Thursday, April 20, 2017

Having a product in development isn't enough for Lanham Act standing

Pulse Health LLC v. Akers Biosciences, Inc., 2017 WL 1371272, No. 16-cv-01919 (D. Or. Apr. 14, 2017)

Pulse was formed to develop a product that can measure aldehyde molecules in human breath via a non-invasive hand-held device. Its device was called FRED or Revelar. Akers develops and sells diagnostic products and devices designed to deliver various health information test results. The parties entered into contracts for Akers to make a breath tube containing a chemical reagent that could accurately measure aldehyde molecules in human breath, to be used with the FRED/Revelar device. Akers’ development failed, according to Pulse, and Pulse requested to part ways. The final agreement provided that Pulse transferred the relevant tech back to Akers, and Akers waived the remainder of what Pulse was supposed to pay.  Akers granted Pulse an exclusive and perpetual license to use the relevant tech in the field of aldehyde tests, which included any testing for oxidative stress, but excluded tests relating to diabetes, cancer, and alcohol. The agreement further provided that Akers had no rights with respect to Pulse’s technology for its hand-held FRED/Revelar device.

Akers started to sell hand-held products that Pulse claimed measured oxidative stress and free radical damage through disposable tubes, which Pulse determined was a copy of its FRED/Revelar product. “The chemistry for the OxiChek and the Assigned Technology reagents are the same, and the circuit boards for the OxiChek product have a similar layout and the same optical chamber, LED, diodes, switches and gates as the original FRED/Revelar device developed by Plaintiff.”

The court rejected Lanham Act and state-law consumer protection claims.  Pulse wasn’t within the zone of interests protected by the statute and there could be no proximate causation of injury, even if, as alleged, Akers “knowingly made false statements in advertising the technology’s ability to detect levels of oxidative stress or free radicals” using Pulse’s technology.  Because Pulse didn’t have a competing product on the market, it failed to allege any injury to a commercial interest in reputation or sales. Possible future sales of a product under development weren’t enough, despite the alleged “spoiling” of the market based on Akers’ false advertising.  Any such injury was purely speculative.

The Oregon Unlawful Trade Practices Act only protects consumers, not competitors. Because leave to amend would not allow Pulse to fix either of these problems, it was denied.

Lesson: write your noncompete more clearly so that suing for breach will give you all the relief you seek, I guess?

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