The US Court of Appeals for the Fourth Circuit reversed a district court’s application of the two-part test for prudential standing to bring a Lanham Act claim, focusing instead on the plain language of § 43(a) of the Lanham Act. Belmora LLC v. Bayer Consumer Care AG and Bayer Healthcare LLC, Case No. 15-1335 (4th Cir., Mar. 23, 2016) (Agee, J). The Court noted that the statute is written in terms of the putative defendant’s conduct in order to allow allegations of unfair competition and false advertising to proceed even where the allegedly injured party did not use its own trademark in commerce in the United States.

This case involves similar branding for similar products in the United States and Mexico. Appellant Bayer Consumer Care AG owns the trademark FLANAX in Mexico (and other parts of Latin America) for a pain reliever composed of naproxen sodium. Bayer has owned the FLANAX mark in Mexico since 1976 and has made sales in Mexico totaling hundreds of millions of dollars through use of the well-known mark and product packaging. Bayer has never sold FLANAX in the United States, but its sister company Bayer Healthcare LLC sells naproxen sodium pain relievers in the United States under the brand ALEVE. 

In 2004, Belmora LLC began selling naproxen sodium tablets in the United States. Belmora registered the trademark FLANAX in the United States. The Belmora packaging for FLANAX in the United States closely mimicked Bayer’s Mexican FLANAX packaging, with a similar color scheme, font size and typeface. Belmora’s marketing materials included statements implying that its FLANAX brand in the United States was the same FLANAX product sold by Bayer in Mexico, including statements that the pain reliever was a top-selling product among Latinos. There was also evidence in the record that Belmora’s marketing materials resulted in a belief among its distributors, vendors and marketers that the Belmora FLANAX product in the United States was the same as or affiliated with Bayer’s FLANAX product in Mexico.

In 2007, Bayer initiated proceedings at the Trademark Trial and Appeal Board (TTAB) that eventually led to the cancellation of Belmora’s US trademark registration. Before the TTAB, Bayer established misuse of the Belmora mark in the United States by trading on the reputation and good will of Bayer’s Mexican mark.

Belmora appealed the TTAB decision by initiating a civil proceeding in the US District Court for the Eastern District of Virginia. The TTAB appeal was then consolidated with a pending lawsuit filed by Bayer for Lanham Act violations and claims arising under California state law. Ruling on a motion for judgment on the pleadings, the district court dismissed the case, concluding that Bayer lacked standing to assert its claims for unfair competition and false advertising, among other things, because Bayer did not own a registration for the FLANAX mark in the United States and had never used the FLANAX mark in the United States. The district court also reversed the TTAB’s decision canceling Belmora’s mark. Bayer appealed to the Fourth Circuit.

In a detailed analysis that unpacked the requirements to bring claims under § 43(a) of the Lanham Act, the Fourth Circuit vacated the district court’s legal conclusions and remanded for further proceedings. The analysis turned on the two-part test established by the Supreme Court of the United States in Lexmark Int’l, Inc. v. Static Control Components, Inc. (IP Update, Vol. 17, No. 4).

The Fourth Circuit evaluated the plain language of § 43(a) and concluded that the district court erred in finding that in order to be standing, a plaintiff must have initially used its own mark in commerce within the United States. Rather, the Fourth Circuit explained that § 43(a) does not require that a plaintiff possess or have used a trademark in US commerce as an element of the cause of action. In reaching this conclusion, the Fourth Circuit looked to the Lanham Act’s purpose statement, distinguished between the statutory injuries for trademark infringement and those for false advertising, and relied on the manner in which § 43(a) is crafted as defining causes of action based on a defendant’s putative conduct. Ultimately the Fourth Circuit explained that a well-pled Lanham Act claim—such as the claims asserted by Bayer—can proceed where there is a reasonable basis to conclude that the claimant is likely to be damaged by the defendant’s activities in the United States.

In order to assess whether Bayer was in a position to properly allege that it had been or would likely be damaged by Belmora’s conduct, the Fourth Circuit walked through the two-part test established in Lexmark for both the unfair competition and false advertising allegations. In both instances, the Fourth Circuit determined that the plaintiff’s claim fell within the “zone of interests” protected by the statute, and that Bayer sufficiently pled proximate causation of a cognizable injury. 

Lastly, for reasons that largely overlapped with the § 43(a) analysis, the Fourth Circuit found that the district court erred in reversing the TTAB’s cancellation of Belmora’s mark for misuse.