Summit Technology v. High-Line Medical Instruments

• Decision Date: 28 February 1996
• Docket Number: No. CV95-6491 ABC (SHx).,CV95-6491 ABC (SHx).
• Parties: SUMMIT TECHNOLOGY, INC., Plaintiff, v. HIGH-LINE MEDICAL INSTRUMENTS COMPANY, INC., et al., Defendants.
• Court: U.S. District Court — Central District of California

922 F. Supp. 299

SUMMIT TECHNOLOGY, INC., Plaintiff, v. HIGH-LINE MEDICAL INSTRUMENTS COMPANY, INC., et al., Defendants.

No. CV95-6491 ABC (SHx).

United States District Court, C.D. California.

February 28, 1996.

COPYRIGHT MATERIAL OMITTED

Blanc Williams Johnston & Kronstadt, John A. Kronstadt, John C. Rawls, Cynthia S. Arato, Mona D. Miller, Los Angeles, CA, for plaintiff.

Foley Lardner Weissburg & Aronson, James R. Kalyvas, Shana T. Torem, Los Angeles, CA, for Hi-Line Medical.

Blecher & Collins, Maxwell Blecher, Alicia Rosenberg, William C. Hsu, Los Angeles, for Kenneth York/York Lago Eye Center.

Alioto & Alioto, John Alioto, Linda Alioto, San Francisco, CA, for William Ellis/Eye Center of No. Calif.

ORDER RE: DEFENDANTS' MOTIONS TO DISMISS

COLLINS, District Judge.

Defendants' motions to dismiss came on regularly for hearing before this Court on February 5, 1996. After reviewing the materials submitted by the parties, argument of counsel, and the case file, it is hereby ORDERED that Defendants' motions are GRANTED.

I. Background

This case concerns a dispute over the use and distribution of "excimer" laser devices used by opthamologists in laser eye surgery. Plaintiff SUMMIT TECHNOLOGY, INC. ("Summit") is a Massachusetts corporation that develops, manufactures, sells, and services laser systems for opthamologists. These laser systems can be used to correct a variety of vision disorders such as myopia, astigmatism, farsightedness, or cataracts. Summit holds a registered trademark in the name "Summit Technology." (Trademark No. 1785393).

On September 28, 1995, Summit filed a Complaint against Defendants HIGH-LINE MEDICAL INSTRUMENTS COMPANY, INC., d/b/a HI-LINE MEDICAL ("Hi-Line"), KENNETH K. YORK and YORK LASER EYE CENTER ("York" Defendants), WILLIAM ELLIS and EYE CENTER OF NORTHERN CALIFORNIA, INC. ("Ellis" Defendants), and PARIS E. ROYO, PARIS E. ROYO, INC. and ROYO EYE CENTER MEDICAL GROUP ("Royo" Defendants). Essentially, Summit asserts that Defendants have unlawfully imported, advertised, promoted, used, or serviced Summit Excimer Laser Systems which have not been approved by the United States Food and Drug Administration ("FDA"). The Complaint asserts causes of action for false and misleading advertising under § 43(a) of the Lanham Act (15 U.S.C. § 1125(a)) (against all Defendants), importation of goods bearing infringing marks or names (15 U.S.C. § 1124) (against Hi-Line), infringement of a registered trademark (15 U.S.C. § 1114) (against Hi-Line and York), copyright infringement (against Hi-Line), a second count of copyright infringement (against York, Ellis, and Royo), unfair competition in violation of Cal.Bus. & Prof.Code § 17200 (against all Defendants), common law unfair competition (against all Defendants), false and misleading statements in violation of Cal.Bus. & Prof.Code § 17500 (against all Defendants), and violation of the Sherman Food, Drug, and Cosmetic Law (Cal.Health & Safety Code §§ 26000-26851. The substance of these allegations will be addressed in further detail below.

On November 20, 1995, Defendant Hi-Line and the York Defendants filed separate motions to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). On the same date, the Royo Defendants filed a motion to dismiss, or in the alternative, a motion for summary judgment. The Ellis Defendants filed another motion to dismiss on November 21, 1995. On December 22, 1995, Summit filed a Consolidated Opposition to these motions to dismiss. This Opposition was filed under seal, subject to a protective order. On January 22, 1996, the York Defendants and Hi-Line filed separate Reply briefs. Neither the Ellis Defendants nor the Royo Defendants have filed Reply briefs. On Friday, February 2, 1996, the Court received word that Plaintiff and the Royo Defendants had reached a tentative settlement. Because of this, the Court will not address the Royo motion.

II. Plaintiff's Allegations

As stated above, Summit is a Massachusetts corporation that develops, manufactures, sells, and services opthamological laser systems for treatment of a variety of eye disorders. Compl. ¶¶ 14 & 24. Summit holds a registered trademark in the name "Summit Technology." Compl. ¶ 26. In the past decade, Summit has manufactured and sold a variety of optic laser systems for use abroad and in the United States. The Summit Excimer Laser System's¹ multiple parts, housed in a single unit, include laser systems and motors that control the precise movements of the laser. In addition, the laser systems include copyrighted software which controls the operation of the laser. Compl. ¶ 25.

Until very recently, the Summit Excimer Laser System had not been approved by the Food and Drug Administration ("FDA") for use or distribution in the United States. The FDA has been considering commercial approval of the system for various surgical procedures for many years. During this period, the FDA has, however, permitted investigational use of the device at U.S. universities to facilitate data collection about the safety and effectiveness of the Excimer Laser System. Compl. ¶ 4. Pending FDA approval, Summit has successfully marketed earlier versions of the Summit Excimer Laser System (at issue in this case) in approximately 45 foreign countries, including Canada, Mexico, and several European nations. In many of these countries, the Summit Excimer Laser System is legally used to perform both photorefractive keratectomy ("PRK") and phototherapeutic keratectomy ("PTK"). Compl. ¶¶ 7 & 37.

On March 10, 1995, the FDA approved the Summit Excimer Laser System to perform commercial PTK in the United States. PTK is a therapeutic procedure for treating certain corneal pathologies, such as corneal opacities, growths or scars. Compl. ¶ 5. On September 18, 1995, Summit received formal notice that the FDA had approved the Summit Excimer Laser System to treat myopia with PRK. However, the FDA has not yet given final authorization for commercial use of the Summit Excimer Laser for PRK in the United States. Compl. ¶ 6.

According to the Complaint, the Summit systems sold in foreign countries differ significantly from the Summit system currently marketed in the United States (after FDA approval). For example, many of the foreign models are incapable of performing PRK with the six millimeter optical zone procedure required by the FDA. However, both the foreign and domestic models bear the same trademark, "Summit Technology." Compl. ¶ 40.

Defendant Hi-Line is a California corporation engaged in the business of buying and selling used medical equipment. Hi-Line has acquired legally exported Summit Excimer Laser Systems used in foreign countries and then re-imported or facilitated the re-importation of these systems for distribution in the United States. Hi-Line may also have acted as a broker, arranging or facilitating the sale of foreign Summit Excimer Laser Systems to domestic purchasers in exchange for monetary compensation. Compl. ¶ 41. Hi-Line has also advertised in the United States the availability of used Summit Excimer Laser Systems for purchase in this country. These advertisements (one of which is attached as Exhibit C to the Complaint) feature allegedly unauthorized photographs of Summit Excimer Laser Systems. Compl. ¶ 42.

In some of its advertisements, Hi-Line includes a reprint of a trade press article, which features the banner headline: "FDA APPROVES SUMMIT EXCIMER FOR PTK" and states that the used Summit Excimer Laser Systems offered by Hi-Line are "perfectly reliable." The trade press article also refers to the expected future approval of the Summit Excimer Laser System for commercial PRK. Compl. ¶ 43. Plaintiff contends that Hi-Line's advertisements are false and misleading because they fail to disclose that the Summit systems sold by Hi-Line are not approved by the FDA for sale or use in the United States, and that the FDA disapproves of the domestic use of re-imported Summit Excimer Laser Systems. In addition, Plaintiff asserts that Hi-Line's advertisements fail to disclose that the Summit systems sold by Hi-Line are materially different from Summit systems that have been approved for use in the United States. Finally, Plaintiff alleges that Hi-Line's advertisements are false and misleading because they do not disclose that Summit has not serviced or maintained the used Summit machines offered by Hi-Line. Summit contends that Hi-Line's false advertising has created (and is likely to create) consumer confusion, has eroded Summit's goodwill, and constitutes a danger to the public.

On April 28, 1995, the FDA sent a warning letter to Hi-Line concerning its re-importation and distribution of used Summit systems (attached as Exhibit D to the Complaint). The FDA warned Hi-Line that a re-imported Summit Excimer Laser System could not lawfully be offered for sale in the United States and that Hi-Line should not import any additional systems for commercial distribution. Compl. ¶ 45.

Defendant Kenneth K. York is a California physician who is apparently the principal of Defendant York Laser Eye Center (collectively "York"). Compl. ¶¶ 16-17. York acquired a used Summit system which Summit originally sold to a person or entity outside the United States. Compl. ¶ 48. York has promoted and advertised this fact by writing letters to other physicians advising them that he has purchased a Summit system and would like to make the system available to other qualified opthamologists, in exchange for a "user fee." (a copy of such a letter is attached to the Complaint as Exhibit E). Compl. ¶ 49. The Complaint alleges that the statements in York's letters are false and misleading in the same way that the Hi-Line statements are false and misleading. Compl. ¶ 50.

In addition, York has advertised the availability of PRK in magazines and newspapers and on billboards (copies of such advertisements are attached to the Complaint as Exhibit F). These advertisements are directed primarily...