Synthes, a medical device company, sued competitor Emerge
(founded in part by former employees) for various torts, including false
advertising, which is all I'll discuss. Emerge allegedly falsely
claimed that its products were “identical,” of “statistical equivalence,” or
made in the same location as Synthes's products, and that the FDA had
determined that Emerge's drill bits and guide wires were substantially
equivalent to Synthes's drill bits and guide wires. Emerge moved to dismiss this claim because
Synthes hadn’t alleged that the statements were made in “commercial advertising
and promotion.” Under Gordon & Breach, neither private
statements to competitors nor isolated statements to potential customers suffice. The statements, though not necessarily part
of a classic ad campaign, must be widely disseminated and part of an organized
campaign to penetrate the relevant market.
The specifics alleged were that “labels bearing Emerge's
name and logo that directed Synthes customers to reorder Synthes' surgical
drill bits from Emerge appeared in a Synthes Inventory Management System
(‘SIMS’) cabinet in an account in [one defendant’s] former territory in Arizona
as well as on product sealed in Synthes packaging. … Since that time, Emerge's
labels have begun to appear in additional SIMS and sets stored at other of
Synthes' customers' facilities ….” The
complaint also generally alleged that the defendants had made
identical/equivalence claims. Synthes’
brief also referred to an e-mail to a customer, a video broadcast distributed
by a well-known publisher in the orthopedics industry, and a PowerPoint
presentation made to a health system.
The court thought that “[a]t first blush—and taken in
isolation—these allegations appear to identify only sporadic instances of
dissemination, in lieu of the requisite public dissemination of the purportedly
false advertising.” But closer reading
suggested that they were examples of a broad and widespread dissemination to
the relevant purchasing public. “A
requirement that Plaintiff describe in detail the precise scope of Emerge's
advertising campaign would far exceed the pleading mandates under the Federal
Rules of Civil Procedure and the Twombly/Iqbal
standards.” Discovery could be used to
test the truth of the idea that there was a relatively large-scale marketing
campaign at work.
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