One80 Physical Therapy v. Thurlow: Unfair Competition and Trademark Claims Survive

One80 Physical Therapy, P.C. operated physical therapy clinics in Colorado and marketed its services using specific slogans, taglines, treatment descriptions, and advertising language. Nicolas Thurlow worked for One80 as a physical therapist beginning in 2012. During his employment, Thurlow entered into multiple agreements with One80 addressing confidentiality, proprietary information, and employment terms.

While still employed by One80, Thurlow began preparing to open a competing business, Next Era Physical Therapy, LLC. After leaving One80’s employment in March 2017, Thurlow opened Next Era and began marketing physical therapy services in the same general market.

One80 filed suit in the District Court for Arapahoe County asserting multiple claims arising from Thurlow’s conduct before and after his departure. The complaint included claims for unfair competition, intentional interference with contractual relations, tortious interference with prospective business advantage, breach of confidentiality agreements, breach of the duty of loyalty, and trademark infringement under both federal and state law.

The defendants moved to dismiss several claims under Colorado Rule of Civil Procedure 12(b)(5), asserting that the complaint failed to state claims upon which relief could be granted.

Pleading Standards Applied by the Court

The district court began by outlining the pleading standard governing motions to dismiss under Rule 12(b)(5). The court explained that Colorado courts apply a plausibility standard requiring factual allegations sufficient to support a reasonable inference of liability. Legal conclusions, formulaic recitations of elements, and allegations equally consistent with lawful conduct were not entitled to a presumption of truth.

Applying this framework, the court evaluated each claim based solely on the allegations in the complaint and documents referenced therein, accepting well-pleaded factual allegations as true and viewing them in the light most favorable to One80.

Unfair Competition and Interference Claims

One80 alleged that Next Era and Thurlow misappropriated proprietary treatment methods and copied advertising language used by One80 in order to confuse the public regarding the source of physical therapy services. The court concluded that One80 plausibly alleged a claim for common law unfair competition based on alleged confusion about whether customers were receiving One80 services through Next Era.

The court also addressed claims for intentional interference with contractual relations and prospective business advantage. It determined that One80 sufficiently alleged interference with scheduled patient appointments and prospective treatment opportunities. Although the parties were competitors, the court found that One80 alleged independent wrongful conduct beyond lawful competition, including misuse of confidential information and solicitation of clients during employment.

The court dismissed the portion of the interference claim alleging that Next Era interfered with Thurlow’s own employment agreement, concluding that a business entity could not interfere with a contract when its owner was a party to that contract.

Confidentiality Agreements and Duty of Loyalty

The court reviewed multiple confidentiality agreements executed during Thurlow’s employment. It determined that the Confidential Disclosure Agreement entered in 2014 superseded earlier confidentiality provisions and remained enforceable. The court rejected arguments that the agreement lacked consideration or protected only general professional skill, concluding that enforceability depended on factual development.

The court also addressed claims for breach of the duty of loyalty. It explained that employees may prepare to compete after termination but may not solicit customers or operate a competing business while still employed. The court concluded that One80 plausibly alleged that Thurlow solicited clients and operated Next Era while still employed, which supported a duty-of-loyalty claim.

The court dismissed claims based on a covenant not to compete, concluding that the noncompete provision was void under Colorado law because Thurlow did not qualify for a statutory exception at the time the agreement was executed.

Trademark Infringement Allegations

One80 asserted trademark infringement claims under the Lanham Act based on slogans, taglines, and website content used by Next Era that closely resembled One80’s advertising. The complaint identified specific phrases, descriptions, and marketing language allegedly copied by Thurlow.

The court outlined the elements of trademark infringement, including the existence of a protectable interest in a mark, use of a similar mark in commerce, and a likelihood of consumer confusion. It concluded that One80 adequately alleged each element by identifying the marks at issue, describing their use in commerce, and alleging confusion resulting from similarity in advertising.

The court rejected arguments that the claims failed as a matter of law at the pleading stage. It explained that whether the slogans and taglines qualified as protectable trademarks or trade dress, and whether consumer confusion was likely, were factual questions unsuitable for resolution on a motion to dismiss.

The court also allowed the related common law trademark infringement claim to proceed, treating it under the same analytical framework as the Lanham Act claim.

The Court’s Decision

The district court granted the motion to dismiss in part and denied it in part. It dismissed the claim based on the covenant not to compete and the portion of the interference claim involving Thurlow’s own employment agreement. The court allowed the unfair competition, confidentiality, duty of loyalty, trademark infringement, and remaining interference claims to proceed.

Assistance With Trademark Law Matters

If you’re dealing with trademark disputes, unfair competition, or issues involving the commercial use of branding, Whitcomb Selinsky PC handles trademark law matters. Reach out to our team to schedule a consultation and learn how our team can assist with your situation.