Credit Drew Kelly
SAN FRANCISCO â For the past two weeks, the blood-testing start-up Theranos has faced a battery of questions about its most visible product, called the nanotainer, a tiny vial used to collect finger-pricked blood from patients.
It turns out that one large medical company previously had questions about the nanotainers as well â specifically, whether Theranosâs use of the nanotainer name was creating confusion for customers by making them think the vials were related to an established blood-collecting product with a similar name.
Starting late last year, Theranos and Becton, Dickinson & Company, a medical equipment maker founded in 1897 and now known as BD, were embroiled in dueling trademark lawsuits over similarities between the nanotainer and BDâs âmicrotainer,â which is also used to collect blood. While the nanotainer began to draw a lot of attention in 2013 and is seeking regulatory approval, microtainers have been around for at least 45 years and are approved by the Food and Drug Administration.
In court documents from last November, BD asserted that Theranos had âthe intent to trade off of the significant good will that BD has established in its microtainer markâ and that the confusion between the brands was âespecially troublesome in light of Theranosâs lack of approval from the Federal Drug Administration for its products.â Theranos argued that BD should not have a trademark on microtainers.
The legal wrangle was dropped in September, with no money changing hands. Yet the case shows that BD wanted to put some distance between itself and Theranos, which built itself into a Silicon Valley darling valued at around $ 9 billion, largely based on claims that it can perform numerous medical tests using tiny blood samples and on the charisma of its 31-year-old founder, Elizabeth Holmes.
Questions are now swirling around Theranos after a Wall Street Journal investigation this month said the company was not using its proprietary technologies, like the nanotainer, for as many blood tests as it claimed.
BD declined to comment on the trademark case, which was filed in federal court in California. Theranos also declined to comment.
The dispute between the two companies began in March 2014 when BD opposed Theranosâs trademark application for the nanotainer, saying that the name would confuse customers of the microtainer, which is a $ 25 million annual business for the BD, which is based in Franklin Lakes, N.J.
Theranos then sued BD in November to invalidate the microtainer trademark. In court papers, lawyers for Theranos dismissed worries that customers would think that BD made the nanotainer. The lawyers argued that the word microtainer âhas become a generic term and cannot serve to indicate a unique source for blood collection tubes.â
Theranos also said that its nanotainers were sold and marketed through different channels than the microtainer, making any mix-ups unlikely.
In turn, BDâs lawyer, John Margiotta, said, âTheranos hasnât introduced any kind of new technology in the sense of introducing capillary blood collection,â according to court papers. Theranos was using some of BDâs other products, he said, including tiny blades sold under the microtainer trademark, to perform the finger pricks, which could also cause blurring around the brands.
BD added in court documents that both companies made blood collection and testing products, and that both sold their products directly to health care professionals. The company told the court that it expected to find in discovery that âTheranos lured potential customers away, or that existing customers of BD who might have planned a larger order than the prior year decided to give an order to Theranos instead.â
While Theranos and BD make containers that are smaller than many other vials used to collect blood, the nanotainer and microtainer are different sizes. While the nanotainer is about half an inch tall, the microtainer is 1.8 inches tall.
The suits at one point went to arbitration, but the process was delayed by the mediatorâs medical issues, according to court documents. The suits did not reach the discovery phase and were settled on Sept. 28.
Two weeks later, on Oct. 12, Theranos filed paperwork to raise $ 217 million, according to a company filing with the state of Delaware; the filing was earlier reported by Fortune.
Since the controversy over Theranos has erupted, the company has dialed back some of what it has said about the nanotainer. The start-up said it was using conventional testing equipment and methods for all but one blood test, while still charging much less than traditional lab testing companies, and it said it was waiting for the F.D.A. to approve use of the nanotainer for other tests.
Ms. Holmes also confirmed that the F.D.A. paid a surprise visit to Theranos this summer, though she said she had no reason to believe that anything was unusual about the inspection. She has also said that she is under fire because her start-up threatens the traditional lab industry.
This week, the F.D.A. released reports saying that when it visited Theranos, the start-up had quality-control issues and had mishandled customer complaints. The F.D.A. said it wasnât sure the nanotainer âconforms to defined user needs and intended uses,â a concern that the agency also had in 2014. It also found that âcomplaints involving the possible failure of a device to meet any of its specifications were not reviewed, evaluated and investigated where necessary.â
Theranos previously told The New York Times that âwe believe that we addressed and corrected all the observations at the time of, or within a week of, the inspection and have submitted documents to F.D.A. that say so.â