literal falsity can exist even if there's a strained "truthful" reading

Kopp Development, Inc. v. Metrasens, Inc, No. 1:21cv1216, 2025 WL 371303 (N.D. Ohio Feb. 3, 2025)

Metrasens and plaintiff KDI compete in the market for ferromagnetic detectors, used to detect magnetic items (such as iron) on a person’s body or clothing before the person enters a room containing an MRI scanner. In 2018, Metrasens purchased a Kopp Ferralert Solo unit from a third-party located in Singapore and provided it, along with a Metrasens Ferroguard Screener unit, to a company called Intertek Testing & Certification. Intertek then issued a test report identifying the units by serial number and photos. The report concluded that “[t]he results of the testing showed that the Metrasens Ferroguard Screener had a significantly higher detection rate than the Kopp Ferralert Solo across the range of typical target objects.”

Metrasens then created a summary, which said in relevant part:

Ferromagnetic detection systems (FMDS) are not all the same. In an independent testing-laboratory comparison of 570 presentations of 9 typical risk items, there was a significant difference in the probability of items being detected, with Ferroguard Screener detecting 96% of presentations for the complete risk-item set, compared with 75% probability of detection for Kopp Ferralert Solo.

...

KEY FINDING

For smaller risk-Items, Ferroguard Screener proved significantly more effective at detecting threats to patient and staff safety and operational performance (94% of risk items detected) than the Kopp Ferralert Solo (56% of risk items detected).

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TESTING METHOD

- Independent testing-laboratory  

- Standard, new, 2018 FMDS patient screening systems …

There were also comparative charts.

KDI’s owner testified that the Ferralert Solo unit that Intertek tested was an early prototype from when the product was first released in 2012, and that KDI had made several improvements to the Ferralert Solo product since 2012. In late 2020, KDI told Metrasens that the Intertek unit tested was an “old” version. Metrasens responded that it was unable to confirm the manufacturing date but offered to resubmit the products if KDI provided evidence that current versions were modified/upgraded. KDI responded that, if Metrasens hadn’t confirmed the manufacturing date, it objected to the claim that it tested “Standard, new 2018 FMDS patient screening systems.”

Previously, the court held that there was a genuine issue of material fact as to whether Metrasens’ advertisements proximately caused KDI to lose business from the University of Pittsburgh Medical Center, one of KDI’s existing customers, which also created a genuine factual issue on corresponding tort claims.

Although it excluded KDI’s proposed expert on damages, the court concluded that KDI could try to show evidence of damages with reasonable certainty at trial, including by showing the dollar value of the specific lost sales to UPMC or other sales evidence.

Here, the court addresses additional briefing it sought on when a presumption of money damages could apply.  Deception and injury are both components of causation. Notably, “the sort of proof of these elements a plaintiff must show varies depending upon whether damages or injunctive relief is sought.” Where the “rigorous” requirement of literal falsity is met, deception may be presumed; otherwise “[t]here must be evidence that a ‘significant portion’ of the consumer population was deceived.”

For injury, a plaintiff must generally prove damages, but they may be presumed in cases of willful deception where the plaintiff was the target of comparative advertising. And it is a rebuttable presumption. The court expressed some doubt that this presumption only applies to literal falsehoods—since it’s about the injury component, it doesn’t obviously require literal falsity if there’s willfulness & deceptive comparative advertising—but the parties assumed it to be the case, and anyway this was a literal falsity case.

Literal falsity: Metrasens argued that it didn’t outright say that the unit was made in 2018, just bought in 2018 and not used (new), which was true. But in context, “the meaning of the challenged statement is not ambiguous.” “[A]ny reasonable consumer of MRI screeners would interpret the statement ‘standard, new, 2018 FMDS patient screening systems’ as meaning that the KDI product involved in the testing was (1) standard; (2) new; and (3) manufactured and sold by KDI in 2018.” Although it quoted the (really misleading, ironically) Seventh Circuit statement that a literally false statement is “bald-faced, egregious, undeniable, or over the top,” the court explained that Metrasens was not required to explicitly state the date of manufacture to engage in literal falsity. In context of a guide allowing hospitals to compare the performance of the competing products on the market, “new, 2018” could not reasonably be interpreted to mean purchase date.  

However, whether this was true was a disputed factual question. KDI’s witness testified that he could identify it as a 2012 prototype because of its color and serial number. On the other hand, (1) Metrasens bought the KDI Ferralert Solo “on the open market as per a customer could have bought it;” (2) the model number of the KDI Ferralert Solo that Metrasens bought matched the model number of the KDI Ferralert Solo that was being sold at the time; (3) the price that Metrasens paid for the Ferralert Solo fell within the market price range for that product at the time; and (4) the box, packaging, and instruction manuals of the KDI Ferralert Solo purchased by Metrasens were “pristine.” The jury would have to decide. Presumption of damages: KDI argued that literal falsity plus comparative advertising, without bad faith, sufficed to presume damages. There’s logic to this—it’s not the bad faith that makes the damage so much more likely, it’s the direct comparison! But the court disagreed because it read the precedent to require literal falsity, bad faith, and comparative advertising.

KDI also argued that Metrasens acted with “recklessness amounting to willfulness” when it (1) purchased the Kopp Ferralert Solo product despite knowing that the supplier “had been known in the past to provide old stock;” (2) “willfully put out an ad” saying that the KDI product was a “Standard, new, 2018” model “with no support to label it as such”; and (3) decided to “keep up the campaign and continue to publish after express notice that the message was literally false.”

Even if Metrasens purchased the KDI Ferralert Solo without verifying the manufacture date and despite knowing that the supplier had provided “old stock” in the past, its witness testified, at length, to the many reasons why Metrasens reasonably believed that the KDI Ferralert Solo it purchased for Intertek’s testing was, in fact, KDI’s current 2018 model. This too created a jury question.