Axiom Worldwide Inc. v. Excite Medical Corp. et al.

The U.S. Court of Appeals for the Eleventh Circuit affirmed a district court’s $1.32 million judgment in favor of a medical device maker, ruling that it never owned the trademarks in question and therefore could not have passed the rights in the trademarks to a successor. Axiom Worldwide Inc. v. Excite Medical Corp. et al., Case No. 13-13900  (11th Cir., Nov. 17, 2014) (Rosenbaum, J.)

Axiom Worldwide, Inc. (Axiom, Inc.) developed, manufactured and sold medical products and owned various trademarks for use in connection with its products.  In 2007, Axiom, Inc. transferred all of its assets, including its “goodwill,” to non-party Axiom Worldwide, LLC (Axiom, LLC) via a warranty bill of sale. The bill of sale was made retroactive to January 3, 2006.  Axiom, LLC later transferred the acquired assets to Progress Bank, and in July 2010, HTRD purchased all of the assets from Progress Bank.  HTRD, set up by a former employee of Axiom, Inc., produced generic medical devices sold as authorized Axiom products. The former employee had forged Axiom, Inc. CEO’s signature on a document claiming that HTRD had been given the rights to Axiom, Inc.’s intellectual property in China. HTRD also believed that the assets purchased from Progress Bank included Axiom, Inc.’s intellectual property rights.  However, it had been determined in an earlier ruling by another court that the intellectual property rights was not part of the transfer of assets to Axiom, LLC, and therefore the trademarks in question still belonged to Axiom, Inc.

In 2011, Axiom, Inc. filed a lawsuit for trademark infringement, copyright infringement and misappropriation of trade secrets against HTRD and its affiliated companies and several former Axiom, Inc. employees (collectively, the defendants) arguing that the defendants made counterfeit devices and tried to steal its trademarks.  Axiom, Inc. also claimed that HTRD had submitted false and misleading information to the U.S. Patent and Trademark Office in an attempt to steal Axiom Inc.’s trademarks.

The district court found that the rights in the trademarks had not been transferred from Axiom, Inc. in connection with the warranty bill of sale and that the defendants infringed Axiom, Inc.’s trademarks.  The district court further found that the former employee Saleem Musallam was individually liable for $85,000 in statutory damages and that HTRD’s U.S.-affiliated Excite Medical Corp. was liable for $1.32 million.  The defendants appealed, claiming they had rights in the trademarks and contesting the amount of damages set by the district court.

The 11th Circuit affirmed the district court, noting, “[b]ecause we agree with the district court (and Billy Preston and Bruce Fisher, for that matter) that ‘nothin’ from nothin’ leaves nothin’,’ and because we find no error in any of the district court’s other challenged rulings, we affirm.”