?Fools rush in where angels fear to tread,? said the English poet, Alexander Pope. He might just have been thinking about a new industry like robotics and the pitfalls that come with new robotics? products entering into a traditional marketplace; a steely marketplace that offers no break to the unwary, the youthful or those ignorant of the law.
Be aware! False advertising can be a killer label that can haunt a product forever. There?s no get-out-of-jail card just because of uncertainty or ignorance about a product claim that turns out to be without merit.
PharMEDium Healthcare Corportion vs. Health Robotics is just such a case.
Tale of an unfortunate press release
PharMEDium Healthcare Corporation, a company that provides customized pharmacy sterile compounding for hospitals, has filed a false advertising complaint against intravenous medication robots company, Health Robotics S.r.l (Health Robotics Italy), and its subsidiary Health Robotics Canada Inc., suppliers of intravenous medication robots.
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The complaint relates to a press release issued by Health Robotics Italy in early September, which PharMEDium allege contained false claims, including claims about cost savings achieved using Health Robotics equipment at Mercy Medical Center in Cedar Rapids, Iowa. ??According to the complaint filed in Illinois Northern District Court on Monday, the ROI study on which these cost savings claims were based did not take place. ??The complaint further alleges that within the same press release, which was widely disseminated online, Health Robotics Italy falsely attributed specific costs of sales for certain medical compounds to PharMEDium, falsely represented the costs of PharMEDium?s services, and fabricated customer statements about PharMEDium?s sales. ?
The press release was allegedly withdrawn from the Health Robotics website in late September, but it is still available elsewhere online.
The primary federal statute covering false advertising in the United States is the Lanham Act, which sets out what sort of claims companies can legitimately make about both their own products and those of their competitors. ??PharMEDium is also claiming that Health Robotics Italy breached parts of the Illinois Uniform Deceptive Trade Practices Act, the Illinois Consumer Fraud and Deceptive Business Practices Act, and Illinois common law claims for defamation and commercial disparagement.
If successful, PharMEDium may be able to obtain more than just money damages. It can also seek a variety of equitable/injunctive remedies under the Lanham Act and the deceptive trade practices act. ?
Health Robotics Italy, Health Robotics Canada, and PharMEDium did not respond to our request for an interview.
Critical lessons for robotics companies
?This case has some important lessons for robotics companies, says C. Andrew Keisner, an expert on legal issues facing robotics companies, and an attorney at Davis & Gilbert LLP, a leading firm on advertising law. ?
Robotics companies face potential litigation regarding false advertising both from companies within the robotics industry and from companies with traditional products that may be replaced by a robot, says Keisner.
?The issues that complex hardware technology companies like those in the robotics industry face, especially when it comes to false advertising claims concerning performance, are different from other industries,? explains Keisner.
?PharMEDium claims that Health Robotics issued the press release on or around September 9th and removed it on or around September 24th. PharMEDium filed its lawsuit less than a month after the press release was issued.
?That’s a fairly short time period during which hospitals could have been misled,? observes Keisner. ?
?Either the amounts at issue between these companies are so large that a single month of sales warrants a lawsuit, or it may be difficult for PharMEDium to prove it is entitled to substantial monetary damages,? says Keisner, who suggests that a primary goal for PharMEDium in filing this lawsuit may be non-monetary relief, including, if they win the case, the potential for corrective advertising. ?
?Anytime your company makes performance claims about your product and particularly comparative claims about another product, you’ve got to have adequate substantiation for those claims,? says Harold Weinberger, head of law firm Kramer Levin’s advertising group and an expert in advertising law. ?
Under the Lanham Act, the primary U.S. federal law regarding false advertising, if a company makes claims and doesn’t cite a study then the other side has to prove those claims are false. If they’re referring to a study all you have to show is that the study isn’t valid, explains Weinberger. ?
?This is the first time I have seen a case like this involving a robotics company, which doesn’t mean it hasn’t happened before. But certainly, there hasn’t been an increased frequency of cases in the robotics area yet,? says Weinberger. ???
Truth in advertising for everyone
The veracity of robotics company marketing claims featured in the jury verdict win by Intuitive Surgical in Washington State earlier this year. In that case, prosecutors alleged that Intuitive had failed to disclose important information in product materials and statements in advertising materials provided to hospitals.
The risk to a robotics company from a false or misleading statement in its advertising materials does not stop at the risk of a competitor filing a lawsuit, warns Keisner. ???They can also attract other unwanted attention, including investigations and lawsuits against robotics companies by state attorney generals and/or the Federal Trade Commission.? ?
Robotics companies should be diligent and implement policies and procedures specifically designed to reduce the risk of any statements or videos being disseminated about their robot that could be perceived as false or misleading, says Keisner
Get an expert to point out pitfalls
Advertising claims should be checked by an advertising attorney. ?
But to determine whether a claim could be misconstrued or misleading, it can be useful to run any claims you are making about your robot’s performance by a non-engineer who is less familiar with its capabilities, suggests Keisner. ???Something that seems straight forward to an engineer or roboticist could be perceived very differently by someone who doesn?t know what the current state of technology is.?
?Further, the people in charge of the robotics company?s advertising materials should periodically check with the company?s engineers when it comes to the robot?s capabilities and with its sales and account executives when it comes to its own sales and success in the field. ??Some robotics companies would prefer to avoid implementing such strict policies and
procedures, adds Keisner, ?but there is little doubt that the cost of this lawsuit to Health Robotics will greatly outweigh the cost it would have taken to implement such policies and procedures, which could have prevented the alleged false press release from being disseminated.?
