Belmora LLC v. Bayer Consumer Care AG

• Decision Date: 02 February 2021
• Docket Number: No. 18-2232,No. 18-2183,18-2183
• Citation: 987 F.3d 284
• Parties: BELMORA LLC, Plaintiff – Appellee, v. BAYER CONSUMER CARE AG, a Swiss Corporation; Bayer Healthcare LLC, a Delaware Limited Liability Company, Defendants – Consolidated Plaintiffs – Appellants, v. Belmora LLC, a Virginia Limited Liability Company; Jamie Belcastro, an individual, Consolidated Defendants – Appellees, and Does, 1 – 10, inclusive, Consolidated Defendants. United States of America, Amicus Supporting Appellant. Belmora LLC, Plaintiff – Appellant, v. Bayer Consumer Care AG, a Swiss Corporation; Bayer Healthcare LLC, a Delaware Limited Liability Company, Defendants – Consolidated Plaintiffs – Appellees, v. Belmora LLC, a Virginia Limited Liability Company; Jamie Belcastro, an individual, Consolidated Defendants – Appellants, and Does, 1 – 10, inclusive, Consolidated Defendants.
• Court: U.S. Court of Appeals — Fourth Circuit

987 F.3d 284

BELMORA LLC, Plaintiff – Appellee,

v.BAYER CONSUMER CARE AG, a Swiss Corporation; Bayer Healthcare LLC, a Delaware Limited Liability Company, Defendants – Consolidated Plaintiffs – Appellants,

v.Belmora LLC, a Virginia Limited Liability Company; Jamie Belcastro, an individual, Consolidated Defendants – Appellees,andDoes, 1 – 10, inclusive, Consolidated Defendants.

United States of America, Amicus Supporting Appellant.

Belmora LLC, Plaintiff – Appellant,

v.Bayer Consumer Care AG, a Swiss Corporation; Bayer Healthcare LLC, a Delaware Limited Liability Company, Defendants – Consolidated Plaintiffs – Appellees,

v.Belmora LLC, a Virginia Limited Liability Company; Jamie Belcastro, an individual, Consolidated Defendants – Appellants,andDoes, 1 – 10, inclusive, Consolidated Defendants.

No. 18-2183

No. 18-2232

United States Court of Appeals, Fourth Circuit.

Argued: October 26, 2020

Decided: February 2, 2021

ARGUED: Jessica Andrea Ekhoff, PATTISHALL, MCAULIFFE, NEWBURY, HILLIARD & GERALDSON LLP, Chicago, Illinois, for Appellants/Cross-Appellees. Lewis Yelin, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Amicus United States of America. Joel Geoffrey MacMull, MANDELBAUM SALSBURG, PC, New York, New York; Ronald David Coleman, DHILLON LAW GROUP, New York, New York, for Appellees/Cross-Appellants. ON BRIEF: Phillip Barengolts, Bradley L. Cohn, PATTISHALL, MCAULIFFE, NEWBURY, HILLIARD & GERALDSON LLP, Chicago, Illinois; Robert J. Shaughnessy, WILLIAMS & CONNOLLY LLP, Washington, D.C., for Appellants/Cross-Appellees. Craig C. Reilly, LAW OFFICES OF CRAIG C. REILLY, Alexandria, Virginia, for Appellees/Cross-Appellants. Joseph H. Hunt, Assistant Attorney General, Mark R. Freeman, Civil Division, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C.; Thomas S. Krause, Solicitor, Christina J. Hieber, Associate Solicitor, Mary Beth Walker, Associate Solicitor, Benjamin T. Hickman, Associate Solicitor, UNITED STATES PATENT AND TRADEMARK OFFICE, Alexandria, Virginia; G. Zachary Terwilliger, United States Attorney, OFFICE OF THE UNITED STATES ATTORNEY, Alexandria, Virginia, for Amicus United States of America.

Before AGEE, FLOYD, and THACKER, Circuit Judges.

Affirmed in part, vacated in part, and remanded with instructions by published opinion. Judge Floyd wrote the opinion, in which Judge Agee and Judge Thacker joined.

FLOYD, Circuit Judge:

This appeal arises out of an action brought by Bayer Consumer Care AG (Bayer) alleging that Belmora LLC (Belmora) engaged in unfair competition in violation of § 43(a) of the Lanham Act. The district court held that Bayer's § 43(a) claims were time-barred. Because the Lanham Act does not include a limitations period for § 43(a) claims, the district court borrowed the statute of limitations from the most analogous state law, declining to apply the equitable doctrine of laches to those claims.

For the reasons set forth below, we conclude that laches, rather than a statute of limitations, is the appropriate defense to Bayer's § 43(a) claims. We also conclude that the district court failed to consider whether Bayer's related state-law claims were subject to tolling. Accordingly, we vacate the district court's judgment on Bayer's § 43(a) and related state-law claims and remand for further proceedings consistent with this opinion. We affirm the district court's judgment in all other respects.

I.

A.

Since the 1970s, Bayer's Mexican affiliate has sold naproxen sodium pain relievers under the trademark "FLANAX" in Mexico and other parts of Latin America. Bayer, a Swiss entity, owns a Mexican registration for the FLANAX mark.¹ Bayer neither owns an American registration for the mark nor sells pain relievers under the FLANAX name in the United States. Rather, Bayer's American sister company, Bayer Healthcare LLC (BHC), sells naproxen sodium pain relievers in the United States under the "ALEVE" name.²

Bayer's FLANAX is a top-selling pain reliever in Mexico. The drug is therefore well known among consumers in the United States who have spent time in Mexico and other parts of Latin America.

Given the familiarity with FLANAX among a large subset of consumers in the United States, Belmora saw an opportunity to sell naproxen

sodium pain relievers under the FLANAX name to American consumers. To that end, Belmora began selling naproxen sodium pain relievers under the FLANAX name in the United States in 2004.

Belmora's early marketing materials targeted Hispanic American consumers familiar with FLANAX. Belmora's founder, Jamie Belcastro, described the company's business model as "provid[ing] a user-friendly menu of ... drug products for common ailments to U.S. residents of Hispanic background." J.A. 85. Belmora also associated its FLANAX pain relievers with Bayer's FLANAX sold in Mexico. For example, a telemarketer script identified Belmora as "the direct producers of FLANAX" in the United States and described its product as "a very well-known medical product in the Latino American market [that is] sold successfully in Mexico." J.A. 94. Belmora's packaging used a color scheme, font size, and typeface similar to Bayer's FLANAX packaging.

On October 6, 2003, Belmora petitioned the U.S. Patent and Trademark Office (PTO) to register the FLANAX mark. On February 27, 2004, Bayer filed a competing application with the PTO to register the mark.³ The PTO published Belmora's application for opposition on August 3, 2004. On September 19, 2004, the PTO sent a letter to Bayer suspending its application, citing Belmora's earlier application. The PTO issued the registration to Belmora on February 1, 2005.

On June 29, 2007, Bayer petitioned the U.S. Trademark Trial and Appeal Board (TTAB) to cancel Belmora's registration. Bayer's petition sought cancellation under § 14(3) of the Lanham Act, alleging that Belmora misrepresented the source of its goods bearing the FLANAX mark.⁴ The parties litigated the matter before the TTAB for nearly seven years. On April 17, 2014, the TTAB granted Bayer's petition and canceled Belmora's registration. The TTAB concluded that the evidence "readily establish[ed] blatant misuse of the FLANAX mark [by Belmora] in a manner calculated to trade in the United States on the reputation and goodwill of [Bayer's] mark created by its use in Mexico." J.A. 90. Specifically, the TTAB found that Belmora (1) knew that the FLANAX mark was in use in Mexico when it adopted the mark in the United States, (2) copied Bayer's packaging, and (3) "repeatedly invoked" the reputation of Bayer's product in its marketing materials. J.A. 91–93.

B.

On June 9, 2014—less than two months after the TTAB issued its ruling—Bayer sued Belmora in the Central District of California. The complaint asserted claims for false association and false advertising under § 43(a) of the Lanham Act. The complaint also asserted three related claims under California law for unfair competition and false advertising.⁵

Meanwhile, Belmora sought review of the TTAB decision in the Eastern District of Virginia pursuant to 15 U.S.C. § 1071(b). The Central District of California transferred Bayer's suit to the Eastern District of Virginia pursuant to 28 U.S.C. § 1404(a), where it was consolidated with Belmora's action. Belmora moved to dismiss Bayer's § 43(a) claims under Federal Rule of Civil Procedure 12(b)(6) and moved for judgment on the pleadings as to Bayer's § 14(3) claim litigated in the TTAB proceedings. The district court granted Belmora's motion. Bayer appealed.

We vacated the district court's dismissal and remanded for further proceedings. Belmora LLC v. Bayer Consumer Care AG (Belmora I ), 819 F.3d 697, 715 (4th Cir. 2016), cert. denied , ––– U.S. ––––, 137 S. Ct. 1202, 197 L.Ed.2d 246 (2017). On remand, Belmora filed an answer to Bayer's complaint and brought seven counterclaims. Both parties moved for summary judgment. Bayer sought summary judgment on each of Belmora's counterclaims and affirmance of the TTAB decision. Belmora sought summary judgment on Bayer's § 43(a) and related state-law claims, arguing that those claims were barred by the statute of limitations and laches. In response to Belmora's motion, Bayer argued that laches, not a statute of limitations, governed its § 43(a) claims. Bayer also argued that its state-law claims were subject to tolling.

The district court granted both parties’ motions. As to Belmora's motion, the court concluded that Bayer's claims were time-barred, reasoning that Bayer had "misse[d] the statute of limitations by almost a decade" on its § 43(a) claims, implicitly rejecting Bayer's laches arguments. J.A. 888. The district court further concluded that Bayer's state-law claims were time-barred but did not address Bayer's contention that its cancellation petition with the TTAB tolled those claims. As to Bayer's motion, the district court concluded that Belmora failed to marshal evidence to support each of its counterclaims. This cross-appeal followed.

II.

We review the district court's summary judgment rulings de novo. Synergistic Int'l, LLC v. Korman , 470 F.3d 162, 170 (4th Cir. 2006). "Summary judgment is appropriate when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law." Ray Cmmc'ns, Inc. v. Clear Channel Commc'ns, Inc. , 673 F.3d 294, 299 (4th Cir. 2012) (citing Fed. R. Civ. P. 56(a) ).

Because the district court "disposed of cross-motions for summary judgment, ‘we consider each motion separately on its own merits to determine whether either of the parties deserves judgment as a matter of law.’ " Defenders of Wildlife v. N.C. Dep't of Transp. , 762 F.3d 374, 392 (4th Cir. 2014) (quoting Bacon v. City of Richmond , 475 F.3d 633, 638 (4th Cir. 2007) ). "In considering each motion, we ‘resolve all factual disputes and any competing, rational inferences in the light most favorable to the party opposing that motion.’ " Id. (quoting Rossignol v. Voorhaar , 316 F.3d 516, 523 (4th Cir. 2003) ).

III.

On appeal, Bayer contends that the district court...