photo of competitor's product not false where it's indistinguishable; also some design patent functionality

Tactical Medical Solutions, Inc. v. KARL 2019 WL 2435859, No. 14 C 06035 (N.D. Ill. Jun. 11, 2019)

TMS sued Karl and his sole proprietorship, EMI, for infringement of TMS’s design and utility patents by selling a “knockoff” version of TMS’s SOF tourniquet. TMS argued that EMI falsely advertised the knockoff by using images of the SOF tourniquet on its website and in its product catalogs. EMI counterclaimed for infringement of EMI’s TACMED trademark and interference with its business relationships with its distributors by sending them C&D letters. There was a genuine dispute of material fact exists as to the validity of TMS’s patents on functionality (design patent) and obviousness (utility patent).

TMS alleged that EMI’s T.A.T. tourniquet was an inferior, infringing copy of the TMS SOF tourniquet.  As to the design patent, the EMI tourniquet did have beveled ends, like the design patent; EMI argued that these were primarily functional because they “allow for easy insertion of the handle ends in the locking rings to lock the handle in place when the tourniquet has been deployed.” And indeed, two of TMS’s utility patents for the SOF tourniquet described the functionality of the beveled handle ends. TMS’s co-founder and CEO said that, at the time the patent application was filed, he believed the truncated cones at the ends of the handle “would make [the tourniquet] easier to use,” and other patents describe the utility of beveled ends to facilitate insertion.  TMS argued that it didn’t advertise functional aspects, that the CEO eventually (and conveniently) realized that he was wrong, and that there were other tourniquets with similar handles but different handle-end designs. EMI rejoined that none of the other handle end designs identified were for use with the locking rings that were disclosed in TMS’s patents-in-suit.  The court disregarded the CEO’s volte-face on an interesting ground: as long as they thought the design was functional, then the “question is whether the design was dictated by function, not … whether it was as effective as it was initially expected to be for that function after it was designed.”  Still, there was evidence that beveling wasn’t the only way to fulfill the function, which matters because design patent functionality is ridiculously restricted (though why it matters if there wasn’t conscious ornamental design seems like a question worth asking).  An anticipation defense failed because the cited prior art was for spark plugs and drawer knobs, which weren’t medical devices.  I feel that this limit on prior art makes sense if and only if we are confining design patents to truly ornamental designs—once we’re getting to even semi-functional designs, prior art on attaching things to one another seems relevant.  But I’m a design patent dabbler.

There were also triable issues on invalidity (obviousness) and infringement for the utility patents.

TMS also alleged that EMI used an image of the SOF tourniquet on its website and in its product catalogs to market the T.A.T. tourniquet, constituting false advertising and unfair competition:

Although TMS alleged that the EMI tourniquet was inferior to the TMS tourniquet, it didn’t argue that EMI misrepresented any of its qualities through images.  EMI argued that it innocently used the photo from its supplier and that, if they are nearly identical, then non-high resolution images couldn’t have been false representations where the product is visually “virtually indistinguishable.”

The court denied TMS’s motion for partial summary judgment on false advertising.  There was no evidence of actual consumer confusion stemming from EMI’s use of the tourniquet image; TMS rested on a literal falsity theory.  But while liability can attach from the use of an image of a competitor’s product in advertising its own, such liability “is not automatic.”  The issue is whether the image is of a product identical to the one the advertiser is prepared to deliver.  But TMS also argued that the tourniquets were “virtual twin[s]” and that their appearance was “virtually indistinguishable.” The alleged inferiorities—lower-quality stitching, coating that chips more easily, a cap screw that rusts more easily, and lack of pin covers—were “not discernible from the photo at issue.”

There was also a material dispute over the TACMED trademark, including over whether the mark was descriptive or suggestive. Courts don’t understand registration, and this case offers a frustrating example of that fact. While this case was pending, the PTO rejected EMI’s application to register TACMED because it found that the mark was descriptive, and EMI amended to the Supplemental Register.  TMS argued, correctly, that this was a concession of an absence of inherent distinctiveness, but the court said that EMI hadn’t said so in as many words so there was no concession and that “the registration scheme contemplates that a mark registered on the Supplemental Register may later be registered on the Principal Register on the basis that it is inherently distinctive,” a surprise to many of us.  [OK, in theory you could let the registration expire and try to start from scratch with a new application and a new examiner, but that’s still not the scenario here.]  The court cited Park ‘N Fly, Inc. v. Dollar Park and Fly, Inc., 469 U.S. 189, 212 n.13 (1985), as “describing [a] process whereby applicant may get mark from Supplemental Register to Principal Register, including by arguing that mark is inherently distinctive.”  Of course, that is not what the Park ‘N Fly footnote says at all; it says that the applicant can argue inherent distinctiveness and the presence of secondary meaning in the alternative to avoid the Supplemental Register, citing McCarthy. The court also cited California Cooler, Inc. v. Loretto Winery, Ltd., 774 F.2d 1451, 1454 (9th Cir. 1985), which stands for a completely different proposition: registration on the Supplemental Register isn’t a concession that the mark lacks secondary meaning at the time of registration; it means only that the secondary meaning hadn’t been shown to the PTO.  So the court’s alternative rationale—that EMI might be able to show secondary meaning—is correct, and it would’ve been better to stick to that.

There were also genuine issues on tortious interference. Interesting: “EMI’s reasonable expectancy of continuing or entering into valid business relationships with its distributors—and EMI’s knowledge of those relationships—is evidenced by TMS’s decision to send its letters to those customers. TMS did not, of course, select those customers at random ….” TMS argued that it sent the letters in a good-faith attempt to protect its intellectual property rights, but EMI “provided evidence that could give rise to a reasonable inference that the letters were motivated by an unjustified desire to drive EMI out of business.” Specifically, emails indicating a desire to put EMI out of business.  Very hard to get clients not to send those.