InterRad Medical, Inc. v. Aquilant Limited

Background

InterRad supplies SecurAcath, a medical device. Aquilant was InterRad’s exclusive distributor in England, Wales, and Scotland under distribution agreements beginning in 2016. The parties’ 2022 agreement included monthly purchase forecasts for 2023 and 2024.

Aquilant accumulated a large surplus of SecurAcath inventory after selling substantially less product than it purchased. In 2023, Aquilant stopped placing some new orders and suspended other orders. InterRad terminated the agreement, appointed Vygon as its replacement distributor, and sought to prevent Aquilant from continuing to sell its remaining inventory.

Aquilant attempted to sell its inventory in bulk to the National Health Service Supply Chain. That deal did not proceed. The NHS Supply Chain later discontinued purchases and sales of SecurAcath after recognizing Vygon as InterRad’s authorized distributor and determining that a replacement agreement was needed. Aquilant continued selling SecurAcath.

InterRad’s amended complaint asserted claims for declaratory judgment, breach of contract, breach of the implied duty of good faith and fair dealing, and tortious interference. InterRad sought damages and other relief, including an injunction.

Subject-Matter Jurisdiction

The court first considered whether diversity jurisdiction was adequately pleaded. It concluded that InterRad’s allegations plausibly showed that Aquilant was a United Kingdom private limited company equivalent to a corporation for jurisdictional purposes. Because InterRad alleged that Aquilant was incorporated in the United Kingdom and had its principal place of business in Basingstoke, England, and that InterRad was a Delaware corporation with its principal place of business in Plymouth, Minnesota, the court found that the parties were completely diverse. The court also found that the amount-in-controversy requirement was satisfied.

Preliminary-Injunction Standard

A preliminary injunction is temporary relief issued before a final decision. The court considered four factors: the likelihood that InterRad would succeed on the merits, the threat of irreparable harm, the balance of harms, and the public interest. InterRad had the burden of establishing these factors.

Likelihood of Success

The court concluded that InterRad was likely to show that it properly terminated the agreement on September 14, 2023, after Aquilant failed to meet the monthly purchase forecasts. That termination likely triggered Aquilant’s post-termination obligations.

The court nevertheless found that InterRad had not shown a likelihood of success on its main theory: that the agreement prohibited Aquilant from selling its remaining SecurAcath inventory. Section 19(a) required Aquilant to return certain information and materials, stop using InterRad’s trademarks, choose between stopping customer contacts or making introductions for successors, and provide a customer list. But the agreement did not expressly require Aquilant to stop selling SecurAcath or specify how it had to dispose of remaining inventory. The court found that the agreement was, at most, ambiguous on this question, and InterRad had not presented outside evidence showing the parties’ intent.

The court also found that InterRad had not shown a likelihood of success on its claim under Section 19(a)(iii), because the provision appeared to give InterRad a choice between two alternative obligations: Aquilant could stop contacting customers, or it could make appropriate introductions for a successor. InterRad had not specifically addressed this interpretation.

The court did find that InterRad was likely to succeed on its claims that Aquilant failed to provide a current customer list and failed to return certain confidential information and other materials. Aquilant acknowledged that it had not provided the customer list, and the court found that Aquilant had not shown that United Kingdom data-protection law made providing information about customer entities impracticable.

Irreparable Harm

The court held that InterRad had not shown a likely immediate injury that could not be adequately compensated with money damages. Lost business and lost profits generally could be measured financially, and InterRad had not shown that its losses were uniquely difficult to calculate or threatened the existence of its business.

InterRad also had not provided sufficiently substantial proof that Aquilant’s continued sales would damage InterRad’s reputation or goodwill. InterRad did not claim that Aquilant was selling expired, outdated, or altered product, and it did not identify specific conduct beyond Aquilant’s continued sales that would tarnish the SecurAcath brand. The court also found that marketplace confusion did not establish likely reputational harm in this breach-of-contract case.

The court further found insufficient evidence that Aquilant’s conduct would imminently damage InterRad’s relationships with suppliers or prevent InterRad from meeting its obligations. The court characterized InterRad’s principal harm as lost business that could be addressed through damages.

Other Factors and Disposition

The balance of harms did not change the result. Aquilant’s continued sales could substantially harm InterRad, but an injunction could cause Aquilant to lose its remaining inventory, which Aquilant valued at approximately $2.6 million. The public interest favored enforcing contracts, but InterRad had not shown that the agreement required Aquilant to stop selling SecurAcath.

The court therefore denied InterRad’s Motion for a Preliminary Injunction. Although InterRad showed a likelihood of success on the customer-list and confidential-information issues, it did not show the required irreparable harm, and it had not requested those specific forms of relief in its proposed order. The order did not finally resolve the underlying contract claims.