The Bayer-Belmora FLANAX trademark dispute has additional lessons for international trademark owners whose business may cross international borders.
A U.S. District Court Judge in the Eastern District of Virginia granted Bayer AG’s motion for summary judgment, dismissing rival Belmora’s claims to the trademark FLANAX. In Mexico, Bayer uses the FLANAX mark for the popular pain medication known elsewhere as Aleve (naproxen), and successfully blocked Belmora’s attempt to market its own naproxen product under the mark FLANAX in the United States. The ruling also affirms a U.S. Trial and Appeal Board ruling that cancelled Belmora’s U.S. trademark for FLANAX, which the company secured in 2005. The United States Court of Appeals for the Fourth Circuit had previously determined that the Lanham Act authorized Bayer’s claims against Belmora for unfair competition under §43(a) and its cancellation action under §14(3).
The District Court ruling is significant for two reasons:
- It shows that foreign trademark holders can bring Lanham Act claims in the U.S. when based upon commercial use of the mark only in foreign nations, but not in the United States, and
- It demonstrates that trademark holders can use the procedures available at the Trademark Trial and Appeal Board (TTAB) to block competitors from use of their foreign marks.
Lanham Act Implications on International Trademarks
The outcome in the current case was made possible by a 2016 decision by the Fourth Circuit Court of Appeals holding that Bayer had standing to sue Belmora under the Lanham Act for unfair competition in its use of Bayer’s FLANAX mark that was used in Mexico (but not the United States).
The decision is novel because previous legal doctrine maintained that trademark protection did not extend beyond a particular nation’s borders. Thus, a mark used by Company A in Mexico, but not used by that company in the United States, could be freely used by Company B in the United States as Company A’s rights would be limited to Mexico, the country in which it used the mark. Indeed, prior to the Fourth Circuit decision, the District Court had initially found that Bayer had no grounds to sue Belmora because it had never used the FLANAX mark in U.S. Bayer, however, successfully argued to the Fourth Circuit that Bayer’s use in the United States of the FLANAX mark would lead to “blatant deception of Mexican-American immigrants,” who were familiar with Bayer’s naproxen product and would assume that the FLANAX sold in U.S. stores was the same Bayer-made product found in Mexico.
In ruling in favor of Bayer, the Fourth Circuit stated that there was “no unstated requirement” for companies to have used a trademark in the U.S. in order to sue, thus blurring the previously firm territorial lines and paving the way for companies to domestically block another’s use of marks based on rights derived from use outside the U.S..
TTAB Can Protect Trademark Holders in Cross-Border Disputes
The District Court ruling was also a victory for the TTAB and its authority to regulate such cross-border trademark disputes.
In 2014, the TTAB canceled Belmora’s registration of the FLANAX trademark, siding with Bayer that its use would be a deliberate attempt to mislead consumers.
The TTAB ruled that, “The preponderance of the evidence before us readily establishes blatant misuse of the FLANAX mark 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 Board noted that Belmora’s marketing materials even mentioned that FLANAX was a “highly recognized top-selling brand among Latinos,” and found those materials to be a blatant effort to deceive customers.
The Board said, “We have no doubt that retail customers and consumers exposed to them would draw the logical conclusion that respondent’s U.S. product is licensed or produced by the source of the same type of product sold under the FLANAX brand for decades south of the border.”
In upholding the TTAB’s decision, the District Court ruled that Belmora had failed to produce any credible new evidence that the TTAB ruling was in error, and was clearly deferential to the TTAB’s findings.
The decisions highlight the importance of the TTAB as the primary forum to litigate trademark disputes. The TTAB has a more streamlined process for developing a trademark infringement case, engaging in discovery, and obtaining a decision in a faster timeline that through the U.S. district court system. The deference given to the TTAB by the Court (both the District Court and the Court Appeals) highlights the importance and significance of TTAB decisions regarding trademark matters. While the TTAB’s jurisdiction is limited to issues related only to the right to register or maintain a registration, and does not include injunctive relief or monetary damages, findings by the TTAB may be used in later infringement litigation. Defendants may be persuaded to abandon their plans for continued use when faced with a TTAB opinion finding the existence of infringement, particularly in situations involving bad faith or copying, as was the case in the Belmora action.
Defending Against Cross-Border Trademark Infringement
The Bayer-Belmora FLANAX trademark dispute has additional lessons for international trademark owners whose business may cross international borders. While Belmora’s intentional conduct was a significant factor in the ultimate decision of the case, the dispute still highlights the importance of trademark clearance prior to using one’s mark, as well as the importance of including consideration of international or marks when clearing a domestic mark for use, particularly if the international mark may be considered well known.
In addition, the decision highlights the importance of policing of one’s mark, including in foreign territories as knowledge of competitor’s use and timing are important to being able to bring successful claims before the U.S. courts. Not only does active policing assist trademark owners in obtaining knowledge of competitors’ behavior, it also allows for development of the most efficient strategy to stem possible infringing use. Bayer delayed many years in bringing its case before a U.S. District court, as a result many of its claims against Belmora were time-barred. The lesson here is to watch the market carefully for developments and to act promptly once an issue is identified. Trademark watching and monitoring services are useful ways to uncover potentially infringing uses in a timely manner.
Click here to read the full opinion from the US District Court, Eastern District of Virginia.
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