Novartis Consumer Health, Inc. v. McNeil-PPC, Inc., Civ. No. 99-280 (WHW)

• Decision Date: 14 September 1999
• Docket Number: Civ. No. 99-280 (WHW)
• Parties: NOVARTIS CONSUMER HEALTH, INC., Plaintiff, v. MCNEIL-PPC, INC., Defendant.
• Court: U.S. District Court — District of New Jersey

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NOVARTIS CONSUMER HEALTH, INC., Plaintiff, v. MCNEIL-PPC, INC., Defendant.

Civ. No. 99-280 (WHW)

United States District Court, D. New Jersey.

Richard D. Catenacci Connell, Foley & Geiser, LLP, Roseland, New Jersey, Keith E. Sharkin, Larry H. Tronco, Nims, Howes, Collison, Hansen & Lackert, New York, NY, Attorneys for Novartis.

Francis X. Dee, Carpenter, Bennett & Morrissey, Three Gateway Center, Newark, NJ, Thomas C. Morrison, Carin G. Reynolds, Patterson, Belknap, Webb & Tyler LLP, New York, NY, Attorneys for defendant McNeil.

OPINION

WILLIAM H. WALLS, U.S.D.J.

I. Introduction

This matter is before the Court on the summary judgment motions of defendant McNeil-PPC, Inc. ("McNeil") to dismiss the complaint and for judgment in its favor on its counterclaim, and of plaintiff Novartis Consumer Health Inc. ("Novartis") to dismiss McNeil's counterclaim. McNeil's motion for summary judgment was originally scheduled for April 26, 1999, but this Court granted Novartis's request for a stay pending the completion of discovery until July 26, 1999. The parties submitted additional material on McNeil's summary judgment motion, Novartis moved for summary judgment to dismiss McNeil's counterclaim, and McNeil cross-moved for summary judgment on its counterclaim. The Court granted Novartis's motion for an additional stay pending the resolution of certain discovery issues. The motions were stayed until now, September 13, 1999.

Defendant's motion for summary judgment to dismiss the complaint is granted. Defendant's counterclaim is dismissed for failure to state a claim upon which relief may be granted.

II. Background

On January 20, 1999, Novartis sued McNeil for trademark infringement, false designation of origin and unfair competition based on defendant's unauthorized use of the mark Soft-Chews. Novartis is the manufacturer of the Triaminic brand of over-the-counter pharmaceutical products which includes cough, cold, allergy, and sinus products. McNeil, a division of Johnson & Johnson, is the manufacturer of the Tylenol brand of over-the-counter acetaminophen based pain relievers and fever reducers. Novartis manufactures a line of Triaminic products for children in the form of soft, chewable, fast-dissolving tablets under the Softchews mark. (See Compl. Ex. A.) Novartis is the owner of a registration on the Supplemental Register of the United States Patent and Trademark Office ("PTO") for its SOFTCHEWS¹ mark for "cough, cold, allergy and sinus pharmaceutical preparation" (Reg. No. 1,979,054) which issued on June 4, 1996. (Compl. ¶ 7, Ex. B.) McNeil has marketed a line of Tylenol pain-relieving and fever-reducing products for children under the mark Soft-Chews. (See Compl. Ex. D.)

Plaintiff's mark softchews is registered with the PTO, not on the Principal Register, but on the Supplemental Register. Plaintiff's predecessor, Sandoz Corporation, had initially applied for registration of the term "soft chews" with the PTO on the Principal Register on April 5, 1995 on the basis of its intent to use the mark it had not yet used the mark. (Reynolds Decl. Ex. A.) On September 11, 1995, the PTO refused registration of the proposed mark on the Principal Register because it "merely describe[d] the goods." (PTO Office Action, Reynolds Decl. Ex. A.) The PTO explained that "[t]he proposed mark SOFT CHEWS appears to indicate that the goods are soft and for chewing." (Id.) On February 15, 1996, Novartis filed an "Amendment to Allege Use" with the PTO in which it declared that it had used the mark "soft chews" in commerce since November 29, 1995. (Reynolds Decl. Ex. A.) On March 1, 1996, Novartis amended its application to register the term "softchews" rather than "soft chews" on the Supplemental rather than Principal Register. (Id.) The mark "softchews" was registered on the Supplemental Register on June 4, 1996. (Id.; Reg. No. 1,979,054.)

Novartis claims that McNeil's use of the term Soft-Chews is a copy or colorable imitation of its registered softchews mark in violation of § 32(c) of the Lanham Act, 15 U.S.C. § 1114(1). Novartis also claims that McNeil's prominent use of Soft-Chews in its advertising and promotions conveys the misleading commercial impression to the public that McNeil's pharmaceutical products are affiliated, connected, or associated with those of Novartis and creates a false or misleading designation of origin in violation of § 43(a)(1) of the Lanham Act, 15 U.S.C. § 1125(a)(1). Plaintiff also claims reverse confusion—that defendant's use of the mark creates a likelihood of confusion and leads the public to believe that the plaintiff, not the defendant, is the trademark infringer. Finally, plaintiff claims that defendant has violated the New Jersey Unfair Competition statute, N.J.S.A. § 56:4-1 and the New Jersey common law prohibiting trademark infringement and unfair competition.

On February 26, 1999, McNeil filed a counterclaim against Novartis under § 14 of the Lanham Act, 15 U.S.C. § 1064 for cancellation of a fraudulently obtained trademark registration. McNeil asserts that Novartis initially sought to register the term "soft chews" on the Principal Register of the PTO on the basis of an intent to use application an application for registration of a mark that the applicant has yet to use but intends to use in the future. An applicant may apply for registration on the Principal Register, but not on the Supplemental Register, on the basis of intended use. McNeil claims that Novartis's later amendment of its application alleging that it had first used the "soft chews" mark on November 29, 1995 was false and that its registration of the mark "softchews" on the Supplemental Register was therefore fraudulently obtained. McNeil alleges that Novartis did not make any actual, bona fide use of the "soft chews" mark in commerce until about July, 1998. McNeil charges Novartis with fraudulently obtaining registration of the "softchews" mark on the Supplemental Register and claims that it has been damaged by this fraudulently obtained registration.

Defendant McNeil has moved for summary judgment to dismiss the complaint on the grounds that softchews is not a legally protectable mark and there is no likelihood of confusion between Children's Tylenol Soft-Chews and Triaminic Softchews. McNeil argues that softchews is a generic term, or in the alternative, that it is merely descriptive and that it has not acquired distinctiveness through secondary meaning. Novartis responds that softchews is a suggestive, not a generic or descriptive term. Novartis also says that softchews has acquired secondary meaning and there is a likelihood of confusion between plaintiff's softchews and defendant's soft-chews.

Plaintiff Novartis moves for summary judgment dismissal of McNeil's counterclaim and McNeil cross-moves for summary judgment on its counterclaim. Novartis argues that its November 29, 1995 shipment of Softchews constituted a "use in commerce" under § 45 of the Lanham Act and that McNeil cannot prove fraud. McNeil maintains that proof of fraudulent intent is not required to cancel a trademark on the Supplemental Register or to recover damages, and that even if it were required to show fraudulent intent, it has met its burden. Moreover, McNeil contends that Novartis's one-time product test on November 29, 1995 does not constitute a bona fide use in commerce under the trademark laws.

III. Discussion

A. Summary Judgment Standard

Summary judgment is appropriate where the moving party establishes that "there is no genuine issue of fact and that [it] is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). A factual dispute between the parties will not defeat a motion for summary judgment unless it is both genuine and material. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986). A factual dispute is genuine if a reasonable jury could return a verdict for the non-movant and it is material if, under the substantive law, it would affect the outcome of the suit. See Anderson, 477 U.S. at 248. The moving party must show that if the evidentiary material of record were reduced to admissible evidence in court, it would be insufficient to permit the non-moving party to carry its burden of proof. See Celotex v. Catrett, 477 U.S. 317, 318, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986).

Once the moving party has carried its burden under Rule 56, "its opponent must do more than simply show that there is some metaphysical doubt as to the material facts in question." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986). The opposing party must set forth specific facts showing a genuine issue for trial and may not rest upon the mere allegations or denials of its pleadings. See Sound Phillip Ship Building Co. v. Bethlehem Steel Co., 533 F.2d 96, 99 (3d Cir. 1976), cert. denied, 429 U.S. 860 (1976). At the summary judgment stage the court's function is not to weigh the evidence and determine the truth of the matter, but rather to determine whether there is a genuine issue for trial. See Anderson, 477 U.S. at 249. In doing so, the court must construe the facts and inferences in the light most favorable to the non-moving party. See Wahl v. Rexnord, Inc. 624 F.2d 1169, 1181 (3d Cir. 1980).

B. Plaintiff's Claims under the Lanham Act, the New Jersey Trademark Act, and under New Jersey Common Law

Defendant McNeil argues that plaintiffs' claims under sections 32(c) and 43(a) of the Lahnham Act fail because the softchews mark is not a valid and legally protectable mark and because there is no likelihood of confusion between Children's Tylenol Soft-Chews and Triaminic Softchews. Specifically, defendant McNeil contends that because Novartis registered softchews on the Supplemental Register, the mark is not entitled to any statutory presumption that it is a trademark and not a generic name. McNeil maintains that softchews is a generic...