IP Law Daily Shrimp producers barred from deceptive use of ‘Primo’ name in China
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Monday, May 1, 2017

Shrimp producers barred from deceptive use of ‘Primo’ name in China

By Thomas Long, J.D.

Florida-based shrimp producers have been preliminarily enjoined by the federal district court in Fort Myers, Florida, from using the brand name “Primo” in connection with the sale of shrimp in China or elsewhere. According to the court, using the Primo name or falsely representing that their shrimp descended from certain genetic stock was likely to cause irreparable damage to the goodwill and reputation of the Texas-based owner of the “Primo” name. The Texas company was denied, however, an injunction barring the Florida producers from misappropriating trade secrets relating to the genetic makeup of the Primo shrimp because any animals in the producers’ possession that could have contained purported trade secret information had died (Primo Broodstock, Inc. v. American Mariculture, Inc. , April 27, 2017, Steele, J.).

Primo Broodstock, Inc. (Plaintiff or Primo) was a Texas corporation engaged in the business of studying shrimp genetics and breeding and selling disease-resistant shrimp from a particular genetic strain. Defendant Robin Pearl was a shrimp farmer and the co-founder of defendants American Mariculture, Inc. (AMI) and American Penaeid, Inc. (API).

AMI—a supplier of fresh and frozen shrimp produced at its farming facility—hired Primo’s lead scientist to serve as a paid consultant to help AMI’s subsidiary API improve the viability of its shrimp farming operations. Primo and AMI entered into a nondisclosure agreement (NDA) under which each party agreed not to use or disclose the other’s confidential information. Later, Primo and AMI executed another agreement (the “Grow-Out Agreement”) for the purpose of using a portion of AMI grow-out capacity to produce broodstock for Primo for sale to third parties. The Grow-Out Agreement provided that AMI would grow young, post-larval shrimp (supplied by Primo) to large adult size. AMI would then either sell the live adult shrimp back to Primo or “harvest” (kill) the animals to sell as fresh or frozen dead shrimp, with the proceeds belonging exclusively to AMI. The Grow-Out Agreement stated that Primo shrimp were considered Primo’s intellectual property, and it prohibited AMI from selling or transferring any live Primo Shrimp to others without Primo’s permission.

The relationship between the parties deteriorated, and a dispute emerged over Primo’s alleged refusal to buy back live shrimp pursuant to the Grow-Out Agreement. The parties reached a settlement, the terms of which required Primo to remove all of its live shrimp from AMI’s facility by a certain date. Primo left about 46,000 live adult shrimp at the facility, which it could not afford to repurchase, as well as 650,000 shrimp that were too young to buy back. The settlement agreement was silent as to what would happen to live animals not recovered from the facility. Primo alleged that Pearl assured Primo that AMI would harvest all of the remaining shrimp, but Pearl denied making this promise.

Primo later learned that API was attempting to attract buyer interest, particularly in China, for the shrimp Primo had left at the AMI facility. Primo subsequently filed suit against the defendants for breach of contract, unfair competition in violation of the Lanham Act and Florida law, and trade secrets misappropriation in violation of the Defend Trade Secrets Act and the Florida Uniform Trade Secrets Act. Primo moved for preliminary injunctive relief.

Trade secrets misappropriation. Primo asserted that the defendants “misappropriated numerous trade secrets belonging to Primo embodied in the genetic code of its living shrimp and the male and female breeder pairs of each shrimp broodstock family containing highly desirable production traits.” The defendants argued that Primo was unlikely to succeed on this claim because no case law supported the broad proposition that animal genetics obtained through selective breeding could constitute a trade secret.

The court deferred making a decision on the question of whether Primo possessed a trade secret, instead ruling against Primo on the basis of its failure to show irreparable harm. Even if Primo shrimp genetics constituted a trade secret, and assuming that the defendants continued to misappropriate the trade secret by breeding the “grandchildren” of those shrimp, harm to the putative trade secret’s real, intrinsic value derived from third-party access to a pure Primo breeder pair, the court said. Any Primo shrimp left at the AMI Facility had died. There was no evidence that continued sale of hybrid animals—the only type of shrimp left in the defendants’ possession—would irreparably harm the value of the purported genetic trade secret. Accordingly, an injunction on trade secret misappropriation grounds was not warranted.

Unfair competition. Primo asserted that the defendants had made false and misleading statements to commercial enterprises about their “rights” over significant portions of Primo’s broodstock and associated intellectual property. Specifically, the defendants allegedly called the shrimp they sent to China “Primo” shrimp and lied about the “pure” genetic makeup of those animals “to confuse the customers and trade on Primo’s reputation.” The defendants contended all statements they had made were truthful. Further, while the defendants agreed that the use of the Primo name was “improper,” they asserted that the name was being used by their Chinese customers, over whom the defendants lacked direct control.

The court found that Primo was likely to succeed on its Lanham Act claim. There was evidence that the defendants had stated that they possessed Primo’s “full genetic bank”; this statement was likely false and resulted in injurious consumer confusion or deception. The record demonstrated that, at least in China, using the name “Primo” in connection with shrimp was financially advantageous. API, in contrast, had little reputation or goodwill in China prior to associating with the name “Primo.” Failure to issue a Lanham Act injunction would result in irreparable harm to Primo’s reputation and goodwill, the court said. This injury outweighed whatever harm a preliminary injunction may cause the defendants, and the public had an interest in ensuring that American businesses competed fairly with each other, both at home and abroad. Accordingly, the defendants were enjoined from referring to AMI’s or API’s shrimp as “Primo,” stating that their shrimp were created by breeding males and females from the same Primo line, or representing that they possessed Primo’s “genetic bank.”

Breach of contract. The court denied injunctive relief with respect to the NDA, finding that Primo had not shown a substantial likelihood that the defendants “used” or “disclosed” Primo’s confidential information or that they were likely to do so in the future. The court also declined to issue an injunction regarding the Grow-Out Agreement, determining that the agreement related only to female and male breeders from the same Primo family line, and not the hybrid shrimp that the defendants were producing and marketing.

The case is No. 2:17-cv-00009-JES-CM.

Attorneys: Chene Marie Thompson (Pavese Law Firm) for Primo Broodstock, Inc. Melville G. Brinson, III (Melville G. Brinson, III, PA) for American Mariculture, Inc. and American Penaeid, Inc.

Companies: Primo Broodstock, Inc.; American Mariculture, Inc.; American Penaeid, Inc.

MainStory: TopStory Trademark TradeSecrets FloridaNews

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