trividia in offering Nipro a discount below the
level of Contract Year Two (emphasis added), despite the fact that the Agreement requires that if
the parties are unable to agree to an amount for Contract Year Three, the amount will be set at the
same level as Contract Year Two:
Dear Mr. Iwasaki….I previously shared the shock and disappointment from my senior management team when it was recently informed by you that Nipro’s proposed purchase level for Year Three of the Agreement is 27 MPCS, which represents an 85% reduction in the amount that was purchased from year 2. These significantly reduced purchase levels are not acceptable. In an effort to demonstrate our good faith commitment to Nipro, Trividia is willing to reduce year 3 annual minimum volumes to that which were agreed to in year 1, approximately 3,400,000 fifty (5) count vials of strips (170,000,000 strips). As you know, the agreement requires that if the parties are unable to agree on the annual minimum purchase prior to the end of the then current year, which in this case is January 6, 2018, then the annual minimum purchase for year 3 will be the same as year 2. Therefore, Trividia is making this offer which is a significant concession, as a sign of good faith and to show you our commitment to Nipro….
(CWS-01 Sorrentino ¶¶ 3; 6-14; C-003 - C-010)
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78. Notwithstanding these good faith efforts by Trividia, Nipro rejected attempts to
resolve this matter. (CWS-01 Sorrentino ¶ 13; C-009) Therefore, Trividia was forced to bring
this arbitration action to seek confirmation of its rights under the parties’ Agreement and, later, to
recover compensation for Nipro’s violations of those rights.
79. Nipro spills a lot of ink trying to claim that it sought a meeting in April 2017 with
Trividia. What it fails to disclose is that it requested this meeting at Trividia’s location and invited
all of their various Nipro offices to attend. Nipro’s intent was not to engage in a good-faith
discussion with Trividia regarding the Year Three Annual Minimums, but rather, to use Trividia’s
site for the purpose of its own businesses’ annual meeting to save on the costs and expenses of
having to rent a location. (CWS-Lopez ¶ 22). As Trividia was now owned by Sinocare, there was
no reason that Nipro should be demanding from Trividia the free use of its facilities for Nipro’s
annual meeting. Accordingly, Nipro’s representative responded by asking why all of the Nipro
offices needed to attend and requested a call. (See C-024)
80. Ultimately, the meeting was not held in April and instead was held on July 19,
2017. The meeting started in a very unprofessional way with Nipro’s representative making
disparaging ethnic remarks about Trividia’s Chinese owner. (CWS-001, Dean Sorrentino Witness
Statement.) During that meeting, Mr. Miyazumi discussed the unit numbers for Contract Year
Two which had been trending significantly below expectation and he assured Trividia that by
December 31, 2017, he would meet the numbers. (CWS-Lopez ¶ 23.) Additionally during that
meeting, among other topics, Mr. Wakatsuki asserted that the parties’ IDA was only a two-year
agreement and it did not need to meet the Annual Minimum Purchases in Contract Years Three
through Five. Thereafter, Nipro refused to agree on the Annual Minimum for Contract Year Three
unless Trividia would agree that termination was its “sole remedy.” Trividia’s manufacturing
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business suffers if it does not have substantial lead time and projections, so it continued to press
to get forecasts from Nipro, but Nipro refused to agree on an Annual Minimum for Contract Year
Three, even after Trividia made the good-faith offer to reduce the levels down to that of Year One.
Even after the dispute arose, Trividia continued, and continues, to request forecasts, and Nipro
continues to refuse to provide forecasts. (CWS-3 Suppl. Lopez ¶¶ 37; 38.)
81. Nipro has wrongly claimed that the prices in the IDA—that it agreed to—were
inflated or not commercially reasonable. On November 8, 2017, Vanessa Perez wrote to Mr.
Iwasaki explaining that his requested reduction of 85% from the prior year was not in good faith.
Specifically Vanessa Perez said:
We reviewed your estimate units purchased for 2018 and we were startled to see the 85% reduction compared to 2017. Please provide Nipro offices 2018 estimated units purchased by product (item code) and counting for our review….
(Trividia 020304) (C-133)
On December 8, 2017, Ms. Perez again asked for the information from Nipro. Thereafter, on
December 21, 2017, Vanessa relays the following message to Mr. Iwasaki:
I have brought forward to senior management your proposal for year 3 which is 85% lower than year 2. These proposed volumes are not acceptable and we are not in agreement. We need a higher volume commitment for 2018 by the end of this calendar year or per the distribution agreement we revert back to last year’s volume for 2018.
(Trividia 020276) (C-134)
82. Although Nipro accuses Trividia of bad faith in not accepting a Year Three
minimum purchase amount more than 85% below what the IDA sets as the floor for Year Three,
Nipro never explains how such a massive reduction is in anyway commercially reasonable.
Rather, Nipro complains that Trividia did not allow Nipro to register a new product—one not
contemplated in the IDA—in Australia. But aside from the factual inaccuracies with that
statement, see CWS-3 Suppl. Lopez ¶ 33, Nipro’s argument fails for several other reasons. First,
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the IDA specifically contemplates that Trividia and Nipro will compete with each other in Years
Three to Five—and Nipro agreed to those conditions at the same time it agreed that minimums
would carryover. Second, Nipro’s sales of Trividia’s strips in Australia average less than 10% of
Nipro’s total purchases. Even if Trividia’s sales of True Metrix strips, which began in December
2018 and are negligible, could be held to justify a reduction of Nipro’s contractual obligations, this
amount certainly doesn’t support a drop from 180 million strips to 27 million. Finally, any
argument Nipro has made that it could only reasonably be expected to purchase 27 million strips
is wholly undermined by the fact that Nipro continues to purchase far above this amount and has
since committed to purchase over 116 million strips to settle the Year Three dispute. (CSOD ¶
113; IDA Amend. 2.) Nipro—and not Trividia—clearly negotiated Year Three from a position of
bad faith.
2. Neither the IDA nor Good Faith Require Reduction of the Carryover Minimum
83. In any event, whether the parties’ Year Three negotiations were conducted in good
faith has no bearing on the fact that Nipro still breached its Annual Minimum Purchase obligation
for Year Three. That is because the IDA expressly carries over the prior year’s purchase amount
regardless of whether the parties mutually agree to a new minimum amount. Nothing in the
language of the IDA makes the carryover amount contingent on good-faith negotiations, and the
IDA certainly does not require Trividia to negotiate below the floor set by the carryover provision.
84. Under New York law, “[i]t is the primary rule of construction of contracts that when
the terms of a written contract are clear and unambiguous, the intent of the parties must be found
within the four corners of the contract, giving a practical interpretation to the language employed
and the parties’ reasonable expectations.” In re Coudert Bros., 487 B.R. 375, 389 (S.D.N.Y. 2013)
(CLA-401). “Language whose meaning is otherwise plain does not become ambiguous merely
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because the parties urge different interpretations in the litigation.” Law Debenture Trust Co. of
420). “That said, in analyzing contractual text, a court need not turn a blind eye to context. Rather,
a court should accord contractual language its plain meaning giving due consideration to the
surrounding circumstances and apparent purpose which the parties sought to accomplish.” In re
Coudert Bros., 487 B.R. at 389 (internal quotations and alterations omitted) (CLA-401).
85. In terms of what constitutes “good faith,” parties must negotiate truthfully, with
honest articulations of their interests. See Gas Nat., Inc. v. Iberdrola, S.A., 33 F. Supp. 3d 373,
382 (S.D.N.Y. 2014) (CLA-377). However, acting in “self-interest is not bad faith.” Id. (quoting
L-7 Designs, Inc. v. Old Navy, LLC, 964 F. Supp. 2d 299, 307 (S.D.N.Y. 2013)) (CLA-418). Nor
does acting on the basis of a good faith business judgment constitute bad faith. See id. (quoting
Zilg v. Prentice-Hall, Inc., 717 F.2d 671, 681 (2d Cir. 1983)). (CLA-507) Conversely, bad faith
requires some sort of intentional misconduct that is “arbitrary or capricious [and] taken out of spite
or ill will or to back out of an otherwise binding contractual commitment.” See id. (internal
quotations omitted).
86. Here, Nipro (wrongly) alleges that Trividia did not negotiate the Year Three
minimum in good faith, and that such failure to negotiate in good faith relieves Nipro of its to
obligation to purchase the carryover Annual Minimum Purchase quantity for Year Three.
Specifically, Nipro contends that a good-faith negotiation is a “condition precedent” to invoking
the carryover provisions of Section 2.2 and Schedule C. That interpretation simply does not square
with the contract’s language.
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87. By design, and after extensive negotiations, the parties entered the IDA with the
intent that Nipro would purchase a certain amount of strips each year for five years. Specifically,
Section 2.2 of the IDA provides:
Commencing from the second Contract Year, in the event that the parties have not agreed on the Annual Minimum Purchase for the next Contract Year during the initial or any renewal term, then the parties shall use good faith efforts to mutually agree on the Annual Minimum Purchase for the next Contract Year prior to the end of the then current Contract Year; provided, however, that in the event the parties are unable to agree on the Annual Minimum Purchase for the next Contract Year prior to the end of the then current Contract Year, then the Annual Minimum Purchase for the next Contract Year shall be the same as that of the then current Contract Year.
IDA § 2.2 (emphasis added); see also id. Schedule C:
“In the event the Parties have not mutually agreed on the Annual Minimum Purchase for any Contract Year, the Annual Minimum Purchase for such Contract Year will be the same as the prior Contract Year.”
In practical terms, the IDA provides that, at a minimum, Nipro would purchase at least 170 million
strips in Year One and 180 million strips in each year for Years Two through Five, unless another
agreement was reached.
88. By its plain language, the IDA ensures that Nipro would purchase a minimum
amount of strips for five years. And while preserving a mechanism for adjusting the minimum,
the IDA recognizes that a mutual agreement may not be possible and thus sets a floor for each year
of the contract to preserve the parties’ expectations.
89. Nothing in the language of the IDA suggests that good-faith negotiations are a
“condition precedent” to invoking these carryover minimums. New York law requires that a
condition precedent be clearly identified in a contract’s language. See, e.g., Tyndall v. Tyndall, 42
N.Y.S.3d 250, 251-52 (N.Y. App. Div. 2016) (CLA-488) (“A contractual duty ordinarily will not
be construed as a condition precedent absent clear language showing that the parties intended to
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make it a condition.” (citation omitted)); id. (“It must clearly appear from the agreement itself that
the parties intended a provision to operate as a condition precedent. If the language is in any way
ambiguous, the law does not favor a construction which creates a condition precedent.” (internal
quotation marks and citations omitted)). The IDA contains no such “clear language” making good-
faith negotiations a condition precedent. In fact, the language used in Section 2.2—“provided,
however”—demonstrates the opposite proposition, expressly modifying the annual negotiation
requirement to preserve a minimum carried over each year of the contract independent of the
parties’ reaching an agreement on a new minimum.8 Tellingly, Nipro conspicuously omits these
two words when quoting Section 2.2 in its brief. See CSOD ¶¶ 100-101. Carrying over the prior
year’s minimum is not contingent on good-faith negotiations; it is a contingency in the event no
such negotiations take place or no agreement is reached.
90. Moreover, Nipro cannot redefine “good faith” to require Trividia to negotiate below
the minimums it is guaranteed in each year of the contract. While Trividia did, in fact, negotiate
in good faith with Nipro, good faith did not require Trividia to abandon its own economic self
interest. See Gas Nat., 33 F. Supp. 3d at 382 (CLA-377) (acting in self-interest is not bad faith).
Trividia was under no duty to accept or even counter Nipro’s absurdly low offer to purchase 27
million strips—a decrease of 153 million strips from the minimum guaranteed to Trividia in the
IDA. But it did make a counter offer, and Nipro rejected Trividia’s generous good faith offer.
91. Nipro agreed to a contract that obligated it to purchase at least 180 million strips in
Year Three (as well as Years Four and Five). Nipro failed to do so, and thus breached its
8 And as explained below in Section IV.A, Nipro’s interpretation would render the carryover provisions utterly meaningless, while Trividia’s interpretation preserves both the good-faith clause and the carryover provision.
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obligations under the IDA. That Nipro, a sophisticated international corporation, may now regret
the agreement it executed, has no bearing on whether it is required to live up to its contractual
obligations.
3. Nipro Cannot Establish a Frustration of Purpose Defense
92. Nipro’s frustration of performance defense appears to be primarily premised on the
fact that it is upset with Trividia because Trividia did not go outside the four corners of the IDA
and grant Nipro the right to sell a new product that Trividia had developed with Bluetooth
technology. CSOD ¶¶ 124-127. The IDA expressly contemplates that Trividia will compete with
Nipro. See IDA § 1.1 (“non-exclusive distributor of the Products”); Schedule C (providing for a
reduction in the Annual Minimum Purchase amount for purchases by “any direct customer of
[Nipro] that becomes a direct customer of [Trividia] or its affiliates during such Contract Year.”).
The IDA also expressly does not identify the True METRIX Air as among the twenty-plus products
governed by the IDA in Schedule A. Even if Nipro’s narrative was accurate, Trividia cannot
“frustrate” Nipro’s performance by refusing to take on new obligations that were not part of the
original agreement. Nipro agreed to purchase a minimum number of certain products from
Trividia. Nipro’s frustration of performance defense is nothing more than a claim that because it
does not like the contract it entered into, it should be able to demand from Trividia any other
products it wanted.
93. Nipro’s cited cases do not support its position because here, there can be no
frustration of performance when the product that Nipro complains that it was not allowed to sell
in Australia was not a product governed by the IDA. Moreover, the Annual Minimum Purchase
quantity is a requirement to purchase strips from Trividia for sale in all territories, not just
Australia. So to the extent Nipro resolved to promote and sell its new GlucoKey product in
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Australia rather than the TRUE products, it was still required to purchase the same total amount
of product from Trividia, and could have made sales elsewhere in the appropriate territory. Nipro
cites Ixe Banco, S.A. v. MBNA Am. Bank, N.A. No. 07 CV 0432 (LAP), 2009 WL 3124219
(S.D.N.Y. Sept. 29, 2009) (CLA-388), but that case is distinguishable because in Ixe Banco, the
party took affirmative steps to prevent Ixe Banco from getting a regulatory approval from the
Mexican government that it knew was a condition precedent to the contract. Id. at *6. Nipro
applying for or receiving a particular tender for the True METRIX Air, a product not even covered
by the IDA, was not a “condition precedent” to its required purchases under the IDA. Indeed, Ixe
Banco cites Corbin on Contracts for the principle that: “One who sues for damages, alleging as a
breach the prevention or hindrance by the other party must prove that the condition on which his
rights depended would have occurred or been performed but for the prevention or hindrance.” Id.
at *5. Nipro cannot establish that proposition in this case because the facts prove that Nipro’s
ability to purchase the Annual Minimum Purchase quantity for Contract Year Three was in no way
conditioned on Trividia’s granting Nipro the right to distribute the True METRIX Air in Australia..
94. Similarly, United States v. Bedford Associates., 548 F. Supp. 732 (S.D.N.Y. 1982),
cited by Nipro, is inapplicable because it involved a case where the government engaged in
excessive delays that caused the renovations to be postponed and in the interim the construction
costs skyrocketed making performance impossible under the original contract. Id. at 737. But
here, no action by Trividia stood in Nipro’s way of meeting its Annual Minimum Purchase
obligations for Contract Year Three. Under New York law, a party who is willfully
underperforming cannot use the frustration of performance doctrine as an excuse for the party’s
own performance failures. See VJK Productions, Inc. v. Friedman/Meyer Productions, Inc., 565
F. Supp. 916, 920 (S.D.N.Y. 1983) (CLA-500) (“The defense is not available where, as here, the
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promisor is responsible for the event which makes performance impossible.”); see also
Lowenschuss v. Kane, 520 F.2d 255, 265-66 (2d Cir. 1975) (“Impossibility caused by a judicial
order prohibiting performance will excuse a party’s performance only if the fault of the party
owing performance did not contribute to the order.”).(CLA-424)
95. Moreover, as confirmed by Dean Sorrentino’s witness statement, Nipro again
mischaracterizes the facts. Trividia did not “effectively block[] Nipro’s access to the Australian
market.” CSOD ¶ 125. Rather Nipro made a calculated choice to not register Trividia’s eligible
TRUE products with the Australian Department of Health National Diabetes Service Scheme
(“NDSS”) and instead, as Nipro’s document production reveals, to surreptitiously enter into an
agreement in Contract Year Two with a competitor to sell GlucoKey meters and strips at an
increasing rate for the next three years. These documents further evidence Nipro’s efforts to steal
Trividia’s customers and “switch” them from Trividia to Nipro’s new product. (AEO
NIPRO0013429-13446) (C-135); (NIPRO0002016) (C-102) (“I would estimate that
approximately 40,000 diabetics use a True Meter at the moment. We believe that we could replace
75% of those in the first 6 months. We keep warranty cards of all our customers - so as soon as we
have success in the Tender we will begin a calling and postal campaign to convince them to
switch to a free 'latest technology' meter etc and bring them across.”).
96. Now after the documents have been produced, it is clear that Nipro’s frustration of
purpose defense is a red herring because it was already in the process in Contract Year Two of
registering its new product and not making efforts to register or sell the existing products it was
entitled to sell under the IDA. In fact, Nipro Australia started the process of registering its
competing products prior to the end of Contract Year Two, specifically on or about September 27,
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2017. (CWS-Lopez ¶ 16.) Nipro essentially has frustrated its own performance from the
beginning of the IDA.
97. As for the government tender that Nipro has raised in its brief, again it
misrepresents the truth. The NDSS Tender Deed (CWS-Lopez ¶ 15) did not require BGMs to
have a Bluetooth connection to participate in the tender. Moreover, Nipro Australia, behind the
back of Trividia, did participate in the tender and was listed on the new NDSS Tender
Reimbursement list (CWS-Lopez ¶ 15) for its GlucoKey product, but Nipro made no effort to
register the TRUE products. The documents show that Nipro knew that Bluetooth technology was
not required for the tender:
Dear Tsuchiya san,To answer your questions – no, being bluetooth was not essential, just highly regarded. We currently have non-bluetooth meters on the tender, for use in Multi-Patient facilities (aged care). There are one or two other meters, that made the tender that don’t have Bluetooth.
NIPRO0002044 (C-136).
98. Even more concerning, Nipro delayed notifying Trividia that Nipro had failed to
meet a TGA regulatory deadline, causing potentially adverse consequences to how Trividia’s
product would be handled by the TGA. More specifically, Nipro was notified by the TGA of the
issue in July 2017 and waited until September 2017 to give any response to TGA, which coincides
from a timing perspective with their registration of their new Glucokey product technology.
(CWS-Lopez ¶ 16; C-026) Despite the Agreement providing in Section 3.3 that Nipro must
immediately notify Trividia about any regulatory inquiry, and despite being contracted by the
regulation in July 2017, Nipro sat on the request for over a year without providing information to
Trividia, thus resulting in Nipro missing the deadline for the required submission to TGA. (CWS-
Lopez ¶ 16; C-027)
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99. Nipro’s complete disregard for the Agreement and complete disregard for ensuring
that it complies with TGA’s requests demonstrates that it never intended to participate in this
Agreement beyond Contract Year Two despite continuing to reap the benefits from the IDA.
100. Nipro’s facts regarding what occurred in Australia are again incorrect. First, the
parties’ Agreement allows Trividia to register products. Second, the regulatory authority in
Australia, TGA, allows more than one company to register the same product. (CWS-Lopez ¶ 13.)
Trividia registered the TRUE METRIX portfolio. (CWS-Lopez ¶ 13.) Trividia is also authorized
to sell any of its products in Australia pursuant the Agreement. (CWS-Lopez ¶ 13.) There was
absolutely no “registering behind Nipro’s back.” And in fact Nipro’s own documents show it was
Nipro that was instructing its employees to register products “behind TRIVIDIA’s back.” (AEO
NIPRO00185856) Nipro registered that competing product—called GlucoKey—on September
29, 2017. (CWS-Lopez ¶ 13; C-025) It has also illicitly used advertising on its website with the
Trividia brand to cross-market this non-Trividia GlucoKey product in Australia to try to get
Trividia customers to “switch” to GlucoKey.
101. And finally, as a matter of fact, Trividia’s sales volume in the Territory is just
simply not sufficient to frustrate Nipro’s sales efforts or excuse its purchase obligations. Trividia
did not sell any product in any of the Territories in 2016 or 2017. In 2018, one customer in
Germany approached Trividia requesting to purchase directly from Trividia instead of through
Nipro, as it had done prior to Nipro owning Trividia. Thus, in 2018, Trividia sold 205,056 units
directly to the German customer. But, pursuant to Schedule C, that amount was deducted from
Nipro’s Year Three purchase obligations. (See CER-1 Suppl. Kindler at ¶ 51, n.101, Exh 5 ).
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4. The Force Majeure Clause Does Not Excuse Nipro’s Underperformance nor Its Scheme to Steal Customers and “Switch” them to Nipro’s New Product
102. Nipro attempts to argue that its failure to meet the Annual Minimum Purchase for
Contract Year Three should be excused by the IDA’s Article VI “force majeure” clause. New
York law, however, does not allow a poor performing party who attempts to blame market
conditions to use a force majeure clause to excuse its conduct. Notably here, Nipro was clearly
able to perform; it simply chose not to in the hopes that Trividia would not bring an action. Nipro’s
ability to perform is plainly demonstrated by the fact that after Trividia terminated the IDA, Nipro
then agreed to purchase the remaining product to meet the Annual Minimum Purchase for Contract
Year Three. The issue is not that Nipro was precluded from performing by circumstances beyond
its control. The issue is that Nipro simply did not want to perform.
103. The case law in New York makes clear that financial changes in the market or a
party’s under performance, are not embraced by a force majeure clause. In Rochester Gas &
Electric Corp. v. Delta Star Inc., No. 06-CV-6155-CJS-MWP, 2009 WL 368508, at *7 (W.D.N.Y.
Feb. 13, 2009) (CLA-461), in denying the application of the force majeure clause, the Court
explained:
The New York courts have held that non-performance based on a force majeure clause is excusable “only if the force majeure clause specifically includes the event that actually prevents a party's performance.” Kel Kim Corp. v. Central Markets, 70 N.Y.2d 900, 902–03, 524 N.Y.S.2d 384, 519 N.E.2d 295 (1987).“Moreover, the impossibility must be produced by an unanticipated event that could not have been foreseen or guarded against in the contract.” Kel Kim, 70 N.Y.2d at 902, 524 N.Y.S.2d 384, 519 N.E.2d 295 (citations omitted). “However, financial difficulty does not, in and of itself, make out an impossibility defense.” Bank of America Nat'l Trust & Sav. Ass'n v. Envases Venezolanos, S.A., 740F.Supp. 260, 267 (S.D.N.Y.1990), aff'd 923 F.2d 843 (2d Cir.1990). “Financial difficulties growing out of a general business slowdown or recession may cause personal inability to perform but do not usually constitute an excuse by impossibility of performance.” 14–74 Corbin on Contracts § 74.7. (emphasis added)
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104. Again in Kel Kim Corp. v. Central Markets, 519 N.E.2d 295 (N.Y. 1987) (CLA-
411), the Court found that a lessee of a roller skating rink’s inability to get liability insurance would
not be excused under the force majeure clause. The court explained that the clause would need to
specifically list the failure to be able to obtain insurance in order to obtain the benefit of the force
majeure clause, because those clauses are narrowly construed and limited to their specific
provisions. The “catchall” of “or other similar causes beyond the control of such party” could not
be interpreted to include insurance because “the principle of interpretation applicable to such
clauses is that the general words are not to be given expansive meaning; they are confined to things
of the same kind or nature as the particular matters mentioned.” Id. at 386.
105. Here Nipro complains that the market was changing and Trividia’s other products
were making it difficult for Nipro to compete. Even if that were true, which it is not, Nipro could
not rely on the force majeure clause to excuse its non-performance because financial hardship is
not covered by the force majeure clause. In Macalloy Corp v. Metallurg, Inc., 728 N.Y.S.2d 14
(N.Y. App. Div. 2001) (CLA-425), the plaintiff, like Nipro here, tried to use the excuse of financial
hardship to relieve itself of its obligations to perform under the contract based on the “plant
shutdown” language contained in the force majeure provision of the contract. The Court rejected
this explaining:
Such force majeure clauses excuse non-performance only where the reasonable expectations of the parties have been frustrated due to circumstances beyond the control of the parties (see, Kel Kim Corp. v. Cent. Mkts., Inc., 70 N.Y.2d 900, 902, 524 N.Y.S.2d 384, 519 N.E.2d 295; United Equities v. First Natl. City Bank, 52 A.D.2d 154, 157, 383 N.Y.S.2d 6, affd. 41 N.Y.2d 1032, 395 N.Y.S.2d 640, 363 N.E.2d 1385). Plaintiff shut down its plant voluntarily due to financial considerations brought about by environmental regulations. Those are not circumstances constituting a force majeure event, and financial hardship is not grounds for avoiding performance under a contract (see, 407 E. 61st Garage v. Savoy Fifth Ave. Corp., 23 N.Y.2d 275, 282, 296 N.Y.S.2d 338, 244 N.E.2d 37; Matter of Coastal Power Production Co. v. New York State Pub. Serv. Commn.,153 A.D.2d 235, 240, 551 N.Y.S.2d 354). Furthermore, plaintiff was fully aware
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of the environmental regulations, and the Environmental Protection Agency's intention to enforce them fully, prior to entering into the contract with defendant.
Id. at 14-15; see also Team Marketing USA Corp. v. Power Pact LLC, 839 N.Y.S.2d 242, 245-46
(N.Y. App. Div 2007))(CLA-479) (rejecting use of force majeure clause where the unforeseen
circumstance were not those specifically listed in the force majeure clause).
106. The cases Nipro cites do not support its position. For example, Constellation
Energy Serv. of New York, Inc. v. New Water St. Corp., 46 N.Y.S.3d 25, 27 (N.Y. App. Div. 2017)
(RLA 161), is distinguishable because it was dealing with the implication of a broad force majeure
clause that covered issues relating to Hurricane Sandy. Similarly Harriscom Svenska, AB v. Harris
Corp, 3 F.3d 576 (2d Cir. 1993) (RLA 162), cited by Nipro is not applicable because the failure
of performance was due to the U.S. Government banning the shipment of certain goods to Iran,
which was the purpose of the contract at issue. Id. at 580 (“Further, for RF Systems to have failed
to comply would have been unusually foolhardy and recalcitrant, for the government had
undoubted power to force compliance.”). Nor is Castor Petroleum v. Petroterminal De Panama,
968 N.Y.S.2d 435, 436 (N.Y. App. Div. 2013), on point, as that case involved a Panamanian court
preventing a party from carrying out its contractual obligations. Id.
5. Amendment No. 2 Is Irrelevant to the Breach Claim
107. Nipro appears to believe that because the parties have reached an agreement by
which Nipro will purchase 116,411,700 strips to make up for its failure to purchase the required
minimum in Year Three, Trividia’s Year Three breach claim no longer has merit. CSOD ¶¶ 96-
98. But Nipro’s argument is misguided for two reasons. First, and foremost, that agreement
(Amendment No. 2), provides that “Trividia agrees that it shall not seek Monetary Damages
(including interest) relating to the Annual Minimum Purchase for Contract Year 3 in the
Arbitration or otherwise once Nipro pays in full.” IDA Amend. No. 2 (C-137) (emphasis added).
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Nipro has not yet paid in full, and indeed, has already breached its obligations under the
Amendment by improperly cancelling a purchase order. (CWS-4 Suppl. Sorrentino ¶ 61)
Accordingly, until Nipro pays in full, Trividia may continue to seek its Year Three breach claim
and seek the corresponding damages. In the event Nipro fulfills its obligations under Amendment
2, then the award of damages from the Tribunal can be adjusted to once the payment is made in
full.
108. Second, as Nipro acknowledges, “[n]othing in this Amendment may be construed
as a waiver or relinquishment of any claim or defense that Trividia or Nipro has raised or may
raise in the pending Arbitration or otherwise.” The fact that Nipro’s damages liability for Year
Three may eventually be excused by its performance under the Amendment simply has no bearing
on whether Nipro breached its Year Three obligations under the IDA, whether Trividia properly
terminated the IDA, and whether Trividia is entitled to total damages following Nipro’s breaches
of the IDA.
B. Nipro Materially Breached the IDA by Failing to Provide Forecasts
109. Despite repeated requests from Trividia, Nipro failed to comply with the
requirement in Section 3.2 of the IDA that it provide a purchase forecast to ensure Trividia had
predictability with respect to its manufacturing process. As Vanessa Lopez explained in her
witness statement, Trividia made several repeated attempts to try to obtain the forecasts from Nipro
to prepare for the orders but never received any response. (CWS-2 Suppl. Lopez ¶8). Nipro does
not, and cannot, deny that it failed to provide the forecasts. Rather Nipro argues that this Tribunal
should not find that its failure to provide forecasts resulted in a breach of the IDA.
110. Nipro first misconstrues this Tribunal’s Partial Final Award in an effort to suggest
that the Tribunal has already held the failure to provide forecasts cannot be a breach. But the
language Nipro emphasizes in Section 3.2, CSOD ¶ 214, and the Tribunal’s award, PFA ¶ 44,
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deals with a remedy available to Trividia for purchasing materials in reliance on Nipro’s forecasts.
That provision is not applicable here because (a) Nipro provided no forecasts on which Trividia
could rely and (b) that remedy provision does not speak to breaches of the underlying obligation
to provide forecasts. The IDA obligated Nipro to provide forecasts. Its failure to comply is a breach
of that obligation.
111. Nipro spills a lot of ink discussing a “forecast tool” that it used to provide
information to Trividia, but that discussion also misses the mark. Trividia’s provision of a tool to
aid Nipro in satisfying its obligation to provide forecasts does not undermine the parties’ intent
when they executed the IDA that Nipro would provide these forecasts. The cases cited by Nipro
for the proposition that “the parties’ course of performance under the contract is considered to be
the ‘most persuasive evidence of the agreed intention of the parties,’” Fed. Ins. Co. v. Americas
underscore here the “agreed intention of the parties” that forecasts be provided: Trividia attempted
to make it easier for Nipro to comply with its forecast obligations by providing a tool, though it
was not required to do so.9
112. Trividia has also never waived its contractual right to receive forecasts. First,
waiver under New York law is a “voluntary and intentional abandonment of a known right” that
must be “unmistakably manifested.” Gallegos v. Top RX, Inc., No. 04–CV–773A, 2008 WL
4279526, at *13 (W.D.N.Y. Sept. 15, 2008) (CLA-378) (citations omitted). There can be no
unmistakably manifested voluntary abandonment where Trividia repeatedly asked for forecasts up
9 Nipro has not argued that any “course of performance” has modified its obligations to provide forecasts under the IDA. Nor could it, as the IDA expressly prohibits any modification not made in writing and executed by both parties. See IDA Art. XII.
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until the termination of the IDA. Second, as Nipro tacitly acknowledges, the IDA contains a “Non-
Waiver” clause that states: “The waiver of a breach of any provision of this Agreement by either
party shall not operate or be construed as a waiver of any other antecedent or subsequent breach
although of the same or different type.” IDA Art. IX. Thus, by the plain terms of the contract,
even if Trividia’s “acceptance” of Nipro’s non-performance in certain months constituted a waiver
of that month’s breach, Trividia’s subsequent requests—and Nipro’s subsequent non-compliance
despite those requests—are not waived breaches. See generally Bank Leumi Trust Co. of N.Y. v.
can be “withdrawn, provided the party whose performance has been waived is given notice of
withdrawal and a reasonable time after notice within which to perform” (citation omitted)).
Moreover, “estoppel” is not applicable here because Nipro has not shown any detrimental change
in position from not having to provide forecasts. Id. (“However, in the absence of any detriment
resulting from a change of position by defendants, the waiver does not give rise to an estoppel.”).
113. Nipro did not provide the forecasts in 2018 as required by the IDA, despite
Trividia’s repeated requests for the forecasts. Nipro was obligated to provide forecasts, and its
failure to do so is a breach of the IDA. Nipro’s obligations were never “changed” or “waived” by
Trividia’s conduct. The IDA required Nipro to provide forecasts, and recognizing its obligation,
Nipro did provide those forecasts—but eventually stopped after its scheme to switch customers
away from Trividia’s products began to crystalize. Trividia made repeated requests to get the
forecasts but Nipro refused to comply. Nipro breached the IDA by not providing the forecasts.
114. Finally, just as a factual matter, Nipro is incorrect when it claims that Trividia did
not request forecasts. In fact, Trividia repeatedly requested forecasts—on July 6, 2018; August 6,
2018; October 16, 2018; November 8, 2018; and December 5, 2018—but Nipro refused to provide
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the forecasts. (CWS-3 Suppl. Lopez ¶ 37.) Nipro was required to provide these forecasts. It
didn’t. It therefore breached the IDA. Trividia was damaged by this breach. (CER-1 Suppl.
Kindler at ¶ 23)
C. Nipro Materially Breached the IDA by Misusing Trividia’s Licensed Trademarks
115. Nipro further breached the IDA by misusing Trividia’s trademarks in contravention
of the limited license granted under the IDA. These trademarks are highly valuable assets that
Trividia took great care to protect in the text of the IDA. See, e.g., IDA § 3.10 (“The trademarks
and service marks set forth in Schedule F, attached hereto (the ‘NDI Marks’) owned by or licensed
to NDI are vital to NDI’s business.”); IDA § 16.5 (“[T]he Trademarks, Article 3.10 constitute
valuable business assets and rights of NDI, the willfully unauthorized use, disclosure or breach of
which may irreparably damage NDI.”). Nevertheless, Nipro willfully and without authorization
misused Trividia’s trademarks in breach of Section 3.10 and Schedule F. the IDA specifically
provides:
“In addition to the list of trademark and logos below Distributor will not use the “True” in the marketing or distribution of any products other than the product included in the Agreement.”
As Nipro has done elsewhere, its only response to these breaches is to delete and disregard the
language of the IDA demonstrating its breach.
116. Section 3.10 of the IDA, entitled “Trademarks; Service Marks,” provides in full:
The trademarks and service marks set forth in Schedule F, attached hereto (the “NDI Marks”) owned by or licensed to NDI are vital to NDI’s business. NDI hereby grants to Distributor a limited, non-transferable, non-exclusive, fully paid up license to the NDI Marks, during the term of this Agreement, solely for such packaging and labeling and promotional materials, subject to compliance with NDI’s standard quality monitoring guidelines (which shall be provided to Distributor on or before the Effective Date of this Agreement) and Distributor’s advance written notification to NDI of any intended use of the NDI Marks, including the provision of samples of such use, to be used solely with the Products. NDI shall retain ownership of the NDI Marks and all associated goodwill and any
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and all uses of the NDI Marks shall inure to the benefit of NDI or its licensors. Distributor shall have the sole right and responsibility for developing its own trademarks and trade dress for use in connection with the marketing, sale, advertising and/or promotion of its products and services, subject to NDI’s reasonable approval, and Distributor shall own such trademark(s) and trade dress and all associated goodwill, and shall prosecute, maintain and enforce such trademarks and trade dress at its own cost and discretion. Distributor further agrees to take reasonable measures to assist NDI in its protecting the NDI Marks. In partial fulfillment of this responsibility, Distributor agrees to notify NDI of any and all uses of these rights by any unauthorized person or entity of which Distributor becomes aware, and to cooperate in any actions by NDI to protect these rights at NDI’s expense. Nothing set forth herein shall constitute any grant of license or right to use the NDI Marks other than in connection with the Products and their packaging in accordance with the terms of this Agreement. Distributor shall not use NDI, its corporate name, or any of the NDI Marks in connection with any corporate or business name of Distributor.
(emphasis added). Thus, the IDA clearly restricts Nipro’s use of Trividia’s marks solely to
promoting Trividia’s products and clearly prohibits Nipro from using Trividia’s TRUE-related
marks “in connection with any corporate or business name of” Nipro. See also IDA Schedule F
(“Distributor will not use the “True” in the marketing or distribution of any products other than
the products included in the Agreement.”).
117. Despite this clear contractual language, Nipro offers two unconvincing arguments
for why its use of Trividia’s marks in connection with its own products is not a breach. First,
Nipro argues—without any support whatsoever in the language of the IDA—that the IDA permits
Nipro to use Trividia’s marks alongside Nipro’s own products and corporate name, as long as
Nipro is also selling Trividia products. CSOD ¶ 261. But Nipro’s argument simply ignores the
expressed language of Section 3.10 emphasized above and the plain language in the trademark
Schedule F. The IDA plainly limits Nipro’s use of Trividia’s marks to “solely” promoting the
Schedule A “Products”; it does not permit Nipro to use the marks to jointly promote its products
as well.
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118. Consequently, Nipro’s reliance on cases like Twentieth Century Fox Film Corp. v.
Marvel Enterprises, 220 F. Supp. 2d 289 (S.D.N.Y. 2002) (CLA-280), and Merck & Co. v.
Mediplan Health Consulting, Inc., 425 F. Supp. 2d 402 (S.D.N.Y. 2006) (CLA-432), is misplaced.
Unlike the clear contractual language here, neither case involved a contact with clear language
restricting the parties’ use of the trademark. Marvel involved purported breaches of implied terms
of a 1993 licensing agreement. 220 F. Supp. 2d at 293-95. Indeed, the Marvel court recognized
that implied terms do not impose specific obligations that could be breached. Id. at 294 (“These
two implied terms do not create any specific obligations or restrictions on Fox, and thus Fox's
conduct with respect to the domain names does not constitute a breach of either term.”); id. (“This
grant of rights does not refer to any requirement which would subject Fox's use of the X–Men
trademark to quality control approval from Marvel. The absence of any such express provision is
especially telling . . . .”). And in Merck, there was no licensing agreement at all. 425 F. Supp. 2d
at 406 (“Plaintiffs have not granted defendants permission to use their marks.”). These cases
cannot overcome the clear restrictions set forth in the language of Section 3.10 of the IDA.
119. Second, Nipro complains that its use of Trividia marks in connection with its
products on its webpages predates the execution of the IDA. CSOD ¶ 260. But Nipro fails to
explain how that fact changes the clear, express language of the IDA. If anything, it explains why
the restrictive trademark language was included in the IDA—to change the existing practices and
protect Trividia’s now independent intellectual property. As explained in Dean Sorrentino’s May
31, 2019 Witness Statement, Trividia’s trademarks are incredibly valuable to the Company and it
works to protect its marks. (CWS-3 Suppl. Sorrentino ¶¶ 17-30.) Nipro must honor the
commitments it made in executing the IDA. Trividia should not have to expend countless time
and money to constantly verify Nipro’s compliance with the terms of the trademark license.
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120. Nipro’s use of Trividia’s trademarks alongside Nipro’s products and corporate
name, whether on websites, flyers, customer letters, trade show displays, or elsewhere, constitutes
a material breach of the trademark license granted in the IDA.10 Here are just a few of the more
egregious examples:
10 This contractual breach exists regardless of whether Nipro’s misuse of Trividia’s marks causes customer confusion for purposes of trademark infringement law. Section 3.10 contains no exceptions for “non-confusing” misuses of Trividia’s trademarks.
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(NIPRO0000562; NIPRO0000561-562) (C-129)
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(C-087)
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(Trividia 018523) (C-073)
(C-153)
II. TRIVIDIA’S TERMINATION OF THE IDA WAS PROPER AND ENTITLES TRIVIDIA TO DAMAGES
A. Trividia Properly Followed the IDA’s Termination Procedures
121. Section 2.4 of the IDA governs Trividia’s rights to terminate that agreement. As
relevant here, Section 2.4 provides:
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NDI shall have the right at any time during the initial term or any renewal period hereof, by giving notice in writing to Distributor, to terminate this Agreement forthwith without judicial action upon the occurrence of any of the following events:
(i) Distributor’s failure to purchase the applicable Annual Minimum Purchase during any Contract Year as set for on Schedule C, and, as it applies to the first two (2) Contract Years, failure of the Distributor to cure the Purchase Shortfall in accordance with Section 3.2, below;
(ii) any breach of this Agreement by Distributor not cured within thirty (30) days after written notice thereof including breach of any open account payment terms which may be negotiated by the parties (timely payments there under being of the essence);
. . .
(iv) inability or failure of Distributor to make payments under this Agreement and any inability or failure of Distributor to perform its obligations hereunder;
. . . .
IDA § 2.4 (C-001) (emphasis added). Thus, if at any time Nipro fails to meet its Annual Minimum
Purchase obligation, fails to perform its obligations under the IDA, or fails to cure a noticed breach
within thirty days, Trividia is entitled to immediately terminate the IDA. Thus, Nipro cannot—
and does not—contend that termination of the IDA was improperly based on Nipro’s failure to
purchase the Year Three Annual Minimum Purchase amount during Contract Year Three or
Nipro’s failure to provide forecasts. Each of those breaches independently supports termination.
See October 16, 2018 PFA ¶ 47 (finding that Section 2.4(i) “is an express conferral of the right to
terminate the Agreement earlier in time than its five-year duration” if Nipro failed to purchase the
applicable Annual Minimum Purchase).
122. Nipro, though, claims that terminating the IDA based on Nipro’s breach of the
Section 3.10 trademark license was somehow improper. Nipro’s arguments are meritless. Trividia
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was entitled to terminate the IDA and claim damages because it provided the contractually required
notice of breach, and Nipro, by continuing to misuse Trividia’s trademark, did not cure its breach
in accordance with the terms of the Agreement. And in any event, under the plain language of the
IDA, Nipro’s “inability or failure” to abide by the trademark license entitled Trividia to
immediately terminate the IDA without a cure period.
1. Trividia’s Notice of Breach Letter Provided Adequate Notice of Nipro’s Breaching Conduct
123. Trividia provided Nipro with sufficient notice that it was in breach of the IDA’s
trademark provision and that a cure period was being triggered when Trividia sent a Notice of
Breach (“NOB”) on January 16, 2019. (C-065) In its NOB, Trividia informed Nipro that its
“unauthorized use of Trividia’s trademark,” including “us[ing] Trividia’s trademark to direct
customers to competing products,” was in breach of the trademark provisions in the IDA. In
conjunction with this assertion, Trividia provided examples of Nipro’s misconduct, and described
them as such in its letter (i.e., “For example,” “As another example”), to illustrate how Nipro’s
actively driving Trividia’s customers toward purchases of Nipro’s new products constituted a
breach of the trademark license. Now, in spite of providing no supportive authority, Nipro is
claiming that the “limited list” of examples set forth in Trividia’s NOB letter did not provide Nipro
with sufficient notice that Nipro was required to cure its blatant continuing breaches of its limited
trademark license and stop its infringement of Trividia’s trademarks.
124. Under New York law, in order for notice to be effective, it must “objectively” put
a breaching party on notice that a cure period is being triggered and that failure to cure could result
in “drastic legal repercussions.” Gil Enterprises, Inc. v. Delvy, 79 F.3d 241, 246 (2d Cir. 1996)
(CLA-383). The notice need not spell out the “specific consequences” of noncompliance; it need
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only be “sufficiently imperative” to put the receiving party on notice that the letter represents more
than a “mere request.” Id. Trividia’s notice did just that.
125. Trividia’s NOB demanded that Nipro “immediately cease its misuse of Trividia’s
trademarks” and that “[f]ailure to cure…will result in the immediate transfer of all product
registrations and distribution rights in accordance with the IDA.” (C-065) At no point in the letter
does Trividia assert that Nipro’s misuse of its trademark was limited to the few examples set forth
therein. In fact, the NOB quoted language from the IDA prohibiting Nipro from using the
trademark in connection with “any products other than the Products in the Agreement.” The NOB
also cited the provisions of the IDA making clear Trividia’s marks “are a vital and integral part of
its business and cannot be infringed or misused by Nipro,” as well as the provisions of the IDA
permitting Trividia to seek “immediate injunctive relief in court for any breach or threatened
breach.” This “imperative” language plainly and clearly puts Nipro on notice that any continued
misuse of the trademarks in violation of the IDA would result in “drastic legal repercussions.”
Contra Gil Enterprises, Inc., 79 F.3d at 246 (CLA-383) (finding that a notice letter that contained
precatory language such as “please advise” was not “sufficiently imperative” enough to put the
breaching party on notice that termination was at stake). The case law demonstrates that Trividia’s
NOB suffice to put Nipro on notice as to all trademark breaches, not just the exemplars cited in
Trividia’s NOB letter.
126. The case of Orion IP, LLC v. Staples, Inc., 407 F.Supp.2d 815 (E.D. Tex. 2006)
(CLA-451), involved patent infringements against certain pathways of a website. Orion, a
company engaged in intellectual property protection, claimed that Toyota’s website infringed one
of its patents. In Orion’s preliminary infringement contentions (“PICs”), it expressly accused
Toyota’s website of infringement and included screen shots as examples. Id. at 817. Toyota
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argued that Orion’s claims for infringement should be limited by the screen shots provided;
otherwise, Toyota was “left to guess what would be accused.” Id. The court disagreed with Toyota
and found that Orion’s PICs adequately provided notice to Toyota. Id. It held that “plaintiffs
should provide specific theories of infringement and representative examples…so as to give
defendants fair notice of infringement” Id. Similarly, as Orion exemplified, Trividia provided
Nipro with its “theory of infringement” (that it was breaching the trademark provision) and
provided representative examples thus giving Nipro fair and adequate notice of its infringement.
It was required to do no more.
127. Likewise, in Deutsche Bank Nat’l. Trust Co. v. Morgan Stanley Mortg. Capital
Holdings LLC, 97 F.Supp.3d 548 (S.D.N.Y. 2015) (CLA-360), order vacated in part sub nom.
Deutsche Bank Nat'l Tr. Co. for Morgan Stanley Structured Tr. I 2007-1 v. Morgan Stanley Mortg.
Capital Holdings LLC by Morgan Stanley Mortg. Capital Inc., No. 14-CV-3020 (KBF), 2018 WL
357315 (S.D.N.Y. Jan. 10, 2018) (CLA-362), the court found that Deutsche Bank properly
complied with the notice requirement contained in a purchase agreement with Morgan Stanley that
required a 90-day cure period. 97 F. Supp. 3d at 550. Morgan Stanley argued that Deutsche
Bank’s notice failed to comply with the requirement with respect to any loans beyond the 1,620
loans Deutsche Bank specified in its notice of breach letter. Id. at 552-53. The court found that
the letter gave adequate notice beyond the identified loans and that Morgan Stanley was effectively
put on notice for a more extensive range of loans. Id. Similarly, Trividia demanded that Nipro
cease all actions in violation of the trademark provisions, not just the few instances that Trividia
identified. See also Assured Guar. Mun. Corp. v. Flagstar Bank, FSB, No. 11 Civ. 2375(JSR),
2011 WL 5335566, at *7 (S.D.N.Y. Oct. 31, 2011) (CLA-312) (finding that plaintiff’s notification
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to defendant of “pervasive breaches” was sufficient to make defendant aware of, or put on inquiry
notice of, other unidentified breaches).
2. Nipro Failed to Cure Its Breach and Continued to Engage inBreaching Conduct After the Notice and Cure Period Ran
128. By continuing to engage in the noticed breaching conduct during the cure period
and after the cure period ended on February 15, 2019, Nipro failed to cure its breach as required
by Section 2.4(ii) of the IDA, thus giving Trividia proper grounds to terminate the Agreement even
if notice were required. Indeed, as set forth above, Nipro continued to misuse Trividia marks until
at least March 23, 2019, and in some instances, as late as this past week. See, e.g., C-077, C-078,
C-079, C-080, C-131, C-149.
129. Under New York law, a party attempting to cure a breach must show that the
proffered cure conforms to the terms of the contract. Bangkok Crafts Corp. v. Capitolo di San
Pietro in Vaticano, No. 03 Civ. 0015 RWS, 2004 WL 1406076, at *8 (S.D.N.Y. June 23, 2004)
(CLA-330); see also Sinco, Inc. v. Metro-North Commuter R.R. Co., 133 F. Supp. 2d 308, 313
(S.D.N.Y. 2001) (CLA-472). The party must stop the offending conduct, and a failure to
communicate an “unconditional intention to cure” is demonstrates lack of a cure. Id. (citing Allied
Semi-Conductors Int'l, Ltd. v. Pulsar Components Int'l, Inc., 907 F. Supp. 618, 626 (E.D.N.Y.
1995). (CLA-321)
130. In Fleetwood Folding Trailers, Inc. v. Coleman Co., 161 P.3d 786, 794 (Kan. Ct.
App. 2007) (CLA-373), the issue before the court was whether Fleetwood, a chair manufacturer,
had properly cured its breach of an agreement that permitted Fleetwood to print Coleman’s
trademarked logo on its chairs. The agreement contained a 30-day notice and cure provision. Id.
at 794. Fleetwood received written notices from Coleman notifying it of its many breaches, one
being that shipments were being distributed outside authorized territory. Id. at 795. Fleetwood’s
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reply denied failing to comply with the agreed upon procedures and claimed that one of the
breaches was just an “oversight.” Id. at 792. Fleetwood represented that it would “be in full
compliance…from this point forward.” Id. at 797-98. Just two weeks later, however, Fleetwood
breached the agreement again when it shipped trailers outside the territorial bounds of the contract.
Id. Coleman argued that Fleetwood failed to cure the breaches because it continued to breach the
agreement during the cure period. The court agreed, finding that these efforts failed to meet the
level of performance required to cure a breach of contract. Id.
131. Similarly to the agreement in Fleetwood, Section 2.4(ii) of the IDA provides that
Nipro had thirty (30) days after receiving Trividia’s NOB to cure its misuses of Trividia’s
trademarks or Trividia would have grounds to terminate the Agreement. Just as the party in
Fleetwood denied its breach and represented that it would be in “full compliance,” Nipro denied
any breach and simply wrote to “avoid the distraction,” it has “withdraw[n] the flyers and
statements complained of” and thus “resolve[d] the urgency of the concerns raised in [Trividia’s]
letter.” (C-066) Nonetheless, numerous breaches of the trademark provisions continued to occur
in the form internet advertising, if not others. (SOC ¶¶ 12-20; C-077; C-078; C-079; C-080; C-
131; C-147; C-148; C-149; C-150) These breaches, occurring both after Trividia sent its NOB
and after Nipro indicated it had “resolved” Trividia’s concerns, are comparable to Fleetwood’s
continued shipping of products outside the authorized contractual bounds. As the court in
Fleetwood noted, the remedial time period of 30 days “[was] not intended to give breaching parties
an extended time period to commit new breaches” and as such, Nipro’s conduct during the cure
period failed to conform to the terms of the contract. Id. Nipro’s position would essentially require
that Trividia play a never-ending game of “whack-a-mole,” placing the onus on Trividia to
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constantly monitor and swat down any trademark violations rather than simply requiring Nipro to
not violate the trademarks in the first place.
132. None of the cases that Nipro cites in its Corrected Statement of Defense are the
contrary. In fact, Sinco, Inc., 133 F. Supp. 2d at 313 (S.D.N.Y. 2001) (CLA-472), held that to
constitute a cure, the proffered cure must “conform to the contract” and “meet all [] contractual
requirements.” Id. In that case, the breaching party, Sinco, provided Metro-North with a self-
taped video testing the performance of harnesses worn by maintenance workers to demonstrate
that its cure met the quality control requirements of its contract. Id. The court found that the video
did not reliably prove all contract requirements had been met and Metro-North was justified in
terminating the contract. Id. Similarly, Nipro’s continued breach of its Agreement demonstrates
not only that its attempt to cure its breach failed to fulfill the requirements of the contract and also
calls into question whether Nipro attempted to cure at all. As such, Trividia was entitled to
terminate the Agreement.
133. The remaining authorities cited by Nipro are misplaced and easily distinguishable,
at best. In both cases Nipro cites, the breaching parties indisputably cured their breaches to
conform to the relevant agreements. In Raymond Weil, S.A. v. Theron, 585 F. Supp. 2d 473,
(S.D.N.Y. 2008) (CLA-093), when the public display of a poster with actress Charlize Theron’s
image breached her agreement with a watch company, the poster was removed in thirty-six hours
in accordance with the agreement’s 5-day cure period. Id. at 478. Unlike Nipro’s repeated
violations of the Agreement, removing the poster was remedied in such a fashion where there was
no continued breach. In the other case, the question of whether the violation was cured was not
even at issue. Rather, the court dealt with the question of the adequacy of the notice that was
provided and stated, without discussion, that regardless of a finding on notice, the defendants had
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effectively cured the breaches. RBFC One, LLC v. Zeeks, Inc., 171 F. App'x 902, 903 (2d Cir.
2006) (CLA-456); RBFC One, LLC v. Zeeks, Inc., 367 F. Supp. 2d 604, 625 (S.D.N.Y. 2005)
(CLA-457), aff'd, 171 F. App'x 902 (2d Cir. 2006) (plaintiff’s notices urged for certain advertising
items to be approved for a film release and because all items were ultimately approved, the court
found that the breaches were cured).
134. Furthermore, merely ceasing distribution of infringing flyers and text messages
provided to thousands of Trividia’s customers is insufficient to “cure” the trademark infringement,
and the ensuing confusion and damage that Nipro caused. The misleading advertisements were
already in customers’ hands. Where the IDA expressly recognizes the extraordinary value Trividia
places on its trademarks, Section 3.10, and expressly imposes on Nipro an obligation to “promote
the goodwill and good name” of Trividia, Section 3.1, an adequate “cure” must include corrective
advertisements or communications sent to consumers retracting and correcting the prior,
misleading materials. Anything less allows Nipro to retain the benefits of its breaches at Trividia’s
expense. Cf., e.g., Merck Eprova AG v. Gnosis S.p.A., 901 F. Supp. 2d 436, 460-61 (S.D.N.Y.
2012) (finding that defendant’s ceasing its false advertising was insufficient to counter the market
share gained from its illicit conduct). (CLA-433)
3. Trividia Was Entitled to Immediately Terminate the Agreement Pursuant To Section 2.4(iv)
135. In any event, as a result of Nipro’s trademark violations, Trividia was permitted to
immediately terminate the Agreement pursuant to Section 2.4(iv) without notice or a 30-day cure
period. Section 2.4(iv) of the IDA provides that Trividia can terminate the IDA immediately based
on “any inability or failure of Distributor to perform its obligations” under the IDA.
136. As previously discussed, Nipro had an obligation under Section 3.10 to ensure that
any and all uses of Trividia’s trademarks were solely to promote Trividia’s products under the IDA
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and not to be used in connection with Nipro’s products or corporate name. Moreover, Nipro was
on notice that these marks were “vital” to Trividia’s business. IDA § 3.1; see also IDA §16.5
(“Distributor understands and agrees that the Confidential Information, Article 3.6 and the
Trademarks, Article 3.10 constitute valuable business assets and rights of [Trividia], the willfully
unauthorized use, disclosure or breach of which may irreparable damage [Trividia].”).
137. In Wisser Co. v. Mobile Oil Corp., 730 F.2d 54 (2d Cir. 1984) (CLA-503), an oil
company presented grounds for termination of its franchise agreement with a retailer when it
discovered that the retailer was passing off other gasoline as the oil company’s gas. Id. at 56-58.
The contract provided grounds for termination and included a 20-day notice and cure requirement.
Id. at 57. Additionally, the contract contained a clause in paragraph 6 that dispensed with the
notice requirements and gave the oil company the right to immediately terminate for certain
“[mis]use[s] of Seller’s trademarks or brand names.” Id. On appeal, the retailer argued that the
clause in paragraph 6 was superseded by the notice and cure provision and as such, the oil company
was not permitted to terminate the agreement without proper notice and time for cure. Id. The
court disagreed. Id. at 58. Despite warnings from the oil company about the retailer’s continued
misbranding of gasoline over a period of time, the court found that the retailer was not required to
be given an opportunity to cure and the oil company was entitled to immediately terminate the
agreement pursuant to paragraph 6. Id. at 56-58.
138. Contrary to Nipro’s suggestion, nothing in the IDA requires Trividia to give Nipro
a 30-day cure period when Nipro fails to perform its obligations under the contract. That option
exists, at Trividia’s sole discretion, under Section 2.4(ii), but it is not an exclusive provision for
terminating the IDA. “Unless a contract provision for termination for breach is in terms exclusive,
it is a cumulative remedy and does not bar the ordinary remedy of termination for a breach which
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is material, or which goes to the root of the matter or essence of the contract.” Desly Int’l Corp.
v. Otkyroe Aktsionernoe Obschchestvo “Spartak,” 13-CV2303(ENV)(LB), 2016 WL 4532113, at
*10 (E.D.N.Y. Aug. 15, 2016) (CLA-183) (quoting Southland Corp. v. Mir, 748 F. Supp. 969, 983
(E.D.N.Y. 1990)). Sections 2.4(ii) and (iv) are alternatives and one does not negate or limit the
other.
139. Similarly to the contract in Wisser, Nipro and Trividia’s Agreement contained both
a notice-and-cure clause and a termination clause upon the “failure to perform the obligations
hereunder.” (IDA §2.5(iv).) Nipro continued to misuse the trademark even after warnings from
Trividia, in the same way the retailer did in Wissler. Nipro’s violations of the trademark provision,
especially when coupled with its awareness of the mark’s value to Trividia’s business,
demonstrates that Nipro failed to perform its obligations under the Agreement. Accordingly,
Trividia had proper grounds to immediately terminate the Agreement pursuant to the language in
Section 2.4(iv) without the futility of giving Nipro a thirty-day cure period.
B. Trividia Is Entitled to Terminate and Sue for Total Breach Damages Following Nipro’s Material Breaches
140. New York law governs the IDA and hence governs Trividia’s breach and damages
claims. Under New York law “when a contract is materially breached, the aggrieved party can
elect to terminate the contract and sue for damages for total breach.” 28 N.Y. Prac. Contract Law
§ 17:14. (CLA-315) The law gives the non-breaching party the option to terminate the contract
and sue for damages for total breach or continue the contract. The law does not force an aggrieved
party to stay in a contract with the breaching party, giving that party repeated opportunities to
breach its obligations before the aggrieved party can recover. As explained in Filmline (Cross-
Country) Productions, Inc. v. United Artists Corp., 662 F. Supp. 798 (S.D.N.Y. 1987) (CLA-370):
Under New York law, which is concededly applicable, when one party to a contract materially breaches the contract during the course of a continuing performance, the
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injured party has two options. He may terminate the contractual relations at that time or he may choose to continue performance under the contract despite that breach. See Emigrant Industrial Savings Bank v. Willow Builders, Inc., 290 N.Y. 133, 145, 48 N.E.2d 293, 299 (1943). If the injured party chooses not to terminate the contract, he surrenders his right to terminate later based on that breach. See 5Williston on Contracts, § 683 at 270 (3d ed. 1961). In short, as the Second Circuit has noted, under New York law the power to terminate a contract is a power of election. See Apex Pool Equipment Corporation v. Lee, 419 F.2d 556, 562 (2d Cir.1969).
Id. at 804-05. As set forth above, Nipro materially breached the IDA in a number of ways,
including by failing to meet the Annual Minimum Purchase for Contract Year Three, by failing to
provide forecasts, and by misusing Trividia’s licensed trademarks in violation of the IDA to
“switch” customers over to its competing product. Trividia therefore elected its option to terminate
the IDA and now seeks damages for total breach.
141. Despite this clear principle of New York law, Nipro attempts to mischaracterize
Trividia’s total-breach damages claim: “Trividia is not entitled to lost profits for future contract
years because any such damages would not be caused by Nipro’s alleged breach, but rather flow
from Trividia’s own choice to terminate the IDA and interfere with Nipro’s business.” CSOD,
¶ 141. But following Nipro’s material breaches, the law allows Trividia to terminate the contract
and sue for all damages recoverable under the contract. Under New York law, Trividia is entitled
to the benefit of its bargain which included guaranteed Annual Minimum Purchases from Nipro
for five years. See Muni. Capital Appreciation Partners v. Page, 181 F. Supp. 2d 379, 394
(S.D.N.Y. 2002) (CLA-440) (finding defendant’s failure to pay the over $5 million dollars owed
constituted a material breach giving plaintiff the “right . . . to terminate the entire contract and to
sue for damages”). See also cases cited in SOC ¶¶ 124-131 and infra, Sections IV.A-.C.
142. In NAS Electronics Inc. v. Transtech Electronics PTE, Ltd., 262 F. Supp. 2d 134
(S.D.N.Y. 2003)(CLA-444), the Court explained: “Under New York law when one party has
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committed a material breach of contract, the non-breaching party is discharged from performing
any further obligations under the contract, and the non-breaching party may elect to terminate the
contract and sue for damages.” Id. at 145. In Transtech, the plaintiff breached the agreement by
failing to make timely payment of the funds due. The Court held that the non-payment was an
indisputable breach and the defendant was entitled to judgment in the amount of $3.2 million
dollars. Id. at 146. Similarly here, Nipro materially breached the IDA by, among other things,
failing to make the Annual Minimum Purchase for Contract Year Three and therefore, Trividia is
entitled to recover its full expected benefit of the unfulfilled contract, including Years Four and
Five.
143. Trividia’s termination of the IDA was also necessary to protect its claims for all
damages. As noted in Filmline, “Once the non-breaching party elects to continue the contract, he
may not at a later time renounce his election and seek to terminate based on the prior breach.”
Filmline, 662 F. Supp. at 805 (CLA-370). Indeed, in Filmline, the court rejected UA’s effort to
claim a proper breach and termination when it waited months after the breach rather than
immediately terminating and suing for breach. Id. at 806. If Trividia had elected to continue with
the contract and waited until after Nipro breached its purchase obligation in Year Five, Trividia
may have very well waived its ability to seek at the very least its damages for Years Three and
Four. Trividia’s election to terminate and seek total breach damages is both permissible and
prudent under New York law.
III. TRIVIDIA IS ENTITLED TO DAMAGES FOR YEAR THREE
144. As discussed above, Nipro has already conceded that it was required to purchase
180 million strips in Contract Year Three. (C-097) But even without that concession, Trividia has
established that the Year Three Annual Minimum Purchase amount was at least 180 million
strips. In Contract Year Three, though, Nipro purchases amounted to a shortfall of 2,057,032 50-
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count equivalent vials. (CER-1 Suppl. Kindler at ¶ 13) As explained in Trividia’s Expert’s Report,
Nipro’s failure to purchase the Year Three Annual Minimum Purchase amount has damaged
Trividia to the tune of $8,168,888. (CER-1 Suppl. Kindler at ¶ 13-14 and table 2)
145. Also as discussed above, the parties’ subsequent agreement has not yet relieved
Nipro of its liability for Year Three monetary damages. Unless and until Nipro pays in full its
obligations under Amendment 2, Trividia is entitled to pursue its Year Three damages and obtain
an award in its favor. If and when Nipro satisfies its obligations under that agreement, Trividia
will reduce its claim accordingly.
IV. TRIVIDIA IS ENTITLED TO DAMAGES FOR YEARS FOUR AND FIVE
A. The IDA Creates a Guaranteed Yearly Payment Obligation for Five Years
146. Nipro’s entire argument that it is not liable to Trividia for expectancy damages
under the IDA comes down to a single, erroneous premise: that the IDA “does not contain
guaranteed payment obligations.” (CSOD, ¶ 184). Nipro’s position is simply incorrect. It ignores
both the plain text of the IDA, the negotiating history of the IDA, and Nipro’s own subsequent
understanding of the IDA. Contrary to Nipro’s assertion, the IDA committed Nipro to
purchasing—i.e., paying for—at least 17.8 million fifty-count vials of strips over the five years of
the agreement. C-001, “This Agreement shall take effect on the Effective Date and extend for a
term of five (5) years from the Effective Date.”) Nipro’s material breaches of the IDA do not
permit Nipro to escape this obligation.
147. New York law is clear that contracts are to be construed and enforced according to
their plain language. 159 MP Corp. v. Redbridge Bedford, LLC, 128 N.E.3d 128, 130 (N.Y. 2019)
(CLA-314) (“In New York, agreements negotiated at arm's length by sophisticated, counseled
parties are generally enforced according to their plain language pursuant to our strong public policy
favoring freedom of contract.”). In interpreting a contract, this Tribunal looks first, and need not
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look any further, than the four corners of the IDA. See Ashwood Capital, Inc. v. OTG Mgmt., Inc.,
948 N.Y.S.2d 292, 297 (N.Y. App. Div. 2012) (CLA-034). Only if the contract language is
ambiguous is extrinsic evidence used to aid interpreting the meaning of the contract. See id.; see
also Banos v. Rhea, 33 N.E.3d 471, 475 (N.Y. 2015) (CLA-332); Catskill Hudson Bank v. A & J
principle[] of contract construction [is] that an interpretation which renders language in the
contract superfluous cannot be supported.”). Falling back to the prior year’s quantity only makes
sense if the party is required to at least purchase that quantity.
152. Nipro offers no serious argument that the IDA does not contain a guaranteed
payment obligation. Instead, Nipro confusingly attempts to draw a distinction between the word
“purchase” and the word “payment,” arguing apparently that it had no obligation to “pay” anything
until it “purchased” something. CSOD, ¶¶ 184-186. But Nipro’s bit of semantic obfuscation does
it no good. As noted above, a purchase requirement involves paying money for something. Nipro
committed in the IDA to purchase minimum quantities of product—and, necessarily, to pay the
related prices for that product—for a period of five years. And that five year purchase obligation
arose when Nipro executed the contract.
153. Relatedly, Nipro also contends that the good-faith negotiation clause somehow
renders Nipro’s purchase obligations in Years Three, Four, and Five entirely optional. CSOD,
¶¶ 174-182. Nipro argues that because Section 2.2 of the IDA permits the parties to adjust the
Annual Minimum Purchase amounts set forth in the contract, no obligation to purchase any
minimum amount in Years Three, Four, or Five arises until those negotiations take place. Nipro
asserts that imposing a purchase obligation on it would “render the good faith negotiation
requirement meaningless.” Nipro’s argument fails as both a matter of contract interpretation and
common sense.
154. Tellingly, Nipro misleadingly cuts its quotation of Section 2.2 short. See CSOD,
¶¶ 178-179. The full sentence reads:
Commencing from the second Contract Year, in the event that the parties have not agreed on the Annual Minimum Purchase for the next Contract Year during the
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initial or any renewal term, then the parties shall use good faith efforts to mutually agree on the Annual Minimum Purchase for the next Contract Year prior to the end of the then current Contract Year; provided, however, that in the event the parties are unable to agree on the Annual Minimum Purchase for the next Contract Year prior to the end of the then current Contract Year, then the Annual Minimum Purchase for the next Contract Year shall be the same as that of the then current Contract Year.
(IDA § 2.2) (C-001) (emphasis added). The use of “provided, however” following the semicolon
modifies the good-faith clause and makes abundantly clear that regardless of whether good-faith
negotiations take place, the Annual Minimum Purchase for Years Three, Four, or Five, will always
be at least the Annual Minimum Purchase of the prior year. Cf. United States v. Pokerstars, No.
11-CV-2564 (KMW), 2016 WL 4411421, at *5 n.9 (S.D.N.Y. Aug. 19, 2016) (CLA-495) (finding
the words “provided however” following a semicolon to represent a qualification on the
immediately preceding clause).
155. Moreover, Nipro’s interpretation of this language, not Trividia’s, would render
parts of the IDA meaningless. It is well-settled law that a contract’s provisions must be read
together to give effect and meaning to every provision, and interpreted in a manner that reconciles
and harmonizes the contract’s terms. See, e.g., Maven Techs., LLC v. Vasile, 46 N.Y.S.3d 720,
it is a well-established rule in this Circuit that experts are not permitted to present testimony in the
form of legal conclusions.” Id. (internal quotations and alterations omitted). Trividia’s damages
expert does not need to determine whether Nipro is liable, that is the issue for this Tribunal. See
Assured Guar. Mun. Corp. v. Flagstar Bank, FSB, 892 F. Supp. 2d 595, 601, 607-08 (S.D.N.Y.
2012) (noting that causation is an essential element of damages for a breach of contract claim and
that an “expert need not attempt to make the ultimate legal determination”) (CLA-328).
171. Here, Trividia’s expert has quantified Trividia’s actual damages, including the
profits lost for Years Four and Five as a result of Nipro’s material breaches, which led to the
termination of the IDA. New York law, as explained thoroughly above, establishes that Trividia
is entitled to recover all of these actual damages after terminating the contract because of Nipro’s
material breaches. Nipro is responsible for its own misconduct and the consequences flowing from
it, including all of Trividia’s lost profits under the IDA.
D. Nipro’s Position that the IDA Bars Damages Relating to Termination Is a Red Herring
172. In a tortured variation on its ill-reasoned causation argument, Nipro twists the
language of Section 2.9 of the IDA to claim that it should be exempted from damages arising from
its material breaches of the IDA. Yet the plain language of Section 2.9 says just the opposite and
confirms Nipro’s liability:
Neither party shall be liable for the other for damages, indemnities, compensation or any other payment of any kind by reason of the expiration or termination of this Agreement for any reason, but such termination shall be without prejudice to any rights of either party arising prior to such expiration or termination.
IDA § 2.9 (C-001) (emphasis added).
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173. As explained above, Nipro’s obligation to make five years of minimum purchases
arose when Nipro executed the IDA, and thus necessarily arose “prior to termination.” And it is
Nipro’s own material breaches of its obligations under the IDA that has given rise to its damages
liability, not the termination of the IDA. Nipro is responsible for total damages. Global Crossing
Bandwidth Inc., 2008 WL 2079914, at *5 (CLA-176) (court holding that where contract set forth
minimum payments due each month “the actual damages suffered by the non-breaching party is
an amount equal to the payments it would have received absent the breach.”); see also G.V.
Trademark Invs. LTD, 1999 WL 61808, at *2 (CLA – 177). Tracing Trividia’s damages to the act
of termination would undermine all New York case law permitting suits for total damages after a
material breach.
174. The three cases Nipro cites do not support its baseless argument. The Metro. Life
Ins. Co. v. Noble Lowndes Int’l Inc., 643 N.E.2d 504, 507 (N.Y. 1994) (RLA-170) case cited by
Nipro simply stands for the proposition that a limitation on damages provision in a contract that
carves out willful conduct does not offend public policy, which is not a concern in this case. The
Elmira Teachers’ Assn. v. Elmira City Sch. Dist., 861 N.Y.S.2d 195, 197 (N.Y. App. Div. 2008)
(RLA-171) case cited by Nipro stands for the unremarkable proposition that an unambiguous “hold
harmless” clause prevented liability in the case. Finally, the Brooke Grp. v. JCH Syndicate 488,
663 N.E.2d 635 (N.Y. 1996) (RLA- 172) case cited by Nipro supports Trividia’s position here,
that the plain language of the IDA should be followed and that language as noted above provides
that Trividia can seek its full damages relating to the brief irrespective of the termination.
E. Trividia Complied with any Duty to Mitigate
175. Trividia complied with or is excused from any duty to mitigate for multiple,
independent reasons, any one of which suffices to rebut Nipro’s contention that Trividia failed to
mitigate its damages.
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1. New York Law Requires Only Reasonable Mitigation Efforts
176. Under New York law “a duty to mitigate arises when (1) a contract is breached and
(2) it appears that the breaching party has abandoned or repudiated his obligations under the
contract.” United States v. Russell Elec. Co., 250 F. Supp. 2, 20-21 (S.D.N.Y. 1965) (CLA-491).11
However, “the burden of proof on the issue of failure to mitigate damages is on the party asserting
such failure.” Id.; see also Palm Bay Int’l, Inc. v. Marchesi Di Barolo S.p.A., No. CV09-601 ADS
AKT, 2009 WL 3757054, at *4 (E.D.N.Y. Nov. 9, 2009) (CLA-452) (“The party alleging a failure
to mitigate bears the burden of proving that the injured party failed to make reasonable efforts to
mitigate its damages.”); Broadnax v. City of New Haven, 415 F.3d 265, 269 (2d Cir. 2005) (CLA-
340); L-7 Designs, Inc. v. Old Navy, LLC, 964 F. Supp. 2d 299, 316 (S.D.N.Y. 2013) (CLA- 418).
Nipro has not carried its burden as it has not shown that Trividia’s mitigation efforts were
unreasonable, nor has it pointed to any mitigating steps that Trividia should have taken that it did
not take.
177. An injured party is required only to make “reasonable” efforts to mitigate its
damages; it is not required to take extraordinary measures to lessen the consequences of the
defendant’s breach. See, e.g., Royal Park Invs. SA/NV v. Deutsche Bank Nat’l Trust Co., No.
14CV04394AJNBCM, 2016 WL 4613390, at *19 (S.D.N.Y. Aug. 31, 2016) (CLA-465) (the duty
to mitigate does not include an obligation to undertake “extraordinary and costly measures”)
(citing Carrols Equities Corp. v. Villnave, 395 N.Y.S.2d 800, 803 (N.Y. App. Div 1977))(CLA-
11 As explained in the Second Restatement of Contracts, “It is sometimes said that it is the ‘duty’ of the aggrieved party to mitigate damages, but this is misleading because he incurs no liability for his failure to act. The amount of loss that he could reasonably have avoided by stopping performance, making substitute arrangements or otherwise is simply subtracted from the amount that would otherwise have been recoverable as damages.” Restatement (Second) of Contracts § 350 (1981) (CLA-459).
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348); U.S. Bank Nat’l Ass’n v. Ables & Hall Builders, 696 F. Supp. 2d 428, 440–41 (S.D.N.Y.
2010) (CLA-489) (“The duty to mitigate damages, also called the doctrine of avoidable
consequences, requires only reasonable, practical care and diligence, not extraordinary
measures.”). Whether the injured party acted reasonably depends on the facts and circumstances
of the case. See Schwimmer v. Sony Corp. of Am., No. 77C1275, 1980 WL 1930, at *3 (E.D.N.Y.
(emphasis added); see also Rosenfeld v. Renika Pty. Ltd., 923 N.Y.S.2d 328 (Mem.) (N.Y. App.
Div. 2011) (“Plaintiffs’ notice of voluntary discontinuance . . . was apparently served to avoid an
adverse decision on the pending motion to dismiss the complaint with prejudice.”) (CLA-462).
198. The McMahan court’s rational is not limited to instances involving a pending
motion to dismiss. See NBN Broad., Inc. v. Sheridan Broad. Networks, Inc., 659 N.Y.S.2d 262,
263 (N.Y. App. Div. 1997) (“The IAS court properly discontinued the action with prejudice where
plaintiff’s request for a discontinuance without prejudice was an apparent attempt to evade the
consequences of an adverse order on defendant’s pending motion for summary judgment and
preserve its ability to commence a Federal action.”) (CLA-446).
199. Moreover, in U.S. federal court, and in an analogous instance concerning a
litigant’s attempt to withdraw her action ten days before trial without prejudice, the Second Circuit
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has noted that “[v]oluntary dismissal without prejudice is thus not a matter of right.” Zagano v.
Fordham Univ., 900 F.2d 12, 14 (2d Cir. 1990) (CLA-506). “Factors relevant to the consideration
of a motion to dismiss without prejudice include the plaintiff's diligence in bringing the motion;
any ‘undue vexatiousness’ on plaintiff's part; the extent to which the suit has progressed, including
the defendant's effort and expense in preparation for trial; the duplicative expense of relitigation;
and the adequacy of plaintiff's explanation for the need to dismiss.” Id. Here, Nipro lacked
diligence in seeking to withdraw its claims because it did so at the last minute; the proceeding has
progressed extensively; there had been extensive preparation for the March hearing; and, Nipro
has failed to give any specific, non-conclusory and speculative reason for why it had to withdraw
its claims. See id.
200. While the above-mentioned decisions involve withdrawal by a plaintiff in a judicial
proceeding, the reasoning is equally applicable to arbitration proceedings. The common theme is
apparent: a party cannot wait until the last minute to withdraw a claim and argue that it was done
without prejudice, especially when it is apparent that it was done so do avoid a negative decision.
McMahan, 879 N.Y.S.2d at 49 (“[T]he action should not have been discontinued without prejudice
where . . . [it was] apparently served in order to avoid an adverse decision…”) (CLA-431)
201. Nipro’s reasoning for withdrawing the rescission and reformation claims are
conclusory and do not provide an adequate reason for doing so. In fact, “as Nipro explained,
Nipro’s rescission/reformation arguments might be relevant in connection with [Trividia’s] new
claims because there could be rescission or reformation issues related to [Trividia’s] new (and as
yet unarticulated) claims.” CSOD ¶ 135 (emphasis added). Further, Nipro claims that the “factual
landscape” of the proceeding has changed by Trividia’s termination of the IDA. CSOD ¶ 136.
Both of these reasons are unpersuasive.
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202. First, whether the rescission and reformation claims might be relevant in connection
with Trividia’s new claims is immaterial to whether Nipro’s last-minute conduct should be
condoned. See NBN Broad., 659 N.Y.S.2d at 263 (“The IAS court properly discontinued the action
with prejudice where plaintiff’s request for a discontinuance without prejudice was an apparent
attempt to evade the consequences of an adverse order on defendant’s pending motion for
summary judgment and preserve its ability to commence a Federal action.”) (CLA-446). While
Trividia acknowledges that NBN Broadcasting involved a party attempting to withdraw a claim to
preserve its ability to commence another action, the parallels to this proceeding are apparent.
Nipro is attempting to withdraw its claims at the last minute for future use. Indeed, if potential
future use excused the type of conduct Nipro engaged in here, a party could undoubtedly always
and repeatedly withdraw claims at the last minute without prejudice, because there is almost
always certainly some future contingency at stake.
203. Second, Nipro’s fails to explain how a “changed factual landscape” grants it a free
hand to suddenly withdraw its claims last minute. CSOD ¶ 136. At the outset, Trividia’s
termination of the IDA should have come as no surprise given Nipro’s egregious breaches of the
IDA. But regardless, Nipro has still not provided a meaningful explanation of precisely why the
termination of the IDA required it to withdraw its claims or why the IDA’s termination precluded
Nipro from arguing reformation and rescission at the March hearing. Rather, Nipro offers with no
explanation only conclusory assertions that its claims might be relevant in the future, that
“recession/reformation arguments play a different role in this case than they did prior to
termination,” and that it “has the right to raise whatever defenses it has available in response to
Trividia’s claims.” CSOD ¶¶ 135-137. None of these generic statements illuminates why Nipro
had to withdraw the claims two days before the March hearing.
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204. After substantial efforts by the parties, the Tribunal and Trividia envisioned that all
“live claims” between the parties would be resolved at the March hearing. The only inference that
can be drawn from Nipro’s last-minute withdrawal was that it was seeking to avoid an adverse
decision and prolong these proceedings.13 Nipro’s gamesmanship should not be rewarded, and its
reformation and rescission claims should be deemed withdrawn with prejudice.
VI. THE TRIBUNAL HAS AUTHORIZED, AND HAS AUTHORITY TO ADJUDICATE, TRIVIDIA’S NON-CONTRACTUAL CLAIMS
A. The Status of Trividia’s Claims Has Been Resolved (Repeatedly)
205. Nipro again asks this Tribunal to “reconsider” its decision to permit Trividia to
bring its six statutory and common law claims related to Nipro’s infringement of Trividia’s
trademarks. CSOD ¶¶ 278-289. The Tribunal permitted Trividia to bring these claims in its April
9, 2019, Procedural Order. And as Nipro itself acknowledged, the Tribunal rejected Nipro’s first
attempt at seeking reconsideration of that Procedural Order in an Order dated July 15, 2019, stating
that “[t]hose claims are reflected in the Statement of Claim in the prayers for relief.” CSOD ¶ 288;
(C-138).
206. Seemingly undeterred by the Tribunal’s clear order, Nipro once again proclaimed
in a letter dated August 25, 2019, that “Trividia asserted eight new claims, including six non-
contractual claims, e.g. claims under the Lanham Act and the New York General Business Law,
that were not addressed in the Tribunal’s order permitting Trividia to pursue new claims.” (C-140)
The Tribunal was required once again to point out to Nipro that it had decided this issue, in an
13 Indeed, in further evidence of its desire to extend and multiply these proceedings, Nipro recently filed a lawsuit against its former executive team, Scott Verner, Dean Sorrentino, and Jason Mondek, raising the exact same issues and factual allegations that it raised in support of its rescission and reformation claims in this arbitration. That lawsuit is currently pending in the U.S. District Court for the Southern District of Florida, Case No.: 19-CIV-62121.
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email dated August 26, 2019: “The Tribunal recalls its order of July 15, 2019, which dismissed
the Nipro's application to exclude certain of the Trividia's claims . . . . The issue of new claims and
the permission granted to the Trividia to bring them was decided on April 9, 2019.” (C-141)
207. It is therefore abundantly clear that the status of Trividia’s statutory and common
law claims has been settled for quite some time. The Tribunal permitted those claims on April 9,
2019. Nipro offers nothing new that warrants the Tribunal revisiting this question once again.
B. The IDA Grants the Tribunal Broad Jurisdiction over Trividia’s Statutory and Common Law Claims
208. Nipro wrongly contends that this Tribunal lacks jurisdiction over Trividia’s
statutory and common law claims because, it claims, the IDA’s arbitration clause is “narrow.”
Nipro’s interpretation of the arbitration clause is wrong as a matter of New York law. The clause
is broad and reaches Trividia’s claims that are clearly related to Nipro’s misuse of the trademark
rights licensed under the IDA. Trividia’s statutory and common law claims are therefore
arbitrable.
1. The Arbitration Clause Is Broad in Scope
209. Section 16.1 of the IDA contains an arbitration clause that provides, among other
things, that:
All disputes and differences of any kind arising under this Agreement, including the existence or continued existence of this Agreement and the arbitrability of a particular issue, which cannot be settled amicably by the parties, shall be submitted to final and binding arbitration. (emphasis added)14
210. Under New York law, there is a two-step inquiry to determine whether a dispute
falls within a particular arbitration clause. See Louis Dreyfus Negoce S.A. v. Blystad Shipping &
14 Nipro does not dispute that this Tribunal is empowered to determine the arbitrability of Claimant’s claims.
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the importance of the Vanity Fair factors to determining whether the Lanham Act applies
extraterritorially, and stating; “The absence of any one of these is not dispositive.”).
239. It is undisputed that Nipro does not have trademarks on any of the marks at issue
in any of the countries at play. Thus, there is no conflict between Trividia’s trademark rights under
U.S. law, and Nipro’s rights under the laws of Australia, Japan, or Europe, the jurisdictions where
Trividia has evidence currently of Nipro’s trademark infringement. Not only does Trividia hold
trademarks on the TRUE family of marks in the United States, Trividia also holds various
trademarks including the word “TRUE”, some in stylized form, in Australia, Japan, and Europe
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(CWS-3 Suppl. Sorrentino ¶ 21). Nipro, by contrast, does not hold any trademark that includes
the word “True.” Tellingly, Nipro does not even contend it holds a trademark on any of the marks
at issue in any of the relevant countries. So the first factor weighs in favor of extra territorial
application.
240. While Nipro is not a United States citizen, it does have multiple U.S. subsidiaries:
Avantec Vascular Corp., in Sunnyvale, CA; Infared, Inc., in Burlington, MA; Nipro Medical
Corporation, in Miami, FL; Next Surgical Inc., in Vista, CA; and Nipro Pharma Packaging
America Corp., in Millville, NJ. See https://www.nipro.co.jp/en/corporate/network/
group.html. Its significant U.S. presence largely negates the fact that it is not a U.S. citizen, and
arguably suffices to treat Nipro as a constructive U.S. citizen. See NewMarkets Partners LLC v.
Oppenheim, 638 F. Supp. 2d 394, 406-407 (S.D.N.Y. 2009) (CLA-449) (“As for the second factor,
while CAM is a German corporation, it has a substantial presence in the United States: it has an
American subsidiary, it entered into an American-based joint venture with Plaintiffs, and
consented to jurisdiction of United States courts to resolve disputes relating to its relationship with
Plaintiffs. Therefore, CAM may be treated as a United States citizen for purposes of this
analysis.”); A.V. by Versace, Inc. v. Gianni Versace, S.p.A., 126 F. Supp. 2d 328, 337 (S.D.N.Y.
2001) (CLA-318) (finding that the defendant should be “deemed a constructive U.S. citizen”
because, even though he is a citizen of Italy, he has resided in and has done business in the United
State for over four decades); Calvin Klein Indus., Inc. v. BFK Hong Kong, Ltd., 714 F. Supp. 78,
80 (S.D.N.Y. 1989) (CLA-346) (finding that a foreign defendant could be treated as a U.S. citizen
because he resided in New York and was the controlling force behind the foreign defendant-
corporation).
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241. Nipro tries to argue that its status as a foreign citizen defeats the extraterritorial
application of the Lanham Act. That is not the case. Nipro cites a single district court case for the
proposition that the citizenship of the defendant is the most important of the Vanity Fair factors.
CSOD ¶ 309. However, the overwhelming majority of the cases do not distinguish between the
weight accorded to the three factors. “[C]ourts are to balance the factors in deciding whether the
‘contacts and interests of the United States are sufficient to support the exercise of extraterritorial
jurisdiction.’ ” Software AG Inc. v. Consist Software Solutions, Inc., No. 08 Civ. 389(CM), 2008
WL 563449, at *14 (S.D.N.Y. Feb. 21, 2008) (CLA-191) (quoting Warnaco, Inc. v. VF Corp., 844
F.Supp. 940, 950 (S.D.N.Y. 1994)). (CLA-193)
242. Nipro also contends, again citing a solitary district court case, that the cases in
which a court applied the Lanham Act extraterritorially to a foreign defendant, “other factors were
present which justified treating that defendant as a U.S. citizen, such as the defendant’s residence
in the United States or exercise of considerable control over a U.S. corporation engaging in
infringing activities.” CSOD ¶ 311 (quoting Juicy Couture, Inc. v. Bella Intern. Ltd., 930
F.Supp.2d 489, 506 (S.D.N.Y. 2013)) (CLA-204). Again, the law is to the contrary.
243. In Hetronic Int’l, Inc. v. Hetronic Germany GmbH, No. CIV-14-650-F, 2019 WL
3021689 (W.D. Okla. Mar. 22, 2019) (CLA-398), for instance, a case with parallels to this case,
court applied the Lanham Act extraterritorially—to the foreign sales of foreign defendants—even
though “none of the defendants have resided in the United States or conducted business for many
years in the United States or controlled a United States corporation.” Id. at *5. The defendants in
that case were citizens of Austria and German, and the court stated, as could he said here: “The
evidence, viewed in the light most favorable to plaintiff, reveals that HG and HCEE used their
status as distributors and licensee to assist in their alleged infringing conduct.” Id. at 8. The court
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held that the plaintiffs could show substantial impact on U.S. commerce as a result of the diversion
of sales from a domestic company to a foreign company, stating: “The court finds that plaintiff
has proffered evidence, viewed in a light most favorable to plaintiff, sufficient to establish that
defendants' alleged infringing conduct has had a substantial effect on United States commerce. As
recognized by the First Circuit in McBee v. Delica Co., Ltd., 417 F.3d 107, 126 (1st Cir. 2005),
“[c]ourts have considered sales diverted from American companies in foreign countries in their
analyses.” (CLA-430) While the court found the defendants were not U.S. citizens, the court noted
that they had significant ties to the U.S, including the execution of distribution and license
agreements, applying U.S. law and a U.S. forum-selection clause. Of course, Nipro has done
precisely the same thing here. The court also found that , “even though defendants are foreign
nationals, the evidence, viewed in plaintiff’s favor, shows that they have had substantial ties to the
United States and thus exhibited some ‘allegiance’ to the United States.” Id. at *8. The same is
true of Nipro. Weighing all the factors, the court applied the Lanham Act extraterritorially to the
foreign defendants’ foreign sales.
244. In Warnaco Inc. v. VF Corp., 844 F. Supp. 940 (S.D.N.Y. 1994) (CLA-193), for
example, the court applied the Lanham Act extraterritorially against a Spanish company, which
had its principal place of business in Spain, even though that company was not resident in the
United States, and did not exercise control over a U.S. company engaging in infringing activities.
While there was a second company in that case—the parent of the Spanish company, that was a
U.S. company—the court noted that the Spanish company was being sued for breach of contract
as well as for violation of the Lanham Act, and had agreed to litigate the contract claim in New
York. Id. at 952. In language equally applicable here, the court stated: “Also, even though Vivesa
is a Spanish corporation, they have agreed in the Termination Agreement to the adjudication of
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claims arising under that Agreement in the federal courts in New York. The fact that Vivesa has
agreed that it must defend against [plaintiff’s] first claim for breach of contract in this Court lessens
any burden that might normally be imposed by requiring a foreign entity to litigate here. These
considerations weigh in favor of application of the Lanham Act under the second Vanity Fair
factor.” Id. That is equally true here.
245. So contrary to Nipro’s contention, the fact that Nipro is a foreign company is not
the end of the analysis. Turning to the third of the Vanity Fair factors—the impact on United
States commerce—the key questions are how much of an effect Nipro’s infringing conduct has
had on U.S. commerce, and, how much of an effect is required to support extraterritorial
application of the Lanham Act. Nipro contends that “direct and significant impact on United States
Commerce” is required to support extra-territorial application of the Lanham Act. CSOD ¶ 307.
The courts of appeal are divided on how much impact on U.S. commerce is required to support
extraterritorial application of the Lanham Act. The Second Circuit requires a substantial effect.
See Vanity Fair Mills, 234 F.2d at 642. (CLA-187) The Fourth Circuit requires a lesser showing,
requiring only a “significant” effect. Tire Eng’g & Distribution, LLC v. Shandong Linglong
Rubber Co., 682 F.3d 292, 310 (4th Cir. 2012) (CLA-481). The Fifth and Ninth Circuits impose
a still more lenient test requiring only some impact. In American Rice, Inc. v. Arkansas Rice
Growers Coop. Ass’n, 701 F.2d 408, 414 (5th Cir.1983) (CLA-189), the Fifth Circuit held that all
that is required is an “effect on United States commerce.” In that case, the Fifth Circuit explicitly
rejected the “substantial” effect test endorsed by the Second Circuit in favor of the “some effects”
test, endorsed by the Ninth Circuit. Id. 414 & n. 8. The Ninth Circuit still adheres to the “some
effects” test. See Trader Joe's Co. v. Hallatt, 835 F.3d 960, 969 (9th Cir. 2016) (CLA-482) (“A
defendant’s foreign activities need not have a substantial or even significant effect on American
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commerce, rather, some effect may be sufficient.”) (internal citation omitted). And in Steele v.
Bulova Watch Co., (CLA-186) the seminal United States Supreme Court case about the
extraterritorial application of the Lanham Act, the Court never uses the terms “substantial” or
“significant” to describe the requisite impact on United States commerce. Rather it simply requires
an “effect.” See 344 U.S. at 286 (noting defendant’s “operations and their effects were not
confined within the territorial limits of a foreign nation”); id. at 287 (discussing extraterritorial
application of U.S. statute in general and stating, “Unlawful effects in this country . . . are often
decisive”).
246. The case law shows that even the substantial effects test, which establishes a higher
threshold than the “some effect” or “significant effect” tests, is not demanding. See NewMarkets
Partners LLC, 638 F. Supp. 2d at 406-07 (“First, Plaintiffs have alleged a plausible, substantial
effect on United States commerce—their inability to market the Core Fund due to the false
statements in the private placement memoranda for the German Funds. As the recent economic
turbulence has demonstrated, no segment of the United States economy is more global than
finance. Since money flows almost indiscriminately across borders, false statements concerning
Plaintiffs in a private placement memorandum in Germany could plausibly and substantially affect
commerce in the United States.”) (CLA-449); Software AG, Inc., 2008 WL 563449, at *14 (finding
a substantial effect on U.S. commerce because there was the potential for lost sales of the
Colorado-based technical support to customers in Brazil) (CLA-191); Warnaco Inc., 844 F. Supp.
at 952 (“[D]iversion of sales and adverse impact on foreign licensees can constitute substantial
impact on United States commerce.”). (CLA-193)
247. Whether the applicable test requires showing some impact, significant impact, or
substantial impact, Trividia can readily meet it. The record shows that as a result of Nipro’s
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trademark infringements in Australia, Japan, and Europe to promote the sale of Nipro’s own
diabetes products, Nipro’s purchase of competing products from Trividia, and its resale of those
products, has plummeted, while Nipro’s sale of its own competing products has rocketed. (CWS-
4 Suppl. Sorrentino ¶ 54).
B. The Facts Support Extraterritorial Application
248. The record shows that Trividia operates three manufacturing facilities, two located
in the United States (in Fort Lauderdale, Florida, and in Lancaster, New Hampshire), and one
located in Hsinchu City, Taiwan. (Trividia 019386-457 at 019397) (C-142) The Trividia test strips
that are sold abroad, including in Australia, Germany, and England are manufactured and packaged
in the United States. See Trividia 018347; Trividia 017374-5; Trividia 018467; Trividia 019386-
457 at 019397. (C-142-145) While the meters themselves are assembled in Taiwan, they are
quality tested, labeled, and shipped from the Fort Lauderdale facility. See Trividia 017372 -73;
Trividia 018467; Trividia 019386-457 at 019397. (C-142-145) Thus, the drop in demand for
Trividia’s test strips and meters, as a result of Nipro’s infringing sales, has had a direct and
substantial impact in the United States, where the test strips are manufactured and packaged, and
where the monitors are quality tested, labeled, and shipped.
249. Nipro’s argument depends on false statements about where Trividia’s products are
manufactured. See CSOD ¶ 313 (“However, the products at issue are not manufactured in the
United States.”); id. ¶ 321 (“Trividia’s products are only packaged in the United States”); id. ¶ 322
(falsely claiming as “untrue” fact that Trividia’s products are manufactured in the United States).
But as demonstrated above, contemporaneous documents demonstrate that Trividia’s strips, which
account for the overwhelming majority of its sales in the countries at issue, are manufactured in
the United States, and its monitors are quality tested, labeled, and shipped from the United States.
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C. Nipro Misreads the Case Law
250. Nipro suggests that to find a substantial effect on United States commerce Trividia
must show confusion among U.S. customers as to the source of products sold in the United States
or that the infringing goods re-entered the United States. See CSOD ¶ 312. That is not correct.
Under the case law, a plaintiff may establish a substantial impact on United States commerce, even
though the impact on U.S. commerce does not relate to trademark infringement in the United
States.
251. In Charisma World Wide Corp., S.A. v. Avon Products, Inc., 243 F. Supp. 3d 450
(S.D.N.Y. 2017) (CLA-190), the defendant contended that only trademark impairing conduct
could demonstrate effect on U.S. commerce. The court rejected that argument and stated: “many
cases involving extraterritorial application of the Lanham Act have relied on commercial effects
that do not reflect direct impairment to a trademark in the United States.” Id. at 459. In that case,
a Panamanian company called Charisma alleged that Avon directed its Panamanian subsidiary to
infringe Charisma’s Panamanian trademark in Panama. Id. at 451-52. Charisma sold in Panama
a wide variety of women’s cosmetics and personal care products, made almost entirely from
materials obtained from the United States. Id. at 452. In support of its argument that the Lanham
Act should apply extraterritorially, Charisma contended that Avon’s infringement-related
activities in Panama damaged Charisma’s business such that Charisma reduced its purchases of
commodities from U.S. suppliers. Id. at 458. The court agreed that allegation sufficed to support
extraterritorial application of the Lanham Act, noting in language that is equally applicable here,
“several courts have applied the Lanham Act extraterritorially where a domestic company has lost
foreign sales because of infringing conduct abroad.” Id. That is exactly what happened here.
252. Software AG, Inc. v. Consist Software Solutions, Inc., involves a fact pattern
analogous to the instant controversy. There, a domestic software company sued its former
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distributor and its distributor’s Brazilian subsidiary, following termination of the distributor
agreement, alleging false advertising in Brazil concerning to a trademark dispute in Brazil. There
was no claim of trademark infringement in the United States. See 2008 WL 563449 at *14 (CLA-
191) (“[N]o literally false statement was directed into the United States or to a U.S. customer . . .
.”). Rather, the allegation was that the defendant was misusing the plaintiff’s trademark in Brazil
to get business in Brazil that should rightly have gone to the Plaintiff. The district court relied on
the potential for lost sales of computer maintenance and support services to be provided to
customers in Brazil by technical support staff in the United States, in holding that the Plaintiff had
established a “substantial effect on United States commerce.” Id.
253. Warnaco Inc., involves an action between an American company and a foreign
company that had a contract to manufacture and sell the plaintiff’s intimate apparel products in
Spain and Portugal. 844 F. Supp. at 950–51. (CLA-193) The plaintiff alleged that after it
announced it would not renew the distributorship, the defendant, which also manufactured and
sold its own line of intimate apparel in Spain and Portugal, engaged in conduct in violation of the
Lanham Act to weaken plaintiff’s brand in Spain and Portugal during the time left on the
distributorship agreement in order to make it easier for the defendant to successfully sell its own
goods in competition with the plaintiff. The allegations are strikingly similar to the misconduct
alleged here, as the following excerpt from the case demonstrates:
Warnaco alleges that in February 1993, Defendants told buyers from major department stores and other retail accounts where WARNER’s products previously had been sold that WARNER’s products were being discontinued and replaced with Defendants’ own GEMMA and INTIMA CHERRY brand intimate apparel products, and that Defendants have wilfully failed to make available to customers at least ten of the twenty-five top selling WARNER’s styles.
Warnaco further alleges that Defendants have copied the colors and design of several of the best selling WARNER’s styles and have been selling these products under their own GEMMA and INTIMA CHERRY labels, and that they placed on
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their brands of intimate apparel items hang tags and labels of the same color, lettering, size, and typeface as the WARNER’s hand tags, and packaged GEMMA and INTIMA CHERRY products in the same boxes as WARNER’s intimate apparel, even though GEMMA and INTIMA CHERRY products previously had hang tags and packaging that was of a different color and design.
Id. at 945. Based on infringing conduct in Spain and Portugal, the court denied a motion to dismiss
the plaintiff’s Lanham Act claim. The court found the plaintiff’s allegations sufficient to
demonstrate impact on U.S. commerce (because of a drop in demand for products manufactured
in the U.S.) and so to support extraterritorial application of the Lanham Act, stating: “[a]ccepting
the factual allegations in the Complaint as true, the Defendants’ infringing activities have diverted
sales from Warnaco and have caused confusion among consumers, with adverse impacts on
Warnaco’s income, reputation, and licensees.” Id. at 952.
254. Numerous other courts have held that the Lanham Act should be applied
extraterritorially because of effects on U.S. commerce similar to the effects demonstrated here. In
American Rice, Inc. v. Arkansas Rice Growers Coop. Ass’n, 701 F.2d 408, 414–15 (5th Cir.1983)
(CLA-189), the Fifth Circuit held that, the plaintiff established the requisite impact on U.S.
commerce to invoke extraterritorial application of the Lanham Act by demonstrating that the
defendant diverted sales from the plaintiff by selling products under infringing marks in Saudi
Arabia. The court held that there was no requirement that the infringing products make their way
back into the United States. Similarly, in Philip Morris, Inc. v. MidWest Tobacco, Inc., Civ. A.
No. 88-1292-A, 1988 WL 150693, at *3 (E.D. Va. Nov. 4, 1988) (CLA-194), the court said:
“Power extends under the Trademark Act to the regulation of foreign conduct where such conduct
appreciably affects U.S. domestic or export commerce.” There, the Court held the Lanham Act
should be applied abroad because sales of domestic defendant’s products there were expected to
diminish domestic plaintiff’s export sales and diminish its revenues from sales and licensing. Id.
at *3-4.
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D. Nipro’s Cases Are Not to the Contrary
255. Juicy Couture, Inc. v. Bella Intern. Ltd., 930 F. Supp. 2d 489 (S.D.N.Y. 2013)
(CLA-204), is not on point. There the plaintiffs tried to rely on a foreign defendant’s U.S. sales to
show a substantial effect on United States commerce. The court rejected that argument, noting
“the only evidence of sales to the United States totals $3,000 worth of products, a portion of which
consists of the sales made to Plaintiff's investigators.” Id. at 507-08. Here, by contrast, the facts
are quite different because Nipro’s infringing activity had a substantial adverse effect on Trividia’s
U.S. manufacturing plant, and so on United States commerce.
Orl-40GJK, 2015 WL 1708757 (M.D. Fla. Apr. 15, 2015) (CLA-417), does not advance Nipro’s
argument because it addresses a completely different fact pattern. It does not discuss the fact
pattern here, covered by the numerous cases discussed above where the substantial impact on
United States commerce is based on an adverse impact—as a result of a decline of foreign sales—
on U.S. manufacturing facilities.
257. Hong Leong Fin. Ltd. (Singapore) v. Pinnacle Performance Ltd., No. 12 Civ.
6010(JMF), 2013 WL 5746126 (S.D.N.Y. Oct. 23, 2013) (CLA-397), does not provide any
guidance in this matter because it involved a Singapore-based plaintiff bringing suit against a U.S.-
based defendant even though there was no substantial effect on U.S. commerce. Id. at * 4. The
only alleged effect on U.S. commerce was that the defendant was based in New York and planned
its alleged scheme in New York. Id. at *5. Here, Trividia has explained how a drop in demand
for its test strips abroad will have a direct and substantial impact in the United States.
258. McBee v. Delica Co., (CLA-430) provides no support to Nipro because that case
was about an American musician who sought to prevent a Japanese defendant from using his name
on its adolescent female clothing line in Japan. 417 F.3d at 111. The clothes were not sold outside
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of Japan, and the plaintiff was not being harmed by their sale in Japan. Id. at 125-26. While the
court did note that there was “no United States interest in protecting Japanese consumers,” the
plaintiff did not suffer any harm in the United States and no need to extend the Lanham Act’s
protections further. Id.
259. Schreiber v. Dunabin, 938 F. Supp. 2d 587 (E.D. Va. 2013) (CLA-469), is of no
help to Nipro because that case involved a Canadian plaintiff suing a British defendant over the
British defendant’s use of a mark solely in the United Kingdom. Id. at 596. While there were
some American defendants, their only role was to accredit Internet domain names and were not
involved in the trademark dispute beyond registering the British defendant’s website. Id. at 593.
Unlike Schreiber, where the dispute did not involve a company with facilities in the United States,
and the dispute was between two non-American entities, Trividia, a company with its offices in
Florida, is harmed by Nipro’s infringing sales because its domestic manufacturing and packaging
operations are being adversely impacted.
E. Trividia Is Not Relying on Websites for Lanham Act Jurisdiction
260. Trividia, contrary to Nipro’s suggestion, does not invoke Nipro’s infringing activity
on the internet to establish an impact on United States commerce. Rather, Trividia invokes that
activity as additional evidence of Nipro’s liability—that Nipro repeatedly and knowingly engaged
in activity in Australia, England, Germany, and Japan, among other countries that infringed on
Trividia’s trademarks.
X. THE EVIDENCE ESTABLISHES NIPRO’S INFRINGEMENTS CREATE A LIKELIHOOD OF CONFUSION
261. There can be no dispute, as Nipro has expressly recognized, that Trividia’s
trademarks are “valuable business assets” and are “vital” to its success. See, e.g., IDA § 3.10
(“The trademarks and service marks set forth in Schedule F, attached hereto (the ‘NDI Marks’)
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owned by or licensed to NDI are vital to NDI’s business.”); IDA § 16.5 (“[T]he Trademarks,
Article 3.10 constitute valuable business assets and rights of NDI, the willfully unauthorized use,
disclosure or breach of which may irreparably damage NDI.”). Nor can there by any dispute that
Nipro has used Trividia’s trademark to tell “Dear TrueResult Customer[s]” that Nipro’s product—
the GlucoKey meter—was a successor to and an “upgrade” on Trividia’s product, all in an effort
to exploit customers’ loyalty to Trividia’s trademark in order to dupe them into purchasing Nipro’s
competing product. (C-073) That is just one of the many egregious examples of Nipro’s
infringement of Trividia’s trademarks.
262. As a threshold issue, Trividia notes that Nipro does not contest that Trividia’s
registered and unregistered marks are protectable, as required to state a claim under the Lanham
Act and New York law. See, e.g., CSOD ¶ 328. Nor could it plausibly do so. Nor does it contest
Trividia’s assertion that many of its trademarks have obtained incontestable status. Nor could it do
so. As Trividia pointed out in its Statement of Claim and Memorial, it owns numerous valid
registered TRUE-related trademarks that are entitled to protection. SOC ¶ 157; see Gruner + Jahr
USA Publ’g v. Meredith Corp., 991 F.2d 1072, 1076 (2d Cir. 1993) (CLA-202). Moreover,
Trividia’s unregistered TRUE marks, which mirror in many ways its registered marks, are
“inherently distinctive” and therefore also entitled to protection. SOC ¶¶ 158, 174, 187-189; see
Lopez v. Gap, Inc., 883 F. Supp. 2d 400, 414 (S.D.N.Y. 2012) (CLA-245). Nipro has not argued
otherwise. Accordingly, for purposes of Trividia’s Lanham Act claims, and those state law claims
that share the same elements,15 only the second element—likelihood of confusion—is at issue
here.
15 Trividia’s infringement and unfair competition claims under the Lanham Act are evaluated under the same two-part test: (1) is plaintiff’s mark entitled to protection, and (2) is defendant’s use of
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263. Trividia and Nipro also agree that the “likelihood of confusion” analysis is
governed by the factors outlined in Polaroid Corp. v. Polarad Elecs. Corp., 287 F.2d 492, 495 (2d
Cir. 1961) (CLA-203): (1) the strength of the plaintiff's mark; (2) the similarity of the marks; (3)
the competitive proximity of the products in the marketplace; (4) the likelihood that the senior user
will “bridge the gap” by moving into the junior user's product market; (5) evidence of actual
confusion; (6) the junior user's bad faith in adopting the mark; (7) the respective quality of the
products; and (8) the sophistication of the consumers in the relevant market. See SOC ¶ 160;
CSOD ¶ 328. Moreover, the parties agree that under the law, Nipro’s bad faith use of Trividia’s
trademarks dictates a presumption of confusion. See SOC ¶ 161; CSOD ¶ 340. With this shared
perspective in mind, it is clear that Nipro’s bad faith infringement of Trividia’s trademarks creates
a likelihood of confusion.
A. Nipro Indisputably Infringed Trividia’s Marks Intentionally and in Bad Faith
264. The sixth factor here is all but dispositive of the confusion analysis, because the
evidence previously highlighted by Trividia, in combination with the emails and documents
produced by Nipro since then, established that Nipro intentionally used Trividia’s marks in its
now-confirmed efforts to “switch” and steal Trividia’s customers. This intentional copying of
the mark likely to cause confusion. Flat Rate Movers, Ltd. v. FlatRate Moving & Storage, Inc.,104 F. Supp. 3d 371, 378–379 (S.D.N.Y. 2015) (CLA-195) (citing Arrow Fastener Co. v. Stanley Works, 59 F.3d 384, 390 & n. 4 (2d Cir. 1995) (CLA-196)). Trividia’s unfair competition claim under New York law has the same elements. ESPN, Inc. v. Quiksilver, Inc., 586 F. Supp. 2d 219, 230 (S.D.N.Y. 2008) (CLA-278) (“The elements necessary to prevail on causes of action for trademark infringement and unfair competition under New York common law mirror the Lanham Act claims.”). And Trividia’s N.Y.G.B.L. § 360-l (CLA-260) claim shares the distinctiveness element with these other claims. See Johnson & Johnson Consumer Cos. v. Aini, 540 F. Supp. 2d 374, 394 (E.D.N.Y. 2008) (CLA-264) (“Distinctiveness for dilution purposes often has been equated with the strength of a mark for infringement purposes.” (quoting Mead Data Cent., Inc. v. Toyota Motor Sales, U.S.A., Inc., 875 F.2d 1026, 1030 (2d Cir. 1989) (CLA-265))).
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Trividia’s mark gives rise to a presumption of likelihood of confusion. Mobil Oil Corp. v. Pegasus
Petroleum Corp., 818 F.2d 254, 258 (2d Cir. 1987) (CLA-267) (citing Perfect Fit Indus. v. Acme
266. Thus, Nipro’s witnesses’ subjective proclamations of no bad intent, see CSOD ¶
340, are simply not credible, and therefore cannot rebut the presumption of bad faith here. See
New York City Triathlon, LLC v. NYC Triathlon Club, Inc., 704 F. Supp. 2d 305, 339-340
(S.D.N.Y. 2010) (CLA-448). Nipro’s actual knowledge of Trividia’s protected trademark, on
which it capitalized to drive sales of its own competing products, gives rise to a presumption of
16 And it is Nipro’s burden to do so. See Audi AG v. Shokan Coachworks, Inc., 592 F. Supp. 2d 246, 275 (N.D.N.Y. 2008) (CLA-329) (“Where the alleged infringing mark is identical in style and name to the plaintiff's mark, and use began subsequent to plaintiff's registration of its mark, the burden of ‘explanation and persuasion’ rests with defendant.” (citing Cadbury Beverages, Inc. v. Cott Corp., 73 F.3d 474, 483 (2d Cir. 1996))(CLA-344); Tri-Star Pictures, Inc. v. Unger, 14 F. Supp. 2d 339, 357 (S.D.N.Y. 1998) (CLA-485) (“[W]here the infringing marks are identical, defendant has the burden of persuading the court that there is a credible innocent explanation.”).
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bad faith and likely confusion. Indeed, no witness statement cited by Nipro offers a persuasive,
innocent explanation, see Audi AG, 592 F. Supp. 2d at 275 (CLA-329), for why Nipro incorporated
Trividia’s actual trademarks into its promotional activities for non-Trividia products. See Tri-Star,
14 F. Supp. 2d at 357 (CLA-485) (failing to present a “credible innocent explanation” for using an
identical mark supports an inference of bad faith).
267. However, Nipro’s own documents provide that explanation. Reaching back to the
beginning of the IDA, Nipro was scheming to steal Trividia’s customers. And rather than compete
fairly in the marketplace, Nipro intentionally and wrongfully incorporated Trividia’s trademarks
into its strategy. Nipro’s words speak for themselves:
x 1/31/17: “all Trividia will be replaced in one year time to new supplier products.” (AEO NIPRO0010120) (C-104)
x 4/2/17: “we keep pushing them off and continue as we planned through to June 2018 and move to iSens if time permits (current strategy)” (NIPRO0002474) (C-158)
x 4/26/17: “ALTERNATIVE BGM SUPPLIER”, “Convert all existing Type-2 Patient business ASAP” (AEO NIPRO0010297 at 10297-10298) at (C-159)
x 7/9/17: “Huge push to switch out remainder of patients from Trividia to ForaCare (database)” (AEO NIPRO0015345 at 15370) (C-108)
x 8/24/17: “I would estimate that approximately 40,000 diabetics use a True Meter at the moment. We believe that we could replace 75% of those in the first 6 months. We keep warranty cards of all our customers - so as soon as we have success in the Tender wewill begin a calling and postal campaign to convince them to switch to a free 'latest technology' meter etc and bring them across” (NIPRO0002016) (C-102)
x 10/16/17: “We will be tendering with a new meter - which would lead to a cessation of promoting the TRUEresult meter in January and the substitution of the GlucoKey meter in May.” (AEO NIPRO0016253) (C-161)
x 11/21/17: “Supposed we win the tender, what we will do is to replace all existing TRUE brand meter with new one right? By my understanding, there are about 40,000 units of TRUE brand meter in AU and NAU intends to replace it somewhere from May or Jun, 2018 towards the year end.” (AEO NIPRO0011891) (C-162)
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x 12/15/17: “We should complete replacement of existing TRUE kit with Gluco key within 2018 so that NAU will be able to recover this investment from 2019.” (AEO NIPRO0011877) (C-113)
x 12/15/17: “Switch out of current patients ·Email ·Phone ·Post“, “Switch out test strips in 5,000 pharmacies” (AEO NIPRO0014367 at 14380-14381) (C-163)
x 08/01/18: “we should quickly access all of our users and replace old ones with new meters so as NOT to give any advantage to TRIVIDIA in case TRUE result under TRIVIDIA being registered.” (AEO NIPRO0012805) (C-111)
x 08/01/18: “For replacement of TRUE products with Glucokey, I think we should make it as quickly as possible so as NOT to benefit TRIVIDIA in case their TRUE result being shortlisted under TRIVIDIA.” (AEO NIPRO0012807) (C-112)
x 08/03/18: “By my understanding NAU has approx. 40,000 users with TRUE meters. I think we should replace them with Glucokey within this year.” (AEO NIPRO0010901)(C-164)
x 01/01/19: “Nipro expects to be updated regularly with lists of Aged Care facilities switched over to the G|ucoKey”, “couple of our Pharmacy and distributor had alreadystarted swapping strips to G|ucoKey” (AEO NIPRO0010892 (C-122)
See also AEO NIPRO0010286 (C-165) (2/22/17 showing phase out of Trividia products in favor
of iSens); AEO NIPRO0011875 (C-166) (“we have ongoing business with BGM that should be
replaced by new BGM“); AEO NIPRO0019837 (C-167) (“We launched ForaCare just recently
and will fade out Trividia over the coming years”); AEO NIPRO0018676 (C-117) ((in Japanese)
Distribution will start on December 1st of this year, and we will start contacting our current list of
400,000 customers by mail, phone and letter to introduce the new GlucoKey device); AEO
NIPRO0012776 (C-119) (“The reps are now firmly focused on swapping out aged care facilities
and will focus on this through December.”); AEO NIPRO0011842 (C-126) (“we needed the full
team to convert as many as possible, and as fast as possible, before we cut the team.”).
268. Although these emails themselves are devastating to the picture Nipro has tried to
paint of its actions, Nipro’s previously identified conduct has not been refuted and supports a
finding of bad faith. For example, it is clear that after Trividia sent its January 16 letter notifying
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Nipro that it had been caught infringing Trividia’s trademarks, Nipro nonetheless persisted in the
infringing conduct. Indeed, Nipro persisted in infringing long after receiving the notice and even
after it claimed to have “cured” its infringing conduct. Trividia observed and captured infringing
content on Nipro websites on May 23, 2019. (C-077, C-078, C-079, C-080). Most recently,
Trividia has observed continued infringement which was captured on October 23, 2019 (C-131,
C-147, C-148, C-149, C-150).
269. Nipro offers no response to its continued infringement after notice other than
repeating its now thoroughly discredited argument that Trividia’s use of examples its letter
somehow excuses Nipro’s willful trademark infringement in all other cases. And, for purposes of
these trademark law claims, even if Nipro ceased some infringement, it is not absolved of the
damage its infringement caused. In any event, Nipro cannot distinguish the cases cited by Trividia
that find bad faith where a party continues infringing the trademark after notice, as Nipro did here.
See Fendi Adele S.R.L. v. Burlington Coat Factory Warehouse Corp., 689 F. Supp. 2d 585, 600
(S.D.N.Y. 2010) (CLA-210) (“Courts have repeatedly found willfulness where a defendant
receives a cease and desist letter but continues the infringing conduct.”); Microban Prods. Co. v.
API Indus., Inc., No. 14 Civ. 41(KPF), 2014 WL 1856471, at *8 (S.D.N.Y. May 8, 2014) (CLA-
211) (“Courts have found bad faith where defendants have failed to comply with cease and desist
letters without consulting counsel, and have instead threatened continued infringement.”). Nipro’s
citation to Hi-Tech Pharmacal Co. v. Hi-Tech Pharmaceuticals, Inc., No. 05-CV-2674
(ARR)(SMG), 2007 WL 1988737, at *11 (E.D.N.Y. July 5, 2007) (CLA-483), is not on point,
because in that case, the plaintiff was “unable to produce any evidence of defendant’s bad faith,”
such as evidence of any awareness of the trademark or any evidence of intentional copying. Id.
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In contrast, it is undisputed that Nipro knew of Trividia’s trademarks and the scope of its license,
and copied Trividia’s marks anyway to sell Nipro’s goods.
270. And not only did Nipro continue to misuse Trividia’s trademarks after the cease-
and-desist letter, it brazenly continued to use them after the IDA was terminated on March 8, 2019.
See SOC ¶¶ 166-168. On the Forth Valley Diabetes site, as of March 20, 2019, Nipro had posted
the following, indicating that it was the manufacturer of a TRUE product that would be
discontinued and replaced by a Nipro product:
(Trividia 019630) (C-146). Again, Nipro has no answer for this, but tries to obfuscate its
misconduct by claiming that the “IDA specifically permits Nipro to continue marketing
and selling Trividia’s products post-termination” and that Nipro has an “absolute right” to
resell Trividia branded products. CSOD ¶¶ 342-343. But Trividia does not claim that
Nipro is infringing Trividia’s trademarks by using them to sell Trividia’s products. Rather,
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Trividia asserts that Nipro infringes Trividia’s trademarks (and breached the IDA) by using
Trividia’s trademarks to sell Nipro’s products. Accordingly, Nipro’s reliance on
arguments about the “exhaustion doctrine,” by which it claims entitlement to resell
Trividia’s products, CSOD ¶ 343, is wholly misplaced and inapplicable here.
B. Nipro Mischaracterizes the Strength-of-Mark Analysis; Trividia’s Marks Are Strong
271. Nipro’s argument that Trividia has failed to demonstrate the strengths of its
trademarks also miss the mark. As Trividia demonstrated in its Statement of Claim, a number of
its registered trademarks, including TrueTrack, TrueBalance and TrueResult, have achieved
incontestable status, both in stylized and regular form. SOC ¶ 23. Nipro has not and cannot
challenge that assertion. But as a matter of law, marks that have attained incontestable status
cannot be challenged for lack of secondary meaning. As the Second Circuit said in Gruner + Jahr
USA Publishing v. Meredith Corp., 991 F.2d 1072 (2d Cir. 1993) (CLA-202):
What this means is that a defendant in an infringement suit—where plaintiff has an incontestable mark because of five years’ registration—may not succeed in a defense that declares the mark is entitled to no protection because it is descriptive. As the Supreme Court instructs, the holder of a registered mark may enjoin its infringement relying on the mark’s incontestability against a defense that the mark is merely descriptive.
Id. at 1077 (citing Park ‘N Fly, Inc. v. Dollar Park & Fly, Inc., 469 U.S. 189, 194–202 (1985))
(CLA-453); see also Beer Nuts, Inc. v. Clover Club Foods Co., 805 F.2d 920, 924 (10th Cir. 1986)
(“An ‘incontestable’ mark cannot be challenged as lacking secondary meaning; such marks are
conclusively presumed to be nondescriptive or to have acquired secondary meaning.” (citations
omitted)).(CLA-335)
272. Ignoring the fact that many of Trividia’s trademarks are incontestable and relying
on an incorrect analysis of the case law and an incorrect focus on brand popularity in certain
countries, Nipro’s argument boils down to a meritless discussion on the popularity of Trividia’s
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marks in certain marketplaces. See, e.g., CSOD ¶ 334 (“The general public of Australia simply
does not know Trividia, the alleged “TRUE” line, or any specific Trividia products.”). Trividia’s
prior briefing already details the strength of the TRUE marks, SOC ¶¶ 155-58, 170-74, and Nipro’s
contention, based not on evidence, but rather on the self-serving assertions of its declarants, does
not address this briefing, which demonstrates that Trividia’s marks are suggestive, if not arbitrary
and fanciful, and so that Trividia does not have to establish secondary meaning.
273. Nipro’s focus on the popularity of TRUE products in various markets wholly
misses the point of the strength inquiry, which focuses on the intrinsic characteristics of the mark.
See Star Indus., Inc. v. Bacardi & Co. Ltd., 412 F.3d 373, 384-85 (2d Cir. 2005) (CLA-220) (“The
strength of a mark is determined by its tendency to uniquely identify the source of the product.
This tendency is strong to the extent that the mark is distinctive, either inherently or by virtue of
having acquired secondary meaning.”). The TRUE marks are focused on the highly stylized blue
writing, with a red drop of blood nestled in the “U.” SOC ¶ 158. Trividia’s marks are at least
suggestive, if not arbitrary and fanciful—a point Nipro has not disputed; thus, its marks are
inherently distinct and strong. SOC ¶ 174; Star Indus., 412 F.3d at 385 (“Suggestive marks and
arbitrary or fanciful marks are each inherently distinctive.”); Kraft Gen. Foods, Inc. v. Allied Old
English, Inc., 831 F. Supp, 123, 129 (S.D.N.Y. 1993) (“Suggestive marks are entitled to protection
without proof of secondary meaning.”) (CLA-416); see also Hasbro, Inc. v. Lanard Toys, Ltd.,
858 F.2d 70, 73 (2d Cir. 1988) (“Generally, if a term is suggestive it is entitled to trademark
protection without proof of secondary meaning.”) (CLA-396). Suggestive marks have a high
degree of inherent distinctiveness. See Estee Lauder Inc. v. The Gap, Inc., 108 F.3d 1503, 1508-
09 (2d Cir. 1997) (CLA-215); Sports Auth., Inc. v. Prime Hosp. Corp., 89 F.3d 955, 961 (2d Cir.
1996) (CLA-216). A finding that a mark is suggestive satisfies the inquiry of the strength of a
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mark in favor protection without a need to evaluate secondary meaning. See Hasbro, Inc, 858 F.2d
at 73 (noting that if a term is suggestive it is recognized as a strong mark without the need to prove
secondary meaning) (CLA-396); Kraft Gen. Foods, Inc., 831 F. Supp. at 129 (“Accordingly, the
Court’s finding that Bull’s-Eye is a suggestive mark is dispositive of this Polaroid factor.”) (CLA-
416). Suggestive marks, like Trividia’s, have considerable strength because there is a tendency to
identify the source of the product to which the mark is affixed from the mark.
274. Nevertheless, even if the Tribunal chooses to inquire into secondary meaning,
Trividia’s marks have acquired secondary meaning, thus further bolstering its showing of the
strength of its marks. Contrary to Nipro’s arguments, the question is not whether the average
consumer knows who Trividia is or how popular Trividia’s products are. Rather, the question is
whether the average consumer would recognize that Trividia’s TRUE mark on its products
symbolizes the source of those goods, rather than the product itself. “[T]he crux of the doctrine of
secondary meaning is that the mark comes to identify not only the goods, but the source of those
goods, even though the relevant consuming public might not know the name of the producer.”
Kraft Gen. Foods, Inc., 831 F. Supp. at 129 (internal quotations omitted) (emphasis added) (CLA-
416); see Akiro LLC v. House of Cheatham, Inc., 946 F. Supp. 2d 324, 333 (S.D.N.Y. 2013) (“The
first factor, the strength of the mark, measures a mark’s ‘tendency to identify the goods sold under
the mark as emanating from a particular, although possibly anonymous, source.’” (CLA-320)
(quoting Sports Auth., Inc., 89 F.3d at 960) (CLA-216). As the case Nipro itself relies on explains,
“To establish secondary meaning, a manufacturer must show that, in the minds of the public, the
primary significance of a product feature or term is to identify the source of the product rather
than the product itself.” Bristol-Myers Squibb Co. v. McNeil-P.P.C., Inc., 973 F.2d 1033, 1041
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(2d Cir. 1992) (CLA-219) (emphasis added) (quoting Inwood Labs. v. Ives Labs., 456 U.S. 844,
851 n. 11 (1982)).17
275. Here, Nipro misstates the secondary meaning inquiry by focusing on brand
popularity and market share as opposed whether the consuming public recognizes “TRUE” and its
variations as a trademark. CSOD ¶¶ 333-35. Indeed, as Nipro concedes, “The fundamental
question, however, is whether ‘the primary significance of the term in the minds of the consuming
public is not the product but the producer.’” Bristol-Myers, 973 F.2d at 1041 (CLA-281) (citation
omitted). Although “commercial success” is one indicator of secondary meaning, there are others,
including advertising expenditures, length of use, and attempts to plagiarize the mark. Id.; Kraft
Gen. Foods, Inc., 831 F. Supp. at 129 (CLA-416). Here, Trividia’s marks have acquired secondary
meaning through its considerable spending on advertising that incorporates the marks. (CWS-2
million in advertising its products using its marks in the United States and abroad. (CWS-3 Suppl.
Sorrentino ¶ 28.) Moreover, Trividia has held and used TRUE trademarks for 17 years, dating
back to 2002. See Trividia 018241 (C-169). And of course, Nipro’s own attempt to co-opt
Trividia’s marks to sell its own products lends support to the marks’ strength. This evidence taken
together demonstrates that Trividia’s marks have acquired secondary meaning, thereby bolstering
17 Moreover, Nipro seems to agree (elsewhere in its brief) with the proposition that, for purposes of trademark infringement, the strength inquiry focuses not the strength of the brand among the consuming public, but on the intrinsic nature of the mark and its ability to identify its particular source. CSOD ¶ 383 n.25. Of course, as might be expected given Nipro’s conduct in this proceeding so far, Nipro wholly fabricated the authority to support that proposition. Neither Star Industries, Inc. v. Bacardi & Co. Ltd., 412 F.3d 373 (2d Cir. 2005) (CLA-220), nor Johnson & Johnson v. Am. Nat’l Red Cross, 552 F. Supp. 2d 434 (S.D.N.Y. 2008) (CLA-407), contain the language that Nipro purportedly “quotes” from those authorities.
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its already sufficiently showing of the strength of its marks. See Kraft Gen. Foods, Inc., 831 F.
Supp. at 129 (CLA-416).
276. Moreover, Nipro provides absolutely no support for the notion that there should be
an independent strength inquiry for each country. CSOD ¶¶ 334-35. The very nature of the
strength inquiry, which focuses on the distinctiveness of the mark—a property intrinsic to the mark
itself—suggests that strength of the mark must be evaluated on the whole. Even Giggle, Inc. v.
netFocal, Inc., 856 F. Supp. 2d 625 (S.D.N.Y. 2012) (CLA-382), another case on which Nipro
relies, explains that assessing secondary meaning requires looking at the “market as a whole, not
just niches.” Id. at 631. In an extraterritorial context such as the one presented here, the “whole
market” is the worldwide territory where Trividia’s product are sold, not the “niches” of each
individual country. Because the TRUE marks are inherently distinctive and have acquired
distinctiveness through secondary meaning, they are strong marks—a finding that strongly
supports a likelihood of confusion.
277. In any event, Trividia’s trademarks have acquired secondary meaning, especially
in Australia. To determine whether a trade mark has secondary meaning, for infringement
purposes, the court considers six factors: (1) advertising expenditures, (2) consumer studies linking
the mark to a source, (3) unsolicited media coverage of the product, (4) sales success, (5) attempts
to plagiarize the mark, and (6) length and exclusivity of the mark’s use. Gucci Am., Inc. v. Guess?,
Inc., 868 F. Supp. 2d 207, 238 n.199 (S.D.N.Y. 2012) (CLA-392) (citing Cartier, Inc. v. Sardell
Jewelry, Inc., 294 F. App’x 615, 617 (2d Cir. 2008)) (CLA-349). The Second Circuit has held that
“no ‘single factor [is] determinative, and [that] every element need not be proved.” Am. Footwear
Corp. v. Gen. Footwear Co., 609 F.2d 655, 663 (2d Cir. 1979) (CLA-323) (internal citation
omitted). While Trividia does not break down its advertising expenditures by country, Trividia has
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been selling products in Australia for more than a decade and, until the infringing conduct by
Nipro, had exclusive use of its marks in Australia. Australia was a highly successful market for
Trividia, and one measure of secondary meaning acquired by Trividia’s marks in Australia is the
scope of Nipro’s campaign to misuse those marks in order to convert Trividia’s customers to
Nipro’s customers.
C. The Evidence Demonstrates Actual Confusion
278. Contrary to Nipro’s assertions, Trividia has provided evidence of actual confusion
in its witness statements and in the documents cited in its Statement of Claim and below. What
Nipro derides as “assumptions” are in fact strong inferences that can be drawn from the evidence.
Indeed, confusion is the obvious inference that must be drawn from Nipro’s GlucoKey “upgrade”
letter (C-071) If Nipro was not trying to maintain the illusion that its products were part of
Trividia’s TRUE brand, why would Nipro address the recipient of its letter as a “TRUE customer,”
(C-071), reinforcing the customer’s connection with a competitor? Nipro could just as easily have
addressed the letter to “Dear GlucoKey customer.” Even more telling, why would Nipro address
text messages it sent out to “Dear TrueResult customer,” saying “Reply back Yes for a free
GlucoKey upgrade,” and then signing the letter as “the TrueResult Team,” if not to confuse
consumers. (C-073) TrueResult is not only a registerd Trividia trademark, it has also achieved
incontestable status. Because the letter was sent by Nipro, but fraudulently signed as coming from
the TrueResult team and urged the recipients, who were TrueResult customers to switch to a
GlucoKey meter, any recipient who read the text was necessarily confused into thinking the
GlucoKey was part of Trividia’s product line. It is patently clear that Nipro had succeeded in
confusing its customers as to the origin of the GlucoKey product and was seeking to reinforce that
confusion by capitalizing on the TRUE brand.
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279. In any event, the GlucoKey “upgrade” letter and text are not the only evidence of
actual confusion. Although Nipro significantly restricted the volume and sources of documents
available to Trividia to prove actual confusion by first limiting its production requests to four
countries and then improperly refusing to produce consumer-related documents from two of those
four countries, the limited documents Nipro did turn over illustrate additional instances of actual
confusion.
“I need to know exactly what the lancets are that go in your lancing devices? Are they the TrueUniversal? Also –can we buy lancing devices of yours or how do we tell customers to access a new lancing device if required? Nipro’s response is: “Yeah, the TrueUniversal is our brand – but any universal lancet will work (which means any bar a Roche lancet). And if you let us know your mailing address I’ll send you a few lancing devices for free.”
(NIPRO0018470) (C-124)
“Today we had evidence that the Glucokey test strips were sent out to all Australian pharmacies. No meters were sent and some pharmacies are not happy and through them in the bin as they would rather have a rep tell them about the meters and test strips. We also saw some disappointing things in pharmacy with many pharmacies having TRUEresult rep advising that the replacement is Glucokey. The Nipro rep have been calling themselves the TRUE reps and have been promoting their meter as the TRUE replacement meter.”
Trividia 019792-93. (C-125)
280. And the witness statements of Dean Sorrentino reveal instances of confusion, and
are certainly entitled to as much weight as Nipro’s self-serving witness statements.18 (CWS-3
281. The second Polaroid factor compares the similarity of the senior trademark with
the infringing trademark. But where, as here, the marks are identical, that “is powerful evidence
18 And, as explained above in Section VIII, the self-serving witness statement of Nipro’s Tom Rosseel should be excluded from the Tribunal’s consideration.
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of a likelihood of confusion.” Audi AG, 592 F. Supp. 2d at 273 (CLA-329) (“Where marks are
‘essentially identical,’ the second factor of the Polaroid analysis weighs in favor of the plaintiff.”
(quoting Lois Sportswear, U.S.A. v. Levi Strauss & Co., 799 F.2d 867, 873 (2d Cir. 1986)) CLA-
206). Because Nipro is misusing Trividia’s actual trademarks to promote its own lines of diabetes
supplies, this factor tilts heavily in favor of finding a likelihood of confusion.
282. Nipro disingenuously asserts that the similarity factor is irrelevant because it was
and is permitted to use Trividia’s marks for the “sale and promotion of TRUE products.” CSOD
¶ 352. But as explained above, Nipro infringing conduct is the use of Trividia’s marks to sell and
promote its non-TRUE products such as GlucoKey and 4Sure. Indeed, Nipro’s willful misuse of
the licensed trademarks beyond the scope of the license all but certainly establishes a likelihood
of confusion. Cf. L & L Wings, Inc. v. Marco-Destin, Inc., 676 F. Supp. 2d 179, 188-89 (S.D.N.Y.
2009) (“It is evident that the so-called Polaroid factors are more geared towards comparing two
distinct, albeit similar, marks. Thus, their application may be unnecessary in the case of an ex-
licensee using a previously licensed mark where only one trademark is involved.” (CLA-235)
(quoting Ryan v. Volpone Stamp Co., 107 F. Supp. 2d 369, 400 (S.D.N.Y. 2000)). (CLA-238)
E. Competitive Proximity of Nipro’s and Trividia’s Diabetes Products Favors a Likelihood of Confusion
283. Nipro similarly elides the importance of the competitive proximity of the products
in question in the likelihood of confusion analysis. Indeed, it is well settled that when products
are in direct competition with one another, using similar (or in this case identical) marks is likely
to cause confusion. See Kraft Gen. Foods, 831 F. Supp. at 130 (CLA-416); see Audi AG, 592 F.
Supp. 2d at 273-74 (“Products which directly compete in the marketplace clearly warrant a finding
of the highest degree of competitive proximity.” (CLA-329) (quoting Hasbro, Inc. v. Lanard Toys,
the court reasoned that enhanced damages were warranted where a defendant “deliberately and
willfully engaged in false advertising as part of a strategy designed to gain its market share in the
lucrative vitamin and nutritional supplement industry through deception,” could provide no
reasonable explanation for its infringing use, and continued to misuse the protected term long after
being aware of its infringing use. See id. at 458. Likewise, Nipro brazenly used Trividia’s marks
to deceptively gain market share in the diabetes supply market, has offered no explanation for why
it was permitted to use Trividia’s marks to sell its own products, and even continued to misuse
Trividia’s marks after being informed of its infringement. Accordingly, an award trebling
Trividia’s damages is warranted here.
327. Similarly, in Mobius Management Systems, Inc. v. Fourth Dimension Software,
Inc., 880 F. Supp. 1005, 1025-26 (S.D.N.Y. 1994) (CLA-436), the court trebled damages because
the defendant had knowingly made false statements about the plaintiff in a letter, which occurred
after the defendant had agreed not to make such statements in the marketplace. The court awarded
treble damages to compensate the plaintiff for the loss of goodwill it has sustained and the efforts
it took to combat the statements made in the defendant’s letter it sent out to consumers. Id. at
1025-26. The court was persuaded to enhance damages due to the high degree of the defendant’s
bad faith, as—much like Nipro—it knew what it was doing was incorrect. See id.
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328. The Lanham Act also allows for enhancement of a defendant’s disgorged profits,
stating “the court may in its discretion enter judgment for such sum as the court shall find to be
just, according to the circumstances of the case.” See 15 U.S.C. 1117(a) (CLA-313). Here, the
same factors that support trebling a damage award based on Trividia’s lost profits also support
enhancing a damage award based on Nipro’s ill gotten gain. See Merck Eprova AG v. Gnosis
S.p.A., 901 F. Supp. 2d 436, 460 (S.D.N.Y. 2012) (CLA-433). The Court has broad discretion in
determining how much of an enhancement to award. See Getty Petroleum Corp. v. Bartco
Petroleum Corp., 858 F.2d 103, 109 (2d Cir.1988). (“Unlimited enhancement or reduction of an
award based on defendant's profits is permitted in order to correct inadequacy or
excessiveness.”).19 (CLA-443)
329. Trividia has established instances of actual confusion. It has established that
Nipro’s infringing conduct was done willfully and in bad faith. Trividia’s expert has established
that as a result of Nipro’s trademark-related misconduct, Trividia has lost sales and Nipro has
gained profits as set forth in the following chart:
19 Damages for an unfair competition claim under New York common law are also measured by the profits Trividia lost as a result of Nipro’s misconduct. Suburban Graphics Supply Corp. v. Nagle, 774 N.Y.S.2d 160 (N.Y. App. Div. 2004) (CLA-496). Unfair competition claims follow the rule for compensatory damages, and such damages need to correspond to “the amount which the plaintiff would have made except for the defendant’s wrong”. E.J. Brooks Co. v. Cambridge Security Seals, 31 N.Y.3d 441, 449 (NY 2018) (CLA-287) (internal quotations and alterations omitted). But “[t]o be sure, courts may award a defendant’s unjust gains as a proxy for compensatory damages in an unfair competition case.” Id. at 450 (internal quotations and alterations omitted). Such a proxy for lost profits may be used “where a plaintiff's actual losses cannot be traced with even approximate precision,” but it is clear that a defendant’s misconduct caused plaintiff loss. See id. (internal quotations omitted).
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B. Trividia Is Entitled to a Permanent Injunction
1. The IDA Entitles Trividia to an Injunction
330. Having established that Nipro has breached Section 3.10 of the IDA by using
Trividia’s trademarks to promote and sell Nipro’s products, Section 16.5 clearly provides that
Trividia is entitled to an injunction restraining Nipro from misusing or continuing to misuse
Trividia’s trademarks. The agreement itself recognizes the irreparable harm that arises from
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trademark abuse and the parties have contractually agreed that an injunction is appropriate in these
circumstances. IDA § 16.5 (“willfully unauthorized use, disclosure, or breach [of Trividia’s
trademarks] . . . may irreparably damage” Trividia and Trividia “shall be entitled to an
injunction”). The Tribunal need not even reach questions of irreparable harm or balancing equities
because the parties have agreed that an injunction should issue when a breach or even threatened
breach of the trademark license has occurred. See generally Ticor Title Ins. Co. v. Cohen, 173
F.3d 63, 69 (2d Cir. 1999) (CLA-480) (treating contract clause providing for injunctive relief as
an “admission” plaintiff would suffer irreparable harm); Roswell Capital Partners LLC v.
Alternative Constr. Techs., 08 Civ. 10647(DLC), 2009 WL 222348, at *17 (S.D.N.Y. Jun. 16,
2009) (courts may view terms in contract specifiying “irreparable harm” as “evidence of an
admission that irreparable harm has occurred”). (CLA-463)
2. Trividia Meets the Standard for a Permanent Injunction
331. In any event, Trividia has clearly met the standard for a permanent injunction. A
permanent injunction is appropriate when a plaintiff demonstrates “(1) actual success on the merits
and (2) irreparable harm.” Gucci Am., Inc. v. Duty Free Apparel, Ltd., 286 F. Supp. 2d 284, 290
(S.D.N.Y 2003) (CLA-391). As the foregoing briefing in this matter establishes, Trividia has
demonstrated actual success on the merits. And while the general law governing injunction
requires a balancing of hardships and an assessment of the public interest, consideration of those
factors is obviated in the trademark cases because, “with respect to the balance of hardships, an
infringer cannot complain about the loss of its ability to infringe,” and “the public has an interest
in not being deceived—in being assured that the mark it associates with a product is not attached
to goods of unknown origin and quality.” See Scores Holding Co. Inc. v. CJ NYC Inc., No. 17-
CV-0020 (RA), 2017 WL 2297014, at *3 (S.D.N.Y. May 24, 2017) (CLA-251) (citing WPIX, Inc.
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v. ivi, Inc., 691 F.3d 275, 287 (2d Cir. 2012) (CLA-505), and N.Y.C. Triathlon, LLC v. NYC
(citation omitted). Nipro has certainly had ample opportunity here to argue, albeit unsuccessfully,
why these standards are not met. But the standards apply all the same.
334. Nipro’s cited cases do not support its argument. For starters, Gowanus Dredgers
v. Baard, No. 11–CV–5985 (PKC), 2013 WL 6667361 (E.D.N.Y. Dec. 17, 2013) (CLA-387), did
not even analyze issuance of an injunction in the trademark context. It disposed of the case finding
that the plaintiff lacked standing. Id. at *7-11. In Microsoft, the court denied an injunction without
prejudice because Microsoft did not bother to address the injunction factors in its motion. 589 F.
20 The same irreparable harm standards are also found in cases not involving defaults. See, e.g.,WPIX, Inc. v. ivi, Inc., 691 F.3d 275 (2d Cir. 2012) (CLA-505); Lobo Enters., Inc. v. Tunnel Inc.,822 F.2d 331 (2d Cir.1987) (CLA-422); C=Holdings B.V. v. Asiarim Corp., 992 F. Supp. 2d 223 (S.D.N.Y. 2013) (CLA-343); Gucci Am., Inc. v. Duty Free Apparel, Ltd., 286 F. Supp. 2d 284, 290 (S.D.N.Y 2003). (CLA-391)
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Supp. 2d at 204. And finally, Nipro’s citation to Conan Properties is misplaced, because Nipro
neglects to inform the Tribunal that the magistrate’s recommendation it relies upon was rejected
and overruled by the district judge, who did grant injunctive relief after finding that courts
“routinely” award injunctions in cases of that type where there is a threat of continuing
infringement. See Conan Props. Int’l LLC v. Sanchez, No. 1:17-cv-00162-FB-RLM, 2018 WL
3869894, at *6 (E.D.N.Y. Aug. 15, 2018) (CLA-513), modifying recommendation in 2018 WL
4522099 (E.D.N.Y. June 8, 2018). (CLA-358)
335. In any event, in Trividia’s cited cases, the courts did not “presume irreparable
harm,” but found irreparable on the same facts that established a likelihood of confusion because
“[i]t is well-settled that a trademark owner's loss of goodwill and ability to control its reputation
constitutes irreparable harm,” and, thus, “where there is likely confusion in an action for trademark
infringement, the requisite irreparable harm is established as a matter of course.” See N.Y. City
Triathlon, 704 F. Supp. 2d at 325-26; accord U.S. Polo, 800 F. Supp. 2d at 540-41 (CLA-448)
(finding irreparable harm from loss of ability to control goodwill and reputation after discussing
whether or not irreparable harm could be presumed). And still other courts found irreparable harm
based not a confusion presumption, but on difficulty in ascertaining future monetary damages from
lost customers, Protection One, 553 F. Supp. 2d at 206 (CLA-552), and the likelihood that a
defendant will continue infringing, Scores, 2017 WL 2297014, at *3. (CLA-251)
336. All of these factors point to irreparable harm here. Nipro has clearly caused actual
confusion with its misleading uses of Trividia’s trademarks, ripping goodwill and reputation away
from Trividia. Nipro’s willful misuse of the trademarks long after being notified of its
infringement suggests that Nipro will not be deterred from continuing its infringement absent, at
least, an injunction. And finally, while Trividia’s expert has been able to ascertain some measure
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of damages to-date based on Nipro’s trademark misuse, the uncertainty in calculating adequate
damages many years into the future to account for the loss of recurring strip customers that have
been stolen away, militates in favor of finding irreparable harm and issuing an injunction here.
3. An Injunction Is Warranted Because Nipro Is Likely to Continue Infringing
337. Nipro’s last attempt to avoid a permanent injunction is to claim, essentially, that an
injunction is “moot” and “unnecessary” because it has “cured” its trademarks violations and
apparently is willing to “stipulate[] that it will not infringe in the future.” See CSOD ¶¶ 384, 409-
410. But as Nipro itself subtly concedes, an injunction is only appropriate after violations have
ceased if a defendant “shows no inclination to repeat its offense.” CSOD ¶ 409; see Doctor’s
Assocs. LLC v. Hai, No. 19-CV-1968 (NGG) (RER), 2019 WL 2385597, at *4-5 (E.D.N.Y. June
6, 2019) (CLA-363) (“A defendant’s voluntary change of conduct only renders a case moot if the
defendant demonstrates both that ‘(1) there is no reasonable expectation that the alleged violation
will recur and (2) interim relief or events have completely and irrevocably eradicated the effects
of the alleged violation.’” (emphasis added)). It is Nipro’s burden to show that it has met these
requirements. Id. at *5. And Nipro, which has essentially refused to produce relevant
documentation of its infringements from all but two countries, has made no such showing here.
338. On the contrary, Nipro’s callous disrespect for Trividia’s trademark rights
demonstrates that it has every inclination to misuse Trividia’s trademarks in the future. It misused
them despite the clear language of the IDA license. It continued misusing them after Trividia
informed it that it was infringing. And it continued to use them long after Trividia terminated the
IDA. Indeed, Nipro all but concedes it intends to continue misusing Trividia’s trademarks by
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making its erroneous argument that Amendment No. 2 to the IDA permits such use,21 and by
describing its purported cessation of infringements as “a precaution.” See CSOD ¶¶ 409-410.
339. When a defendant acts with such willful disregard of a plaintiff’s trademark rights,
courts regularly conclude that an injunction is appropriate even if the offending party has
purportedly stopped its violations. See, e.g., Register.com, Inc. v. Verio, Inc., 356 F.3d 393, 405
(2d Cir. 2004) (CLA-243) (court may look to “previous infringing behavior as a justification for
the injunction” in spite of agreement to cease infringing); Turn On Prods., Inc. v. Almost Famous
(“Although Defendants have complied with [plaintiff’s] prior demands, [defendant’s] past willful
infringement supports a grant of injunctive relief.”) (CLA-486); Doctor’s Assocs., 2019 WL
2385597, at *5; Coty Inc. v. Excell Brands, LLC, 277 F. Supp. 3d 425, 465 (S.D.N.Y. 2017) (CLa-
363) (injunction appropriate, despite cessation of all operations, due to defendant’s “tendencies in
the past”); Microban Prods. Co. v. API Indus., Inc., No. 14 Civ. 41(KPF), 2014 WL 1856471, at
*21 (S.D.N.Y. May 8, 2014) (CLA-211); Mobius Mgmt. Sys., Inc., 880 F. Supp. at 1024 (CLa-
436); see also 5 McCarthy on Trademarks & Unfair Competition § 30:11 (5th ed.)(CLA-508)
(“Even if the defendant has ceased its wrongful activities, an injunction should be granted where
defendant's intentions are in doubt.”).22 Given Nipro’s past behavior and its failure to show beyond
any doubt that it will not repeat its infringement, a permanent injunction is warranted in this case.
21 Again, the IDA permits Nipro to use Trividia’s trademarks to sell Trividia’s products, not to sell Nipro’s products.22 Indeed, as the McCarthy treatise observes, the appropriate question for Nipro is, “If you have irreversibly stopped those acts, then how can you be harmed by an injunction to not do what you say you will not do again?” 5 McCarthy on Trademarks & Unfair Competition § 30:11 (5th ed.) (citation omitted).(CLA-508)
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XV. REQUESTED RELIEF
340. Trividia respectfully requests that the Tribunal allow its claims to proceed and grant
the following relief:
x Grant Trividia’s claim that Nipro breached the IDA by failing to make the Annual Minimum Purchase for Contract Year Three thereby resulting in termination of the IDA and award expectancy damages under New York law for Contract Years Three through Five. See IDA Sections 1.1; 2.1; 2.2; 3.2; Article V; Schedule A; Schedule C; Schedule D.
o Respondent conceded that the Annual Minimum for Contract Year Three should be the same as Contract Year Two. The Contract Year Two Annual Minimum was 3,600,000 fifty (50)-count vials of strips (180,000,000 strips) equalling $18,900,000 in purchases. As a result of Respondent’s breach and resulting termination of the IDA, the Contract Year Two Annual Minimum also applies for Contract Years Four and Five. Respondent failed to purchase the required 50-ct. equivalent test strip vials of product in Contract Year Three.
o Trividia’s expert report details the damages requested. (CER-1 Suppl. Kindler at Exhibit 1). As set forth in Trividia’s Nov. 1, 2019 expert report (CER-1 Suppl. Kindler at ¶ 15 and Table 2) the expectancy damages relating to the breach of the agreement of failing to meet the Annual Minimum Purchase requirement are as follow:
� Contract Year Three: $8,168,888� Contract Year Four: $8,679,260� Contract Year Five: $10,796,311� Total: $27,644,459
These numbers are present value numbers. In addition, under New York law, the Trividia is also entitled to prejudgment interest at a rate of 9%.
x Grant Trividia’s claim for breach of the IDA for Nipro’s misuse of Trividia’s trademarks in violation of the parties’ agreement (which entitles Trividia to expectancy damages in the amount, at least, of the damages relating to Contract Years Three through Five of $27,644,459 as set forth above because it was forced to terminate the IDA as a result of the breach).
x Grant Trividia’s trademark infringement claims and award related damages including treble, punitive and statutory damages as allowed by law. As set forth in Expert, Kindler’s supplemental report, Trividia Request an award of damage as follows as set forth in Expert Kindler’s Report:
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x Grant Trividia’s request for treble, statutory and punitive damages.
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x Grant Trividia’s claim for injunctive relief based on Nipro’s infringement and misuse of Trividia’s trademarks and permanently enjoin Nipro’s acts of trademark infringement.
x Grant Trividia’s claim for breach of the IDA by failing to provide requested forecasts for Contract Year Four and award related damages. As a result of Nipro’s breach of the IDA, Trividia was forced to terminate the IDA.
x Deny Nipro’s reformation and rescission claims with prejudice as a result of their withdrawal of those claims on the eve of the scheduled March, 2019 hearing.
x Grant Trividia and adverse inference on the issue of customer confusion in Europe and strike Tom Rosseel’s witness statement and testimony based on Nipro’s failure to produce.
x Grant Trividia prevailing party attorney’s fees, costs and expenses associated with this matter as provided for in Article XIV of the IDA.
x Grant pre-judgment interest pursuant to New York law, which is presently at a rate of 9%.
x Grant such other relief to Trividia as the Tribunal may conclude is just and proper.
Dated: November 1, 2019Respectfully submitted,
/s/ Sigrid McCawleySigrid McCawleyCarlos SiresCarl GoldfarbBrendon OlsonBOIES SCHILLER FLEXNER LLP401 East Las Olas Blvd Suite 1200Fort Lauderdale, FL 33316Tel: (954) 356-0011Facsimile: (954) 356-0022Email: [email protected]
Counsel for ClaimantTrividia Health, Inc.
Case 1:20-cv-08450-VEC Document 20-20 Filed 05/11/21 Page 201 of 201
