Belmora LLC v. Bayer Consumer Care AG, 819 F.3d 697 (4th Cir. 2016) [click for opinion]
Since the 1970's, Bayer Consumer Care AG (collectively with Bayer HealthCare LLC, "Bayer") have owned the trademark "FLANAX" in Mexico and other parts of Latin America, and sold naproxen sodium pain relievers under the mark. Belmora LLC ("Belmora"), owns the trademark "FLANAX" in the United States, and has sold naproxen sodium pain relievers under the mark since 2004. While unaffiliated, Belmora allegedly used various marketing products implying that the two FLANAX brands were the same. These products included similar packaging as well as telemarketing and advertising schemes relying on the success of Bayer's FLANAX in Latin America.
In 2007, Bayer successfully petitioned the U.S. Trademark Trial and Appeal Board ("TTAB") to cancel Belmora's registration for the FLANAX mark based on deceptive use. In 2014, the TTAB ordered cancellation of Belmora's FLANAX registration. Belmora appealed the TTAB cancellation order and elected to proceed with the appeal as a civil action in the Eastern District of Virginia. At that time, Bayer filed a counterclaim. Separately, Bayer filed a complaint for false association and false advertising against Belmora under the Lanham Act in the Southern District of California. The Southern District of California case was transferred to the Eastern District of Virginia, where the cases were consolidated. The district court reversed the TTAB cancellation order and dismissed the false association and false advertising claims.
In its decision, the district court focused on a key question related to Bayer's Lanham Act § 43(a), 15 U.S.C. § 1125(a), claim: "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 to assert priority rights over a mark that is registered in the United States by another party and used in United States commerce?" The district court held that the answer was no, based on the district court's interpretation of the Supreme Court's analysis in Lexmark International, Inc. v. Static Control Components, Inc.
In Lexmark the Supreme Court addressed whether: (i) the plaintiff's claim fell within the "zone-of-interests" protected by the statute; and, (ii) the plaintiff's injuries were proximately caused by violations of the statute. The district court determined that the Bayer's claims were not cognizable because they were outside the Lanham Act's "zone-of-interests" in that the Bayer did not possess a protectable interest in the FLANAX mark in the United States, and that loss under the Lanham Act cannot exist as to a mark that was not used in U.S. commerce.
Bayer appealed the district court's decision and the U.S. Court of Appeals for the Fourth Circuit vacated the district court holding and remanded for new proceedings consistent with the court's opinion. The court found that the district court erred in its interpretation of the Lanham Act. The court determined that the plain language of the Lanham Act § 43(a) does not require that a plaintiff possess or have used a trademark in U.S. commerce. The court determined that it is not the plaintiff's use, but rather the defendant's use in commerce—of an offending "word, term, name, symbol, or device," or of a "false or misleading description [or representation] of fact"—that creates injury under the terms of the statute. The court thus held that it was Belmora's use of FLANAX in commerce that grounded the injury.
To determine if Bayer would likely be damaged by Belmora's actions, the court relied on the Supreme Court's framework for analysis in Lexmark. The court found that for both false association and false advertising, Bayer's claims fell within the zone-of-interests and Bayer's potential injuries through lost customers and sales were proximately caused by Belmora's actions. The court further held, based on the Supreme Court's analysis from Lexmark, that the district court erred in reversing the TTAB's cancellation order on the basis that Bayer lacked standing.
The court ultimately found that Bayer did have standing to bring its Lanham Act § 43(a) claim and should be entitled to a chance to prove its case. The court remanded the case to the district court to make a determination based on proper evidence regarding the Lanham Act § 43(a) claims as well as cancellation.