United States District Court, D. Oregon
PULSE HEALTH LLC, an Oregon Limited Liability Company, Plaintiff,
AKERS BIOSCIENCES, INC., a New Jersey Corporation, Defendant.
H. ANGELI KRISTEN L. TRANETZKI ANGELI LAW GROUP LLC, ADAM K.
YOWELL MICHAEL D. ROUNDS SHERLI FRANK BROWNSTEIN HYATT FARBER
SHRECK, LLP ATTORNEYS FOR PLAINTIFF
JENNIFER WAGNER STOLL STOLL BERNE LOKTING & SCHLACHTER
PC, ANTHONY J. DIMARINO EMMETT S. COLLAZO A.J. DIMARINO, P.C.
ATTORNEYS FOR DEFENDANT
OPINION & ORDER
A. HERNÁNDEZ UNITED STATES DISTRICT JUDGE
Pulse Health brings this breach of contract action against
Defendant Akers Biosciences, Inc. Defendant moves for summary
judgment on Plaintiff's claim for breach of contract. For
the reasons that follow, the Court denies Defendant's
Pulse Health LLC is an Oregon Limited Liability Company. Am.
Compl. ¶ 1, ECF 40. In 2008, Plaintiff was developing
the Free Radical Enzymatic Device (“FRED”), which
sought to detect the range of aldehydes in human breath.
DiMarino Decl. Ex. F (Marsh Dep.) 12:24-14:3, ECF 58-6.
Plaintiff also developed a device called “Revelar,
” which also sought to detect aldehydes in human
breath. Id. at 14:24-15:8, 17:12-24. Approximately
4.5 to 5 million Revelar devices were sold in the United
States for a period of six to nine months in 2010 and 2011,
but Plaintiff removed the product from the market due to
consistency issues. Rounds Decl. Marsh Dep. 30:17-32:10, ECF
64; DiMarino Decl. Ex. J (Marsh 2016 Decl.) ¶ 16, ECF
Akers Biosciences, Inc., is a New Jersey corporation. Am.
Compl. ¶ 2. Defendant is in the business of developing
and selling “diagnostic products and devices that are
designed to deliver various health information test results
with laboratory-level accuracy, but with cheaper and faster
results.” Def. Mot. Summ. J. (“Def. Mot.”)
4, ECF 57 (citing DiMarino Decl. Ex. H (Akers Decl.)
¶¶ 5, ECF 58-8). Defendant's products include
the Vivo and OxiChek products. DiMarino Decl. Ex. I (Akers
Dep.) at 106:8-19, ECF 58-9; Am. Compl. ¶¶ 19, 21.
The Parties' Agreements
parties entered into a Technology and Development Agreement
(“TD Agreement”) around September 14, 2007, and a
Technology Transfer Agreement (“TT Agreement”)
around December 31, 2008. Am. Compl. Exs. 1, 2. According to
Plaintiff, the purpose of the TD agreement was for Defendant
to “design and develop ‘New Versions' of its
existing free radical test product in order for it to be used
in combination with [Plaintiff's] hand-held FRED
product.” Id. at ¶ 11, Ex. 1 at 1. The TT
Agreement terminated the TD Agreement and required Plaintiff
to pay Defendant a sum of $3, 000, 000. Id. at Ex. 2
¶ 4. In exchange for this payment, Defendant agreed to
“complete research, development, and testing for the
‘Free Radical Technology'” and
“assigned all intellectual property rights of any kind
in the ‘Assigned Technology' to [Plaintiff].”
Id. at ¶ 13 (citing TT Agreement at
¶¶ 1.5, 2.1, and Schedules 1.5 and 2.5).
“Assigned Technology” included “all
Technology now or hereafter owned or controlled by
[Defendant] which relates in any way to non-invasive exhaled
breath testing, including without limitation the Technology
described in Schedule 1.5 . . . .” Id. at Ex.
2 ¶ 1.5. Schedule 1.5, in turn, describes the Assigned
Technology as: “(a) The Free Radical Breath Condensate
Technology . . . .” and (2) “all breath tubes,
reagents, measurement devices, and all methods pertaining to
the design, formulation and manufacturing of same, together
with all . . . know-how . . . pertaining to the same.”
Id. at Ex. 2 at 18. According to Plaintiff,
Defendant unsuccessfully attempted to develop a reagent to
test for aldehydes under these agreements. DiMarino Ex. J
(Marsh 2016 Decl.) ¶ 9.
April 8, 2011, the parties entered into an Assignment,
License and Settlement Agreement (“Settlement
Agreement”) that terminated all prior agreements. Am.
Compl. Ex. 3 at § 11.1. The Settlement Agreement
transferred to Defendant all of its rights in the Assigned
Technology and, in exchange, relieved Plaintiff of its
remaining payment obligations under the TT agreement:
“In consideration of the assignment set forth in
Section 2.1, ABI agrees to release and forever discharge
Pulse from any obligation to pay the remaining balance of
$2.325 million owing to ABI under the Technology Transfer
Agreement.” Id. at § 2.2. Particularly
relevant to this cause of action, the Settlement Agreement
also gave Plaintiff:
[A]n exclusive, worldwide, transferable, sublicensable, fully
paid-up, perpetual license under the Assigned Technology and
ABI Patents to: (a) make, have, made, use, sell, offer for
sale, import and otherwise distribute and dispose of products
that use or incorporate any Assigned Technology in the field
of Aldehyde Tests as defined in Section 1.3; and (b) to
practice any methods, processes and procedures included
within, and otherwise commercially exploit, such Technology
in the field of Aldehyde Tests as defined in Section 1.3.
Id. at § 3.4. Defendant also
“acknowledge[d] and agree[d] that it has no right or
license to use any Assigned Technology or to practice the ABI
Patents in the field of Aldehyde Breath Tests.”
Id. at § 3.4.2. The Settlement Agreement
defines “Aldehyde Tests” as:
[T]ests that qualitatively or quantitatively detect the
presence of aldehydes in human exhaled breath or breath
condensate for detection of free radical damage, cell damage
or cell death, oxidative stress (including weight loss and
BMI correlations), and interventions to mitigate oxidative
stress (including diet, exercise, supplementation and stress
relief). For avoidance of doubt, Aldehyde Tests do not
include Alcohol Breath tests, Ketone Breath Tests, or Pulmo
Id. at § 1.3. The Settlement Agreement defines
“Assigned Technology” as “all Technology
assigned by ABI to Pulse under the Technology Transfer
Agreement.” Id. at § 1.5.
also agreed that Plaintiff “has the unlimited right to
use and otherwise commercially exploit all Technology
developed by [Plaintiff], including any modifications,
improvements, or additions to the Assigned Technology, and
that [Defendant] has no rights with respect to such
Technology.” Id. at § 5. Technology
inventions, processes, designs, copyrights, trade secrets,
know-how, trademarks, domain names, development,
improvements, tests, software, and intellectual property
rights of any nature whatsoever, including without limitation
any applications or registrations of the foregoing, any
rights arising from registration of any of the foregoing, and
any right to sue for past or future infringement of the
Id. at § 1.7.
Defendant's Vivo and OxiChek Devices
2012 and 2015, Defendant developed its “Vivo” and
“OxiChek” devices. Vivo is a “reagent and
reader” created by Defendant for two of Plaintiff's
former employees. DiMarino Decl. Ex J (Marsh 2016 Decl.)
¶ 17; Rounds Decl. Akers Dep. 94:25-95:13, 97:23- 98:4.
Defendant's witnesses admit that the “Vivo reagent
measured aldehydes in exhaled breath.” Rounds Decl.
Akers Dep. 101:9-25; id. at Feldman Dep. 17:11-14.
Defendant sold approximately 25 Vivo products to
Plaintiff's former employees in 2012, id. at
Akers Dep. 101:9-25, and sold the remaining inventory of Vivo
reagents to a distributor in India in 2015 for $55, 000,
id. at Akers Dep.140:21-141:7; id. at Exs.
8, 9 at 1.
parties disagree on whether the purpose of the OxiChek device
is to use the Assigned Technology to test for aldehydes
exhaled in human breath. The device consists of a cartridge
that the user breathes into and a reader that receives the
cartridge to provide health data to the user. DiMarino Decl.
Ex. N at 3, ECF 58-14. The reagent used in the test is
contained in a small glass ampule inside the cartridge that
the user breaks to release the reagent. Id.
Defendant's BreathScan Lync Reader “analyzes the
reagent in the cartridge and sends the results to the Akers
Wellness App.” Def. Mot. 6.
contends that OxiChek tests for “indicators of
oxidative stress in exhaled breath—specifically
hydrogen peroxide and superoxide.” Id. at 6
(citing Ex. N at 2 (OxiChek product insert)). Defendant
alleges that Plaintiff “has no evidence that ABI sells
a product that tests for aldehydes in human breath” and
that Plaintiff's “witnesses and documents confirm
that [Plaintiff's] own testing of [Defendant's]
OxiChek product show that OxiChek does not test for
aldehydes in exhaled human breath. Id. at 9
(emphasis in original) (citing DiMarino Decl. Ex. F (Marsh
Dep.) 97:14-98:13, ECF 58-6; id. at Ex. L at 26, ECF
58-12). Defendant argues that its marketing materials that
state otherwise were a mistake that was corrected after
Defendant discovered the error. DiMarino Decl. Ex. I (Akers
by contrast, alleges that the OxiChek and FRED/Revelar
reagents have chemically identical core compounds.
Compare Hahon Decl. Ex. 5 at 1 and Ex. 6 at 1
with Rounds Decl. Ex. 10 at 1 and Ex. 11 at 4. Both
reagents use a “Schiff test.” Rounds Decl.
Ramanujachary Dep. 33:10-35.25; id. at Akers Dep.
35:5-36:18. Plaintiff admits that there are some minor
chemical differences between the OxiChek and FRED/Revelar
reagents. Compare Hahon Decl. Ex. 5 at 1 and Ex. 6
at 1 with Rounds Decl. Ex. 10 at 1 and Ex. 11 at 4.
Defendant also repeatedly tested the OxiChek device to
determine whether it could test aldehydes, Rounds Decl.
Exs.12, 13; id. at Cougan Dep. 30:25-31:5, 37:14-19,
and the initial product insert, an early press release, a
power point presentation to a future distributor, and sell
sheets all market the OxiChek device as capable of measuring
aldehydes in addition to oxides and superoxides. Id.
at Exs. 14-19. Plaintiff emphasizes that only one test was
conducted to determine whether OxiChek could accurately
measure hydrogen peroxide, and it was conducted after the
litigation was filed 2016. Id. at Ex. 12 at 26-27;
id. at Cougan Dep. 58:8-23. Plaintiff also suggests
that the Defendant and its expert disagree on how the reagent
causes a reaction with hydrogen peroxide. Compare
DiMarino Decl. Ex. D ¶ 5, ECF 58-4 with Rounds
Decl. Ex. 21 ¶ 28.
parties also disagree on whether Defendant's OxiChek
device and Plaintiff's FRED/Revelar devices contain
Plaintiff's Technology as defined in the agreement. Both
parties agree that these devices are colorimeters, Def. Mot.
6, but Defendant contends that this is technology that has
been available for over a century and was not used in any new
or innovative way by Plaintiff's FRED/Revelar products,
DiMarino Decl. Ex. D (Def Resp. Pl. Interrog. No. 10) at 8.
Defendant admits some “generic” similarities
between the devices. Def. Mot. 10-11 (citing DiMarino Decl.
Ex. M (Carlsen Dep.) 21:1-23:6, ECF 58-13). Defendant also
contends that the components of the two devices are different
in key ways: (1) the circuit boards and schematic design are
different; (2) the optical chamber, LED, diodes, switches,
and gates are different; and (3) the OxiChek provides a
readout to a mobile device via Bluetooth rather than a LCD
readout. DiMarino Decl. Ex. D (Def. Resp. Pl. Interrog. 10)
at 8. Plaintiff's witness also testified that the devices
do not have “identical components, manufacturer kind of
thing” and had breath cartridges that appear different
“in appearance, ” different light sensors, and
“different microcontrollers” that “could be
similar, ” though he could not know for sure without
the program code from the OxiChek.” DiMarino Decl. Ex.
M (Carlsen Dep.) 20:2-21:7, 25:5-12, 29:9-30:22.
contends that these devices contain the same technology: both
use (1) an LED to illuminate the reagent, (2) an optical
sensor to read the light of the reagent, (3) a switch to
activate the reader; and (4) electronic components called
NAND gates. Id. at 20:2-21:22, 22:4- 23:12; Rounds
Decl. Daniel Dep. 31:2-33:14, 36:15-37:17, 56:5-12, 67:6-12.
The same electronics designer also designed the electronics
and circuit board for both devices. Rounds Decl. Daniel Dep.
21:5-23:14; id. at Akers Dep. 152:2-153:7.
filed this case on September 30, 2016, bringing three claims
against Defendant: (1) False advertising under the Lanham
Act; (2) Unlawful Trade Practices under Or. Rev. Stat.
646.608; and (3) Breach of Contract. Compl., ECF 1. Defendant
moved to transfer venue and dismiss this case for lack of
personal jurisdiction and failure to state a claim under
Federal Rule of Civil Procedure 12. Def. Mot. Dismiss, ECF
18. The Court granted Defendant's motion in part, finding
that Plaintiff could not state a claim under the Lanham Act
or Or. Rev. Stat. 646.608. Opinion & Order, ECF 36. The
Court denied Defendant's motion to transfer venue and
determined that it has personal jurisdiction over the
Defendant. Opinion & Order, ECF 36. The Court,
accordingly, allowed Plaintiff's breach of contract claim
to proceed. Id. Plaintiff filed an Amended Complaint
on April 28, 2017, alleging only breach of contract. Am.
Compl., ECF 40. Defendant now moves for summary judgment and
dismissal of Plaintiff's Amended Complaint. Def. Mot. 1.
Oral Argument on Defendant's motion was held on May 29,
judgment is appropriate if there is no genuine dispute as to
any material fact and the moving party is entitled to
judgment as a matter of law. Fed.R.Civ.P. 56(a). The moving
party bears the initial responsibility of informing the court
of the basis of its motion and identifying those portions of
“‘the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the
affidavits, if any, ' which it believes demonstrate the
absence of a genuine issue of material fact.”
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)
(quoting former Fed.R.Civ.P. 56(c)).
the moving party meets its initial burden of demonstrating
the absence of a genuine issue of material fact, the burden
then shifts to the nonmoving party to present “specific
facts” showing a “genuine issue for trial.”
Fed. Trade Comm'n v. Stefanchik, 559 F.3d 924,
927-28 (9th Cir. 2009) (internal quotation marks omitted).
The nonmoving party must go beyond the pleadings and
designate facts ...