Medisim sued BestMed for patent and copyright infringement; false designation of origin and false advertising under the Lanham Act; and false advertising, unfair competition, and unjust enrichment under New York law. BestMed and Medisim once had a distribution agreement for BestMed to distribute Medisim’s digital thermometer. But BestMed ultimately replaced Medisim with K-Jump, which allegedly used Medisim’s IP to make a competing thermometer that allegedly looks similar, has the same features, and produces identical audible and visual messages. When Medisim sought to sell its thermometers on its own, several retailers rebuffed it in favor of the K-Jump-made thermometers from BestMed, which CVS was even selling under the same SKU it had used for the Medisim-made ones.
Medisim sought trade dress protection for its product configuration and packaging design. The claimed configuration was “a predominantly white teardrop[-]shaped device with light blue accents surrounding the elongated probe, and a body in an oval shape on which is centered a square LCD display, with a light blue on/off switch positioned above the LCD display.” BestMed's forehead thermometer also had these features. Medisim also claimed rights in two packaging designs—the one used in CVS, and the one used in Rite Aid. Each of those used the respective house brands and were mostly clear plastic over the card holding the device with promotional text/pictures.
BestMed argued that Medisim failed to articulate the allegedly distinctive features of its product until too late (its opposition to the summary judgment motion), but BestMed should have moved to dismiss earlier on vagueness grounds. Anyway, the lack of fact and expert discovery on these features was more trouble for Medisim, which had the burden of showing distinctiveness and nonfunctionality, than for BestMed.
BestMed argued that its product packaging was inherently distinctive, citing Second Circuit precedent that because packaging possibilities are virtually unlimited, product package trade dress will “typically” be inherently distinctive. But this still requires a look at the product and the market. BestMed argued that Medisim didn’t situate its packaging features relative to the marketplace, but the court thought that was irrelevant, since “a virtually infinite array of colors, shapes, and text descriptions were available to both BestMed and Medisim.”
Nonetheless, Medisim flunked the fundamental distinctiveness test because the packaging failed to identify Medisim, which wasn’t named anywhere on the package. Though a mark may be entitled to protection as long as it identifies a source, albeit anonymous, this packaging did identify sources: the retailers—CVS, Rite Aid, etc. There was no evidence that consumers were aware of or cared about the identity of those who manufactured the products on those retailers’ behalf. Medisim couldn’t identify any cases in which a manufacturer’s trade dress was held entitled to Lanham Act protection despite identifying the retailer and not the manufacturer. Each claimed trade dress identified a different retailer.
Medisim suggested that the retailers might be the relevant consumers, and offered some evidence that they might have been confused as to source. But that would require evidence of secondary meaning to the retailers, which Medisim didn’t have; at most, they may have identified it with BestMed. (The court seemed to hold, despite its earlier reasoning, that the claimed mark was descriptive, but didn’t say much about that.)
As for the product configuration, Medisim argued acquired distinctiveness, but still didn’t show any reason to think that the configuration would do anything other than identify the retailer even if distinctive. “[I]t is difficult to envision how consumers would identify the packaging with an unidentified manufacturer.” As for retailers, they presumably either knew who made the thermometers or didn’t care who BestMed’s source was; there was no evidence they made purchasing decisions based on the shape or packaging of the thermometers.
Medisim also claimed protectable rights in the CVS SKU, then failed to respond to BestMed’s arguments about why it could have no protectable interest or consumer confusion.
The court then turned to the NY unfair competition claim, which, it held, didn’t require evidence of secondary meaning for Medisim’s trade dress claim. (If this is so, I would think federal copyright and patent law would preempt it, as per Sears/Compco.) This claim also required bad faith in the form of a competitor’s “palming off, actual deception, appropriation of the plaintiff's property, or deliberate copying of a trade dress,” and was sufficiently pled. (Look at that language! An intent element doesn’t avoid preemption, nor does a limitation of the class of potential defendants to competitors.)
However, and I admit I’m not entirely clear on how this goes down, the court also apparently treated likely confusion as an element of the unfair competition claim, even in the absence of secondary meaning (and apparently in the absence of inherent distinctiveness, since that wasn’t ever resolved). There was no evidence on the strength of the mark, but there was a high degree of similarity between the trade dresses, they competed, and there was evidence of bad faith. Thus, even without evidence of actual confusion, a jury could find likely confusion. (Again, I’m mystified about the lack of preemption. In the absence of secondary meaning, the likely confusion finding can only stem from similarity—that is, copying—which is pretty much exactly what the Supreme Court found preempted in Sears/Compco.)
Medisim’s evidence of bad faith was testimony that BestMed desired the shape and packaging of the K-Jump-manufactured thermometers to appear similar to the shape and packaging of Medisim's product; (2) testimony that BestMed asked K–Jump to copy the exact “beep sequence” of the Medisim device; (3) testimony that BestMed sent K–Jump an instruction manual from a Medisim thermometer so that it could closely copy the device's operation; and (4) BestMed's use of the same SKU for CVS. This was sufficient to allow a jury to conclude that the similarities between the devices and packaging were a result of direct and intentional efforts. (That is, of copying.) So summary judgment on the NY unfair competition/trade dress claim was denied.
Extra commentary: if NY’s common law doesn’t have a functionality requirement, then it is clearly preempted by patent law even setting Sears/Compco aside, so the failure to analyze nonfunctionality here, especially as to the configuration of the device itself, is very odd.
Turning to the false advertising claims, the court applied Famous Horse on standing: Medisim needed a reasonable interest to be protected and a reasonable basis for believing it would be damaged by BestMed’s advertising. Medisim argued that its interests were its “commercial and pecuniary interests in selling its products”; and “maintaining its commercial reputation.” The former was a reasonable interest, but not the latter, since Medisim had no name recognition among consumers and its name didn’t appear on its own trade dress: it had no commercial reputation to be damaged. It argued that a customer who bought Medisim’s device expected to receive Medisim’s high quality product, not BestMed’s inferior device, but that presumed that there was evidence that it had any reputation in the market. Nor did Medisim offer evidence that thermometer purchasers are repeat customers whose past experiences are likely to affect future purchase decision. Anyway, this was a backdoor trademark confusion argument. And Medisim hadn’t even offered evidence of inferiority. Except for the idea that it would lose sales because of likely confusion—another trade dress argument—there was no reason to think Medisim would be harmed by BestMed’s noncomparative advertising, which only touted its own advantages without direct reference to competing products. Thus, Medisim lacked Lanham Act false advertising standing.
In addition, the only statement Medisim identified as false was BestMed's statement that its thermometer “rapidly tracks heat flow.” This was the same phrasing used when BestMed distributed Medisim’s thermometer; Medisim argued that this described the method performed by the two-sensor Medisim device. The K-Jump device had one sensor, and Medisim argued that it was literally false to say that it “rapidly tracks heat flow” because that was synonymous with “performs a heat flux calculation,” which a one-sensor device couldn’t do. Even assuming that was all correct, Medisim would still need evidence of materiality, which it didn’t have. Medisim provided no evidence that consumers equated “rapidly tracks heat flow” with “performs a heat flux calculation,” let alone that they knew or cared what the latter was.
Medisim’s NY GBL §§ 349 and 350 claims failed because the gravamen of its complaint wasn’t consumer injury or harm to the public interest.
The unjust enrichment claim, however, survived because the unfair competition claim did, and so it wasn’t just duplicative of the copyright infringement claim and preempted. The Lanham Act doesn’t preempt state law (but see above).
BestMed also managed to kick out claims for statutory damages for copyright infringement, since the registration followed the commencement of infringement, which occurred many years after first publication. Medisim’s patent claims, which I haven’t discussed, survived.