Harm story fails where deceived doctors' choices wouldn't have mattered

Quidel Corp. v. Siemens Medical Solutions USA, Inc., No. 16-cv-3059-BAS-AGS, 2020 WL 4747724 (S.D. Cal. Aug. 17, 2020)

Previously, the court ruled that alleged misrepresentations, even if false, didn’t affect testing labs’ choice of which of the parties’ tests to offer, but reserved judgment on whether they affected physicians’ choices. Here, the court grants summary judgment, finding that any falsity could not have caused cognizable harm because of the ways that physicians order tests.

The parties produce competing assays (blood tests) used for measuring thyroid stimulating immunoglobins, which can aid in the detection of Graves’ disease. There are two relevant types of assays available: (1) TSH receptor antibody (TRAb) assays, which detect both stimulating and blocking thyroid immunoglobins (TSI and TBI) and which are therefore apparently less useful and (2) TSI only assays. In Quidel’s opinion, Siemens’s product doesn’t distinguish between stimulating or blocking antibodies, but it was advertised as a TSI only assay.

Physicians order tests from labs for their patients, and labs carry one “TSI only” test at a time. Physicians’ deference to labs, versus picking a lab because it carries a specific test, apparently varies. Labs pay Quidel and Siemens for the tests. If a doctor requests a test from a lab without specifying, and relies instead on the lab to picks, Quidel couldn’t be damaged by the lab’s use of the Siemens test because, as the court already ruled, the lab did not rely on any allegedly false advertising to cause it to carry the Siemens test. If the doctor wanted Quidel’s product but used Siemens’s because the lab only carried the latter, again Quidel wouldn’t have been damaged by the false advertising. And if the doctor would only use Quidel’s product and picks labs with that in mind, again there’s no damage.

Quidel argued that there were doctors who wanted to use Siemens’s product because of its allegedly false advertising, and who thus chose a Siemens-using lab. But the court found that “Quidel cannot claim that its damages are caused by the lab carrying the product which in turn leads to the physicians ordering the product from the lab.” But: if there are doctors who did pick Siemens over Quidel, why wouldn’t that be harm causation from the allegedly false advertising even if the labs were waiting to supply them? The court responds: this is a previously undisclosed damages theory. Quidel originally claimed damages based on the labs’ switching tests, not any doctors. Quidel’s damages expert didn’t  consider the actions of individual physicians in his damages evaluation. This wasn’t a harmless omission, since it deprived Siemens of the chance to develop information about individual doctors. And even if the theory had been adequately disclosed, it didn’t have supporting evidence that doctors were influenced or that labs consider physician preference in determining which test to carry.

Quidel argued that it did have evidence that individual clinicians were misled: Siemens and labs received inquiries from clinicians regarding whether the Siemens product could differentiate between TSI and TBI, and they didn’t disclose the (alleged) truth. But that still wasn’t proof that the doctors acted on what the labs did or didn’t say.  

Quidel’s evidence of its corrective advertising expenses were also insufficient because Quidel had to show it suffered likely injury before it could claim corrective advertising damages. “If the false statements have no material impact, there is nothing to correct.”

Nor would the court presume injury because of the parties’ direct competition plus a likelihood of deception from comparative advertising, as the Ninth Circuit has said can be done. The challenged advertising didn’t compare the parties’ products; instead, it continually contrasted Siemens’ product with TRAb assays. The market isn’t a two-player market. Without comparative advertising, “injury to a particular competitor may be a small fraction of the defendant’s sales, profits, or advertising expenses.” In such cases, “actual evidence of some injury resulting from the deception is an essential element of the plaintiff’s case.” Here, “[i]f TSI only assays are substantially better than TRAb assays, as both parties claim, then Siemens could be making sales to those who used to use TRAb assays but switched over to using [its product].”

No presumption of injury. Also, no injunctive relief: though proof of “injury” wasn’t required for injunctive relief, “irreparable harm” was. And Quidel’s only claimed harm was monetary: lost sales.