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Medisim Ltd. v. BestMed LLC

United States District Court, S.D. New York

November 28, 2012

MEDISIM LTD., Plaintiff,
v.
BESTMED LLC, Defendant.

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Gerald Levy, Esq., Keith J. McWha, Esq., Mark H. Anania, Esq., Scott Christie, Esq., McCarter English, LLP, Newark, NJ, for Medisim Ltd.

Nicholas L. Coch, Esq., Kramer, Levin, Naftalis & Frankel, LLP, New York, NY, Talivaldis Cepuritis, Esq., Joseph M. Kuo, Esq., Anita M. Cepuritis, Esq., Brian R. Michalek, Esq., Olson & Cepuritis, Ltd., Chicago, IL, for BestMed LLC.

OPINION AND ORDER

SHIRA A. SCHEINDLIN, District Judge.

TABLE OF CONTENTS

I.

INTRODUCTION 599

II.

BACKGROUND 600

A. Undisputed Facts 600

B. Disputed Facts 601

C. The Invention 601

D. Procedural History 602

III.

LEGAL STANDARD 603

IV.

APPLICABLE LAW 604

A. Unfair Competition and False Designation of Origin Under the Lanham Act 604

B. Unfair Competition Under New York Common Law 606

C. False Advertising Under the Lanham Act 606

D. False Advertising Under New York Law 607

E. Deceptive Acts Under New York Law 607

F. Unjust Enrichment 608

G. Availability of Statutory Damages for Copyright Infringement 608

H. Provisional Rights 608

I. Patent Validity 609

J. Patent Infringement 610

K. Inequitable Conduct 610

V.

DISCUSSION 611

A. Unfair Competition and False Designation of Origin Under the Lanham Act 611

1. Trade Dress 611

a. Descriptions of the Claimed Trade Dress 611

b. Evidence of Distinctiveness 613

2. The CVS SKU 615

B. Unfair Competition Under New York Common Law 615

1. Likelihood of Confusion 615

2. Bad Faith 616

C. False Advertising Under the Lanham Act 617

1. Standing 617

2. Falsity and Likelihood of Misleading Consumers 618

D. False Advertising and Deceptive Acts Under New York Law 618

E. Unjust Enrichment 619

F. Availability of Statutory Damages 619

G. Provisional Rights 620

H. Patent Validity 621

I. Patent Infringement 623

1. The Apparatus Claim 623

2. The Method Claim 624

J. Inequitable Conduct 626

1. Pre-Critical Date Commercial Activities 626

2. Omission of Two Patents from the IDS 627

3. Yarden's Representations of the Prior Art 628

VI.

CONCLUSION 629

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I. INTRODUCTION

Medisim Ltd. (" Medisim" ) brings this action against BestMed LLC (" BestMed" ) for patent and copyright infringement, unfair competition/false designation of origin under the Lanham Act, false advertising under the Lanham Act, false advertising under New York law, deceptive acts and practices under New York law, unfair competition under New York law, and unjust enrichment. [1] BestMed has brought counterclaims

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for declaratory judgment of patent noninfringement, declaratory judgment of patent invalidity, false patent marking, and patent unenforceability due to inequitable conduct. [2]

On June 29, 2012, the Court held a pre-motion conference to discuss the parties' proposed grounds for potential summary judgment motions. The Court spent considerable judicial resources to review the parties' pre-conference submissions and consider the strength of their potential motions. At the conference, I advised the parties not to move on the grounds for which there was likely a disputed issue of fact.[3] BestMed ignored my advice and moved for summary judgment on all of the grounds they raised in their pre-conference letter.[4] For the reasons set forth below, the motions are granted in part and denied in part. Unsurprisingly, summary judgment is denied on all of the claims that the Court advised BestMed to exclude from its summary judgment motion.

II. BACKGROUND

A. Undisputed Facts[5]

In November 2004, BestMed and Medisim entered into an International Distributorship Agreement (" Distribution Agreement" ) for BestMed to distribute Medisim's digital, conductive forehead thermometer in the United States and Canada.[6] Between the signing of the Distribution Agreement and its May 1, 2009 termination, BestMed had access to some technical information pertaining to Medisim's thermometers and received a draft of the thermometer user's instructions from Medisim.[7] On April 7, 2008, Medisim and BestMed entered into a Purchase Sale Agreement which provided that:

By executing this Agreement, and as a condition to entering into this Agreement, each party hereby ratifies the two addenda described in the Recitals to this Agreement and the appendices to [the Distribution Agreement], and irrevocably waives and relinquishes any right, claim or cause of action it may have now or in the future, whether known or unknown, now or hereafter existing against the other party and its officers and agents arising from the actual or alleged performance, termination, breach or continuation of [the Distribution Agreement] and the parties' subsequent correspondence relating to [the Distribution Agreement] and the proposed renewal or replacement thereof. [8]

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On October 6, 2009, United States Patent No. 7,597,668 (" the '668 Patent" ) titled " NON-INVASIVE TEMPERATURE MEASUREMENT" was issued to Moshe Yarden, the Chief Executive Officer and Chief Technology Officer of Medisim. [9] The '668 Patent matured from U.S. Patent Application Serial No. 11/444,710 (" the '710 Application" ), which Yarden filed on May 31, 2006. [10] Among the products distributed by BestMed under the Distribution Agreement were thermometers manufactured by Medisim that practiced some or all of the claims of the '668 Patent.[11]

B. Disputed Facts

Medisim asserts that while the parties were operating under the Distribution Agreement, BestMed began secret negotiations with K-Jump Health Co., Ltd. (" K-Jump" ) " to replace the Medisim digital, conductive forehead thermometer with a thermometer that was substantially similar in operation and technology, to be manufactured in China." [12] Medisim alleges that BestMed directed K-Jump to begin manufacturing a thermometer incorporating Medisim's intellectual property, and that BestMed subsequently terminated the Distribution Agreement and began purchasing thermometers from K-Jump for distribution in the United States.[13] Medisim asserts that compared with its own thermometers, those manufactured by K-Jump have a similar physical appearance, embody the same features, and execute software enabling it to produce identical audible and visual messages.[14]

When Medisim attempted to sell digital thermometers on its own, several retailers rebuffed it and expressed their satisfaction with the K-Jump-manufactured thermometers they were purchasing from BestMed.[15] Further, BestMed sells K-Jump-manufactured thermometers to the CVS drug store chain with Stock Keeping Unit (" SKU" ) number 050428075739— the same SKU under which BestMed sold CVS digital thermometers manufactured by Medisim.[16] Medisim asserts that BestMed " has unfairly foreclosed Medisim from selling its product to many of the customers that previously bought its products" through its " systematic and willful acts of copying Medisim's product technology and design, and trading on Medisim's ...


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