United States District Court, D. Delaware
false and misleading advertising and unfair competition
action, Plaintiff, and counterdefendant, SurgiQuest
("SurgiQuest") alleges that Lexion Medical, Inc.,
and counterplaintiff, ("Lexion") participated in
false and misleading advertising activities. (D.I. 1.) The
court held a six-day jury trial in this matter on April 3
through April 11, 2017. (D.I. 261-66.) At trial, Plaintiff
properly moved for judgment as a matter of law
("JMOL") at the end of Defendant's case
pursuant to Rule 50(a) of the Federal Rules of Civil
Procedure and again at the close of evidence. (D.I. 243);
(D.I. 253 at 1-2); Tr. 1422:9-16.
April 11, 2017, the jury returned a verdict in favor of
Lexion on the issue of false advertising under the Lanham Act
and under Delaware's Unfair Competition Law, and awarded
compensatory damages in the amount of $2.2 million and
punitive damages of $10 million. Tr. 1782:3-1783:24; (D.I.
253 at 2.) The court entered judgment on the verdict on April
13, 2017. (D.I. 249.)
before the court is SurgiQuest's motion for judgment as a
matter of law and Lexion's motions for permanent
injunction, disgorgement of profits, attorney's fees,
prejudgment interest, and post-judgment interest. (D.I. 252);
(D.I. 255.) Having considered the entire record in
this case, the substantial evidence in the record, the
parties' post-trial submissions, and the applicable law,
the court will deny all motions. The court's reasoning
STANDARD OF REVIEW
Renewed JMOL Motions
prevail on a renewed motion for judgment as a matter of law
following a jury trial and verdict, the moving party
"must show that the jury's findings, presumed or
express, are not supported by substantial evidence or, if
they were, that the legal conclusion(s) implied [by] the
jury's verdict cannot in law be supported by those
findings." Pannu v. Iolab Corp., 155 F.3d 1344,
1348 (Fed. Cir. 1998) (quoting Perkin-Elmer Corp. v.
Computervision Corp., 732 F.2d 888, 893 (Fed. Cir.
1984)). "Substantial evidence" is defined as
"such relevant evidence from the record taken as a whole
as might be accepted by a reasonable mind as adequate to
support the finding under review." Perkin-Elmer
Corp., 732 F.2d at 893.
court should only grant the motion "if, viewing the
evidence in the light most favorable to the nonmovant and
giving it the advantage of every fair and reasonable
inference, there is insufficient evidence from which a jury
reasonably could find liability." Lightning Lube,
Inc. v. Witco Corp., 4 F.3d 1153, 1166 (3d Cir. 1993)
(citing Wittekamp v. Gulf Western Inc., 991 F.2d
1137, 1141 (3d Cir. 1993)). "In determining whether the
evidence is sufficient to sustain liability, the court may
not weigh the evidence, determine the credibility of
witnesses, or substitute its version of the facts for the
jury's version." Lightning Lube, 4 F.3d at
1166 (citing Fineman v. Armstrong World Indus.,
Inc., 980 F.2d 171, 190 (3d Cir. 1992)). Rather, the
court must resolve all conflicts of evidence in favor of the
non-movant. Williamson v. Consol. Rail Corp., 926
F.2d 1344, 1348 (3d Cir. 1991); Perkin-Elmer Corp.,
732 F.2d at 893. "The question is not whether there is
literally no evidence supporting the party against whom the
motion is directed but whether there is evidence upon which
the jury could properly find a verdict for that party."
Lightning Lube, 4 F.3d at 1166 (quoting Patzig
v. O'Neil, 577 F.2d 841, 846 (3d Cir. 1978)).
considered the substantial evidence in the record, the
parties' post-trial submissions, and the applicable law,
the court will deny all of SurgiQuest's motions as well
as Lexion's motions for permanent injunction,
disgorgement of profits, attorneys' fees, and prejudgment
interest and grant Lexion's motion for postjudgment
interest. The court's reasoning follows.
SurgiQuest moves for judgment as a matter of law on the
jury's award of monetary damages. (D.I. 253.) SurgiQuest
asserts that no reasonable jury could have awarded monetary
damages because (1) Lexion failed to prove causation between
the false advertising claims and damages; (2) the jury
instructions on causation and damages were incorrect; and (3)
hearsay and salesperson confusion evidence was improperly
admitted. "To recover damages, a plaintiff must show
that the 'falsification [or misrepresentation] actually
deceives a portion of the buying public.'" U.S.
Healthcare, Inc. v. Blue Cross of Greater Philadelphia,
898 F.2d 914, 922 (3d Cir. 1990) (citing Parkway Baking
Co. v. Freihofer Baking Co., 255 F.2d 641, 648 (3d Cir.
1958). "This does not place upon the plaintiff a burden
of proving detailed individualization of loss of sales. Such
proof goes to quantum of damages and not to the very right to
recover. However, there must be a showing of some
customer reliance on the false advertisement[.]"
Parkway Baking, 255 F.2d at 648; Warner-Lambert
Co. v. Breathasure, Inc., 204 F.3d 87, 92 (3d Cir. 2000)
("we held [in Parlcway Baking, 255 F.2d at 648]
that a plaintiff seeking damages under § 43(a) must
establish customer reliance but need not quantify loss of
sales as that goes to the measure of damages, not plaintiffs
cause of action."); Larry Pitt & Assocs. v.
Lundy Law LLP, 2018 WL 925011, at *4 (E.D.Pa.Feb. 15,
asserts that Lexion failed to provide sufficient evidence
that the false statements had a causal link to Lexion's
lost sales. (D.I. 253 at 4-6.) SurgiQuest further contends
that marketplace competition does not provide a nexus for
false advertising damages and argues that is the only basis
for which Lexion tried to show any lost sales. (D.I. 253 at
12.) In contrast, Lexion asserts that SurgiQuest did not, and
cannot, prove a lack of sufficient evidence because the
statements were literally false, consumers purchased the
AirSeal product and stopped purchasing Lexion's product.
Additionally, Lexion contends that evidence of confusion
demonstrated that the false advertising actually
deceived a portion of the buying public. (D.I. 257 at
4-7.) The court agrees for two main reasons.
Lexion presented more than enough evidence that consumers
stopped purchasing Lexion's products as a result of
SurgiQuest's false statements. Lexion's witness, Dr.
Paul Kobza, stated that as a result of being
"misled" by SurgiQuest's false statements, he
stopped using Lexion's Insuflow product and switched to
SurgiQuest's AirSeal product. Tr. 807:6-808:9, 812:16-23.
While Dr. Kobza stopped using AirSeal
"[i]mmediately" when he learned it could draw
operating room air into the abdomen, Lexion never got the
account back. Tr. 808:10-809:4, 815:16-816. Similarly,
Tiffany Brenton, a robotic coordinator at Peace Health
Hospital, testified she was told AirSeal did not suck air
into the abdomen, which partially impacted the hospital's
purchasing decision. Tr. 580:25-581:15. Ms. Brenton explained
AirSeal's smoke evacuation capability "for the
surgeon to be able to see while they operate" was a key
reason why the hospital wanted the AirSeal system. Tr.
the jury heard evidence relevant to establish the fact of
damage and whether "confused" buyers purchased
AirSeal or failed to purchase Lexion's products as a
result. The jury heard the testimony of: (1) Bridget Moriarty
who identified multiple consumer accounts that believed
AirSeal heated and humidified, and stopped buying or reduced
their purchases from Lexion as a result (Tr. 502:7-504:7);
(2) Brett Emery who testified that his hospital system
purchased fewer Insuflow devices because they were using
AirSeal, which did the exact same thing as
Lexion's products (Tr. 620-21); and (3) Robert Fadem, a
SurgiQuest sales representative who testified SurgiQuest
targeted Lexion's customers by telling them AirSeal
performed identically to Insuflow, and that they could
justify the cost of their purchase by getting rid of
Insuflow. Tr. 290-93. This strategy proved successful at
Northside Hospital where Lexion lost an account that produced
revenue of $100, 000 per year. Tr. 290-93, 722-23.
evidence at trial demonstrated that SurgiQuest's false
advertising actually deceived customers purchasing
the device and Lexion lost sales and customers as a result,
the court concludes that the evidence at trial was sufficient
to support a verdict that the false advertising had a causal
connection to Lexion's loss. Tr. 574-81, 610-15, 1313-12.
The Jury Instructions Were Proper 
SurgiQuest's post-trial motion asserts that absent
incorrect jury instructions, no reasonable jury could have
awarded damages. (D.I. 253 at 16.) SurgiQuest argues that the
"errors in the jury instructions directly contributed to
the insufficiency of the evidence" and can, therefore,
be raised at JMOL. (D.I. 268 at 8.) The court disagrees.
"[J]udgment as a matter of law is not the appropriate
remedy for [jury instruction] errors. Rather, prejudicial
errors in jury instructions are remedied by a new
trial." Power Integrations, Inc. v. Fairchild
Semiconductor Int'l, Inc., 585 F.Supp.2d 562, 567
(D. Del. 2008) (Farnan, J.), affd, 711 F.3d 1348
(Fed. Cir. 2013). While disputes over jury instructions
occur, "the precise wording of jury instructions is left
to the discretion of the [c]ourt." Power
Integrations, 585 F.Supp.2d at 567 (citing United
States v. Flores, 454 F.3d 149, 161 (3d Cir. 2006)). In
its brief, SurgiQuest asserts that "[a] new trial is not
warranted" in this case and it, therefore, only seeks
a new trial if Lexion does. (D.I. 253 at 25.) Because Lexion
did not move for a new trial, the court need not address this
issue. However, even if the complaint about jury instructions
were not waived, the court will deny the motion on its
substantive merits for the reasons that follow.
SurgiQuest argues that the jury was improperly instructed
that "[i]f literal falsity is found, Lexicon does not
need to prove actual deception of consumers to recover
damages for false statements made by SurgiQuest." (D.I.
253 at 16); Tr. 1712:15-20. SurgiQuest argues that
"[t]his instruction contradicts the Third Circuit's
holding in Warner-Lambert that a party seeking
monetary damages for false advertising must show customer
reliance on the false or misleading statements and thus
demonstrate a causal nexus between the statements and
damages. Warner-Lambert Co., 204 F.3d at 92;
Labware, Inc. v. Thermo Labsystems, Inc., 2005 WL
1541028, at *9, 12 (E.D.Pa. June 29, 2005); Synygy, Inc.
v. Scott-Levin, Inc., 51 F.Supp.2d 570, 575, 577 (E.D.
Pa. 1999); Parkway Baking, 255 F.2d at 648;
Castrol Inc. v. Pennzoil Co., 987 F.2d 939, 943 (3d
Cir. 1993) ("[A] plaintiff must prove either literal
falsity or consumer confusion, but not both."). Prior to
finalizing the instruction on literal falsity, the court
exhaustively went through the parties' objections to the
jury instructions at the pre-trial conference and during
trial. (D.I. 223 at 51-57); Tr. 1603:11-1615. In doing so, the
court "thoroughly disagree[d] with the rather hyperbolic
statement from SurgiQuest" about the false or misleading
statements. (D.I. 223 at 90.) After considering the case law
and parties' arguments, the court decided to use
Lexion's proposal for the jury instructions as to false
advertisement and confusion. Id. at 91-92.
Nevertheless, as previously explained, Lexion presented
evidence that consumers were actually deceived by
the false statements and provided ample evidence of a causal
connection between the false statements and damages.
Proof of Actual Confusion
SurgiQuest takes issue with the court's instruction that
"[e]vidence of actual confusion is difficult to find
and even a. few incidents may[, ] therefore[, ] be
probative." (D.I. 253 atl7);Tr. 1647, 1707. SurgiQuest
maintains that the Lanham Act requires proof that a
substantial number of consumers were misled by the
advertisements and that the court improperly relied on
trademark law. (D.I. 253 at 17); Johnson &
Johnson-Merck Consumer Pharm. Co. v. Rhone-Poulenc Rorer
Pharm., Inc., 19 F.3d 125, 129, 136 (3d Cir. 1994). The
court recognizes that there is a dearth of case law
explaining the proof of actual confusion requirement in the
false advertising context. Tr. 1638. The court, therefore,
determined that further evidence on the issue can be found in
Circuit precedent in the area of trademark law. Tr.
1646-1647:13. The Third Circuit often refers to trademark law
when deciding false advertising cases because both causes of
action arise out of the same section of the Lanham Act.
Ferring Pharms., Inc. v. Watson Pharms., Inc., 765
F.3d 205, 211, n.6 (3d Cir. 2014). Courts outside of the
Third Circuit have taken similar positions. Cashmere
& Camel, 284 F.3d at 314-315; U-Haul Int'l
Inc. v. Jartran, Inc., 793 F.2d 1034, 1041 (9th Cir.
1986); Cuisinarts, Inc. v. Robot-Coupe Intern.
Corp., 509 F.Supp. 1036, 1044 (S.D.N.Y
the instruction was not correct, the error was harmless for
at least two reasons: First, while SurgiQuest's motion
for JMOL concerns damages, the challenged instruction is not
a damages instruction, but was given in the context of an
instruction on proof of confusion necessary if a statement
was not literally false. Tr. 1706-07. SurgiQuest has
not challenged the jury's liability finding and Lexion
presented evidence that SurgiQuest made literally false
statements. Thus, this instruction likely had no impact on
the jury's determination. (D.I. 257 at 13-14.) Second,
Instruction 14 stated that:
For you to find that a statement is true but misleading, the
party in the position of the plaintiff must show that the
statement actually deceived or had the tendency to deceive a
substantial segment of the audience. Put
differently, if a challenged advertising statement is not
literally false, a party cannot obtain relief under
the Lanham Act by arguing how consumers could react; it must
show how consumers actually do react.
Tr. 1706:18-25. Therefore, SurgiQuest's contention that
the instruction on actual confusion allowed the jury to
improperly use a single incident as evidence of causation of
harm is inconsistent with the court's instruction.
Presumptions of Intent
SurgiQuest takes issue with the instruction that "[i]f a
party demonstrates that the defendant has intentionally set
out to deceive the public and its conduct in this regard is
of an egregious nature, a presumption arises that consumers
are, in fact, being deceived." (D.I. 253 at 17); Tr.
1707. Regardless, the instruction was given in the context of
where the statement was not literally false, which
is not the case here. As previously explained, Lexion
presented evidence that SurgiQuest made literally false
statements, which actually deceived ...