Axiom Worldwide, Inc. v. HTRD Grp. Hong Kong Ltd., Case No.: 8:11-cv-1468-T-33TBM

Decision Date01 June 2013
Docket NumberCase No.: 8:11-cv-1468-T-33TBM
PartiesAXIOM WORLDWIDE, INC., Plaintiff, v. HTRD GROUP HONG KONG LIMITED a/k/a HTRD GROUP HONG KONG LIMITED, INC., ET AL., Defendants.
CourtU.S. District Court — Middle District of Florida
ORDER

This cause comes before the Court pursuant to Plaintiff/Counter-Defendant Axiom Worldwide, Inc.'s Motion for Judgment on the Pleadings (Doc. # 92), filed on September 24, 2012, and Axiom Inc.'s Motion for Summary Judgment (Doc. # 146), filed on December 1, 2012. Also before the Court are the Motions for Summary Judgment filed on December 3, 2012, by Defendant/Counter-Plaintiff HTRD Group Hong Kong Limited (Doc. # 147), Defendant Eltech USA, LLC (Doc. # 148), Defendant Andrew Deweerd (Doc. # 149), Defendant Excite Diagnostics, LLC (Doc. # 150), and Defendants David Ren, Ryzur Medical, Inc., Ryzur Medical Group, Ryzur Medical Investment Co., Ltd., and Anhui Ryzur Axiom Medical Devices, Ltd.1 (Doc. # 152).

The parties have filed timely responses to the respective motions (Doc. ## 95, 156, 224, 226, 228-29, 231), and with leave of the Court, Axiom Inc. filed a reply in support of its Motion for Judgment on the Pleadings (Doc. # 101) and in support of its Motion for Summary Judgment (Doc. # 160). Likewise, with the Court's permission, the Defendants filed a joint reply in support of their Motions for Summary Judgment (Doc. # 243).

Also before the Court is Axiom Inc.'s Motion for Permission to Formally Designate Expert Witness Previously Identified and Expert Opinion That Was Filed With The Court On April 26, 2012 (Doc. # 249), filed on April 14, 2013. The Defendants have not filed a response in opposition to this Motion, but rather, filed their own Motion in Limine (Doc. # 247) requesting the Court to exclude the expert testimony for which Axiom Inc. seeks permission in its Motion. However, the Defendants subsequently withdrew their Motion in Limine (Doc. # 263), reporting that the parties had reached an agreementconcerning the testimony of their experts. Thus, the Court considers Axiom Inc.'s Motion for Permission to Formally Designate Expert Witness to be unopposed.

Defendants Excite Medical Corp. and Saleem Musallam also filed a Motion for Summary Judgment on December 3, 2012. (Doc. # 151). However, on June 1, 2013, the Court adopted the Report and Recommendation of The Honorable Thomas B. McCoun III, United States Magistrate Judge (Doc. # 305), struck Excite Medical and Musallam's pleadings, and directed the entry of default against them due to their egregious, prejudicial, and willful abuse of the discovery process. (Doc. # 316). Thus, as Excite Medical and Musallam "have forfeited the right to defend the suit," Id. at 6, and their pleadings have been stricken, the Court will not consider their Motion for Summary Judgment herein. However, the Court will still analyze Axiom Inc.'s Motion for Summary as it applies to these Defendants.

After careful consideration and being fully advised in the premises, Axiom Inc.'s Motion for Summary Judgment (Doc. # 146) is granted in part and denied in part as detailed herein; HTRD's Motion for Summary Judgment (Doc. # 147) is denied; Eltech USA, LLC's Motion for Summary Judgment (Doc. # 148), Andrew Deweerd's Motion for Summary Judgment (Doc. #149), and Excite Diagnostics, LLC's Motion for Summary Judgment (Doc. # 150) are denied in part as to ownership of the intellectual property but otherwise granted; and David Ren and the Ryzur Defendants' Motion for Summary Judgment (Doc. # 152) is granted in part and denied in part as detailed herein.

Furthermore, Axiom Inc.'s Motion for Judgment on the Pleadings (Doc. # 92) is denied as moot and Axiom Inc.'s Motion for Permission to Formally Designate Expert Witness Previously Identified and Expert Opinion That Was Filed With The Court On April 26, 2012 (Doc. # 249) is granted as unopposed.

I. Background

According to the parties' joint pretrial statement, Plaintiff "Axiom Inc. developed, manufactured, and sold medical products all over the world." (Doc. # 250 at 24). Its flagship product was the DRX9000, a device that treats back pain. Id. "Later Axiom Inc. developed a similar appliance for the treatment of neck pain and it was either marketed or sold as the DRX9000C or DRX9500." Id.

The parties agree that "Axiom Inc. expended significant resources in developing and distributing machines worldwide in the medical community marketplace" including the costs ofregistering five trademarks with the U.S. Patent and Trademark Office (USPTO):

"Axiom Worldwide Logo" (Serial No. 76533071, filed June 28, 2003);
"DRX 9000" (Serial No. 76533070, filed July 28, 2003);
"Better Technology..." (Serial No. 76536333, filed August 11, 2003);
"Axiom Worldwide" (Serial No. 76595705, filed June 4, 2004); and
"DRX" (Serial No. 78583889, filed March 9, 2005).

Id. Between 2001 and 2006, Axiom Inc. also obtained several 510(k) clearances from the U.S. Food and Drug Administration (FDA) authorizing Axiom Inc. to market its devices in the United States. (Doc. # 1-1 at 7-9, 14-17).

Non-party Axiom Worldwide LLC ("Axiom LLC") was established on December 29, 2005, "in connection with a proposed sale to a group of investors." (Doc. # 250 at 25). James Gibson, who is and was at all material times the president and CEO of Axiom Inc., executed a Warranty Bill of Sale on February 19, 2007, with a retroactive effective date of January 3, 2006, transferring certain assets of Axiom Inc. to Axiom LLC. Id. at 23, 25; (Doc. # 1-2). Pursuant to the Warranty Bill of Sale, Axiom Inc. transferred to Axiom LLC its "right, title and interest in and to all of [Axiom Inc.'s] raw materials inventory, finished goods inventory, computerequipment, leasehold improvements, machinery, equipment, furniture, fixtures and goodwill." (Doc. # 1-2).

On July 14, 2006, Axiom Inc. and Axiom LLC were sued by a non-party, North American Medical Corporation, in the U.S. District Court for the Northern District of Georgia, North American Medical Corp. v. Axiom Worldwide, Inc., et al., No. 1:06-cv-1678-CCH (the "Atlanta Federal Case").2 (Doc. # 250 at 25). Axiom LLC filed a counterclaim for trademark infringement against North American on January 27, 2009. Id. On June 25, 2010, the court in the Atlanta Federal Case granted summary judgment in favor of North American on Axiom LLC's counterclaim. Id. at 26. The court ruled that Axiom LLC lacked standing to bring the trademark infringement counterclaim because it did not own the trademarks at issue. (Doc. # 1-3 at 8-9). Specifically, the court ruled that "the 2007 Warranty Bill of Sale did not, by its terms, transfer Axiom Inc.'s trademarks, or any intellectual property rights, to Axiom LLC." Id. at 8.

Meanwhile, in September of 2008, Axiom LLC borrowed money from Progress Bank, N.A. (Doc. # 250 at 26). Pursuant to the loan documents, Progress Bank acquired a security interest inall of Axiom LLC's assets. Id. Axiom Inc. was not a party to the loan agreement between Progress Bank and Axiom LLC. Id. In December of 2009, Progress Bank withdrew its agreement to renew the loan and filed suit against Axiom LLC. Id.

On March 25, 2010, Axiom LLC filed a petition commencing an action for the Assignment for Benefit of Creditors in the Thirteenth Judicial Circuit Court in and for Hillsborough County, Florida, In re: Axiom Worldwide, LLC, Assignor to Michael Luetgert, Assignee, No. 10-CA-006801 (the "ABC Case"), pursuant to which Axiom LLC assigned all of its assets to an assignee, Michael Luetgert. Id. at 26-27; (Doc. # 5-5). Following a hearing on July 1, 2010, the court entered an order authorizing the transfer of Axiom LLC's assets from the assignee to Progress Bank. (Doc. # 250 at 27; Doc. # 1-5). On July 2, 2010, the assignee executed a bill of sale to Progress Bank of all of Axiom LLC's assets in his possession. (Doc. # 250 at 27; Doc. # 1-6).

Thereafter, on July 16, 2010, Progress Bank sold the assets it had acquired from Axiom LLC to Defendant HTRD "on an additional 'as is' and 'where is' basis without any warranties or representations of any kind pursuant to a document titled 'Quit Claim Bill of Sale and Assignment.'" (Doc. # 250 at 27; Doc. # 1-7). HTRD entered into the Quit Claim Bill of Saleand Assignment "with actual knowledge of the June 25, 2010 Order entered in the Atlanta Federal Case." (Doc. # 250 at 28).

Subsequently, "HTRD and Excite Medical filed paperwork with the FDA to become contract manufacturers for Axiom 510(k) products." Id. Additionally, "HTRD has filed paperwork with the USPTO seeking to transfer to itself trademarks that were initially registered to Axiom Inc. and which were never formally transferred to Axiom LLC on the USPTO records." Id.

Axiom Inc. initiated this trademark ownership and infringement declaratory judgment action on July 1, 2011. (Doc. # 1). Axiom Inc. filed a verified amended complaint on August 26, 2011, in which it alleges that it is the owner of the relevant intellectual property, including trademarks, registered marks, trade secrets, trade names, copyrights of the designs and drawings of products marketed under the trademarks, and 510(k) authorizations from the FDA. (Doc. # 20). Axiom Inc. seeks declaratory and injunctive relief as well as damages for alleged trademark and copyright infringement, unfair competition, fraud on the USPTO, misappropriation of trade secrets, interference with its business relationships, and breach of confidentiality agreements. Id.

On July 25, 2011, in response to the original complaint, HTRD filed a counterclaim against Axiom Inc. (Doc. # 5). HTRD contends that its purchase of assets from Progress Bank included "the goodwill carried on the books of Axiom LLC and therefore, the intellectual property and trademarks that [Axiom] LLC had been using for the last four years." Id. at 22. Accordingly, HTRD seeks a declaratory judgment that it is the rightful owner of the intellectual property and that Axiom Inc. has infringed HTRD's...

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