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Mionix, LLC v. ACS Technology

United States District Court, D. Colorado

May 14, 2018

MIONIX, LLC, a Nevada limited liability company, Plaintiff,
v.
ACS TECHNOLOGY aka Mionix CO., WALTER LARRY L'HOTTA, an individual, Defendants.

          ORDER

          R. Brooke Jackson United States District Judge.

         This matter is before the Court on Plaintiff Mionix, LLC's (“Mionix”) motion for summary judgment as to its affirmative claims, ECF No. 63, and its motion for summary judgment regarding the counterclaims asserted against it by defendants ACS Technology and Walter Larry L'Hotta. ECF No. 70. After reviewing the briefing and relevant law, the Court DENIES both motions.

         BACKGROUND

         Mionix is a biotechnology firm that invents and sells chemical technologies to a wide array of industries, including the agribusiness and food safety industries. ECF No. 39 at 2. Larry L'Hotta worked as a sales manager for Mionix from approximately 2005-2007. Id. at 4. In January 2007 Mionix informed its employees that it was closing down operations and would be laying off its workforce. ECF No. 55 at 14. In an effort to help Mionix stay in business or alternatively sell its assets, Mr. L'Hotta stayed on with Mionix for an additional six months. Id. By the time Mr. L'Hotta's employment ended in 2007, Mionix owed him $3, 500 in back pay that Mionix claimed that it lacked funds to pay. Id. at 15. Mr. L'Hotta proposed that in lieu of Mionix paying him the $3, 500, Mionix could instead treat the $3, 500 as Mr. L'Hotta's payment to obtain a licensing agreement whereby he would independently continue his sales and marketing efforts of Mionix products. Id. Under the terms of this two-year agreement, Mr. L'Hotta had the right to market, manufacture, and sell Mionix's various chemical products; was to pay Mionix a percentage of his sales; and could only solicit clients with whom Mionix did not have a prior business relationship. Id.; ECF No. 79 at 1-2. To effectuate this agreement, Mr. L'Hotta formed a company called ACS Technology. Id. ACS Technology and Mionix formalized the licensing agreement in October 2007. ECF No. 55 at 15.

         During the two years covered by this licensing agreement, Mionix entered into another licensing agreement with a company called Ivesco to sell Mionix's product FreshFlo 100. Id. at 16. Around this same time, Mionix requested that ACS Technology voluntarily cease its sale of FreshFlo 100. Id. ACS Technology rejected this request but countered with a proposal that Mionix buy out ACS Technology's license, which Mionix allegedly ignored. Id. Then, ACS Technology was informed by its FreshFlo 100 supplier, Hydrite, that Mionix had purchased all remaining inventory of FreshFlo 100, leaving no FreshFlo 100 product for ACS Technology to sell to its customers. Id. at 17. Later, Mionix switched suppliers of FreshFlo 100 and provided the product to Ivesco but not to ACS Technology. Id. When ACS Technology demanded that Mionix allow it to purchase some of the FreshFlo 100 made by this new supplier, Mionix quoted ACS Technology a price approximately twice market price, which effectively prevented ACS Technology from obtaining any FreshFlo 100. Id.

         Because ACS Technology was unable to consistently obtain FreshFlo 100 to sell, Mr. L'Hotta approached Hydrite-the original supplier of FreshFlo 100-about developing a new process to make a product similar to FreshFlo 100. Id. The products would be similar in that they would both be made using acidified calcium sulfate (“ACS”) and would both be sold for use in animal drinking water. Id. Hydrite agreed, and in 2008 ACS Technology began selling its new ACS product. Id. Initially ACS Technology sold the new product under the FreshFlo 100 brand that it had licensed from Mionix. Id. However, in April 2009, months before the licensing agreement ended, ACS Technology began selling the product under a new name, LpH 100. Id. at 17-18.

         After the two-year licensing agreement between Mionix and ACS Technology ended in October 2009, ACS Technology continued to market and sell its LpH 100 product. Id. at 18. Defendants admit that at certain times since October 2009 they have “inadvertently and erroneously” referred to Mionix's products in their communications or invoices. Id. Mionix asserts that this wrongful use of Mionix intellectual property occurred on the ACS Technology website and in its business documents where ACS Technology featured Mionix research studies, patent information, and an industry standards identification code without attributing this information to Mionix. Mionix asserts that this was done to give the appearance that ACS Technology was in some way still associated with Mionix. ECF No. 39 at 10-14.

         In 2013 Mionix's attorney sent Mr. L'Hotta a letter threatening legal action for these alleged misuses of its property. ECF No. 55 at 20-21. Mr. L'Hotta complied, and he sent a letter back seeking confirmation that the issue between the two companies had been resolved. Id. In June 2016 Mionix again complained to Mr. L'Hotta through its lawyer about his use of its property, as well as about Mr. L'Hotta's use of the company name “ACS Technology” which it believed infringed on its trademark to the acronym “ACS.” Id. In response, Mr. L'Hotta agreed to stop using the name ACS Technology and dissolved that company. Id. He then formed a new company named SAFE-pHix that is still in operation. Id.

         In August 2016 Mionix filed the instant lawsuit against Mr. L'Hotta, ACS Technology, and SAFE-pHix and asserted eight claims for relief. ECF No. 39. Defendants answered and asserted three counterclaims against Mionix. ECF No. 55. Defendants' counterclaims arise from Mionix's behavior in 2010-2014, during which time Mionix apparently contacted several of ACS Technology's customers, potential customers, and its supplier Hydrite and told them that ACS Technology's product was illegal or unauthorized. Id. at 19-20. Mionix filed motions for summary judgment with regard to both its claims against defendants and defendants' counterclaims against it. ECF Nos. 63, 70. Both motions have been fully briefed and are ripe for this Court's review.

         STANDARD OF REVIEW

         The Court may grant summary judgment if “there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). The moving party has the burden to show that there is an absence of evidence to support the nonmoving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). The nonmoving party must “designate specific facts showing that there is a genuine issue for trial.” Id. at 324. A dispute about a fact is material “if under the substantive law it is essential to the proper disposition of the claim.” Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir. 1998) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)). A material fact is genuine if “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson, 477 U.S. at 248. The Court will examine the factual record and make reasonable inferences therefrom in the light most favorable to the party opposing summary judgment. Concrete Works of Colo., Inc. v. City & Cnty. of Denver, 36 F.3d 1513, 1517 (10th Cir. 1994).

         ANALYSIS

         A. Mionix's Motion for Summary Judgment on Its Affirmative Claims.

         Mionix asserts eight claims against defendants: (1) Unfair Competition under the Lanham Act; (2) False Designation of Origin; (3) Federal Trademark Infringement; (4) Trade Dress Infringement; (5) Unfair Competition under Colorado law; (6) Trademark Infringement under Colorado law; (7) Violation of the Colorado Consumer Protection Act; and (8) Civil Conspiracy. ECF No. 39. Mionix seeks summary judgment regarding defendants' liability on all eight of these claims. ECF No. 63.

         Defendants argue that summary judgment regarding their liability is improper for two reasons. First, defendants argue that each of Mionix's claims is barred by laches, the applicable statute of limitations, and/or Mionix's acquiescence.[1] ECF No. 79 at 10. Second, Defendants argue that Mionix cannot show that their conduct created a “likelihood of confusion” as required to find liability for six of the eight claims, and that Mionix has not met its burden on the other two ...


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