Antitrust Law Daily Wrap Up, ADVERTISING—D. Mass.: Court spits out preliminary injunction request in dental AI company dispute, (Jul 22, 2024)

By Seth Abrams, J.D., M.A.

Overjet was unlikely to succeed on the merits of its claims against VideaHealth for false advertising under the Lanham Act and for copyright infringement.

The federal district court in Boston, Massachusetts denied Overjet, Inc.’s (“Overjet”) motion for a preliminary injunction against VideaHealth, Inc. (“Videa”).” Overjet argued that Videa made false statements concerning the capabilities of its products in violation of the Lanham Act. While the court found several likely false or misleading statements, it concluded that the statements were not material. Overjet also argued that Videa used their copyrighted color and shape designs for annotating dental X-rays. The court held that Overjet’s choice of “colors, shades, and shapes” served a functional purpose and were “not sufficiently original.” The court found that Overjet had failed to show that it was likely to either succeed on the merits or suffer irreparable harm (Overjet, Inc. v. VideaHealth, Inc., No. 1:24-cv-10446-ADB (D. Mass. July 19, 2024)).

Background. Overjet and Videa are both dental AI companies and direct competitors. Videa made LinkedIn posts, promotional videos, and blog posts related to its company and products, which have since been deleted or changed. Overjet “uses AI to scan dental radiographic X-rays and detect dental diseases.” Overjet implements “‘color schemes, shapes, and designs’ to help visualize detection and segmentation of diseases on dental X-rays.” It launched a visualization tool in fall 2023, which introduced the coloring scheme at issue here. It uses “white to represent enamel, purple to denote the pulp of a tooth, bright green circles at the ends to indicate measurements of bone levels, and red and translucency to mark areas of decay.”

Videa’s AI software program “analyzes radiographs and assists in detecting and diagnosing oral diseases.” In its patient view, its scheme is a “stoplight system” with green indicating healthy gum levels through to red which highlights a potential problem. Overjet alleged that the patient view of Videa’s AI copied its protected scheme, shades, and shapes. Prior to litigation, the companies were competing for a partnership with Heartland Dental, which ultimately selected Videa as its dental AI partner in December 2023.

Lanham Act. To determine whether to grant a preliminary injunction, the court must consider whether the movant is likely to succeed on the merits. Overjet asserted that Videa’s promotional materials, including a LinkedIn post, videos, and blogs, contained false and misleading statements. The court agreed, in part, finding six statements about the company or its products made by Videa that were literally false or misleading. Nevertheless, the court found that the statements did not meet the requirement of materiality. Because Videa “sells its products to sophisticated customers,” such customers are “likely to have the scientific and technological understandings to fully appreciate Videa’s product offering and its limitations.”

The court found that any of the allegedly false advertising did not have “any material effect on purchasing decisions.” The court concluded that it was reasonable to assume a thorough and lengthy sales process, with a “heavy focus on the software’s actual capabilities.” This process and investigation would render the false statements immaterial under the Lanham Act.

Although the court found that materiality would likely be fatal to Overjet’s Lanham Act claims, it also noted that Overjet did not state how the misrepresentations at issue tend to cause consumer deception. Among the pool of potential customers, the allegedly false statements in the promotional materials are unlikely to cause deception. The court also did not find a likelihood of injury because of the alleged misrepresentations. The court found that the Massachusetts state law claim for false advertising was likely to fail because the federal claim would likely fail.

Copyright infringement. Overjet alleged that Videa’s patient view copied its protected coloring scheme, shades, and shapes. In response, Videa claimed that the color schemes, shades, and shapes that are created by Overjet’s AI are not entitled to copyright protection because they only serve a functional purpose.

The court first addressed whether Overjet could show ownership of a copyright in the colors, shades, and shapes generated by the software code. The court noted that it must apply the “abstraction-filtration-comparison” test to assess non-literal infringement. Relevant here was the filtration analysis, which required the court to filter out elements that are not protectable. The court noted that it must separate the annotated X-rays “expressive aspects” from its uncopyrightable functional aspects. Here, it “appears intuitive to use certain specific colors to indicate problem areas or create contrast in order to efficiently identify pathologies.” This suggests that the color, shade, and shaping decisions were driven by functionality, and Overjet will not succeed on the merits. The court also found that the originality requirement would likely not be met because the use of color, shades, and shapes was not sufficiently creative to merit protection. The court stressed the “limited and fairly common elements at issue here.”

Irreparable harm. The court noted that Overjet would also be unable to make a showing of irreparable harm for the injunction. The court found that its claims that it would lose customers and suffer harm to its reputation and brand were overly speculative. Furthermore, the six statements that the court deemed literally false have been cured. This factor weighed significantly against finding irreparable harm.

The Case is No. 1:24-cv-10446-ADB.

Judge: Burroughs, A.

Attorneys: Sharona H. Sternberg (Sunstein LLP) for Overjet Inc. Brendan Hughes (Cooley LLP) for VideaHealth Inc.

Companies: Overjet Inc.; VideaHealth Inc.

Cases: Advertising StateUnfairTradePractices MassachusettsNews