Marlyn Nutraceuticals Inc. vs. Mucos Pharma GMBH & Co.
Filed 7/2/09
Court of Appeals for the Ninth District
Cite as CV-07-00012-ROS

CA Upholds That Wobenzym Dietary Supplement's Copyright Infringed

In the late 1980s, Dr. Karl Ransberger met Joachim Lehmann, the CEO of Marlyn Nutraceuticals, Inc. (“Marlyn”). Dr. Ransberger developed Wobenzym, an enzyme-based dietary supplement originally produced and sold by the German corporation he owned which is called Mucos Pharma GmbH & Co. (“Mucos”).

In exchange for allowing Marlyn to exclusively distribute Wobenzym in the United States, Ransberger acquired a 50% ownership interest in Marlyn. Wobenzym is federally trademarked and from 1991 to 2006, Marlyn distributed Wobenzym in the United States for Mucos. Marlyn sold Wobenzym in labels that prominently displayed Mucos’s trademark. Mucos sold over $25 million of Wobenzym to American customers.

When Ransberger died in 2001, problems arose between Mucos and Marlyn. Allegedly, there was a 2002 Settlement Agreement where terms of distributorship were made.

The Distributorship Provision provided that, under the future distributorship agreement, Marlyn was to be the exclusive distributor of Wobenzym and two other supplements in the United States for a period of ten years, with a five-year extension option.

It further stated that if Mucos ceased production of Wobenzym, Marlyn would have “an exclusive non-transferable, non-sublicensable license to manufacture [Wobenzym] within the United States” and sell the Wobenzym it manufactures. However, no such formal agreement was ever executed.

In 2006, Marlyn submitted purchase orders to Mucos but refused to take delivery because it believed that Mucos had changed the product. Marlyn had requested and received a batch weighing sheet from Mucos which revealed a difference between the actual amount of certain active ingredients and the amount listed on Wobenzym’s product label.

Marlyn construed the discrepancy between the actual amounts of the ingredients and the stated amounts as indication that Mucos had ceased producing Wobenzym. Marlyn believed that, according to the Distributorship Provision, it had the right to begin manufacturing Wobenzym and selling it under the Wobenzym label. In March of 2007 it began doing just that.

Thus, an action for trademark infringement was brought before the court by Mucos. It claimed that Marlyn’s Wobenzym formula differed from its formula and caused confusion. Mucos requested a preliminary injunction to stop Marlyn from selling Wobenzym with the Wobernzym mark.

The district court granted Mucos’s motion for a preliminary injunction. It ordered Marlyn to stop selling Wobenzym, recall the Wobenzym that it had already sold, and provide restitution to customers who had bought Marlyn’s Wobenzym on November 13, 2007.

Three days after the district court issued the preliminary injunction and seven days after the hearing ended, Marlyn moved to introduce three new pieces of evidence and requested that the court reconsider its decision. The district court declined to admit the evidence or reconsider its decision.

Marlyn now appeals the preliminary injunction, the scope of the injunction, and the court’s decision not to reconsider its decision in light of new evidence.

The Court of Appeals, in view of the issues raised by Marlyn’s appeal held that:

• With regard to the preliminary injunction issued, it ruled that the court correctly held that to be liable for trademark infringement, someone must “(1) use in commerce (2) any word, false designation of origin, false or misleading description, or representation of fact, which (3) is likely to cause confusion or misrepresents the characteristics of his or another person’s goods or services”


• As to Marlyn’s arguement that its manufacture and sale of Wobenzym using Mucos’s mark is justified because of the terms laid out in the Distributorship Provision, the CA held that Marlyn must show first that the Distributorship Provision was enforceable and second that Mucos ceased production of Wobenzym.


• It also said that there was no clear error in the district court’s factual determination that Mucos never ceased production of Wobenzym. The change in the Wobenzym formula was not significant enough to constitute cessation of production because the new formula maintained the desired level of enzymatic activity per milligram.


• The CA held that they see no reason to disturb the district court’s finding as Marlyn did not meet its burden in proving its defense because it did not show that the change in question constituted a cessation of production. Trademark owners are permitted to make small changes to their products without abandoning their marks. Thus, Mucos did not cease production of Wobenzym and that Marlyn did not have the right to use Mucos’s mark.


• As to the challenged scope of the injunctive relief provided by the district court when it ordered Marlyn to stop manufacturing and distributing its Wobenzym product, recall its already-distributed products, and provide restitution to its Wobenzym customers, the CA held that the remedy went beyond the status quo pending litigation and instead required Marlyn to take the affirmative step of recalling its product.


• The CA said that to justify a recall, the infringed company must first satisfy the traditional standard for a prohibitory preliminary injunction. In addition, the district court must consider three further factors: (1) the willful or intentional infringement by the defendant; (2) whether the risk of confusion to the public and injury to the trademark owner is greater than the burden of the recall to the defendant; and (3) substantial risk of danger to the public due to the defendant’s infringing activity.


• Thus, it held that the district court to consider these factors before granting a preliminary injunction directing product recall in a trademark infringement case. If the district court makes a finding that the infringing product causes a substantial risk of danger to the public, it should order a recall.