Belmora LLC v. Bayer Consumer Care AG

• Decision Date: 06 February 2015
• Docket Number: Case No. 1:14–cv–00847–GBL–JFA.
• Citation: 115 U.S.P.Q.2d 1032,84 F.Supp.3d 490
• Parties: BELMORA LLC, Plaintiff, v. BAYER CONSUMER CARE AG & Bayer Healthcare LLC, Defendants–Consolidated Plaintiffs, v. Belmora, LLC, Jamie Belcastro, & Does 1–10, Inclusive, Consolidated Defendants.
• Court: U.S. District Court — Eastern District of Virginia

84 F.Supp.3d 490

115 U.S.P.Q.2d 1032

BELMORA LLC, Plaintiff

v.BAYER CONSUMER CARE AG & Bayer Healthcare LLC, Defendants–Consolidated Plaintiffs

v.Belmora, LLC, Jamie Belcastro, & Does 1–10, Inclusive, Consolidated Defendants.

Case No. 1:14–cv–00847–GBL–JFA.

United States District Court, E.D. Virginia, Alexandria Division.

Signed Feb. 6, 2015.

Craig Crandall Reilly, Law Office of Craig C. Reilly, Alexandria, VA, John Nolan Jennison, Law Offices Jennison & Shultz, P.C., Arlington, VA, for Plaintiff.

Robert J. Shaughnessy, Eric Christopher Wiener, James Norman Bierman, Jr., Williams & Connolly LLP, Washington, DC, for Defendants–Consolidated Plaintiffs.

MEMORANDUM OPINION AND ORDER

GERALD BRUCE LEE, District Judge.

THIS MATTER is before the Court on Belmora LLC's (“Belmora”) Motion to Dismiss Bayer Consumer Care AG and Bayer Healthcare's Complaint (“Motion to Dismiss Complaint”) (Doc. 36), Belmora's Motion to Dismiss Bayer CC AG's Counterclaim (“Motion to Dismiss Counterclaim”) (Doc. 45), and Belmora's Motion for Judgment on the Pleadings (Doc. 55). This case arises from Bayer Consumer Care AG and Bayer Healthcare's (collectively “Bayer”) claims that Belmora's FLANAX trademark should be cancelled because Belmora deceives consumers into thinking that its FLANAX brand of pain relief medicine is the same FLANAX brand under which Bayer has sold pain relief medicine in Mexico for decades. The Trademark Trial and Appeal Board (“TTAB”) cancelled Belmora's trademark. The parties seek review of that decision and bring additional causes of action.

There are six issues before the Court. The first issue is whether the Court should dismiss Count I of Bayer's Complaint, alleging that Belmora violated Section 43(a)(1)(A) of the Lanham Act, 15 U.S.C. § 1125(a)(1)(A), which prohibits the false designation of origin, because Bayer lacks standing to bring the statutory cause of action. The second issue is whether the Court should dismiss Count II of Bayer's Complaint, alleging that Belmora violated Section 43(a)(1)(B) of the Lanham Act, 15 U.S.C. § 1125(a)(1)(B), which prohibits false advertising, because Bayer lacks standing to bring the statutory cause of action. The third issue is whether the Court should dismiss Bayer's California state law claims. The fourth issue is whether the Court should dismiss Bayer's Article 6bis counterclaim and affirm the TTAB's dismissal of Bayer's Article 6bis claim because Section 44(b) of the Lanham Act, 15 U.S.C. § 1126(b), which implements the Paris Convention, does not protect foreign mark owners beyond the protections already afforded by the Lanham Act. The fifth issue is whether the Court should grant Belmora's Motion for Judgment on the Pleadings and affirm the TTAB's holding that Bayer had standing to bring a misrepresentation of source action under Section 14(3) of the Lanham Act, 15 U.S.C. § 1064(3), because Bayer is not within the class of plaintiffs Congress sought to protect under Section 14(3). The sixth issue is whether the Court should grant Belmora's Motion for Judgment on the Pleadings and affirm the TTAB's holding that Belmora misrepresented the source of FLANAX under Section 14(3) because there is a use requirement in a misrepresentation of source action.

This may be a case of first impression which presents novel questions about the reach of the Lanham Act. Belmora's FLANAX, trademarked and sold in the United States, has a similar trade dress to Bayer's FLANAX and is marketed in a way that capitalizes on the goodwill of Bayer's FLANAX, which is trademarked and sold in Mexico. The Court has grappled with whether Belmora's FLANAX mark deceives the public in a manner prohibited by the Lanham Act. The 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 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 answer is no. Accordingly, the TTAB's decision cancelling the registration of Belmora's FLANAX mark is REVERSED and Belmora's Motion to Dismiss Complaint, Motion to Dismiss Bayer's Counterclaim, and Motion for Judgment on the Pleadings are GRANTED.

The Court GRANTS Belmora's Motion to Dismiss Complaint for two reasons. First, the Court GRANTS Belmora's Motion to Dismiss the false designation of origin claim because Bayer lacks standing to sue under Section 43(a)(1)(A) of the Lanham Act pursuant to Lexmark Int'l, Inc. v. Static Control Components, Inc., ––– U.S. ––––, 134 S.Ct. 1377, 188 L.Ed.2d 392 (2014), as Bayer's interests do not fall within the zone of interests Congress intended to protect under Section 43(a)(1)(A) and Bayer did not sufficiently plead economic injury or an injury to business reputation proximately caused by Belmora's use of the FLANAX mark. Second, the Court GRANTS Belmora's Motion to Dismiss the false advertising claim because Bayer lacks standing to sue under Section 43(a)(1)(B) of the Lanham Act as Bayer did not sufficiently plead an injury to commercial interest in sales or business reputation proximately caused by Belmora's alleged misrepresentations as required by Lexmark. Furthermore, the Court DISMISSES Bayer's state law claims because they have no federal claim to attach to as both of the federal claims are dismissed.

The Court GRANTS Belmora's Motion to Dismiss Bayer's Counterclaim and AFFIRMS the TTAB's dismissal of Bayer's Article 6bis claim because Bayer's claim that it can bring an action under Article 6bis against Belmora is implausible as the Paris Convention is not self-executing and Sections 44(b) and (h) of the Lanham Act, 15 U.S.C. § 1126(b) and (h), do not make Article 6bis of the Paris Convention a ground for contesting trademark registration.

The Court GRANTS Belmora's Motion for Judgment on the Pleadings for two reasons. First, the Court GRANTS Belmora's Motion for Judgment on the Pleadings and REVERSES the TTAB's holding that Bayer had standing to seek cancellation of the registration of Belmora's FLANAX mark under Section 14(3) because Bayer lacks standing to sue pursuant to Lexmark as Bayer's interests do not fall within the zone of interests Congress intended to protect under Section 14(3) and Bayer did not sufficiently plead economic injury or an injury to business reputation proximately caused by Belmora's use of the FLANAX mark. Second, the Court GRANTS Belmora's Motion for Judgment on the Pleadings and REVERSES the TTAB's holding that Belmora was using the FLANAX mark to misrepresent source because Section 14(3) requires use of the mark in United States commerce and Bayer did not use the FLANAX mark in the United States.

I. BACKGROUND

Belmora is a Virginia limited liability company formed in 2002. It is owned and operated by Jamie Belcastro. (Doc. 1 ¶¶ 9–10.) Belmora operates in the United States and sells over-the-counter pain relief products under the FLANAX brand name. (Id. ¶ 10.) FLANAX was originally an “analgesic tablet that contained naproxen

sodium as its active ingredient,” but the brand has since grown to encompass liniment and lozenges. (Id. ¶¶ 11–12.) On October 6, 2003, Belmora filed an application with the United States Patent and Trademark Office (“PTO”) to register the FLANAX mark for the analgesic tablets. (Id. ¶ 13.) This application was published for opposition on August 3, 2004, and the PTO issued the registration for the FLANAX mark on February 1, 2005. (Id. ¶¶ 14–15.) Belmora has used the FLANAX mark in interstate commerce in the United States since March 1, 2004. (Id. ¶ 17.)

Bayer Consumer Care AG, a Swiss corporation, Bayer Healthcare LLC, a Delaware limited liability company, and predecessors have sold analgesics in Mexico under the Mexican-registered trademark FLANAX since the 1970s. Bayer Compl. ¶¶ 1–2, 9, 14. Bayer does not possess a trademark for FLANAX in the United States. (Id. ¶¶ 26–31.) Bayer attempted to register FLANAX in the United States in 2004 but the PTO rejected the application based on Belmora's preexisting efforts to register the mark. (Doc. 35 ¶¶ 32–36.) Bayer has sold hundreds of millions of dollars of FLANAX products in Mexico. Bayer Compl. ¶ 11. Bayer promotes FLANAX in Mexico, including in major cities near the United States–Mexico border, but has never marketed or sold FLANAX in the United States. (Id. ¶ 12; Doc. 35 ¶¶ 56–57.) Bayer has never received approval from the FDA through a New Drug Application to market or sell FLANAX in the United States. (Doc. 35 ¶¶ 53–61.)

Belmora's early packaging of FLANAX was “virtually identical” to that of Bayer's FLANAX, including a similar color scheme, font size, and typeface.¹ Bayer Compl. ¶¶ 21–25. Belmora has since changed its packaging, but this modified scheme remains similar to that of Bayer's FLANAX. (Id. ¶ 26.) Belmora's marketing messages often suggested a historical connection between its FLANAX and Latino customers. (Id. ¶¶ 30–35.)

On June 29, 2007, Bayer petitioned the TTAB to cancel the registration of Belmora's FLANAX mark. (Doc. 37 at 2.) After several years of litigation, on April 14, 2014, the TTAB issued a ruling canceling Belmora's FLANAX registration pursuant to Section 14(3) of the Lanham Act, 15 U.S.C. § 1064(3). Bayer Consumer Care AG v. Belmora LLC, 110 U.S.P.Q.2d 1623, 2014 WL 1679146 (T.T.A.B.2014). On June 3, 2014, Belmora filed a Notice of Appeal to the Federal Circuit with the TTAB; however, on June 13, 2014, Bayer filed its Notice of Election to Have Review by Civil Action with the TTAB. (Doc. 37 at 3–4.)

On June 6, 2014, Bayer sued Belmora in the United States District Court for the Southern District of California. See Bayer Consumer Care AG v. Belmora, LLC, No. 3:14–cv–01395 (S.D.Cal.). Shortly thereafter, Bayer filed a notice of voluntary dismissal because “the case was filed in the wrong district.” (Doc. 37 at 3 n. 2.) On June 9, 2014, Bayer refiled its complaint in the ...