Merck & Co. v. Mediplan Health Consulting Inc
| Decision Date | 30 March 2006 |
| Docket Number | No. 05 CIV. 3650(DC).,No. 05 CIV. 3701(DC).,No. 05 CIV. 3700(DC).,No. 05 CIV. 3696(DC).,No. 05 CIV. 3698(DC).,No. 05 CIV. 3699(DC).,05 CIV. 3650(DC).,05 CIV. 3696(DC).,05 CIV. 3698(DC).,05 CIV. 3699(DC).,05 CIV. 3700(DC).,05 CIV. 3701(DC). |
| Citation | 425 F.Supp.2d 402 |
| Parties | MERCK & CO., INC. and MSD Technology, L.P., Plaintiffs, v. MEDIPLAN HEALTH CONSULTING, INC., d/b/a/ RxNorth.com, Defendant. And Related Cases. |
| Court | U.S. District Court — Southern District of New York |
Fitzpatrick, Cella, Harper & Scinto by Robert L. Baechtold, Pasquale A. Razzano, Nina Shreve, Peter Shapiro, New York, NY, for Plaintiffs.
R. Kunstadt, P.C. by Robert M. Kunstadt, Ilaria Maggioni, New York, NY, for Mediplan Health Consulting, Inc., North Pharmacy Inc., PPI Pivotal Partners Inc., and Universal Drug Store LTD.
Morgan & Finnegan, L.L.P. by John F. Sweeney, Seth J. Atlas, Kathleen E. McCarthy, New York, NY, for Canada Drugs.com Partnership and Kris Thorkelson.
Rothwell Figg Ernst & Manbeck by Steven Lieberman, Minaksi Bhatt, Lisa N. Phillips, Washington, DC, for Medcenter Canada Inc., Glassey Consulting, and Alex Glassey.
Darby & Darby P.C. by Andrew Baum, David K. Tellekson, Justin Kayal, Robert L. Jacobson, New York, NY, for Total Care Pharmacy Ltd. and Dave Robertson.
In these six related cases, defendants operate Canadian online pharmacies. Through interactive websites, they offer for sale to U.S. consumers generic versions of plaintiffs' popular cholesterol medication, Zocor. In listing their products, certain defendants use plaintiffs' trademark ZOCOR, identifying their products as "generic ZOCOR" or some variation thereof. Certain defendants also use plaintiffs' stylized ZOCOR logo, and several defendants also have purchased sponsored links from the Internet search companies Google and Yahoo, so that consumers who search the word "ZOCOR" will be offered links to these defendants' websites.
Plaintiffs have not granted defendants permission to use their marks. They brought these lawsuits, alleging unfair competition, including, inter alia, trademark infringement, trademark dilution, and false advertising, under federal and state law. Defendants move to dismiss or for judgment on the pleadings, arguing, inter alia, that their use of plaintiffs' marks is "fair use." Defendants (with one exception) admit using the ZOCOR marks, but contend that they do it only to identify their products as more affordable generic versions of Zocor. They contend further that no reasonable consumer could be confused into believing that "generic ZOCOR" was anything other than a generic alternative to Zocor.
For the reasons that follow, the motions are granted in part and denied in part.
For purposes of these motions, the facts alleged in the complaints are assumed to be true.
Plaintiff Merck & Co. ("Merck") is "one of the world's leading pharmaceutical companies." (Compl. ¶ 12).1 It invests billions of dollars in research and development of prescription drugs, including Zocor. (Id. ¶¶ 12, 13). Merck owns U.S. trademark registration no. 1,457,984 for the word mark ZOCOR and trademark registration no. 1,749,211 for the design mark ZOCOR, which features the mark ZOCOR in a stylized logo. (Id. ¶ 16, Ex. B).
Merck developed, manufactures, and markets Zocor, which patients take to reduce the cholesterol and fatty substances in their blood. (Id. ¶¶ 13, 15). Simvastatin is the active ingredient in Zocor (id. ¶ 13), and, since November 1986, Merck has been the exclusive entity legally authorized by patent laws and the U.S. Food and Drug Administration (the "FDA") to sell simvastatin products in the United States (id. ¶¶ 14, 15). Plaintiff MSD Technology L.P. ("MSD") is the assignee of U.S. Patent No. 4,444,784 ("the 784 patent") for "Antihypercholesterolemic Compounds," initially issued in 1984 to Merck. .
Defendants are Canadian entities that control and operate Internet pharmacies offering prescription drugs for sale to U.S. consumers. (See, e.g., id. ¶ 20).2 Through their interactive websites, defendants advertise and fill on-line orders for prescription drugs, including a generic simvastatin alternative to Zocor. (See, e.g., id. ¶¶ 18, 19, 21). In addition to their generic versions of simvastatin, defendants also offer for sale Zocor manufactured by Merck affiliates in Canada that are not party to these lawsuits. (Id. Ex. C).3
Defendants' websites target a U.S. clientele: prices are listed in U.S. dollars; discounts are listed in comparison to U.S. pharmacy prices; a large percentage of visitors are located in the United States; the sites boast substantial volumes in U.S. sales; and headlines on the sites' main pages identify defendants' intent to service a U.S. market. (See, e.g., id. ¶ 20). For example, a headline on the crossborderpharmacy.com homepage reads "A GLOBAL PHARMACY SERVING AMERICANS," and text on the site explains that the business was built "for the sole purpose of providing Americans with safe affordable Canadian prescriptions." . CanadaPharmacy.com claims to be the most visited Canadian mail order pharmacy website, with more than 500,000 customers and one million prescriptions filled. (CanadaPharmacy Compl. ¶ 20).
With the exception of RxNorth, all defendants utilize the ZOCOR word mark in connection with the sale of their generic simvastatin products. (See, e.g., Compl. ¶ 22). These defendants list the generic alternative to Zocor on their sites in combination with the ZOCOR word mark, and, in the case of CanadaPharmacy, Universal, and MedCenter, the ZOCOR design mark as well. For example, CanadaDrugs lists "Zocor" as one of the "most popular prescription drugs" on its home page. (CanadaDrugs Compl. ¶ 22). Clicking on the listing "Zocor" or running a search for the word "Zocor" on the site links consumers to a page that offers "Zocor" and "Generic Zocor" products in five dosage levels. (Id.). By clicking on the desired dosage level and quantity, consumers are linked to pages where they may complete the sale. (Id. ¶ 22 & Ex. C).
Defendants' sites differ in the way they list the generic simvastatin products and their proximity to the ZOCOR mark. On the Universal Drugstore site, for example, the ZOCOR design mark appears. Clicking on the logo takes a consumer to a page that offers "SIMVASTATIN (Zocor generic)" as well as "ZOCOR (simvastatin)" in various doses and quantities. . On the North Pharmacy site, consumers are shown the ZOCOR design mark and are taken to a page that features the design mark again above a box that offers a choice between "Generic" and "Brand" in varying doses and quantities. . The site offers "brand Zocor," made by Merck's Canadian affiliate, as well as "generic Zocor." (Id.).
The CrossBorder site is somewhat different. The home page lists a number of brand-name drugs, including "Zocor." Clicking on the word "Zocor" takes the consumer to a page that is headed: "ZOCOR 80MG TABLET." Underneath, in parentheses, is the word "SIMVASTATIN." Underneath that the consumer is offered, on separate lines: "ZOCOR 80MG TABLET," "GENERIC SIMVASTATIN 80 MG TABLET," and "GENERIC SIVASTATIN 80 MG TABLET," with different quantities for the latter two. . In other words, the site offers both Zocor (manufactured by a Merck Canadian affiliate) and generic simvastatin, but does not use the phrase "generic Zocor" or any iteration thereof.
CanadaPharmacy, MedCenter, and Universal have engaged Internet search engines Google and Yahoo to have links to their websites displayed, as sponsored links, among the first results returned when a consumer searches the keyword "Zocor." (Compl. ¶ 19; CanadaPharmacy Compl. ¶ 19; Universal Compl. ¶ 19).4
Defendants' websites differ in the dosages of generic simvastatin and Zocor they " offer, the volume of their U.S. sales, the ways that they advertise the products to consumers (including their use of search engines), their use of the ZOCOR marks, and their explanation of the lack of FDA approval.5 Merck has not authorized the sale of generic simvastatin products by defendants or defendants' use of the ZOCOR word mark or design mark, and none of defendants are authorized by law to sell prescription drugs in the United States. (See, e.g., RxNorth Compl. ¶ 20; Canada-Pharmacy Compl. ¶¶ 26-28).
Merck filed its complaint against RxNorth on April 8, 2005, and the complaints against all other defendants on April 11, 2005. Against RxNorth, Merck asserts claims for patent infringement (Count I), unfair competition under the Lanham Act and state law (Counts II and III), and deceptive acts and practices under state law (Count IV). In the other cases, Merck asserts eight counts: federal claims of patent infringement (Count I), trademark infringement (Count II), unfair competition and false designation of origin (Counts III and IV), and dilution (Count V), as well as state law claims of trademark infringement and unfair competition (Count VI), dilution (Count VII), and deceptive acts and practices (Count VIII).
RxNorth moves for judgment on the pleadings pursuant to Fed.R.Civ.P. 12(c) to dismiss Counts II-IV and CanadaPharmacy, Universal, and CrossBorder move for judgment on the pleadings to dismiss Counts MedCenter and Canada-Drugs move to dismiss Counts pursuant to Fed.R.Civ.P. 12(b)(6). No defendant has moved to dismiss the patent infringement claims and those claims are not before the Court on these motions. Thorkelson moves to dismiss the claims against him for lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2).
First, I review the standards applicable to motions to dismiss for failure to state a claim and motions for judgment on the pleadings. Second, I discuss defendants' motions to dismiss plaintiffs' claims on...
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