PhotoMedex, Inc. v. Irwin

• Decision Date: 14 April 2010
• Docket Number: No. 07-56672.,07-56672.
• Citation: 601 F.3d 919
• Parties: PHOTOMEDEX, INC., a Delaware corporation, Plaintiff-Appellant, v. Dean Stewart IRWIN, an individual; Ra Medical Systems, Inc., a California corporation, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

601 F.3d 919

PHOTOMEDEX, INC., a Delaware corporation, Plaintiff-Appellant, v. Dean Stewart IRWIN, an individual; Ra Medical Systems, Inc., a California corporation, Defendants-Appellees.

No. 07-56672.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted June 4, 2009.

Filed April 14, 2010.

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John J. Leonard and Michael R. Matthias, Baker & Hostetler LLP, Los Angeles, CA; Thomas D. Warren (argued), Baker & Hostetler LLP, Cleveland, OH, for the plaintiff-appellant.

Alan K. Brubaker, James A. Mangione, and Tracy L. Nation, Wingert Grebing Brubaker & Goodwin LLP; John S. Addams (argued), Law Offices of John S. Addams, San Diego, CA, for the defendants-appellees.

Before WILLIAM A. FLETCHER, RICHARD R. CLIFTON and MILAN D. SMITH, JR., Circuit Judges.

CLIFTON, Circuit Judge:

Plaintiff PhotoMedex, Inc. appeals the district court's grant of summary judgment in favor of Defendants Dean Stewart Irwin and Ra Medical Systems, Inc. on Lanham Act claims for misleading advertising and on California state law claims for false advertising and unfair competition. These claims are based on allegations of three separate misrepresentations made by Defendants regarding: (1) clearance by the Food and Drug Administration (FDA) to market their laser device, (2) the anticipated date their laser would be available for purchase, and (3) Irwin's role as inventor of PhotoMedex's laser device.

The first alleged misrepresentation requires us to address the question of whether a medical device manufacturer who is not permitted to bring a private action to enforce the Food, Drug, and Cosmetic Act (FDCA), 21 U.S.C. § 301 et seq., may nevertheless maintain a suit under the Lanham Act based on a claim that a competitor violated the FDCA by misrepresenting that its product had received FDA clearance, when the FDA declined to make a finding that there was no valid clearance or to bring an enforcement action itself. Under the particular circumstances of this case, where the FDA permits Defendants to determine in the first instance whether their laser device was covered by clearance previously given to a similar device and to market their device without an affirmative statement of approval by the FDA, we conclude that the claim by PhotoMedex may not proceed.

We conclude, however, that claims based on the other two alleged misrepresentations are potentially viable, including claims alleging a false projection of when a product would be available on the market. Though a forecast of future events may ordinarily be a statement of opinion upon which such claims cannot be based, we conclude that such a statement may be actionable if the speaker knew at the time the statement was made that it was false or did not have a good faith belief in the truth of what was said. The commercial depiction of Irwin as inventor of PhotoMedex's laser is also actionable because it may misrepresent his actual contribution.

We affirm the summary judgment for the claim based on alleged misrepresentations regarding FDA clearance but vacate summary judgment on the claims based on alleged misrepresentations regarding the release date for Ra Medical's laser and Irwin's role as the inventor of PhotoMedex's laser.

I. Background

PhotoMedex directly competes with Ra Medical in the production and sale of lasers for use in dermatological treatments. These dermatological lasers are regulated by the FDA and must pass what is known as the "510(k)" clearance process, described below, before being placed on the market. PhotoMedex's product is the "XTRAC Excimer Laser System" (XTRAC), the first excimer laser the FDA cleared for the treatment of the skin disorders psoriasis and vitiligo.

Irwin served on the development team for the XTRAC system during his employment with PhotoMedex from February 1998 to July 2002. Following his departure from PhotoMedex, Irwin co-founded Ra Medical in September 2002.

Ra Medical entered into a licensing agreement for a competing laser product with SurgiLight, Inc. on March 13, 2003. SurgiLight had received FDA 510(k) clearance in March 2002 for its "EX-308" excimer laser for the treatment of psoriasis and vitiligo, though at the time of the agreement it had not actually manufactured or marketed the cleared laser. In exchange for royalties, SurgiLight gave Ra Medical the "exclusive manufacturing rights and exclusive marketing rights for the FDA-cleared EX-308 device, including any derivative devices, substantially conforming to the specifications, as well as the exclusive right to use its mark EX-308 on devices Ra Medical intends to manufacture and market."

After securing the license from SurgiLight, Irwin appeared on Ra Medical's behalf at a trade show held by the American Academy of Dermatology in March 2003. At the show, Defendants distributed a brochure which proclaimed that Ra Medical's "Pharos EX-308 Excimer Laser" (Pharos) was "FDA Approved for Psoriasis & Vitiligo." This brochure also described Irwin as "inventor of the first FDA approved excimer laser for phototherapy," i.e., PhotoMedex's XTRAC laser. Defendants' subsequent marketing materials made similar promotional claims.

Word spread that the Pharos would be available for purchase within a few months. The record includes evidence that a person attending the trade show heard that the Pharos was scheduled for sale in August 2003. SurgiLight issued a press release, also in March 2003, announcing that "Ra Medical anticipates the introduction of its PHAROS EX-308, Excimer laser system for treatment by dermatologists of psoriasis and vitiligo (pigmentation loss) this summer." Defendants did not actually ship the first Pharos laser until September 2004, more than a year after the projected introduction date. The Pharos laser differed in some respects from SurgiLight's already-cleared EX-308 laser.

PhotoMedex filed the present action against Defendants, asserting violations of the Lanham Act and California laws prohibiting untrue and misleading advertising and unfair competition. The district court granted summary judgment in favor of Defendants on each of these claims. The court held PhotoMedex lacked standing to challenge whether Defendants improperly promoted their laser as "FDA approved" because the FDA retains exclusive jurisdiction over FDCA enforcement. The court determined Defendants' predicted release date for its laser was a non-actionable forward-looking statement. Defendants' assertion that Irwin invented PhotoMedex's laser was held to be a matter of opinion and not misleading. PhotoMedex timely appealed.

II. Discussion

We review the district court's grant of summary judgment as well as its statutory interpretations de novo. United States v. Able Time, Inc., 545 F.3d 824, 828 (9th Cir.2008). We must determine whether, viewing the evidence in the light most favorable to PhotoMedex as the nonmoving party, there are any genuine issues of material fact and whether the district court correctly applied the relevant substantive law. McClung v. City of Sumner, 548 F.3d 1219, 1223 (9th Cir.2008).

Section 43(a)(1)(B) of the Lanham Act, 15 U.S.C. § 1125(a)(1)(B), explicitly furnishes a private right of action "against persons who make false and deceptive statements in a commercial advertisement about their ... product." Jarrow Formulas, Inc. v. Nutrition Now, Inc., 304 F.3d 829, 834-35 (9th Cir.2002).¹ "Under the Lanham Act, a prima facie case requires a showing that ... the defendant made a false statement either about the plaintiff's or its own product...." Newcal Indus., Inc. v. Ikon Office Solution, 513 F.3d 1038, 1052 (9th Cir.2008) (internal quotation marks omitted).

A. Claims Regarding FDA Clearance

The FDCA, as amended by the Medical Device Amendments of 1976 (MDA), 90 Stat. 539, (codified at 21 U.S.C. § 301 et seq.), imposes a comprehensive set of requirements upon medical devices. See Buckman Co. v. Plaintiffs' Legal Comm., 531 U.S. 341, 344, 121 S.Ct. 1012, 148 L.Ed.2d 854 (2001). The FDA is charged with investigating potential violations. 21 U.S.C. § 372. The FDCA provides the FDA with a number of enforcement remedies that may be sought. Buckman, 531 U.S. at 349, 121 S.Ct. 1012; Heckler v. Chaney, 470 U.S. 821, 835, 105 S.Ct. 1649, 84 L.Ed.2d 714 (1985); see, e.g., 21 U.S.C. §§ 332 (injunction proceedings), 333 (civil and criminal penalties), 334 (seizure). Citizens may petition the FDA to take administrative action. 21 C.F.R. §§ 10.25(a), 10.30.

Section 337(a) of the FDCA bars private enforcement of the statute, stating that "all such proceedings for the enforcement, or to restrain violations, of thisAct shall be by and in the name of the United States." 21 U.S.C. § 337(a). The Supreme Court has observed that Section 337(a) "leaves no doubt that it is the Federal Government rather than private litigants who are authorized to file suit for noncompliance with the medical device provisions." Buckman, 531 U.S. at 349 n. 4, 121 S.Ct. 1012.

The Supreme Court made clear in Buckman that this section also limits the ability of a private plaintiff to pursue claims under state law theories where such claims collide with the exclusive enforcement power of the federal government. Id. at 343, 349-50, 353, 121 S.Ct. 1012 (holding that a state tort claim based on alleged fraudulent representations made by a medical device manufacturer in the course of seeking market approval from the FDA "would exert an extraneous pull on the scheme established by Congress, and it is therefore pre-empted by that scheme").

Our court has not previously spoken to the question of whether the FDCA limits claims under the Lanham Act.² We conclude, in the circumstances of this case, that it does. Because the FDCA forbids private rights of action under that statute, a private action brought under the Lanham Act may not be pursued when, as here, the claim would require litigation of the alleged underlying FDCA violation in a circumstance where the FDA has not...