Inapplicable studies and lost market share equal literal falsity and irreparable harm

OrthoAccel Technologies, Inc. v. Propel Orthodontics, LLC,
No. 4:16-CV-350, 2016 WL 6248711 (E.D. Tex. Oct. 26, 2016)
OrthoAccel is a medical device company that makes dental
appliances, including the AcceleDent, a hands-free dental device that uses
gentle vibrations to accelerate tooth movement when used with orthodontic
treatment. It has two main functional components: (1) a “Mouthpiece” and (2) an
“Activator,” a small extraoral component that generates a vibrational force when
the patient lightly bites down on it to accelerate tooth movement during
orthodontic treatment.  It received
510(k) clearance in 2011, which requires a showing that the device is as safe
and effective as a legally marketed device that is not subject to premarket
approval.  In 2013, OrthoAccel launched
its second-generation product, the Aura, which was cleared for use with braces
and in 2016 for use with clear aligners.
Propel is an OrthoAccel competitor.  It released the VPro5, which costs
significantly less than the Aura.  Propel
markets the Vpro5 through its sales force, promoting it as a quicker, cheaper
alternative to the Aura that offers “5 Clinical Benefits”: (1) more efficient
aligner seating, (2) relieves orthodontic pain, (3) accelerates tooth movement,
(4) fast tracks retention, and (5) stimulates bone growth and remodeling.
OrthoAccel argued that the burden of avoiding a finding of
falsity should shift to Propel under Novartis v. Johnson & Johnson-Merck
Consumer Pharm. Co., 290 F.3d 578 (3d Cir. 2002), because its claims were “completely
unsubstantiated.”  But the Fifth Circuit
hasn’t adopted this rule, and anyway Propel’s claims weren’t “completely”
However, the court did find several Propel claims to be
literally false.  For example, a document
for the sales force said that, “We have many research studies that show the
benefits of high frequency vibration. Let me detail some of them with you.” Another
claim was that there are “significant clinical findings that support the
VPro5’s ability to increase bone formation and accelerate tooth movement.” But
no such studies existed. Propel also claimed that the frequency of the VPro5’s
vibration was clinically optimal, also completely unsubstantiated.  OrthoAccel also showed falsity by disproving
Propel’s establishment claims; the literature and studies on which Propel
relied weren’t reliable enough to support its claims, mainly because they didn’t
test the VPro5 or just offered hypotheses. 
One article summarized a single patient’s positive experience with the
VPro5, but that didn’t support the “Clinical Benefits” claims.
OrthoAccel also showed actual deception, though it didn’t
need to because of the literal falsity, by showing that dentists’ websites had
copied the 5 Clinical Benefits to tout the devices.  One doctor’s declaration also indicated that
he “would expect the VPro5 to have scientific support, similar to AcceleDent.”  Materiality was a given.  OrthoAccel also showed injury: a sharp
decline in sales following the launch of the VPro5.
Irreparable injury:  “It
is well established that loss of market share due to false advertising
constitutes irreparable harm.”  (Quoting
a case involving “a competitive industry where consumers are brand loyal”
without discussing whether that’s true of orthodontic devices.)  While OrthoAccel’s annual operating plan and
actual revenues varied by 7% in 2014 and 2% in 2015, the variance measured 57% after
the launch of the VPro5.  Thus,
OrthoAccel showed irreparable harm. 
“Propel can still claim that the VPro5 aids in aligner
seating. It will only enjoin Propel from disseminating claims of the VPro5’s 5 Clinical
Benefits, which are false and misleading.”

Propel argued that OrthoAccel had unclean hands, based on
statements made by OrthoAccel that allegedly misrepresented Propel’s FDA
status. Without explaining its reasoning, the court found these arguments
preempted, but regardless, such statements weren’t enough to “shock[s] the
moral sensibilities of the judge, or…[be] offensive to the dictates of
natural justice.” 

from Blogger

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