Flummoxed By FLANAX: TTAB Cancels Trademark Registration Based On Misrepresentation As To Source Despite No Use In U.S. By Petitioner

by Foley Hoag LLP - Trademark, Copyright & Unfair Competition
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CaptureIn an interesting precedential decision, the Trademark Trial and Appeal Board (TTAB) canceled a registration for FLANAX despite the fact that the petitioner, Bayer Consumer Care AG, did not use FLANAX in the United States, but only in Mexico.  The case illustrates that the “misrepresentation as to source” provision of the Lanham Act can be a useful tool in egregious cases, and can be asserted even when a registration is no longer vulnerable to cancellation based on likelihood of confusion grounds under Section 2(d) because of the passage of time.

Factual Background:  FLANAX is the ALEVE of Mexico

Bayer sells the pain reliever naproxen sodium under the brand name ALEVE in the United States and under the brand name FLANAX in Mexico.  Bayer presented evidence that FLANAX is the best-selling pain reliever in Mexico, and had been sold under that mark since 1976.  The respondent, Belmora LLC, is a one-man operation that describes its business as “provid[ing] a user-friendly menu of OTC drug products for common ailments to U.S. residents of Hispanic background.”  The TTAB found that Belmora (1) adopted the FLANAX mark in the United States for naproxen sodium-based analgesics knowing of its widespread use in Mexico on identical products; (2) copied Bayer’s Mexican packaging, including the font and color scheme; and (3) repeatedly invoked the reputation of Bayer’s FLANAX mark in Mexico when marketing Belmora’s FLANAX products in the United States.

No Use, No Problem!

Based on this evidence, the TTAB held as a matter of first impression that Bayer had proven misrepresentation of source even though Bayer had never used FLANAX in the United States.  Belmora argued that the territorial principles of trademark law allowed it to register and use FLANAX in the United States, since Bayer did not use or intend to use FLANAX in the United States and Belmora did not use or intend to use FLANAX in Mexico.  The TTAB rejected that argument on the grounds that consumers in the United States were harmed as a result of Belmora’s misrepresentations of source, and that the claim would therefore lie.

Elements of Misrepresentation of Source

To prevail on a claim of misrepresentation of source, the complaining party must show that the respondent deliberately passed off its goods as those of the other, or otherwise engaged in blatant misuse of a mark in a manner calculated to trade on the goodwill and reputation of the complaining party.  Willful use of a confusingly similar mark does not meet this high standard — something more is needed.  Because Belmora copied Bayer’s Mexican packaging and repeatedly referred to Bayer’s reputation in Mexico, the TTAB found that Bayer easily met the appropriate standard.  The TTAB noted, “Although the facts before us present a matter of first impression, they do not present a close case.”

What About the Well-Known Marks Doctrine?

This outcome is particularly interesting given the inconsistent results reached in civil cases involving marks that are famous abroad but which are not used by the trademark owner in the United States.  Generally speaking, a plaintiff must be using its trademark in the United States in order to enforce its rights against a would-be infringer in the United States — otherwise, there are no trademark rights to enforce.  In some cases, defendants have taken advantage of this fact by adopting a mark that is well-known outside the United States for identical goods or services within the United States, in a blatant attempt to trade off the goodwill of the original trademark owner and confuse consumers into believing that the businesses are related.

Plaintiffs in these situations have sometimes relied upon the co-called well-known marks doctrine, based on Article 6bis of the Paris Convention, which is implemented in Section 44 of the Lanham Act.  Courts have reached differing conclusions as to whether a claim for civil trademark infringement or dilution lies in these circumstances.

In the TTAB cancellation action, Bayer effectively sought to invoke the well-known marks doctrine by petitioning to cancel Belmora’s registration based on Article 6bis of the Paris Convention, as well as asserting misrepresentation as to source and other claims.  In a prior decision partially granting Belmora’s motion to dismiss, the TTAB noted that neither Article 6bis nor its implementing statute, Section 44, affords an independent basis for cancelation absent use in the United States, but went on to cite a case in a footnote explicitly recognizing the possibility that “in an unusual case, activity outside the United States related to a mark could potentially result in the mark becoming well-known within the United States, even without any form of activity in the United States.”

It is unfortunate that this issue was not considered on the full record in the Bayer case, as it is hard to imagine a more “unusual case” in which a defendant sought to take advantage of the fame of the plaintiff’s trademark abroad, and the trademark bar would benefit from more jurisprudence on this issue.

In the interim, owners of famous trademarks outside the United States can rely on the misrepresentation of source doctrine in opposing or canceling federal trademark registrations where there is evidence of actual passing off.

 

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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