Pharmacia Corp. v. Alcon Laboratories, Inc.

Decision Date14 May 2002
Docket NumberCiv. No. 01-1539(WGB).
Citation201 F.Supp.2d 335
CourtU.S. District Court — District of New Jersey
PartiesPHARMACIA CORP., Pharmacia AB, Pharmacia Enterprises S.A. and Pharmacia & Upjohn Co., Plaintiffs, v. ALCON LABORATORIES, INC., Defendant.

William W. Robertson, Esq., Jeffrey A. Cohen, Esq., Robertson, Freilich, Bruno & Cohen, LLC, Newark, NJ, Bruce P. Keller, Esq., Michael R. Potenza, Esq., Debevoise & Plimpton, New York City, for Defendant.

Andrew T. Berry, Esq., Sherilyn Pastor, Esq., McCarter & English, LLP, Newark, NJ, Edward E. Vassallo, Esq., Timothy Kelley, Esq., James Gibson, Esq., Tila Duhaime, Esq., Fitzpatrick, Cella, Harper & Scinto, New York City, for Plaintiffs.

OPINION

(Amended)

BASSLER, District Judge.

This is an action arising under the Lanham Act, 15 U.S.C. § 1051, et seq. and the laws of the State of New Jersey for trademark infringement and trademark dilution. The Court has subject matter jurisdiction pursuant to 15 U.S.C. § 1121(a) and 28 U.S.C. §§ 1331 and 1338. This Court has supplemental subject matter jurisdiction over all other claims under 28 U.S.C. § 1367(a). Venue is proper in this District. 28 U.S.C. § 1391(b).

Plaintiff Pharmacia Corporation and its related companies filed a complaint on March 30, 2001 against Alcon Laboratories Inc., seeking a preliminary injunction against the use of an existing trademark. The application for a preliminary injunction was submitted to the Court for determination on the basis of five days of testimony of witnesses at an evidentiary hearing, as well as affidavits, exhibits and the transcripts of testimony given upon oral depositions.

FINDINGS OF FACT

The Court makes the following findings of fact1 and conclusions of law pursuant to Rule 52 of the Federal Rules of Civil Procedure. To the extent that any of the findings of fact might constitute conclusions of law, they are adopted as such. Conversely, to the extent that any conclusions of law constitute findings of fact, they are adopted as such.

I. THE PARTIES AND THE NATURE OF THE ACTION
A. THE PARTIES

1. Plaintiff Pharmacia Corporation is a Delaware corporation with its principal place of business located at 100 Route 206 North, Peapack, New Jersey 07977. Pharmacia Corporation is the parent corporation of the other plaintiffs: Pharmacia AB (formerly known as Pharmacia & Upjohn AB), a company organized under the laws of Sweden; Pharmacia Enterprises S.A. (formerly known as Pharmacia & Upjohn S.A.), a company organized under the laws of Luxembourg; and Pharmacia & Upjohn Company, a company organized under the laws of Delaware (collectively, "Pharmacia").

2. Defendant Alcon Laboratories, Inc. ("Alcon") is a Delaware corporation and a wholly-owned subsidiary of Alcon Holdings, which is a wholly-owned subsidiary of Alcon Universal Limited, which is a wholly owned subsidiary of Nestle S.A. Alcon's principal place of business is 6201 South Freeway, Fort Worth, Texas 76134.

3. Pharmacia and Alcon are pharmaceutical companies that manufacture and market, inter alia, ophthalmic preparations for the treatment of the eye disease glaucoma.

B. THE NATURE OF THE ACTION

4. Pharmacia initiated this civil action on March 30, 2001 under the Lanham (Trademark) Act of 1946, 15 U.S.C. § 1051, et seq. (the "Lanham Act") and New Jersey statutory and common law.

5. On April 16, 2001, Pharmacia moved for a preliminary injunction to enjoin defendant Alcon from infringing and diluting Pharmacia's federally registered Xalatan trademark in connection with Alcon's use of the name Travatan for the sale of a prostaglandin-based product used for the treatment of the eye disease glaucoma.

II. THE EYE DISEASE GLAUCOMA AND THE GLAUCOMA MARKET

6. There is no dispute about the nature of the eye disease glaucoma and the glaucoma market. This case is about the medications used in the treatment of glaucoma, a disease of the eye marked by increased intraocular pressure ("IOP") within the eye. Elevated IOP is caused by excess fluid within the eye that can result in damage to the optic disk and cause gradual loss of vision. Left untreated, glaucoma can result in blindness.

7. There is no known cure for glaucoma. The goal in treating patients with glaucoma and ocular hypertension is to decrease and maintain the IOP to within normal limits.

8. There million Americans, primarily those age 40 and over, now suffer from the disease. One million are African-Americans, for whom the disease strikes with greater frequency, is more severe and is more difficult to treat.

9. The newest class of prescription drugs used to treat elevated IOP associated with glaucoma are "prostaglandin analogues." They reduce IOP by increasing the outflow of fluid from the eye. The three largest-selling prostaglandin analogue products are Xalatan, Lumigan and Travatan. Pharmacia markets Xalatan; the generic name of its active ingredient is "latanoprost." Alcon markets Travatan; the generic name of its active ingredient is "travoprost." Allergan, Inc. ("Allergan") markets Lumigan; the generic name of its active ingredient is "bimatoprost."

10. Travatan, Xalatan and Lumigan can be dispensed only with a doctor's prescription.

11. Surveys of ophthalmologists conducted by Pharmacia in May and August of 2001 show over 95% awareness of the brand names of all major glaucoma medications, including Travatan and Xalatan.

12. The Xalatan mark as a whole is strong and is a "famous" mark among ophthalmologists.

III. PHARMACIA AND THE DEVELOPMENT OF THE XALATAN PRODUCT AND NAME

13. Alcon does not dispute Pharmacia's sales figures, advertising expenditures or that Xalatan has received media coverage.

14. Prior to Pharmacia's introduction of Xalatan, no prostaglandin product for glaucoma was available on the market in this country and many doctors were uncertain about its use because the product was widely believed to cause inflammation, pain and other detrimental effects in eyes.

15. Xalatan was a commercial success from the beginning; in its first year, sales in this country were approximately $26 million.

16. Since 1996, sales in this country have continued to increase: In 1997 sales were $126 million; in 1998 sales were $197 million; in 1999 sales were $247 million and in 2000 they were $295 million.

17. In those years, worldwide sales of Xalatan were 139, 282, 452 and 615 million dollars.

18. From its launch of Xalatan in 1996, Pharmacia undertook a massive marketing and educational campaign designed to educate the medical field about its new product and its benefits, and to encourage practitioners to switch their patients to Xalatan. This marketing and educational campaign was particularly important because of the general unfamiliarity with the use of prostaglandins for ocular indications.

19. Pharmacia has spent over $100 million educating doctors about the benefits of using prostaglandin products in the eye, and demonstrating the effectiveness of Xalatan solution. Such efforts have included seminars, publications and face-to-face meetings.

20. By 1998, Xalatan solution had become the leading branded drug for the topical treatment of glaucoma and ocular hypertension, capturing 22.5% of dispensed glaucoma prescriptions in the United States.

21. In the thirteen month period from January 2000 to January 2001, the Xalatan solution was the leader in its class of drugs dispensed.

22. Pharmacia spent large sums of money for market research for Xalatan related research in 2001. Gurreri Tr., at 368-70; Def. Ex. W (DX02498).

23. The Xalatan and Travatan products will be prescribed, dispensed and used by the same groups: physicians, pharmacists and other health care professionals and glaucoma patients.

IV. SELECTION OF THE XALATAN NAME

24. The Xalatan trademark was derived by combining the "LATAN" prefix from its generic name, latanoprost, with the "XA" portion of the code name PHXA41 used by Pharmacia during the product's development.

25. In 1997, Pharmacia obtained Federal trademark registration No. 2,118,188 for its Xalatan trademark.

26. The following paragraphs (a) thru (g) support the finding that what identifies Pharmacia's product in the marketplace and is the dominant part of the Xalatan mark is the prefix "XAL" and not the suffix "ATAN.".

(a) When Pharmacia adopted the Xalatan mark, it was aware of seven pharmaceutical marks with the suffix "ATAN" and ten more with the suffix "TAN." Def. Ex. I (DX00751-52) (Battle Dep. Ex. 1); 12/21 Tr., at 14-16 (Battle).

(b) At least three other pharmaceutical trademarks currently in the market bear trademarks with the suffix "ATAN." Def. Ex. H (DX00614) (Mintz Decl., ¶ 4); id. (DX00624-40) (Mintz Decl., Ex. 3-5) (Rynatan, Phenatan, Germ-tan).

(c) At least 11 other pharmaceutical trademarks currently in the market bear trademarks with the suffix "TAN." Id. (DX00641-72, DX00679-729) (Mintz Decl., Exs. 6-16).

(d) "AN" is the most common suffix among generic names for pharmaceutical products and the sixth most common suffix among registered trademarks in U.S. Category 005 (Pharmaceuticals). Def. Ex. G (DX00580-89) (Bruce L. Lambert, et at., "Descriptive Analysis of the Drug Name Lexicon," 56 Drug Information J.163, 170 Tbl. 3 & 171 Tbl. 4 (2001)); 12/18 Tr., at 189-91 (Lambert).

(e) Timolol is the generic name of the active ingredient of many products in a class of drugs called "beta-blockers," which traditionally have been the "first-line" topical treatment for lowering elevated IOP. Def. Ex. O (DX02073) (Harfstrand Decl., ¶ 14). For its proposed timolol-latanoprost combination product, all of the marks Pharmacia filed with the Food and Drug Administration ("FDA") and the United States Patent and Trademark Office ("PTO") begin with "Xal," none contain either the "ATAN" or "TAN" suffixes. Def. Ex. I (DX01203-28) (PTO filings for Xalaplus, Xalaplus T, Xaltimol, Xalacom Xalacomb, Xalitol and Xalcom); Garanzini Tr., at 62,99-100; Def. Ex. I (DX01259)...

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