San Diego -- The Ninth Circuit on Monday vacated a $60 million trademark judgment and accompanying injunction against the San Diego-based medical device maker NuVasive Inc. in its battle with rival Neurovision Medical Products Inc. over the rights to the trademark "Neurovision."
The appeals court remanded the case to the Los Angeles district court for a new trial and ordered the action to be reassigned to another district judge, scolding Judge Manuel L. Real, who originally presided over the matter.
"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," the Ninth Circuit said.
"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,'" the appeals court said.
Following a five-day jury trial to determine the parties' rights in the
trademark Neurovsion, the jury awarded $60 million to NMP. The jury found that NuVasive committed fraud in procuring its trademark registrations, that NMP had prior rights in the mark, and that NuVasive wilfully infringed NMP's rights.
The district court entered judgment for NMP, issued a permanent injunction barring NuVasive from using the mark, awarded NMP attorneys' fees and costs, and ordered cancellation of NuVasive's trademark registrations.
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 regarding the elements required to prove fraud on the United States Patent and Trademark Office, the Ninth Circuit ruled.
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, according to the appeals court. 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, it said.
The Ninth Circuit ruled that the district court erroneously 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, it said.
The district judge also wrongly 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, the Ninth Circuit said.
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, the appeals court said. The district court instructed the jury to answer only whether NMP established trademark rights in the mark 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, the appeals court noted.
The district court was found to have 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, the Ninth Circuit said.