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Zeltiq Aesthetics, Inc. v. BTL Industries, Inc.

United States District Court, N.D. California

March 25, 2014

ZELTIQ AESTHETICS, INC., Plaintiff,
v.
BTL INDUSTRIES, INC., et al., Defendants

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[Copyrighted Material Omitted]

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For Zeltiq Aesthetics, Inc., a Delaware corporation, Plaintiff: Melissa Olivia Evidente, Thomas P. Hanrahan, Sidley Austin LLP, Los Angeles, CA.

For BTL Industries, Inc., a Delaware corporation, Saturn Consulting LLC, doing business as Monarch Lasers, Defendants: Jeffrey E. Faucette, LEAD ATTORNEY, Skaggs Faucette LLP, San Francisco, CA.

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ORDER DENYING MOTION FOR PRELIMINARY INJUNCTION Dkt. No. 18

JOSEPH C. SPERO, United States Magistrate Judge.

I. INTRODUCTION

Plaintiff Zeltiq Aesthetics, Inc. (" Zeltiq" ) filed this action against Defendants BTL Industries, Inc. and Saturn Consulting LLC dba Monarch Laser Services (" Defendants" ). Zeltiq alleges that Defendants falsely advertised that a medical device manufactured by BTL was approved by the federal Food and Drug Administration (" FDA" ) to be used for fat reduction and body contouring. Zeltiq asserts claims under the Lanham Act, 15 U.S.C. § 1125, and claims for unfair competition under California's Business and Professional Code § 17200 and Massachusetts General Laws ch. 93A § 2. Zeltiq filed a Motion for Preliminary Injunction (" Motion" ). The Court held a hearing on the Motion on March 14, 2014, at 9:30 a.m. For the reasons explained below, the Motion for Preliminary Injunction is DENIED.[1]

II. BACKGROUND

A. FDA's Premarket Approval and 510(k) Clearance

In 1976, Congress amended the federal Food, Drug, and Cosmetic Act (" FDCA" ),

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which previously only regulated food and drugs, with the Medical Device Amendments (" MDA" ), 90 Stat. 539, 21 U.S.C. § 301. The MDA " classifies medical devices in three categories based on the risk that they pose to the public." Medtronic, Inc. v. Lohr, 518 U.S. 470, 476, 116 S.Ct. 2240, 135 L.Ed.2d 700 (1996). As explained by the Supreme Court in Medtronic :

Devices that present no unreasonable risk of illness or injury are designated Class I and are subject only to minimal regulation by " general controls." 21 U.S.C. § 360c(a)(1)(A). Devices that are potentially more harmful are designated Class II; although they may be marketed without advance approval, manufacturers of such devices must comply with federal performance regulations known as " special controls." § 360c(a)(1)(B). Finally, devices that either " presen[t] a potential unreasonable risk of illness or injury," or which are " purported or represented to be for a use in supporting or sustaining human life or for a use which is of substantial importance in preventing impairment of human health," are designated Class III. § 360c(a)(1)(C).

Id. at 476-77. While " Class III devices must complete a thorough review process with the FDA before they may be marketed," Buckman Co. v. Plaintiffs' Legal Comm., 531 U.S. 341, 343, 121 S.Ct. 1012, 148 L.Ed.2d 854 (2001), Class I and II devices only need to submit a " 'premarket notification' to the FDA, in accordance with the less burdensome '510(k) process.' " PhotoMedex, Inc. v. Irwin, 601 F.3d 919, 925 (9th Cir. 2010) (quoting Medtronic, 518 U.S. at 477-79).

" Under the 510(k) process,[2] if the Class II device is deemed 'substantially equivalent' to a pre-existing device with prior clearance, 'it can be marketed without further regulatory analysis.'" [3] Id. (citing Medtronic, 518 U.S. at 478; 21 U.S.C. § 360(k); 21 C.F.R. § 807.100). " '[S]ubstantial equivalence" ' means, with respect to a device being compared to a predicate device, that the device has the same intended use as the predicate device...." 21 U.S.C. § 360c(i)(1)(A); see also 21 C.F.R. § 807.100 (" FDA will determine that a device is substantially equivalent to a predicate device ... [if, inter alia, t]he device has the same intended use as the predicate device." ) (emphasis added).

B. Zeltiq's CoolSculpting System

Zeltiq manufactures and markets a medical device known as CoolSculpting. Declaration of Patricia Altavilla (" Altavilla Decl." ) ¶ 6. CoolSculpting is designed to reduce the temperature of fat cells in the treated area, which is intended to cause fat cell elimination through a natural biological process known as " apoptosis" without causing scar tissue or damage to the skin, nerves or surrounding tissue. Id. ¶ 7. CoolSculpting is clinically proven to reduce fat bulges in a sixty-minute procedure. Id.

Zeltiq's CoolSculpting system has been cleared by the FDA for cold-assisted lipolysis of the flank, or " love handles" and the abdomen. Id. ¶ 6. Zeltiq states that it " developed its CoolSculpting technology for a novel indication," and therefore, " submitted clinical studies and other data to FDA to obtain 510(k) clearance for CoolSculpting."

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Altavilla Decl. ¶ 8. Zeltiq states that it undertook the expensive endeavor of obtaining 510(k) clearance because clearance of a device for treatment of body fat conveys instant and substantial credibility to the device. Id.

As a result of its investment to secure FDA clearance, CoolSculpting has become the leading noninvasive medical device for reduction of body fat. Id. ¶ 9. In its most recent quarterly filing, Zeltiq reports having sold over 1,900 CoolSculpting devices and over 500 in the twelve months between September 30, 2012 and September 30, 2013. Declaration of Jeffrey E. Faucette (" Faucette Decl." ) ¶ 2, Exh. A at 19. Zeltiq also reports having generated over $75 million in revenue in the nine months ending in September 30, 2013. Id. In a preliminary full year report, Zeltiq noted that its revenue increased approximately 91% in one year. Faucette Decl., Exh. G.

C. BTL's Vanquish Device

Defendant BTL Industries, Inc. (" BTL" ) is the United States distributor for BTL Industries, which is a worldwide manufacturer of medical devices. Declaration of Michael Besse (" Besse Decl." ) ¶ 2. BLT Industries has offices in over thirty countries and is one of the world's major manufacturers of medical devices in medical aesthetics and other areas. Id. ¶ ¶ 2-3.

BTL submitted to a notice of intent under § 510(k) to market a device that it called " BTL Elite." Altavilla Decl. ¶ 12. Zeltiq states that, like the predicate devices identified in BTL's 510(k), the BTL Elite was designed to deliver heat to muscle tissue. Id. BTL asked for FDA clearance to market its device for

use in applying therapeutic deep heat in body tissues for the treatment of selected medical conditions such as: 1. Relieving pain; 2. Reducing muscle spasm; 3. Increasing range of motion of contracted joints using heat and stretch techniques; and 4. Increasing blood flow to tissues in the treatment area.

Altavilla Decl. ¶ 12, Exh. 1. The FDA send BTL a 510(k) letter of approval clearing the BTL Elite for those proposed uses. Id.

BTL now manufactures and markets a device it calls " Vanquish." Zeltiq does not contend that Defendants unlawfully market Vanquish because it differs from the technology or design for the BTL Elite. Rather, Zeltiq argues that Defendants unlawfully market the Vanquish device because it is promoted for fat reduction and body contouring, which not a use that has been cleared through the 510(k) process for the BTL Elite.

The " Instructions for Use" or " IFU" for the Vanquish device tracks the indications for use that the FDA has cleared for the BTL Elite: the treatment of muscle aches and pains. Altavilla Decl. ¶ 33, Exh. 20. The IFU for the Vanquish is found within the " Operator's Manual" that is provided to every physician who purchases the device. Declaration of Marcel Besse (" Besse Decl." ) ¶ 14; Altavilla Decl. ¶ 33, Exh. 20. In the United States, BTL only sells the Vanquish device to physicians and it cannot be purchased by consumers. Besse Decl. ¶ 13.

D. Defendants' Promotion of Vanquish

Zeltiq contends that, despite having no FDA clearance to market and distribute Vanquish for use in fat reduction and body contouring, Defendants have only promoted Vanquish for this unapproved use. Zeltiq states that there is not a single instance in which Defendants promoted Vanquish for the treatment of muscle aches and spasms, which is the only purpose for which it was cleared. Altavilla Decl. ¶ 32.

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Zeltiq also accuses Defendants of promoting Vanquish exclusively for fat reduction and body contouring while touting the device as " FDA-cleared" without explaining the limits of the FDA's clearance. Zeltiq asserts this is an attempt to mislead physicians into believing that Vanquish is FDA-approved for fat reduction.

Defendants do not dispute that, in 2013, they promoted Vanquish for fat reduction--which Defendants admit is an " off-label use." Nor do Defendants dispute that they have only intended to promote Vanquish for fat reduction. Indeed, BTL's trademark registration describes Vanquish as a " [b]ody treatment device using heating and cooling for fat cell reduction." Declaration of Thomas Hanrahan (" Hanrahan Decl." ), Exh. 22. Defendants contend, however, that they no longer promote Vanquish in the United States for any off-label use, and further contend that they never directly or indirectly represented that Vanquish has received FDA clearance for fat reduction or body contouring. Besse Decl. ¶ 14.

1. Defendants' Promotion of Vanquish to Physicians at Medical Conferences and Workshops

In the spring of 2013, BTL launched Vanquish at three medical conferences: a meeting in Boston of the American Society for Lasers Medicine and Surgery, a meeting in Miami of the American Academy of Dermatology, and a meeting in New York of the American Society for Aesthetic Plastic Surgery. Altavilla Decl. ¶ 15. Plaintiff states that at these conferences, BTL did not talk about using Vanquish for its cleared use--the treatment of aches and pains. Rather, BTL promoted Vanquish as able to " reduce fat." Id.

Zeltiq states that after the initial launch of Vanquish, Defendants hosted several workshops in the United States in which they promoted the use of Vanquish for fat reduction. For instance, on September 29, 2013, Defendants held a workshop in Los Angeles at the Westin Hotel at the Los Angeles International Airport. Altavilla Decl. ¶ 27; Declaration of Kevin Meyers (" Meyers Decl." ) ¶ 5. A similar event was held in Carlsbad, California in early October 2013. Id. Zeltiq states that at these events, Defendants distributed literature depicting Vanquish as a product for body shaping and contouring. Id. The main presenter at the Los Angeles workshop focused his remarks on fat reduction and body contouring using BTL's Vanquish device and other products. Altavilla Decl. ¶ 27; see ...


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