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Arborjet, Inc. v. Rainbow Treecare Scientific Advancements, Inc.

United States District Court, D. Massachusetts

December 3, 2014

ARBORJET, INC, Plaintiff,

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[Copyrighted Material Omitted]

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For Arborjet, Inc., Plaintiff: Kristen S. Scammon, LEAD ATTORNEY, Torres, Scammon & Day, LLP, Boston, MA; Michael S. Day, Torres, Scammon & Day LLP, Boston, MA.

For Rainbow Treecare Scientific Advancements, Inc., Defendant: Kelly W. Hoversten, Norman M. Abramson, LEAD ATTORNEYS, PRO HAC VICE, Gary, Plant, Mooty, Mooty & Bennett, P.A., Minneapolis, MN; Matthew P. Horvitz, LEAD ATTORNEY, Goulston & Storrs, PC, Boston, MA.

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Nathaniel M. Gorton, United States District Judge.

This case arises from an allegation of a breach of a sales agency agreement between plaintiff Arborjet, Inc. (" Arborjet" ) and defendant Rainbow Treecare Scientific Advancements, Inc. (" Rainbow" ). Arborjet is a designer and manufacturer of insect and pest control products for direct injection into trees. Rainbow manufactures and sells pesticides for the protection of trees as well and also distributes pesticides manufactured by other companies. It is a direct competitor of Arborjet.

Pending before the Court is the plaintiff's motion for a preliminary injunction (Docket No. 1) to enjoin Rainbow from marketing, distributing or selling the product ArborMectin. For the reasons that follow, plaintiff's motion will be allowed.

I. Background

Arborjet is a Massachusetts corporation based in Woburn that has been in the business of manufacturing and selling pesticides for the treatment and protection of trees for 15 years. In 2008, after five

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years of research and development, Arborjet began selling its emamectin benzoate product known as TREE-age. TREE-age, when injected into trees using Arborjet's proprietary injection system, protects trees from the emerald ash borer and other destructive pests. TREE-age is one of Arbojet's most successful products.

Defendant Rainbow is a Minnesota corporation that has been in the tree pesticide business for 35 years. Rainbow not only manufactures and sells pesticides and other treatments for the protection of trees, it also distributes pesticides manufactured by other companies.

In 2006, Arborjet and Rainbow commenced their business relationship when Arborjet produced a generic product for Rainbow to distribute. In the summer of 2008, Rainbow solicited Arborjet to become its distributor of the full line of Arborjet's products, including TREE-age.

During negotiations regarding Rainbow's request, plaintiff allegedly expressed concern that if it allowed Rainbow to distribute its products, Rainbow would use that distributorship to expand its own market and copy Arborjet's most popular products to sell directly to Arborjet's customers. Rainbow allegedly assured Arborjet that it had no such intention.

A. The Sales Agency Agreement

On August 1, 2008, Arborjet and Rainbow entered into a Sales Agency Agreement (" Agreement" ), wherein Rainbow agreed to devote its best efforts to the promotion and sale of Arborjet's products.

Section Three of the Agreement consists of a confidentiality and nondisclosure agreement. Within the same section, Rainbow further agreed that

in view of the confidential information regarding Arborjet's business affairs, plans, and necessities, [Rainbow] will not engage in affairs intended to replicate the Arborjet's products or processes.

Arborjet alleges that the express purpose of that provision, as discussed by the parties, was to protect Arborjet during the distributorship from any copying of its products or leveraging of relationships with Arborjet's customers by Rainbow. Plaintiff claims that the provision has been violated regardless of whether Rainbow misappropriated any of its confidential information.

The Agreement also contains a non-competition provision in Section Six, which states:

[Rainbow] will not engage, directly or indirectly,... in manufacturing, buying, selling, or dealing in systemic injections systems that replicate the Arborjet system of using a plug which seals the formulation in the xylem and a needle which injects behind the plug for a period of 2 years after the termination of this agreement...

Plaintiff does not allege that Rainbow breached Section Six but the parties dispute the relevance of that provision to plaintiff's breach of contract claim.

B. Alleged Breach of Agreement

Arborjet alleges that Rainbow violated Section Three of the Agreement by " engaging in affairs intended to replicate" its products.

Plaintiff contends that Rainbow began developing and testing ArborMectin, defendant's own emamectin benzoate product that was intended to replicate TREE-age, as early as 2011. Rainbow's website describes partnering with several institutions and companies to conduct research studies regarding ArborMectin's effectiveness on certain tree-destroying pests. Arborjet alleges that one or more of those studies took place while Rainbow was a distributor

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for Arborjet and subject to the terms of the Agreement.

As a distributor of Arborjet's products, Rainbow had regular and close contact with Arborjet's scientists, employees and customers and thus had access to large amounts of confidential information regarding Arborjet's technology, business and customers. Plaintiff does not allege that Rainbow wrongfully misappropriated Arborjet's ...

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