Edge Sys. LLC v. Aguila

186 F.Supp.3d 1330

Edge Systems LLC, a California limited liability company, and Axia Medsciences, LLC, a Delaware limited liability company, Plaintiffs,

v.Rafael Newton Aguila, a/k/a Ralph Aguila, an individual, d/b/a/ Hydradermabrasion Systems, Defendant.

Case No: 1:14-cv-24517-KMM

United States District Court, S.D. Florida.

Signed May 9, 2016

Ali S. Razai, Brenton R. Babcock, Knobbe, Martens, Olson & Bear, LLP, Irvine, CA, James Anthony Gale, Richard Guerra, Feldman Gale PA, Miami, FL, for Plaintiffs.

Rafael Newton Aguila, South Miami, FL, pro se.

ORDER GRANTING PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT

K. MICHAEL MOORE, CHIEF UNITED STATES DISTRICT JUDGE

THIS CAUSE came before the Court upon Plaintiffs' Motion for Summary Judgment (ECF No. 176) and related responses and replies. The motion is now ripe for review. For the reasons that follow, Plaintiffs' Motion for Summary Judgment is GRANTED.

I. BACKGROUND¹

Bootleg. Clone. Copycat. Imitation. Knock-off. Palm-Off. However one labels a peddled product that conspicuously capitalizes on another's intellectual property rights, this case presents the quintessential example.

Plaintiffs Edge Systems LLC ("Edge") and Axia Medsciences, LLC ("Axia")² brought this action against Defendant Rafael Newton Aguila ("Aguila") seeking damages and injunctive relief for, inter alia , patent, trademark, and trade dress infringement. See generally Compl. (ECF No. 1).

Roger Ignon and William Cohen founded Edge—a California corporation—in 1997. Edge designs and sells skin health devices, including spa and skin treatment products and hydradermabrasion systems. Edge's premier and bestselling product is its HydraFacial MD® hydradermabrasion system (the "Edge Machine") pictured below.

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The Edge Machine utilizes a "wet system" that exfoliates a patient's facial skin tissue by using an abrasive tip in combination with the application of serums, followed by a vacuum source to extract dead skin cells from the patient.

The average sales price for the Edge Machine is $24,000. Sales of the Edge Machine account for over half of Edge's total sales and revenue from sales of the Edge Machine has totaled over $48 million in the past five years. The machine is well-known in the aesthetic industry and has been recognized with numerous awards. Edge extensively advertises the Edge Machine and related products in consumer and trade magazines, at trade shows, seminars, and on the Internet. In the past five years, Edge has spent over $5.6 million in advertisement of its products. In addition to Edge's advertising, several national media outlets have featured profiles of Edge and its various products.

A. Plaintiffs' Intellectual Property

Edge's machine incorporates technology—for exfoliating and moisturizing skin—that is claimed in six U.S. patents³ , owned by Plaintiff Axia and exclusively licensed to Edge. On December 30, 1999, the application for the '620 Patent was filed with the United States Patent and Trademark Office ("USPTO"). On October 9, 2001, the '620 Patent, entitled "Instruments and Techniques for Inducing Neocollagenesis in Skin Treatments," was issued by the USPTO. Claim 1 of the '620 Patent reads as follows:

A system for treating surface layers of a patient's skin, comprising: an instrument body with a distal working end for engaging a skin surface; a skin interface portion of the working end comprising an abrasive fragment composition secured thereto; at least one inflow aperture in said skin interface in fluid communication with a fluid reservoir; and at least one outflow aperture in said skin interface in communication with a negative pressurization source.

ECF No. 1-4.

The '591 Patent, entitled "Instruments and Techniques for Controlled Removal of Epidermal Layers," was issued on November 4, 2003. Claim 1 of the '591 Patent reads:

A system for treating the skin surface of a patient, comprising: an instrument body with a distal working end that defines a skin interface portion for contacting the skin; a first aperture arrangement in said skin interface consisting of at least one port in communication with a treatment media source; a second aperture arrange in said skin interface consisting of at least one port in communication with a vacuum source for removing treatment media and removed tissue from the skin interface; and wherein the skin interface comprises an abrading structure with substantially sharp edges for abrading tissue.

ECF No. 1-5.

As early as 2005, Edge began to use the names ACTIV-4, ANTIOX-6 and BETA-HD to identify serums used with the Edge Machine. In 2010, Edge began to offer serums under the names DERMABUILDER and GLYSAL, and has continuously used all of the serum marks in interstate commerce since their initial use in connection with the advertisement and sale of Edge's products. Edge expanded its selection of serums by offering VORTEX-FUSION®, a mark it registered with the USPTO on March 20, 2012.⁴ In 2014, Edge first offered a serum named ANTIOX+ and has since continuously used this mark in interstate commerce to advertise and sell that product.

In addition to the Edge Machine and related serums, Edge offers a skin resurfacing product named HYDROPEEL®. Edge registered the HYDROPEEL®> mark with the USPTO in September 2008, and has continuously used this mark in interstate commerce to advertise and sell that product as well. The HYDROPEEL® mark is associated with goods described as "medical apparatus and instruments for resurfacing and nourishing tissue" and has attained "incontestable" status.⁵

Additionally, Edge owns the registered trademark The EDGE SYSTEM®, which was registered in September 2005, and has also attained "incontestable" status. According to the registration, the mark is associated with "medical apparatus, namely, systems comprised primarily of a vacuum source and hand piece used for medical body treatments, microdermabrasion and massage therapy."

Since its founding in 1997, Edge has continuously operated under the trade name "Edge Systems," and used the common law mark Edge Systems in connection with the sale and promotion of its products. Since 1999, Edge has used variations of its Chevron "E" logo formed by three triangles as shown below:

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B. Aguila's Allegedly Infringing Conduct

In October 2014, Edge was surprised to learn that one of its main competitors, Lumenis, was apparently offering a copycat version of the Edge Machine (the "Accused Product") on the website www.hydradermabrasion.com("Aguila's Lumenis Website"). When Edge contacted Lumenis, Edge learned that Lumenis was equally surprised at the presence of Aguila's Lumenis Website. After further evaluation, Edge and Lumenis discovered that the website was registered to Aguila, who was using the site, Lumenis' trade name, and Lumenis' trademarks to advertise a knock-off version of the Edge Machine for his business Hydradermabrasion Systems. The Accused Product was advertised, interchangeably, as the HydraDerm, the HydraDermMD, the Hydradermabrasion, and the Hydradermabrasion MD.

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On October 27, 2014, Edge sent Aguila a cease and desist letter and asked that he stop infringing on Edge's asserted patents.⁶ See (ECF Nos. 13-04 ¶ 20, 13-06). Lumenis also separately asked Aguila to cease using its trade name and trademarks. See (ECF No. 13-04, ¶ 21). On October 29, 2014—just two days after Edge's letter—Aguila filed for a Fictitious Business Name with the Florida Department of State for the name EDGE SYSTEMS. See (ECF Nos. 13-15, 13-27). Soon thereafter, Aguila transformed his Lumenis website into one that was designed to blatantly pass his company off as Edge.

Aguila went to great lengths to assume Edge's identity, including filing his own trademark applications for the Edge Systems trade name and Edge's Chevron "E" logo by submitting a false declaration claiming a first use of the marks in commerce that predates Edge's founding. Aguila also started using the website www.edge-systems.com to advertise the Accused Product and had his receptionist greet callers as having called "Edge Systems." At least one of Aguila's "Regional Sales Managers" passed himself off as being affiliated with Edge and even included "Edge Systems" in his e-mail signature line. When a potential customer asked if there was a difference between the Edge Machine and the Accused Product, Aguila's "Regional Sales Manager" represented that the product was Edge's newest upgrade of the Edge Machine.

Aguila's charade as Edge continued as he lured customers into thinking that the Accused Product was an authentic version of Edge's Machine. For example, Dr. Elliott Duboys—a plastic surgeon who purchased the Accused Product from Aguila for $7,650—thought the machine he purchased was actually the Edge Machine. Upon receiving the machine from Aguila, Dr. Duboys contacted Aguila's company to question why the machine was labeled HydraDerm MD instead of HydraFacial MD. Aguila's sales representative assured Dr. Duboys that the HydraDerm MD was the newest version of Edge's medical-grade machine and that it was being sold throughout Europe. After noticing several deficiencies with his purchased product, Dr. Duboys attempted to lodge a complaint through Aguila's website and listed phone number but neither were operational. Dr. Duboys ultimately reached Edge and learned that the product he purchased was not Edge's Machine.

Another customer, Lealani Irby—a day spa owner—purchased a product she believed was Edge's Machine from Aguila for $6,000 through eBay. Irby stated that the overall appearance of the machine that she purchased made her believe that it was an Edge Hydrafacial MD® hydradermabrasion system. After receiving the machine, Irby received an e-mail from Aguila listing a phone number for Hydradermabrasion Systems in case she had any questions regarding installation of the product. Irby encountered difficulty during installation, but was unable to obtain any assistance at the number Aguila provided. Shortly after purchasing the Accused Product, Irby...