Novadaq Techs., Inc. v. Karl Storz GMBH & Co. K.G., Case No. 14-cv-04853-PSG

• Court: United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California
• Writing for the Court: PAUL S. GREWAL, United States Magistrate Judge
• Citation: 143 F.Supp.3d 947
• Parties: Novadaq Technologies, Inc., Plaintiff, v. Karl Storz GmbH & Co. K.G., et al., Defendants.
• Decision Date: 10 November 2015
• Docket Number: Case No. 14-cv-04853-PSG

143 F.Supp.3d 947

Novadaq Technologies, Inc., Plaintiff,
v.
Karl Storz GmbH & Co. K.G., et al., Defendants.

Case No. 14-cv-04853-PSG

United States District Court, N.D. California.

Signed November 10, 2015

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Christopher James Wiener, Derek Francis Foran, Joyce Liou, Kevin Love Hubbard, Roumiantseva Dina, Stuart Christopher Plunkett, Jennifer Lee Taylor, Morrison and Foerster LLP, San Francisco, CA, Marta A. Godecki, Morrison Foerster LLP, New York, NY, for Plaintiff.

Andy I. Corea, St. Onge Steward Johnston and Reens LLC, Wesley W. Whitmyer, Jr., Michael J. Kosma, Michael A. Lavine, Robert D. Keeler, Stephen F.W. Ball, Jr., Walter B. Welsh, Whitmyer IP Group LLC, Stamford, CT, Alfredo A. Bismonte, Kimberly Paul Zapata, Ronald Craig Finley, Beck, Ross, Bismonte & Finley, LLP, San Jose, CA, for Defendants.

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ORDER GRANTING-IN-PART MOTIONS FOR SUMMARY JUDGMENT

PAUL S. GREWAL, United States Magistrate Judge

Product launches are all about creating excitement. Excitement for a product. Excitement for the product's manufacturer. Excitement for the product's anticipated customers. But not everyone is excited, especially a trademark owner that believes the launched product infringes that trademark. This dispute offers one such example.

Plaintiff Novadaq Technologies, Inc. specializes in medical imaging products that use its SPY-trademarked fluorescence imaging technology.¹ Defendants Karl Storz GmbH & Co. KG, headquartered in Germany, and its American counterpart Karl Storz Endoscopy-America, Inc. manufacture and sell imaging systems for endoscopic surgery.² In 2014, Karl Storz launched a new product named IMAGE 1 SPIES, which came with software applications called SPIES CHROMA and SPIES SPECTRA,³ prompting Novadaq to file this trademark infringement suit.⁴

Both sides now move for summary judgment on a number of issues.⁵ Novadaq's motion is GRANTED, and Karl Storz' motions are GRANTED-IN-PART.

I.

Novadaq, a Canadian company, was founded in 2000 and began developing its fluorescence imaging technology in 2001.⁶ That same year, Novadaq registered its SPY word mark with the United States Patent and Trademark Office.⁷ Four years later, Novadaq introduced its first SPY system to the American market.⁸ Since then, the company has marketed imaging devices for use in a variety of surgical applications, and all use what Novadaq calls its proprietary SPY fluorescence imaging technology.⁹ In particular, Novadaq sells a SPY ELITE imaging system for open surgical procedures.¹⁰ At least since September 2011, Novadaq has organized conferences called SPIES or iSPIES, which stand for Summits for Perfusion Imaging and Excellence in Surgery.¹¹

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Novadaq also has ventured into minimally invasive endoscopic surgery, most notably

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by developing its own SPY-based system that it initially called SPYSCOPE.¹⁴ In 2008 and 2009, Novadaq exhibited the SPYSCOPE device at industry conferences, including the Society of American Gastrointestinal and Endoscopic Surgeons annual meeting in 2009, where Novadaq gave Karl Storz head Dr. Sybill Storz a personal demonstration.¹⁵ Novadaq secured FDA approval for the SPYSCOPE device and placed it with several clinical investigators.¹⁶ By the time Novadaq started selling the device in 2012, however, it had renamed it PINPOINT on the advice of its distributor LifeCell.¹⁷ Marketing for the PINPOINT product nevertheless specified that it featured Novadaq's SPY technology, as did the body of the product itself starting at least in 2014.¹⁸

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While Novadaq is a relative newcomer to the medical imaging market, Karl Storz is an established heavyweight. Founded in Germany in 1945, today the company employs thousands of people and has subsidiaries in dozens of countries.²¹ Building on decades of experience in endoscopic imaging, Karl Storz launched the IMAGE 1 system in 2002 and the IMAGE 1 HD system in 2007.²² These systems comprise both hardware and software components that enable capture, display and recording of real-time images and video from endoscopic procedures.²³

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Around 2010, Karl Storz coined the SPIES acronym, short for Storz Professional Image Enhancement System, for its next-generation product.²⁴ In 2011, Karl Storz applied to register a SPIES mark in Germany and then in the United States.²⁵ And in March 2014, Karl Storz introduced the SPIES system to the American market, bearing the full name IMAGE 1 SPIES and including software applications known as SPIES CLARA and SPIES CHROMA.²⁶

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Novadaq brought the present suit in October 2014.³⁰ It alleges under 15 U.S.C. § 1114 that Karl Storz' actions with respect to its SPIES products infringe Novadaq's SPY-related trademarks.³¹ Novadaq also brings several other related causes of action under both federal and California law.³² Finally, Novadaq seeks the cancellation of several of Karl Storz' own trademark registrations on SPIES and related marks.³³

II.

This court has jurisdiction under 28 U.S.C. §§ 1331 and 1367. The parties further consented to the jurisdiction of the

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undersigned under 28 U.S.C. § 636(c) and Fed. R. Civ. P. 72(a).

III.

Pursuant to Fed. R. Civ. P. 56(a), summary judgment is appropriate when "there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law." Material facts are those that may affect the outcome of the case.³⁴ A dispute as to a material fact is genuine if there is sufficient evidence for a reasonable jury to return a verdict for the non-moving party.³⁵ All evidence must be viewed in the light most favorable to the non-moving party. At this stage, a court "does not assess credibility or weigh the evidence, but simply determines whether there is a genuine factual issue for trial."³⁶ Initially, the moving party bears the burden to show that no genuine issue of material fact exists.³⁷ If this burden is met, the burden shifts to the non-moving party.³⁸ Applying these standards to the parties' claims and the evidence in the record, the court concludes that only some of the issues presented can be resolved.

First, Novadaq's registered SPY mark covers endoscopic medical imaging systems because the registration is now incontestable and those devices are within the scope of the registration. The Lanham Act provides that a registered trademark may become incontestable when certain requirements are met, one of which is filing with the USPTO an affidavit "setting forth those goods or services stated in the registration on or in connection with which such mark has been in continuous use for ... five consecutive years [after the registration date] and is still in use in commerce."³⁹ An incontestable trademark registration is "conclusive evidence of the validity of the registered mark and of ... the registrant's exclusive right to use the registered mark in commerce ... on or in connection with the goods or services specified in the affidavit" above.⁴⁰

Even an incontestable trademark registration, however, still is subject to several defenses, including "[t]hat the mark has been abandoned by the registrant."⁴¹ "The burden is on the challenger to plead and prove one or more of the statutory exceptions to incontestability: they are affirmative defenses not put in issue by a general denial."⁴² To establish abandonment, the accused infringer must show that the trademark owner "is not using its mark on the goods that will be effectively excluded by the proposed restriction."⁴³ "To the extent that courts have applied a ‘partial abandonment’ theory,

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it has been limited to situations where the registration describes a class of goods or services on which the owner has ceased using his mark."⁴⁴

Karl Storz did not plead abandonment among its affirmative defenses.⁴⁵ Nevertheless, Karl Storz now argues, both in its own motion for summary judgment and in opposition to Novadaq's, that Novadaq abandoned its SPY mark with respect to devices used in minimally invasive or endoscopic surgery. By failing to plead it earlier, Karl Storz plainly waived its right to raise this defense now.

Even if it had pled the defense, Karl Storz could not succeed on the merits. Novadaq's SPY trademark became incontestable, at the latest, by March 23, 2011, when the USPTO acknowledged Novadaq's affidavit.⁴⁶ Under Section 1115(b), the registration encompasses "the goods or services specified in the affidavit"—namely, "[m]edical imaging systems comprised primarily of imaging, lighting, monitoring and video recording equipment and a computer system for controlling such equipment."⁴⁷ In other words, the registration covers all "medical imaging...