Belmora has filed a petition for en banc reconsideration of the Fourth Circuit’s decision in Belmora v Bayer Consumer care. The case is controversial because the court found that a plaintiff does not have to use a mark in the US to bring false association and false advertising claims under the Lanham Act.
In March, the Fourth Circuit reversed the Eastern District of Virginia’s dismissal for lack of standing and found that use of the Flanax mark is not a prerequisite to sue for unfair competition or false advertising under Section 43(a) of the Lanham Act or for cancellation under Section 14(3). The case was remanded to the district court.
A panel “motivated by a sense of ethical outrage”?
Belmora’s petition for an en banc rehearing argues that the Fourth Circuit panel overlooked material facts and legal considerations, that its verdict conflicts with decision from the Supreme Court and the Fourth Circuit, and that it raises questions of exceptional importance regarding the scope of the Lanham Act.
“In holding that a claimant need neither own nor have used a trademark in US commerce to maintain a cause of action under either § 14(3) or § 43(a) of the Lanham Act, the panel decision appeared to be motivated by a sense of ethical outrage – misplaced, as will be shown – directed at one party as a result of which the Court, it is respectfully submitted, was regrettably too quick to throw out the legal baby with the equitable bathwater,” says the petition submitted by Ronald Coleman and Joel MacMull of Archer & Greiner and Craig Reilly of The Office of Craig C Reilley.
The petition added: “In doing so, it jettisoned its own precedent, failed to address substantively significant authority that is in accord with that approach, and, by giving short shrift to the plain language of the statute and a forced reading of Lexmark Int’l Inc v Static Control Component, 134 Ct. 1377 (2014) threatened to undermine the integrity of the federal trademark system by widening any extant circuit split on this issue with a crowbar.”
“A chink in the wall of territoriality”
This complicated case is being closely watched. “That is a really interesting case because it is a chink in the wall of territoriality that is pretty shocking,” John Welch, counsel at Wolf Greenfield and also author of The TTABlog. “The Fourth Circuit said, because you’ve made deceptive statements, that is enough to give Bayer a right to bring this action under the Lanham Act. In other words you don’t have to be using a mark in the US in order to protect your reputation in Mexico, which was quite a change.”
Bayer had used the Flanax mark for naproxen sodium pills in Mexico going back to the 1970s. The company does not sell the product in the US because it sells the Aleve product there.
In 2004, Belmora started selling Flanax pills in the US in similar packaging to that used by Bayer in Mexico. Belmora registered the Flanax trade mark with the USPTO in 2005. In 2004, the Trademark Trial and Appeal Board (TTAB) sided with Bayer and cancelled the registration.
However, the Eastern District of Virginia the following year dismissed Bayer’s false association and false advertising claims based on its reading of the Supreme Court’s Lexmark decision and ruled that an owner of a foreign mark that is unregistered is not allowed under the Lanham Act to assert priority rights in the US. Lexmark set out a two-prong test for assessing standing under the Lanham Act.
The Fourth Circuit in March this year held that Bayer could bring false association and false advertising claims under the Lanham Act, as well as a petition before the TTAB to cancel Belmora's US registration of the Flanax mark based on deceptive use. This is despite Bayer's non-use of the mark in the United States.
“They said that Mexican-Americans might go over into Mexico and be confused about which is which and Mexicans visiting the US might be confused,” says Welch. “It is kind of crazy.”
It was not only the packaging that was seen as deceptive. Belmora’s statements also implied that the product was the same as that sold in Mexico by Bayer. For example, Belmora said in a brochure: “For generations, Flanax has been a brand that Latinos have turned to for various common ailments. Now you too can profit from this highly recognized topselling brand among Latinos.”
Welch, who was involved in the case representing Belmora at the district court and TTAB, notes: “The problem with this case from the start has been Belmore is a really bad actor. He would have bene fine except he more or less copied Bayer’s packaging and said this is the product you are familiar with from Latin America for many years. Not only did he make false statements, his testimony was unbelievable. Our argument was that, yes he shouldn’t get away with it, but the Lanham Act should be used to stop him.”
In a blog post in April, Akerman attorneys Ira Sacks and Rachel Rudensky said the Fourth Circuit’s decision was important but may not have a big impact in practice.
“Belmora represents an important step in protecting the interests of the owners of foreign trademarks in the United States. However, the breadth of protection that this case may afford future litigants may be limited. The renown of Bayer’s Flanax mark among United States consumers was important to the Court’s analysis, especially when assessing the harm to Bayer’s reputation and loss of sales.”
