Skold v. Galderma Labs., L.P.

THOMAS SKOLD, Plaintiff, v. GALDERMA LABORATORIES, L.P., et al., Defendants.

CIVIL ACTION NO. 14-5280

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA

August 29, 2017

OPINION

This case arises from a dispute over a skincare technology and trademark known as "Restoraderm." Plaintiff entered into two successive agreements with CollaGenex Pharmaceuticals, Inc. ("CollaGenex") to commercialize a product line using his Restoraderm technology. CollaGenex was subsequently acquired by Galderma Inc.,¹ which decided not to pursue the development agreement with Plaintiff. Galderma did, however, utilize the Restoraderm trade name on its own line of eczema relief products - a skincare line named "Cetaphil Restoraderm" that did not contain the technology developed by Plaintiff. Plaintiff sued Defendants for trademark infringement, false advertising, and unfair competition under the Lanham Act, and for breach of contract and unjust enrichment under Pennsylvania state law.

I. PROCEDURAL POSTURE

After a seven-day jury trial in June and July 2016, the jury entered a verdict as follows:

Ownership of the Restoraderm Trademark

1. Did Plaintiff establish that he is the rightful owner of the Restoraderm trademark? Yes.

Likelihood of Confusion

2. Is it likely that the relevant market for purchasers of the products offered by either Plaintiff or Galderma will be confused as to their source? No.

False Advertising

3(a). Is use of the term "Restoraderm" on Galderma's Cetaphil products false or misleading? Yes.

3(b). Does use of the term "Restoraderm" on Galderma's Cetaphil products deceive, or have the capacity to deceive a substantial segment of customers in the marketplace for these products? No.²

Contract Claim

4. Did Plaintiff establish that, under the 2004 Agreement, the Defendants were required to transfer the Restoraderm trademark to Mr. Sköld following the termination of the 2004 Agreement? Yes.

5. Did Plaintiff know or should he have reasonably known before September 14, 2010 that Defendants did not intend to transfer the Restoraderm trademark to Plaintiff? Yes.

Unjust Enrichment

6. Were Defendants unjustly enriched by the use of the Restoraderm trademark? Yes.

The jury awarded $560,000 as a reasonable royalty for Galderma's use of the Restoraderm trademark, $58,800 as the amount of profits earned by Defendants attributable to the use of the Restoraderm trademark, and $550,000 in punitive damages.

Following the jury verdict, Plaintiff moved the Court to enter a proposed judgment awarding him restitutionary damages ($58,800), injunctive relief, and declaratory relief.³ The Court denied Plaintiff's motion and entered judgment in accordance with the jury verdict (ECF No. 185). The judgment dismissed with prejudice Plaintiff's Lanham Act claims for trademark infringement, false advertising, and unfair competition, and also dismissed with prejudice his state law claims for unfair competition and breach of contract. The Court granted judgment for Plaintiff on his unjust enrichment claim in the amount of $58,800 against Defendants Galderma L.P., Galderma S.A., and Nestlé S.A.⁴

The Court denied with prejudice Plaintiff's request for permanent injunctive relief and declaratory relief on his Lanham Act claims because those claims were rejected by the jury. See Ciba-Geigy Corp. v. Bolar Pharm. Co., Inc., 747 F.2d 844, 850 (3d Cir. 1984) (holding that permanent injunctive relief requires actual success on the merits); Scott v. Horn, No. 97-1448, 1998 WL 57671, at *10 (E.D. Pa. Feb. 9, 1998) (holding that declaratory relief requires success on the merits). Because the declaratory relief Plaintiff requested did not align with the elements of unjust enrichment, the Court also rejected that request. The Court attached the jury verdict sheet to the judgment.

The Court also ruled that Plaintiff was entitled to recover costs against Defendants. On March 29, 2017, both parties filed the instant post-trial motions.

Presently before the Court are cross-motions for post-trial relief. Defendants move the Court to set aside the jury's verdict on unjust enrichment under Federal Rule of Civil Procedure 50(b). Plaintiff moves the Court to set aside the verdict under Rule 50(b) or, in the alternative, to order a new trial under Federal Rule of Civil Procedure 59. Because the Court finds no grounds to disturb the jury's verdict, both parties' motions are denied.

II. STANDARDS OF LAW

A. Motion for Judgment as a Matter of Law

The grant of a motion for judgment as a matter of law pursuant to Federal Rule of Civil Procedure 50(b) after trial is warranted "only if, viewing the evidence in the light most favorable to the nonmovant and giving it the advantage of every fair and reasonable inference, there is insufficient evidence from which a jury reasonably could find liability." Lightning Lube, Inc. v. Witco Corp., 4 F.3d 1153, 1166 (3d Cir. 1993). In considering the evidence, "the court may not weigh the evidence, determine the credibility of witnesses, or substitute its version of the facts for the jury's version." Id. "Although judgment as a matter of law should be granted sparingly, a scintilla of evidence is not enough to sustain a verdict of liability." Id. At bottom, "[t]he question is not whether there is literally no evidence supporting the party against whom the motion is directed but whether there is evidence upon which the jury could properly find a verdict for that party." Id. (quotation omitted).

B. Motion for New Trial Pursuant to Rule 59

Concurrent with his motion for judgment as a matter of law, Plaintiff moves, in the alternative, for a new trial. "[E]ven when judgment as a matter of law is inappropriate," a new trial may be granted pursuant to Federal Rule of Civil Procedure 59. Wagner by Wagner v. Fair Acres Geriatric Ctr., 49 F.3d 1002, 1017 (3d Cir. 1995). Rule 59(a)(1)(A) provides a court withthe discretion to grant a new trial after a jury verdict "for any reason for which a new trial has heretofore been granted in an action at law in federal court." Fed. R. Civ. P. 59(a)(1)(A). A motion for new trial may be based, inter alia, on grounds that a verdict is against the weight of the evidence, that an award of damages is excessive or inadequate, or because, for other reasons, the trial was not fair to the moving party. See Montgomery Ward & Co. v. Duncan, 311 U.S. 243, 251 (1940).

A district court generally has wide discretion in the application of Rule 59, but when the proffered basis for a new trial is that "the verdict is contrary to the great weight of the evidence," the court's discretion is narrowed to cases "where a miscarriage of justice would result if the verdict were to stand." Pryer v. C.O. 3 Slavic, 251 F.3d 448, 453 (3d Cir. 2001) (internal quotation omitted). "[N]ew trials because the verdict is against the weight of the evidence are proper only when the record shows that the jury's verdict resulted in a miscarriage of justice or where the verdict, on the record, cries out to be overturned or shocks [the] conscience." Williamson v. Consol. Rail Corp., 926 F.2d 1344, 1353 (3d Cir. 1991).

III. FACTS

Plaintiff Thomas Sköld is a Swedish entrepreneur whose work focuses on skincare technology. In the mid-1990s, he worked at Ponsus Pharma, a small Swedish pharmaceuticals company. In the summer of 2001, he left Ponsus and began pursuing a skincare technology he had developed and which he termed "Restoraderm." Restoraderm was both a topical moisturizer and a dermal delivery technology, i.e. a vehicle that helps the skin absorb other active ingredients.

In 2001, Plaintiff set out to find a business partner interested in commercially developing products using Restoraderm technology. He met and had conference calls with severalpharmaceutical companies in the fall of 2001 - including Johnson & Johnson, Allergan, and Medicis Pharmaceutical Corp. - and discussed collaborating to develop his technology for mass consumption. In January 2002, he attended the American Association of Dermatology conference in the Caribbean, at which he presented and distributed literature on his Restoraderm technology to potential business partners.

One such potential business partner was CollaGenex. After Plaintiff presented CollaGenex with information about his Restoraderm technology, the parties agreed to jointly develop it into a product line. On February 11, 2002, Plaintiff and CollaGenex signed a Co-operation, Development, and Licensing Agreement (the "2002 Agreement"). The 2002 Agreement required CollaGenex to develop at least three products based on Restoraderm technology, while Plaintiff agreed to act as a consultant to CollaGenex throughout the development process. The Agreement also provided that all Restoraderm trademarks would be the exclusive property of CollaGenex and would be registered in CollaGenex's sole name.⁵ The 2002 Agreement contained no provision governing either party's obligations in the event of its termination.

Following the 2002 Agreement, Plaintiff and CollaGenex worked together to develop and promote products based on Restoraderm technology. CollaGenex filed a trademark application for the Restoraderm mark with the United States Patent and Trademark Office ("P.T.O.") on February 28, 2002. The application was granted and the trademark registered in CollaGenex's name on August 16, 2005. Meanwhile, Plaintiff acted as CollaGenex's full-time consultant,traveling from Sweden to the United States to promote Restoraderm, buying ingredients for samples, and hiring laboratories to undertake product testing.

In late 2003, CollaGenex suggested to Plaintiff that they enter into a new agreement. After a few months of negotiations, on August 19, 2004 they entered into an Asset Purchase and Product Development Agreement (the "2004 Agreement"). The 2004 Agreement explicitly terminated the 2002 Agreement.⁶ It provided that CollaGenex acquired various assets from Plaintiff - defined in § 2.1 ("Purchased Assets")⁷ - which included the...