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Elorac, Inc. v. Henson

United States District Court, N.D. Illinois, Eastern Division

March 28, 2017

ELORAC, INC., Plaintiff,
RICK HENSON, et al., Defendants.


          Milton I. Shadur Senior United States District Judge.

         Up to now defendants Rick Henson ("Henson"), KMM Pharmaceuticals, LLC ("KMM") and Stayma Consulting Services, LLC ("Stayma")[1] have appeared to employ what has seemed to be every trick in the books to foster what the evidence adduced to this point has portrayed as a misleading characterization of their wart removal product (referred to by both sides in this litigation as the "KMM Product") as possessing the important quality of "delayed release, " so as to cause the market to regard the KMM Product as the generic equivalent of the wart removal product marketed by plaintiff Elorac, Inc. ("Elorac"), UltraSal-ER, which unquestionably does have that delayed release quality. As explained at length in this Court's March 21 Anticipated Temporary Restraining Order, it then contemplated the issuance of a temporary restraining order ("TRO") for the limited period of time that the competing litigants needed to prepare themselves for an evidentiary hearing that would provide this Court with the necessary grist for its mill in determining whether a preliminary injunction should or should not issue.

         But now for the first time the KMM Defendants have shifted gears from (1) their prior pattern of relying on lawyer advocacy that had lacked properly presented supporting evidence to (2) their newly-filed "Supplemental Amendment to Memorandum in Support of Defendants' Motion To Dissolve TRO and Initial Response to Motion for Preliminary Injunction" (Dkt. No. 85, referred to here as their "March 27 Filing"), which for the first time appears on its face to present credible evidence that the KMM Product does possess the important "extended release" characteristic[2] -- indeed, evidence indicating that the extended release provided by the KMM Product possesses that quality to an even greater extent than Elorac's UltraSal-ER product. Attached to this memorandum order is a photocopy of pages 2 and 3 of the KMM Defendants' March 27 Filing.

         That is the type of evidence that this Court had anticipated receiving from both sides in this litigation in the preliminary injunction hearing that it had expected to conduct at the earliest feasible time, meanwhile planning to enter the anticipated TRO supported by appropriate security as called for in Fed.R.Civ.P. 65(c). And unsurprisingly in light of the tangled web that this complex litigation has continuously woven, with each of the two sides having reacted to each of the other's accusatory submissions with a "you're another!" response, Elorac has just tendered its own newly-filed response (Dkt. No. 96, "Elorac's March 28 Response, " comprising seven pages of lawyer-authored presentation plus four exhibits aggregating just under 60 pages) that seeks to challenge KMM Defendants' March 27 Filing.

         Unfortunately this Court is unequipped at this point to evaluate the competing submissions of the parties in substantive terms, and it may well turn out that the tactics previously employed by KMM Defendants' counsel have carried over into this newest submission. But as justifiable as Elorac's references to Lightspeed Media Corp. v. Smith, 761 F.3d 699, 709 (7th Cir. 2014) and Jolly Group, Ltd. v. Medline Indus., Inc., 435 F.3d 717, 720-21 (7th Cir. 2006) may ultimately turn out to be in evaluating defense counsel's conduct, this Court's review of Elorac's newest submission finds that its primary complaints are focused on the limited time period that it has had to study the KMM Product and (once again) on the misleading manner in which the KMM Defendants conducted their competitive campaign without hard evidence to do so -- yet the bottom line for present purposes is found in this brief sentence at the foot of page 3 of Elorac's current submission:

         Elorac can now perform the testing that will further support its claims.

         In those terms this Court is required to deal with a situation in which KMM Defendants have, but Elorac has not, supplied this Court with the results of scientific evaluation as to the KMM Product's entitlement to claim that it possesses extended release qualities. Under those circumstances the evidence newly tendered for this Court's consideration by KMM Defendants on that score contraindicates the issuance of a TRO of the nature that had been called for by the evidence previously provided by Elorac's key witnesses.

         Meanwhile it is not entirely clear that the leopard has changed its spots -- this Court's daily review of ECF filings this morning has disclosed that the KMM Defendants' counsel has contemporaneously (and prematurely) taken an appeal of the not-yet-entered TRO, while at the same time seeking a stay from this Court. Such a stay is inappropriate -- instead counsel for Elorac and for the KMM Defendants are ordered to appear for the previously set status hearing at 9 a.m. March 30 to discuss further proceedings in the case, in an effort to restore a semblance of order to the case.

         (IMAGE OMITTED)



[1] On March 21 those defendants submitted a Statement of Anticipated Lost Sales for Determination of Amount of Bond, which stated in part at page 1 n.1:

Although KMM is the entity that sells the KMM Product, KMM Defendants have consolidated Stayma, Henson and KMM as the KMM Defendants ...

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