The Court's Decision in the FLANAX US Trademark Dispute Gives Bayer a Headache

On February 6, the United States District Court for the Eastern District of Virginia reversed the US Trademark Trial and Appeal Board’s ruling in Bayer Consumer Care AG v. Belmora LLC, 110 USPQ2d 1623 (TTAB 2014) holding that Article 6bis of the Paris Convention does not grant 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 (EDVA Feb. 6, 2015).

Bayer Consumer Care AG filed a petition with the TTAB to cancel Belmora LLC’s U.S. trademark registration for FLANAX for a naproxen sodium based analgesic on grounds that it was confusingly similar to Bayer’s FLANAX brand of naproxen sodium analgesic products.  Ordinarily, a case involving identical marks used on virtually identical products is a slam dunk for the prior user. However,  in this case Bayer owned a Mexican, but not a US, trademark registration for FLANAX, and did not sell any FLANAX branded products in the US. Rather, the Bayer naproxen sodium analgesic product available in the US was sold under the trademark ALEVE. Nevertheless, Bayer claimed that Belmora's actions in the US were misrepresentative and created confusion among US customers as to the source of the FLANAX products sold in the US.

The TTAB held that Belmora was engaging in conduct that misrepresented the source of its FLANAX products, which justified cancellation of its registration despite the fact that Bayer did not sell any FLANAX products in the US. On appeal, the district court, describing this as a “case of first impression” presenting “novel questions about the reach of the Lanham Act,” reversed the TTAB finding that Bayer had no rights in the US to assert.

In its opinion, the court listed a variety of questions that it needed to consider in order to fully address the issue, and ultimately concluded that:

 “[t]he issues in this case can be distilled into 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 the United States commerce assert priority rights aver a mark that is registered in the United States by another party and used in United States Commerce?”

Drawing on the two factor test laid out in the US Supreme Court’s decision in Lexmark Int'l, Inc. v. Static Control Components, Inc., 134 S. Ct. 1377 (2014), the court concluded that the answer to this question was no. First, because Bayer’s interests did not fall within the “zone of interests” Congress intended to protect under Section 43(a) (1) (A) of the Lanham Act, it lacked the standing to sue. Second, Bayer failed to sufficiently plead economic injury as a result of Belmora’s use of the FLANAX mark.

With respect to the first factor, the court held that Bayer failed to show that its Mexican trademark for a product that it did not use or market in the US represented a “protectable interest.”

As for the “proximate cause” factor, the court held that because Belmora did not sell its products to foreign consumers, but only to consumers in the United States, Bayer was unable to apply the Lanham Act to an extraterritorial trademark. Further, the court held that Bayer only plead harms that equated to “mere confusion,” which “by itself does not constitute reputational injury.” Additionally, Bayer’s other claims that it was harmed because it could not control the quality of Belmora’s FLANAX products were ineffectual because such concerns only applied to a protectable interest in a mark, which Bayer lacked in the US.

As a result of its failure to establish standing with respect to the above claims, the court also held that Bayer lacked the standing to sue for false advertising under Section 43(a)(1)(B) of the Lanham Act.

Bayer also attempted to sue under Article 6bis of the Paris Convention treaty, but the court held that this treaty was not self-executing, which can be observed by the fact that Congress implemented only portions of this treaty through Section 44 of the Lanham Act. Article 6bis had not been implemented by Congress and, thus, was not available as a remedy for Bayer.

This decision underscores the territorial nature of trademark rights and the need to seek formal protection for your marks where possible in all countries of interest. Although the US recognizes unregistered trademark rights under certain circumstances, most other countries recognize rights through registration only. Thus, a thorough evaluation of your trademark priorities, and understanding the risks and limitations of your worldwide filing strategy, is paramount.

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