Is nominative fair use an affirmative defense in the 9th Circuit?

Zest IP Holdings, LLC v. Implant Direct Mfg. LLC, No. 10cv541, 2015 WL 1510755 (S.D. Cal. Feb. 3, 2015)
As usual, I’m ignoring the patent parts of this patent/trademark/false advertising case.  Zest alleged that Implant Direct sold the “GoDirect” dental attachment product and the GoDirect Prosthetic System (“GPS”) in violation of Zest’s patents and falsely and unfairly used the ZEST® and LOCATOR® trademarks when marketing them. Zest and Implant Direct used to have a distributorship relationship, giving Implant Direct a nonexclusive right to sell Zest’s products.  Implant Direct then designed its GoDirect implant, copying the geometry of the Locator “abutment attachment surface”—the top part of the implant.  Implant Direct marketed the GoDirect implant as “compatible” with Zest’s Locator® attachment system: as usable in conjunction with Zest’s Locator® liner and cap, which are the other parts of the system. Litigation resulted.
Zest succeeded in its motion for spoliation and discovery abuse sanctions based on failure to implement a litigation hold, which will merit an adverse jury instruction at trial.
Implant Direct’s successor in interest IDSI argued that the trademark claims were barred by nominative fair use.  Under New Kids, we ask whether (1) the product was “readily identifiable” without use of the mark; (2) defendant used more of the mark than necessary; or (3) defendant falsely suggested he was sponsored or endorsed by the trademark holder. “If the nominative use does not satisfy all the New Kids factors, the district court may order defendants to modify their use of the mark so that all three factors are satisfied; it may not enjoin nominative use of the mark altogether.”
However, the court held that IDSI forfeited affirmative defenses that weren’t pled, and that nominative fair use was an unpled affirmative defense.  (This strikes me as obviously wrong.  The Ninth Circuit has been very, very clear that nominative fair use substitutes for the ordinary confusion test in cases in which its application is appropriate (D is using the mark to identify P’s goods/services).  I can’t see how it’s the defendant’s burden to plead which confusion test applies, when it is always the plaintiff’s burden to show confusion.  In copyright, would we require the defendant to plead that abstraction/filtration/comparison or the more discerning observer test applies in order to take advantage of those tests, assuming they were appropriate under circuit precedent?)  Thus, summary judgment on Zest’s trademark claims was denied. 
This seems to raise a real practical problem: how is one to instruct a jury to evaluate the trademark claims? Even courts that don’t use New Kids recognize that the standard multifactor test doesn’t work well when the defendant’s use identifies the plaintiff.  Similarity of marks and similarity of goods/services will not have the ordinary effect they have if the defendant was using the mark to identify its own goods/services.  I guess the ultimate lesson is: don’t aggravate the district court until it refuses to listen to your good arguments as well as your bad ones.
IDSI also argued that the false designation of origin/false advertising claims were subject to Rule 9(b), and the court agreed, but found the heightened pleading requirements satisfied. The following allegation pled the who, what, when, where, and how:
Implant Direct is using the ZEST and LOCATOR trademarks in a prominent manner in connection with the “GoDirect” product such that consumers are likely to be confused into believing that the “GoDirect” product is authorized, endorsed or sponsored by Zest. (A printout of this advertisement from the Implant Direct website is attached hereto as Exhibit H). Further, the words “Featuring ZEST LOCATOR Compatible Platform” are also likely to cause confusion, deception or mistake because the “GoDirect” product is not in fact “compatible” with the Zest LOCATOR attachment system, but is instead a copy of one or more of the components of the Zest LOCATOR attachment system. Furthermore, the use of the same words “Featuring Zest LOCATOR Compatible Platform” in describing the “Go Direct” and the Zest Locator is likely to cause confusion, deception or mistake among consumers.
(I’m tempted to describe the favorable treatment given to false association compared to false advertising in 9(b) jurisprudence as literally “special pleading,” but what jumps out at me more is that the contention that the IDSI implant isn’t “compatible” because it’s a “copy” makes the overall falsity claim laughable.  In what sense would a consumer ever expect that “compatible” didn’t include the possibility “it’s exactly the same, which is why it fits”?  In what way could this distinction ever be material?)  See above re: good/bad arguments.
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