Novartis Animal Health Us v. Abbeyvet Export Ltd.

• Decision Date: 08 July 2005
• Docket Number: No. 05 Civ.4688(GEL).,05 Civ.4688(GEL).
• Citation: 409 F.Supp.2d 264
• Parties: NOVARTIS ANIMAL HEALTH US, INC., Plaintiff, v. ABBEYVET EXPORT LTD., d/b/a Flea Control Online, Defendant.
• Court: U.S. District Court — Southern District of New York

409 F.Supp.2d 264

NOVARTIS ANIMAL HEALTH US, INC., Plaintiff, v. ABBEYVET EXPORT LTD., d/b/a Flea Control Online, Defendant.

No. 05 Civ.4688(GEL).

United States District Court, S.D. New York.

July 8, 2005.

David Bernstein, Christopher J. Robinson, Debevoise & Plimpton LLP, New York, New York, for plaintiff.

Andrew S. Langsam, Marilyn Neiman, Levisohn, Berger & Langsam, LLP, New York, New York, for defendant.

OPINION AND ORDER

LYNCH, District Judge.

In this Lanham Act action for trademark infringement, Novartis Animal Health US, Inc. ("Novartis-USA"), the American affiliate of Novartis A.G., a manufacturer of veterinary pharmaceuticals, moves for a preliminary injunction against defendant Abbeyvet Export Ltd. ("Abbeyvet"), d/b/a/ Flea Control Online, a British firm that markets similar products via the Internet.¹ There is no genuine dispute about the essential fact that Abbeyvet sells "gray market" products — genuine Novartis drugs, sold in their authentic, original packaging, but designed for the British market — to United States consumers.² Novartis-USA argues that the likelihood of consumer confusion resulting from certain variations between the U.S. and U.K. products warrants an injunction. Its motion will be granted.

A plaintiff is entitled to a preliminary injunction upon a showing of irreparable harm and a likelihood of success on the merits. Virgin Enterprises Ltd. v. Nawab, 335 F.3d 141, 145 (2d Cir.2003). Irreparable harm and the likelihood of success are presumed in trademark infringement cases once the plaintiff has shown a likelihood of confusion. New Kayak Pool Corp. v. R & P Pools, Inc., 246 F.3d 183, 185 (2d Cir.2001). Thus, Novartis-USA will be entitled to an injunction if it can establish a likelihood of confusion.

Novartis-USA has met its burden. There is no dispute that as the U.S. licensee of Novartis A.G., the owner of the marks, Novartis-USA holds valid trademarks for the terms "Novartis" and "Program" in connection with pet medicines. The only issue in the case is whether defendant's sale of British versions of the same medicines, using the same marks, will likely confuse U.S. consumers.

Ordinarily, trademark infringement and the likelihood of confusion is determined by application of the nine "Polaroid factors." See Polaroid Corp. v. Polarad Elec. Corp., 287 F.2d 492 (2d Cir.1961). This complex assessment, though, is not useful in the context of gray market goods, since such goods typically utilize the exact same marks, sold in the original packaging legitimately obtained from the manufacturer. See Original Appalachian Artworks, Inc. v. Granada Electronics, Inc., 816 F.2d 68, 74 (2d Cir.1987) (Cardamone, J., concurring) (stating that the traditional consumer confusion test is difficult to apply for "gray goods"). In this case, for example, Abbeyvet's Internet sales involve genuine Novartis pharmaceuticals, obtained from the British affiliate of Novartis A.G. They are neither counterfeit goods nor goods masquerading as genuine by adopting confusingly similar marks; they use the actual marks and the marks are lawfully affixed to them. Under these circumstances, courts have adopted a simpler test, finding a likelihood of confusion if: (1) the goods were not intended to be sold in the United States, and (2) they are materially different from the goods typically sold in the United States. Id. at 73; Curtis v. Nat'l Wholesale Liquidators, Inc., 890 F.Supp. 152, 158 (E.D.N.Y.1995). "[A] material difference between goods simultaneously sold in the same market under the same name creates a presumption of consumer confusion as a matter of law." Societe Des Produits Nestle, S.A. v. Casa Helvetia, Inc., 982 F.2d 633, 640 (1st Cir. 1992).

Plaintiff indisputably meets the first part of this standard. Abbeyvet acknowledges that the products it sells over the Internet are intended for the British market. It also acknowledges that the product inserts and packaging design are specifically tailored for use in the U.K. and designed to meet U.K. regulatory requirements. The only meaningful question in the case, therefore, is whether Novartis-USA is likely to prevail on the question of material difference.

Abbeyvet points out that the differences in the products are slight. Both the U.S. and U.K. formulations of the product contain the same active ingredient in identical or nearly identical form. They operate in the same way, based on the same underlying chemical and biological principles; they emanate from the same manufacturer; and there appears to be no dispute that they are equally effective, when properly used, for their intended purpose. Some of the minor but arguably material factors to which Novartis-USA points, moreover, have been modified by Abbeyvet in response to this action in ways that most likely render them moot. For example, in order to remedy the concern that the U.K. product inserts unhelpfully direct consumers to British public health authorities in cases of accidental human ingestion of the drugs, Abbeyvet has included special information for U.S. consumers on its website and in informational materials in its shipments. As Abbeyvet correctly points out, U.S. consumers shopping through its website should have no doubt that they are purchasing British formulations, and will not be confused on that point.

Nevertheless, Abbeyvet's arguments are ultimately unpersuasive. The essential fact is that the British product, though marketed under the very same trademarks (which have been exclusively licensed in the U.S. to Novartis-USA), differ in ways that a factfinder at trial would likely find would be material to the average consumer. The British pills, for example, are not flavored, as the U.S. product is, and are sold in different dosages. Indeed, the British version has not been approved for sale or use in the United States by the Food and Drug Administration ("FDA"), and does not provide in or on its packaging certain information and labeling (regarding such matters as proper storage and safety precautions and potential adverse effects) required by FDA regulations.³

These are not trivial differences. Abbeyvet is perhaps correct that many consumers will understand that the British product is different from the U.S. version, and comes from a different source, and that such consumers will have no...