Neurovision Medical Products Inc. v. Nuvasive, Inc.

FILED
NOT FOR PUBLICATION SEP 10 2012
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U .S. C O U R T OF APPE ALS
FOR THE NINTH CIRCUIT
NEUROVISION MEDICAL PRODUCTS No. 11-55120
INC.,
D.C. No. 2:09-cv-06988-R-JEM
Plaintiff-counter-defendant -
Appellee,
MEMORANDUM *
v.
NUVASIVE, INC.,
Defendant-counter-claimant -
Appellant.
NEUROVISION MEDICAL PRODUCTS No. 11-55756
INC.,
D.C. No. 2:09-cv-06988-R-JEM
Plaintiff-counter-defendant -
Appellee,
v.
NUVASIVE, INC.,
Defendant-counter-claimant -
Appellant.
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Appeal from the United States District Court
for the Central District of California
Manuel L. Real, District Judge, Presiding
Argued and Submitted June 5, 2012
Pasadena, California
Before: B. FLETCHER, WARDLAW, and BYBEE, Circuit Judges.
Following a five-day jury trial to determine the parties’ rights in the
trademark “NEUROVISION,” the jury awarded $60 million to Neurovision
Medical Products (“NMP”). The jury found that NuVasive, Inc. (“NuVasive”)
committed fraud in procuring its trademark registrations, that NMP had prior rights
in the NEUROVISION mark, and that NuVasive wilfully infringed NMP’s rights.1
The district court entered judgment for NMP, issued a permanent injunction
barring NuVasive from using the NEUROVISION mark, awarded NMP attorneys’
fees and costs, and ordered cancellation of NuVasive’s trademark registrations.
We have jurisdiction over NuVasive’s appeal pursuant to 28 U.S.C. § 1291. We
vacate the district court’s judgment, the injunction, and the awards of fees and
costs, and we remand for a new trial.
I.
1
We note that each of these orders strongly favoring NMP was prepared by
counsel for NMP, and that the district court engaged in the “regrettable practice” of
signing each one without altering a single line. See Living Designs, Inc. v. E.I.
Dupont de Nemours & Co., 431 F.3d 353, 373 (9th Cir. 2005).
2
The jury’s verdict that NuVasive fraudulently procured trademark
registrations for the NEUROVISION mark must be vacated because the district
court erroneously instructed the jury as to the elements required to prove fraud on
the United States Patent and Trademark Office (“USPTO”). “[T]he burden of
proving that a party fraudulently procured a trademark registration is heavy.” Robi
v. Five Platters, Inc., 918 F.2d 1439, 1444 (9th Cir. 1990). “[T]o prove fraud that
would result in the cancellation of [a] mark, there would have to be a material
misrepresentation in the affidavit on the basis of which the mark was registered.”
Pony Express Courier Corp. of Am. v. Pony Exp. Delivery Serv., 872 F.2d 317, 319
(9th Cir. 1989).
There is no requirement that an applicant for a trademark registration
disclose all prior use of a mark, contrary to the district court’s instruction. Instead,
an applicant must disclose only those prior users that the applicant believes have
acquired superior rights to the mark in the classification for which registration is
sought. See Quiksilver, Inc. v. Kymsta Corp., 466 F.3d 749, 755 (9th Cir. 2006)
(citing Yocum v. Covington, 216 U.S.P.Q. 210, 216–17 (T.T.A.B. 1982) (“[T]he
statement of an applicant that no other person ‘to the best of his knowledge’ has
the right to use the mark does not require the applicant to disclose those persons
whom he may have heard are using the mark if he feels that the rights of such
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others are not superior to his.”)). The district court erred by instructing the jury to
determine only whether NuVasive omitted knowledge of NMP’s prior use of the
NEUROVISION mark; the proper inquiry is whether NuVasive wilfully omitted
knowledge of a superior right held by NMP. Moreover, the district court
erroneously omitted from the jury instructions a key element of proving fraud on
the USPTO: that a trademark applicant intend to induce reliance on a
misrepresentation. See Robi, 918 F.2d at 1444.
II.
A new trial is also required because the district court failed to properly
instruct the jury as to the showing required to challenge an “incontestable” mark.
Unless NuVasive’s trademark registrations are cancelled following a proper verdict
of fraud in their procurement,2 the registrations are incontestable under 15 U.S.C.
§ 1065. Consequently, NMP may not challenge NuVasive’s use of the
NEUROVISION mark unless it can prove that its own use of the mark was
“maintained without interruption.” Casual Corner Assocs., Inc. v. Casual Stores of
Nev., Inc., 493 F.2d 709, 712 (9th Cir. 1974). The judgment below must be
2
If NuVasive’s trademark registrations are properly cancelled, it may still
maintain common law rights in the NEUROVISION mark, but its rights in the
mark will no longer be incontestable under §1065. See Far Out Prods., Inc. v.
Oskar, 247 F.3d 986, 996 (9th Cir. 2001).
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vacated because the district court instructed the jury to answer only whether NMP
“establish[ed] trademark rights in the mark ‘NEUROVISION’ through prior use of
the mark in commerce,” and failed to require that the jury determine both the
geographic scope of NMP’s rights and whether NMP maintained continuous use of
the mark following the acquisition of any state law rights in the mark. See 15
U.S.C. § 1065.
III.
The district court abused its discretion by excluding relevant evidence based
on its legally erroneous determination that any differences in the functions and user
bases of the NMP and NuVasive devices were irrelevant to the likelihood of
confusion analysis. The district court should have admitted NuVasive’s proffered
evidence, which was highly probative of the question of the “proximity of the
goods,” AMF v. Sleekcraft Boats, 599 F.2d 341, 348–349 (9th Cir. 1979), a factor
that “is measured by whether the products are: (1) complementary; (2) sold to the
same class of purchasers; and (3) similar in use and function.” Network
Automation, Inc. v. Advanced Sys. Concepts, Inc., 638 F.3d 1137, 1150 (9th Cir.
2011). The improperly excluded evidence went to whether NuVasive and NMP
directly competed for customers for their devices, a factor that is “always . . .
important” in trademark disputes. Brookfield Commc’ns, Inc. v. W. Coast Entm’t
5
Corp., 174 F.3d 1036, 1054 (9th Cir. 1999). Because the district court not only
excluded the proffered evidence, but also informed the jury that the evidence was
irrelevant to the trademark infringement inquiry, we cannot conclude that “the
jury’s verdict is more probably than not untainted by the error.” Gilchrist v. Jim
Slemons Imps., Inc., 803 F.2d 1488, 1500 (9th Cir. 1986) (quoting Haddad v.
Lockheed Cal. Corp., 720 F.2d 1454, 1459 (9th Cir. 1983)).
IV.
We find that reassignment is warranted on remand because the district court
ignored our precedent, persistently cut off or excluded relevant testimony, and
repeatedly instructed the jury incorrectly. See U.S. v. Sears, Roebuck & Co., 785
F.2d 777, 780 (9th Cir. 1986) (“A district judge’s adamance in making erroneous
rulings may justify remand to a different judge.”). In light of the district court’s
adherence to a view of trademark law that is at odds with clear Ninth Circuit
precedent, there is reason to believe that the district judge may “have substantial
difficulty in putting out of his . . . mind previously expressed views or findings
determined to be erroneous.” United Nat’l Ins. Co. v. R&D Latex Corp., 242 F.3d
1102, 1118 (9th Cir. 2001) (quoting Sears, Roebuck & Co., 785 F.2d at 780). We
therefore direct the clerk of the U.S. District Court for the Central District of
California to assign this case to a different district court judge upon remand.
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VACATED AND REMANDED
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