Fourth Circuit Holds No Use in the U.S. Required to Bring Claims Under the Lanham Act

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On March 23, 2016, the Fourth Circuit reversed the district court’s decision in Belmora LLC v. Bayer Consumer Care AG, 84 F. Supp. 3d 490 (E.D. Va. 2015) and remanded the case. The Fourth Circuit held that contrary to the district court’s decision, the plaintiff, Bayer Consumer Care AG (“BCC”), owner of a foreign trademark registration and foreign trademark rights in the mark FLANAX, had adequate grounds to raise a Section 43(a) claim for false advertising and false designation of origin and to cancel the trademark registration of third party Belmora LLC (“Belmora”), which had used and registered the identical FLANAX mark in the U.S. for identical products.[1]

As background, BCC has used its registered Mexican trademark, FLANAX, in Mexico for naproxen sodium tablets since the 1970s but never marketed or sold FLANAX-branded products in the United States. Instead, BCC’s sister company, Bayer Healthcare LLC (collectively “Bayer”), sold naproxen sodium tablets in the United States under the brand ALEVE.[2]

In 2004, Belmora began selling naproxen sodium tablets in the United States under the mark FLANAX and also registered FLANAX in the U.S. in 2005. Belmora’s FLANAX packaging displayed a color scheme, font size, and typeface similar to those of BCC’s Mexican product. Additionally, Belmora stated in its advertising that its FLANAX brand was the same FLANAX sold by BCC in Mexico.[3]

Two years later, in 2007, BCC petitioned the Trademark Trial and Appeal Board (TTAB) to cancel Belmora’s U.S. registration for FLANAX, alleging that Belmora used FLANAX to misrepresent the source of the goods. When the TTAB canceled Belmora’s registration, Belmora sought de novo review by the U.S. District Court for the Eastern District of Virginia. Concurrently, Bayer sued Belmora in the U.S. District Court for the Southern District of California, alleging false association in violation of Lanham Act § 43(a)(1)(A) and false advertising under § 43(a)(1)(B).[4]

The two cases were consolidated in the Eastern District of Virginia, which dismissed Bayer’s claims under § 43(a) and reversed the TTAB’s cancellation of the Belmora FLANAX registration. The district court ruled that under the Supreme Court’s decision in Lexmark International, Inc. v. Static Control Components, Inc.,[5] BCC, the owner of a foreign mark which was not registered or used in the United States, cannot have superior rights over a third party’s use of the identical mark on identical goods sold in U.S.[6]

On appeal, the Fourth Circuit vacated and remanded the district court’s order, finding that the plain language of § 43(a) does not require use of a trademark in U.S. commerce in order to bring a claim for false advertising and false association.[7] Similarly, the court found that § 14(3), which creates a cause of action for cancellation of a registered trademark, also does not mandate that the plaintiff use its own mark in United States commerce as a condition precedent to a cancellation action.[8] Rather, under Lexmark, the court must make a twofold inquiry: (1) whether the alleged acts of unfair competition fall within the Lanham Act’s protected zone of interest and (2) whether the injuries are proximately caused by violations of the Lanham Act. The Fourth Circuit found that Bayer adequately pleaded its claims under § 43(a) because the Lanham Act’s “zone of interest” covered “the deceptive and misleading use of marks in commerce” and that Bayer adequately pleaded that its injuries were proximately caused by Belmora’s violations of the Lanham Act.[9] For similar reasons, the court found that BCC was entitled to bring a cancellation action under § 14(3).[10]

While this case appears to be unique given the facts of Belmora’s alleged egregious copying and misleading advertising and the potential impact on U.S. customers from the source misrepresentation, the Fourth Circuit’s decision nonetheless potentially opens the door for claims by companies with global portfolios that use different marks in different jurisdictions and that may consider enforcement of their foreign marks in the USPTO and U.S. federal courts.

 

 

[1] Belmora LLC v. Bayer Consumer Care AG, App. No. 15-1335, slip op. at 35 (4th Cir. Mar. 23, 2016)

[2] Id. at 4-5

[3] Id. at 5-7

[4] Id. at 8-9

[5] 134 S. Ct. 1377 (2014)

[6] Belmora LLC, App. No. 15-1335, slip op. at 10

[7] Id. at 13

[8] Id. at 33-34

[9] Id. at 24-31

[10] Id. at 34-35

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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