Ideal Instruments, Inc. v. Rivard Instruments

479 F.Supp.2d 968

IDEAL INSTRUMENTS, INC., a Michigan corporation, Plaintiff, v. RIVARD INSTRUMENTS, INC., a foreign corporation, and Meril Rivard, a foreign national, Defendants.

No. C 05-3079-MWB.

United States District Court, N.D. Iowa, Central Division.

March 28, 2007.

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Mark R. Fox, Toni L. Harris, Fraser, Trebilcock, Davis & Dunlap, P.C., Lansing, MI, for Plaintiff.

Terence J. Linn, Karl T. Ondersma, Van Dyke, Gardner, Linn & Burkhart, LLP, Grand Rapids, MI, Angela Ellen Dralle, Dorsey & Whitney, Des Moines, IA, for Defendants.

MEMORANDUM OPINION AND ORDER REGARDING THE MOTION FOR PRELIMINARY INJUNCTION BY DEFENDANT RIVARD INSTRUMENTS, INC.

BENNETT, District Judge.

TABLE OF CONTENTS
I. INTRODUCTION.......................................................972
       A. Factual Background............................................972
            1. Provisional nature of findings and conclusions...........972
            2. The parties, patents, and products.......................973
            3. Ideal's advertisements of its needles as "detectable"....975
            4. The dispute over "detectability" of Ideal's needles......976
                 a. Dr. Hon's October 2006 tests.......................976
                 b. Dr. Hoff's November 2006 testing....................977
                 c. Ideal's testing.....................................978
                 d. The "wrong steel" dispute...........................980
       B. Procedural Background.........................................981
            1. Ideal's claims...........................................981
            2. Rivard's answer and motion for preliminary injunction....982
            3. The hearing on the motion for preliminary injunction.....982
 II. LEGAL ANALYSIS.....................................................983
       A. Standards For A Preliminary Injunction........................983
       B. Application Of The Standards..................................984
            1. Likelihood of success on the merits......................984
            a. Elements of Rivard's false advertising claim.............985
            b. Analysis.................................................986
                   i. Factual statement.................................986
                  ii. Falsity...........................................988
                 iii. Other elements....................................990
            2. Irreparable harm.........................................991
            3. Balance of harms.........................................992
            4. The public interest......................................994
III. CONCLUSION.........................................................994

Although this lawsuit began life as a patent infringement action, the focus of attention in this ruling is whether the plaintiff is violating the false advertising provisions of § 43 of the Lanham Act, codified at 15 U.S.C. § 1125(a)(1)(B), by selling patented "detectable" hypodermic needles for livestock that are not actually "detectable," as the defendants allege in one of their counterclaims. In a motion now before the court, the defendants asserts that the plaintiff must be preliminarily enjoined from selling its "detectable" needles and enjoined to recall all such needles in the interest of public safety. The plaintiff, however, contends that the motion for a preliminary injunction is a frivolous distraction from the real patent infringement issues in the case.

I. INTRODUCTION

A. Factual Background

1. Provisional nature of findings and conclusions

The general rule is that findings of fact and conclusions of law made in a court's disposition of a motion for preliminary injunction are provisional. See, e.g., University of Texas v. Camenisch, 451 U.S. 390, 395, 101 S.Ct. 1830, 68 L.Ed.2d 175 (1981) (the general rule is that "the findings of fact and conclusions of law made by a court granting a preliminary injunction are not binding at trial on the merits," because courts must customarily decide preliminary injunction motions "on the basis of procedures that are less formal and evidence that is less complete than in a trial on the merits"); accord Henderson v. Bodine Alum., Inc., 70 F.3d 958, 962 (8th Cir.1995) (citing Camenisch, for this "general rule"). Thus, any findings of fact in this ruling, made either in this section or in the course of the legal analysis to follow, as well as any conclusions of law forming part of the court's determination of whether the issuance of a preliminary, injunction is proper in this case, are intended to be subject to this "general rule" and are not to be considered "final."¹

2. The parties, patents, and products

Plaintiff Ideal Instruments, Inc., (Ideal) is a Michigan corporation with its principal place of business in Lansing, Michigan² Defendant Rivard Instruments, Inc., is a closely held for-profit Canadian corporation and defendant Meril Rivard, who is a citizen of Canada and resident of Winnipeg, Manitoba, is the president and majority, if not sole, shareholder of. Rivard Instruments. Unless the context requires otherwise, the court will identify the defendants singly and collectively as "Rivard." Both Ideal and Rivard manufacture "detectable" hypodermic needles for use, for example, in hypodermic syringes for livestock. The needles are "detectable" in the sense that they are made to be easily detected in the carcasses of slaughtered animals if they break off or are otherwise inadvertently left behind using metal detectors installed in meat processing plants.

More specifically, Ideal is the assignee of United States Patent No. 6,488,668 (the '668 patent) for a "detectable heavy duty needle." The '668 patent originally issued on December 3, 2002, and was upheld on ex parte reexamination on December 23, 2004. The Abstract for the '668 patent describes the patented invention as follows:

The present invention provides a detectable heavy duty needle cannula for use in hypodermic syringes and the like. Needle cannula comprises a magnetizable or magnetized stainless steel alloy, which enables needle cannula to be detectable in metal detectors that are commonly used in the meat processing industry to detect broken needle cannulas in the flesh of slaughtered animals. Needle cannula further comprises a sidewall that is thicker than the sidewalls of prior art needle cannulas. The thicker sidewall imparts to needle cannula greater resistance to breakage during the process of injecting animal health products into an animal and greater detectability in a metal detector.

Plaintiffs Exhibit 36 (the '668 patent) (component numbers omitted). Ideal is also the assignee of another patent for a "detectable heavy duty needle," United States Patent No. 6,960,196 (the '196 patent), which issued on November 1, 2005. The Abstract for the '196 patent describes the patented invention in exactly the same terms as the Abstract for the '668 patent. Defendant's Exhibit AA (the '196 patent). Ideal manufactures, sells, and distributes a product exploiting the inventions disclosed in the '668 and '196 patents under the commercial name "D3 Detectable Needles."

Similarly, Rivard Instruments owns Canadian Patent No. 2,298,277 (the '277 patent), which is a patent for "detectable stainless steel needles for meat packing," issued March 16, 2004. See Defendants' Motion To Dismiss (docket no. 13), Exhibit I, attachrnent to Affidavit Exhibit 1A (the '277 patent). The Abstract for the '277 patent describes the patented invention as follows:

Magnetic stainless steel needles are detectable in processed meat. The previous non magnetic versions, made of 304 stainless steel, are not. Disposable hypodermic needles made from martensitic and ferrite stainless steel are easily detectable at the smallest size. A method of detection is also disclosed.

The '277 patent. Rivard Instruments also makes products that it claims exploit the '277 patent, although Ideal disputes that the needles marketed by Rivard Instruments use the stainless steel alloys identified in the '277 patent.

The goal of "detectable" needles, as mentioned briefly above, is to prevent broken needles that are occasionally left behind in livestock at the time of injection from making their way through the food processing chain to consumers. Concerns about the potentially devastating effects on the pork industry if broken needles were found in pork products prompted the National Pork Board (NPB) and the National Pork Producers Council (NPPC) to institute a "One Is Too Many" campaign to make producers, packers, and veterinarians aware of the problem and to encourage them to take responsibility to prevent it. These concerns also prompted the NPB to hold a "Needle Summit" in Des Moines, Iowa, in March 2000, to make those in the industry aware of the problem and to discuss strategies to try to eliminate it. The NPB also commissioned independent testing in 2000 and 2001 by Dr. Steven Hoff, now Rivard's expert witness in this litigation, to determine the extent to which veterinary hypodermic needles were detectable by metal detectors at meat processing plants. Those tests included tests of the "detectable" needles of Rivard's predecessor company, PDN. Because Ideal's D3 needles were still in development, however, Dr. Hoff did not include D3 needles in his tests in 2000 and 2001.

In 2002, Ideal commissioned Dr. Hoff to perform a battery of tests similar to those he had performed for the NPB on Ideal's D3 needles. Following those tests, Dr. Hoff concluded in a report dated November 19, 2002, that, regardless of gauge, fragment length, or orientation, "[n]eedle detection results of the Ideal D3 needle indicate[] clearly that these needles are 100 percent detectable for the controlled experimental' conditions used. ... The results were quite convincing in that for the testing conditions used,...