Ten Reasons Not To Buy From User Laser Brokers – A Litigator’s Perspective

A medical laser can have a significant impact on an individual’s medical practice. It can expand your offered treatment modalities and also generate significant income. Unfortunately, there are numerous companies in the marketplace selling used medical lasers to unsuspecting consumers for a fraction of the cost. This article will address some of the inherent risks to purchasers when buying used medical devices.

While these used lasers will likely reflect the original manufacturer’s logo, these used devices are likely out of warranty, since they have probably not been recently serviced, inspected or examined by the original manufacturer. If maintained properly and regularly by the original equipment manufacturer, lasers and light devices can provide a steady income stream for decades. In fact, some medical device manufacturers claim that at least seventy five (75%) of the medical devices originally sold new in the 1990s remain in use and operating to specification because they are regularly maintained by the original equipment manufacturer pursuant to extended service warranties.

Purchasing a medical device from the original manufacturer not only can help prevent your company from potentially injuring patients, but it can also help protect your company from a defense and indemnity tender from the original manufacturer and/or a cross-claim should a personal injury claim result from a used laser purchased on the secondary market. Therefore, before you put your money, reputation, and patient’s safety on the line by trying to save a few dollars in the short-run by buying a used medical device from a third-party broker, it is important to know the inherent risks. Forewarned is forearmed in this instance. This article discusses the top ten considerations when buying a used medical laser, and why purchasing through the original medical device manufacturer is the more prudent approach to take.

1. Safety
Used laser devices put patient and user safety at risk, since the device has not been certified by the original manufacturer. Many used laser websites will claim that their used lasers have been “certified.” This type of certification, however, has likely not been approved by the original equipment manufacturer (”OEM”) and is not subject to the same rigorous specifications of the OEM.

In addition, in some instances a used laser dealer will even change the configuration of the device. Changing the configuration of an original manufacturer’s device presents at least two serious legal issues for a used laser company and the used laser purchaser. First, by changing the configuration of a device, the used laser company is selling an adulterated device under 21 U.S. § 351, and thus the used device would be considered a “new” product. This would require the used laser company to submit a 510(k) submission to the FDA for its “new” device, in order to demonstrate that the device marketed by the used laser company is at least as safe and effective as a legally marketed device that is not subject to premarket approval (See 21 C.F.R. § 807.81, 21 C.F.R. § 807.20, and 21 C.F.R. § 807.92(a)(3)). Since a used laser dealer’s device will typically contain non-OEM parts, the original device’s performance and safety specifications will become significantly changed, and make it highly unlikely for the used laser company to obtain a 510(k) clearance for its “new” device. Second, an adulterated device presents a substantial risk to patient safety while it is being used. If an adulterated device causes a patient to incur damages while being treated with the used device and that patient sues the medical office, spa, device manufacturer, and treater, the original manufacturer will inevitably tender the claims for defense and indemnity to the Defendant user, implead the used laser broker as Third-Party Defendant , and/or bring a Cross-Claim against the treater and his/her professional association.

Further, due to the serious risks that used medical devices pose to individuals, Congress recently created the Safeguarding Therapeutics Act in order to ensure that counterfeit devices are not used on patients. Under this Act, a counterfeit device is defined as a medical device whose packaging or labeling would bear an unauthorized trademark or any other identifying mark of another manufacturer. See H.R. 5663. If this Act ends up passing, then this will give the FDA the authority to seize a counterfeit medical device, as well as either store or destroy the used device at the used laser dealer’s expense.

2. Confidence
A used laser will likely lack a complete service history, including how long the laser has been in use as well as where it has been used. Without any maintenance or service history, the used medical device will be considered out of warranty by the original manufacturer. This is true even though a used device reflects the original manufacturer’s logo and has the imprimatur of the original manufacturer’s good manufacturing practices, since the device will not be operating up to the original manufacturer’s standards.

By using a device that is out warranty and that has not been serviced, inspected or examined regularly by an original manufacturer, a purchaser misrepresents to his/her patients that the device is safe, which is a fraud on the patient. Also, since a used device will not be operating up to the original manufacturer’s standards, this will present a danger to the patients who are treated with the used device. In the event of a personal injury lawsuit arising from use of the device, the used purchase history could deleteriously impact your defense and could lead to coverage reservations with your insurance company.

Therefore, the only way to tell if your medical laser meets an original manufacturer’s current standards and functionality is to purchase the laser directly from the original manufacturer. Not only will this help ensure that your device is working properly so as not to pose a risk to you, the user, it will also give you peace of mind as far as the device’s safety on your patients.

3. Latest Modalities
A used laser will not contain the original manufacturer’s updated technology. As previously stated, by using a device that includes outdated technology, the used medical device will be considered out of warranty by the original manufacturer. As such, advertising a second-hand system in your practice that may be out of warranty and that has not been recently serviced, inspected, or examined by an original manufacturer presents a risk of injury to the patients who are treated with this used device.

4. Litigation
A used device may be subject to litigation, and inspections of the used device may be mandated by the Court to preserve evidence. Not only will this interrupt your use of the device if a Court Order is granted as to inspection, but if the used laser causes any personal injury on a patient, then the patient will look to the original manufacturer for damages. Since the device that caused the damages was not purchased by the original manufacturer, it is extremely likely that the original manufacturer will then seek indemnification from the used laser purchaser for any product liability and/or personal injury litigation that ensues over this second-hand device.

5. Who will be training you?
When an individual purchases a medical device, it is important for the new purchaser to receive the proper training on how to use the device. By purchasing a used laser, however, the clinical training on how to use the device will not be provided by the original manufacturer. Some used laser dealers claim to offer “advanced on site clinical training” on how to use an original manufacturer’s device. This type of advertisement is misleading, and by receiving clinical training by a used laser dealer, your company may violate 21 C.F.R. § 820.25 of the FDA’s Current Good Manufacturing Practices (“CGMP”) since neither the used laser broker nor your employees will have the necessary education, background, training, and experience to assure that all treatment modalities are correctly performed.

Used laser brokers are not yet subject to the rigors of the FDA like manufacturers. Any clinical training and certifications offered with the purchase of the used device are questionable at best. Also, used laser brokers are not in business to advance technology, but they are simply moving used product from one office to another in the secondary market. As such, they do not have key opinion leaders, and they also lack physicists, legal, regulatory, and/or research and development monitoring the devices in the marketplace. The only way to receive the proper training on how to use a medical device is to request the training directly from the company that made the device. By receiving training from a used laser dealer your company risks violating the CGMP for not receiving the proper training on how to use the device, and for incorrectly and inadequately using the device on your patients.

6. Trademarks
When an individual purchases a used laser, the purchaser does not obtain a license to use any of the trademarked product names or marketing materials that are typically conveyed by the original manufacturer to a purchaser of a new device. Under the Lanham Act, civil liability will be imposed on any person who “uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which . . . misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person’s goods, services, or commercial activities.” POM Wonderful LLC v. Coca-Cola Co., 134 U.S. 228, 2234 (2014) (quoting 15 U. S. C. §1125(a)(1)).

Used lasers do not typically conform to the original manufacturer’s standards and may even contain unverified replacement parts. Thus, if a used laser purchaser attempts to promote laser and light treatments and uses the original manufacturer’s trademark terms and/or photos, for example, in its promotional materials, online, etc., then he or she may be held liable by the original manufacturer for trademark infringement and/or misrepresentation under the Lanham Act, for misusing the original manufacturer’s trademarked name, leading consumers to believe that its system is verified by the original manufacturer and is in working order. Id.

For example, in Warner-Lambert Co. v. Northside Dev. Corp., the Court stated that the distribution of a product that does not meet the trademark holder’s quality control standards may result in the devaluation of the mark by tarnishing its image, and its distribution constitutes trademark infringement in violation of the Lanham Act. Warner-Lambert Co. v. Northside Dev. Corp., 86 F.3d 3 (2nd Cir. 1996). The Court added that to be entitled to relief, a trademark holder must demonstrate only that: (i) it has established legitimate, substantial, and nonpretextual quality control procedures, (ii) it abides by these procedures, and (iii) the non-conforming sales will diminish the value of the mark. Id.

Further, if the used device is considered to be counterfeit, which H.R. 5663 defines as a medical device whose packaging or labeling would bear an unauthorized trademark or any other identifying mark of another manufacturer, you and the broker can be subject to fines, litigation, and cease and desist restraining orders as a result of possession of the device unlawfully baring the imprimatur of the manufacturer.

Absent a service contract and proper transfer of title, the used device may be considered “remanufactured” under applicable FDA regulations. See 21 U.S.C. § 820.3(w). If a used laser purchaser uses a reconditioned and/or remanufactured medical device it may be considered trademark counterfeiting, which is a federal crime and punishable with up to ten (10) years in prison, $5,000,000 in fines, and may result in the seizure of the goods. See 18 U.S.C. § 2320. Further, trademark counterfeiting also gives rise to civil trademark counterfeiting claims under the Lanham Act. See 15 U.S.C. §§ 1114, 1117. Therefore, an aggrieved trademark holder, such as an original manufacturer, may pursue the counterfeiter’s profits, treble damages, or elect statutory damages of up to $200,000 from a used laser purchaser. See 15 U.S.C. § 1117; Sunsport, Inc. v. Barclay Leisure, Ltd., 984 F. Supp. 418 (E.D. Va. 1997)¹.

7. Title Transfer
Many used laser companies claim that they offer the same quality medical devices as an original manufacturer, but at a discount. Notwithstanding the fact that a used medical device is compromised by its lack of regular service and preventative maintenance, an original equipment manufacturer will not service or support a second-hand used laser, unless a service contract and proper transfer of title is completed. In order to obtain a service contract and to transfer properly the title of the used laser to the new purchaser will likely cost the new purchaser numerous additional fees to do so—some of which cost upwards of $60,000. Used laser brokers typically neglect to tell you about that transfer fee in their haste to sell you the used device.

8. FDA Compliance
Used laser brokers are currently being investigated by the FDA. In May 2018, the FDA released a report titled “The Quality, Safety, and Effectiveness of Servicing of Medical Devices.” This report noted that the FDA does distinguish between “servicing” and “remanufacturing,” and states that “[b]ecause remanufacturing can have a significant impact on the safety and effectiveness of the device,” the FDA will actively regulate a remanufacturer as a manufacturer. Thus, in other words, evidence of remanufacturing may lead to FDA enforcement. The FDA has indicated that it intends to publish a guidance on this practice in order to allow more consistent interpretation and categorization regarding what qualifies as “servicing” and “remanufacturing,” as far as used laser sales practices go. The FDA’s action in this regard underscores the serious risk associated with the sales of used laser on the secondary market by brokers.

9. Genuine Parts
A used laser will typically include non-OEM parts in the device because used laser brokers do not have access to an original manufacturer’s genuine parts. A used laser broker may be able to access OEM parts through overseas failed distributors or through a “laser chop shop” that maintains an inventory of harvested component parts from unrepairable systems. Using parts gathered from third party sources renders the device dangerous to the user and to the user’s patient.

An original medical device manufacturer establishes quality control standards for its medical devices, in order to protect its name, to comply with FDA regulations, as well as to protect users and their patients from injury. There are no such incentives in place as far as sales of used lasers by brokers are concerned.

10. Key Opinion Leaders/Consultants
Many medical device manufacturers provide medical device customers with access to Key Opinion Leaders or the manufacturer’s consultants who can provide customers with technical and other advice. When an individual purchases a used laser, however, the used laser purchaser will not be provided access to these Key Opinion Leaders or consultants. By not having access to Key Opinion Leaders or the manufacturer’s specific consultants, a used laser purchaser will likely not have the necessary education, background, training, and experience to assure that all activities with its medical device are correctly performed. Thus, as previously stated above, a used laser purchaser may be in violation of 21 C.F.R. § 820.25 of the FDA’s Current Good Manufacturing Practices for lacking the requisite training on how to use its medical device.

The takeaway of this article is that the buyer needs to beware of investing in used medical devices. Even though the amount saved on the front end by purchasing a used laser may seem too good to pass up, in the long run, purchasing from the original manufacturer is the smarter, long-run approach. By purchasing a medical device from the original manufacturer can help limit potential injury to patients and thwart trademark, tort, and other liability associated with regulatory agencies and original equipment manufacturers.