In PhotoMedex v. Irwin, the Ninth Circuit Court of Appeals ruled that false advertising claims under the Lanham Act extend to false representations made by implication or innuendo; and are not limited to literal falsehoods.
PhotoMedex, Inc. is a medical device manufacturer. It competes against RA Medical Systems, Inc.
PhotoMedex had finished a new laser device for dermatological treatment. Its competitor, RA Medical Systems, was also working on a completing product, but was late to market. RA Medical Systems told its clients that its new laser device would be ready “in a few months.” In fact, the laser device was not available for about 18 months.
PhotoMedex brought Lanham Act claims against RA Systems for making “false and deceptive statements in a commercial advertisement” about the market readiness of its laser product. RA Systems defended by claiming that its statements about the future readiness of the laser device was a matter of opinion, not reachable by Lanham Act claims.
The Southern District of California, Judge Janis Sammartino, agreed and issued summary judgment in favor of defendant. The Ninth Circuit Court reversed, explaining that a statement of opinion 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.”
On a related issue, the Ninth Circuit Court also held that the commercial depiction of a well-known device inventor, Mr. Irwin, as inventor of RA Systems’ laser was also actionable if misrepresented Mr. Irwin’s actual contribution to the invention.
PhotoMedex argued that Defendants knowingly misrepresented in March 2003 that the “Pharos” laser would be available that summer, within just a few months. Defendants admit they did not ship the first Pharos until September 2004, more than a year later, but argue that they were delayed in part by having to defend against PhotoMedex’s multiple lawsuits.
The district court interpreted the predictions of the Pharos’s release date to be mere statements of opinion regarding future events, which are generally not actionable. There is, however, a well-established exception — if “the speaker has knowledge of facts not warranting the opinion.”
An honest or sincere statement of belief about a future event is not actionable, but a statement known at that time by the speaker to be false, or a statement by a speaker who lacks a good faith belief in the truth of the statement, may constitute an actionable misrepresentation.
PhotoMedex provided expert testimony that moving a medical laser from the beginning of design to production would typically require 12 to 18 months. The Ninth Circuit panel concluded that the expert evidence raised a genuine issue of material fact as to whether defendants intentionally misrepresented the Pharos’s release date.
The potential motivation for and harm from such a misrepresentation was obvious: by telling prospective purchasers that the Pharos would be available soon, defendants might have persuaded them not to buy PhotoMedex’s device, which was already available, leaving them open to consider and possibly purchase defendants’ competing product later.
Defendants’ commercial depiction of Irwin as “inventor” of the system is actionable to the extent it misled consumers into believing that Irwin was the sole inventor or made more than his actual share of inventive contributions.
In an expansive reading of the Lanham Act, the Ninth Circuit Court explained: “a false advertising cause of action under the [Lanham] Act is not limited to literal falsehoods; it extends to false representations made by implication or innuendo.”
Prevailing lead counsel in the case was Thomas D. Warren, Baker & Hostetler, Cleveland.
The Ninth Circuit panel included: William A. Fletcher, Richard R. Clifton and Milan D. Smith, Jr., Circuit Judges.
