February 25, 2015
Cambridge, MA – The U.S. District Court for the Eastern District of Virginia, in a case of first impression, confirmed the basic principle of trademark territoriality, ruling that Article 6bis of the Paris Convention, the “famous marks” provision, does not provide trademark rights that are protectable under Section 14(3) (misrepresentation of source), Section 43(a)(1)(A) (infringement of an unregistered mark) and Section 43(a)(1)(B) (false advertising) of the United States Trademark Statute (the Lanham Act). Belmora LLC v, Bayer Consumer Care AG and Bayer Healthcare LLC, 1:14-cv-00847-GBL (E.D. VA Feb. 6, 2015).
The Trademark Trial and Appeal Board had ordered cancellation of Belmora’s registration for the mark FLANAX under Section 14(3) of the Lanham Act, finding that Belmora had used the mark to misrepresent the source of its Naproxen sodium pain reliever ‘in a manner calculated to trade in the United States on the reputation and goodwill of petitioner’s mark created by its use in Mexico.” The district court held that because Bayer had never used the mark FLANAX in the United States and owned no U.S. registration, it lacked standing to bring the Section 14(3) claim.
Although Bayer AG has never used the mark FLANAX in the United States, it alleged that a ‘significant number’ of U.S. consumers were familiar with its Mexican FLANAX brand, and that Belmora LLC’s use of the same mark for the same product had caused confusion in the U.S. Bayer AG, through a predecessor in interest, has used the mark FLANAX in connection with Naproxen, a prescription analgesic, in Mexico, beginning in 1976. It obtained a Mexican trademark registration for FLANAX. After Naproxen was approved for OTC use in Mexico, a mass-market version of FLANAX was launched in 2001-02.
Belmora filed a civil action in the U.S. District Court in June 2014, seeking review of the TTAB’s decision. Bayer responded with counterclaims for trademark infringement and false advertising.
In its 44-page opinion, the district court distilled the issues in the case, involving not only review of the Board’s decision but Bayer’s counterclaims under Section 43(a) of the Lanham Act, to one single question:
Does the Lanham Act allow the owner of a foreign mark that is not registered in the United States and further has never used the mark in United States commerce assert priority rights over a mark that is registered in the United States by another party and used in United States commerce? The answer is no.
The court dismissed Bayer’s Section 43(a) counterclaims because Bayer “fails the zone-of-interests test and fails to meet the proximate cause requirement under Lexmark.” Consequently, it lacks standing to sue under Section 43(a). The court declined to exercise jurisdiction over Bayer’s California state law claims for unfair competition and false advertising.
Reviewing the case law and legal commentary on Section 6bis (the well known marks provision) of the Paris Convention, the court affirmed the TTAB’s earlier dismissal of Bayer’s claim under Article 6bis “because Bayer’s claim is implausible as the Paris Convention is not self-executing and Sections 44(b) and (h) of the Lanham Act … do not render Article 6bis of the Paris Convention a ground for contesting trademark registration.”
And finally the court granted Belmora’s motion for judgment on the pleadings, reversing the TTAB’s holding that Bayer had standing to seek cancellation of Belmora’s registration under Section 14(3). Again, the court found that “Bayer’s interests do not fall within the zone of interests Congress intended to protect under Section 14(3) and Bayer did not sufficiently plead economic injury or an injury to business reputation proximately caused by Belmora’s use of the FLANAX mark.”
Belmora, LLC was represented by Martin Schwimmer, Lauren Sabol and Lori Cooper of Leason Ellis, John L. Welch of Lando & Anastasi, LLP, and Craig Reilly, Esq.
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