Kinetic Concepts, Inc. v. Bluesky Medical Group Inc., 2005 WL 3068223 (W.D. Tex.), involves a variety of claims by one maker of wound treatment products against another. In a series of decisions, the court refused to grant summary judgment to the defendant on these claims; this opinion discusses trademark infringement and dilution as well as false advertising. (Notably, the court is careful to make clear that a dilution by tarnishment claim can only be based on consumers' imputation of the shoddy quality of defendant's product to plaintiff; it is not enough that the defendant's advertising says mean things about plaintiff's product.)

Plaintiff claims that defendant’s advertising campaign falsely compares the parties’ products, plaintiff’s V.A.C. wound drainage system and defendant’s V1. In particular, the ads claim that the V1 performs the same function as the V.A.C., but at lower cost, even though defendant has not conducted any clinical comparison studies. Defendant also stated that the V.A.C. is approved specifically for wound drainage, whereas the V1 performs a variety of functions, implying that the V.A.C. is unidimensional. (Is this material? Is it another variant of a cost-effectiveness claim?)

Notable features of the case: Defendant’s ads state that a hospital can save between $100,000 and $500,000 using the V1, based on product and supply costs. But $500,000 apparently exceeds the maximum savings in defendant’s actual calculations, which claim $342,000 in savings. Is this enough to make the range “$100,000 to $500,000” not false or misleading? The court does not offer an answer.

Plaintiff also offers a survey to show that cost effectiveness, as understood by healthcare professionals, includes the effectiveness of the total treatment regime, including the costs of poor wound healing, and adds anecdotal evidence that defendant’s product sometimes hasn’t healed wounds as well (or as cost-effectively) as the V.A.C. For purposes of denying summary judgment, the court accepts this anecdotal evidence, despite defendant’s evidence that many factors influence wound healing and thus plaintiff’s evidence couldn’t show that the V1 was the cause of poor wound healing. Even if plaintiff's evidence is correct, I'd want to know a lot more about that survey: while doctors and nurses in general may define cost effectiveness broadly -- indeed, it seems natural for them to do so -- I'm not sure that they'd interpret a claim of cost-effectiveness in an ad for a particular product that way; I would think that consumers can be expected to understand that an ad is claiming direct cost benefits and not necessarily assessing total direct and indirect costs, especially if the ad specifically states that its claims are based on "product and supply costs." The plaintiff also has a survey that purports to show that the ads are generally deceptive, but it's not described in the opinion.

Another part of the case raises issues of using the Lanham Act to enforce other federal statutes: the V1 doesn’t qualify for the designation “Negative Pressure Wound Therapy” under Medicare’s definition, but plaintiff uses the term in advertising to describe the V1 anyway. Likewise, though defendant has FDA clearance to market the V1 as “may promote wound healing,” one of its promotions allegedly implies that the V1 affirmatively promotes healing, a claim the FDA hasn’t cleared. (My assessment of the case law is that the FDA claim is shaky – while a straight-up false claim of FDA approval is actionable under the Lanham Act, a statement that merely implies something within the FDA’s jurisdiction and that would require the court to interpret FDA rules is probably not suitable for private enforcement under the Lanham Act.)

Defendant’s ads use the slogan “Consider a better alternative,” and under the Fifth Circuit’s jurisprudence, this could be misleading in combination with specific claims, but the court notes that there’s no evidence that consumers associate the slogan with the ad’s cost-benefit analysis. Nonetheless, the court did not specifically rule out plaintiff’s ability to show that the slogan was misleading.

In a related opinion denying summary judgment against business disparagement claims, the court focused on an ad asking, “Is tearing out healthy tissue part of your negative pressure protocol?” Plaintiff offered evidence that tissue removal was actually a positive sign of healing; thus, the implication that such removal was undesirable could constitute disparagement. The facts may be true, but the "gist" is false, which is actionable under Texas law. Compare this result to claims of "aluminum-free" for deodorant or "rBGH-free" for dairy products, both of which have triggered litigation, with aluminum- and rBGH-using plaintiffs claiming that the defendants falsely implied that plaintiffs' products were dangerous.

The court also found an issue of fact on malice, another necessary element of a common-law business disparagement claim. Likewise, plaintiff’s claim of libel survived, since the defendant’s ad’s rhetorical question “Are you getting VACuumed by your wound drainage company?” could be defamatory. Because plaintiff isn’t a public figure, only negligent falsehood is required to succeed on a libel claim. (One might wonder why plaintiff is bothering with the business disparagement claims, which seem to duplicate the false advertising claims; the libel claim is useful because damages are generally presumed in libel cases, whereas they'd need to be proved for false advertising and business disparagement.)