E.D. Va. Reverses TTAB and Holds No Lanham Act Standing Without US Trademark Use or Registration | Practical Law

E.D. Va. Reverses TTAB and Holds No Lanham Act Standing Without US Trademark Use or Registration | Practical Law

In Belmora LLC v. Bayer Consumer Care AG, the US District Court for the Eastern District of Virginia reversed the US Trademark Trial and Appeal Board's (TTAB) cancellation of Belmora's federal trademark registration finding that, without its own registration or use in the US, Bayer did not have standing to challenge Belmora's registration.

E.D. Va. Reverses TTAB and Holds No Lanham Act Standing Without US Trademark Use or Registration

by Practical Law Intellectual Property & Technology
Published on 10 Feb 2015 • USA (National/Federal)
In Belmora LLC v. Bayer Consumer Care AG, the US District Court for the Eastern District of Virginia reversed the US Trademark Trial and Appeal Board's (TTAB) cancellation of Belmora's federal trademark registration finding that, without its own registration or use in the US, Bayer did not have standing to challenge Belmora's registration.
On February 6, 2015, in a matter of first impression, the US District Court for the Eastern District of Virginia issued an opinion in Belmora LLC v. Bayer Consumer Care AG, finding that without its own registration or use in the US, Bayer Consumer Care AG did not have standing under the Lanham Act to seek cancellation of Belmora LLC's FLANAX mark (No. 1:14-cv-00847 (E.D. Va. Feb. 6, 2015)).

Background

Belmora is a Virginia company that sells over-the-counter pain relief products under the FLANAX mark, which it has been using in US commerce since 2004. Belmora obtained a registration for the FLANAX mark from the USPTO in 2005, based on an application filed in 2003. Bayer, a Swiss corporation, has sold analgesics in Mexico under its Mexican-registered FLANAX mark since the 1970s. Bayer does not use the FLANAX mark in the US nor own a US registration for that mark. In 2004, Bayer tried to register the FLANAX mark in the US but its application was refused because of Belmora's earlier-filed application.
In 2007, Bayer petitioned the US Trademark Trial and Appeal Board (TTAB) to cancel Belmora's registration for the FLANAX mark, asserting various grounds for relief including likelihood of confusion, fraud and misrepresentation of source. Ultimately, the TTAB cancelled Belmora's registration for the FLANAX mark on the ground that Belmora misrepresented the source of its FLANAX analgesic in the US as a Bayer product (for more information on the TTAB's decision see Legal Update, Decision of First Impression Grants Foreign Trademark Owner’s Petition to Cancel US Registration of Mark: TTAB).
The US District Court for the Eastern District of Virginia reviewed the TTAB's decision on appeal, as well as additional claims raised by the parties (see 15 U.S.C. § 1071(b)).

Outcome

On appeal, the court reviewed the TTAB's decision de novo and considered Belmora's motions to dismiss Bayer's Lanham Act false designation of origin and false advertising claims. Although the court identified six issues before it, it focused on the central question of whether the Lanham Act allows the owner of a foreign mark that is not registered in the US and has never been used in US commerce to assert priority rights over a mark that is registered in the US by another party and is used in US commerce. The court determined that it does not.

Lanham Act Claims

In considering Bayer's various Lanham Act claims, the court applied the Supreme Court's two-prong analysis from Lexmark Int'l, Inc. v. Static Control Components, Inc., to determine whether Bayer had standing.
Under Lexmark, a statutory cause of action extends only to plaintiffs who can show both:
  • Interests that fall within the zone of interests Congress intended to protect under the statute.
  • Injuries or harm tied to the defendant's conduct.
(134 S. Ct. 1377 (2014)).
The court reasoned that Bayer's claims did not fall within the zone of interest protected by the Lanham Act because Bayer does not possess a protectable interest in the FLANAX mark in the US. In particular, the court noted that although the Lanham Act protects qualifying unregistered trademarks, the unregistered marks must be used in US commerce and Bayer did not show that it used the FLANAX mark in the US.
On the second prong, the court pointed out that even if Bayer had satisfied the zone of interest test, it failed to plead sufficient facts to show that Belmora's alleged violations of Section 43(a) were the proximate cause of Bayer's economic injury. Bayer argued that it suffered economic loss under the Lanham Act because it was unable to convert consumers from its Mexican-branded FLANAX to its US-branded ALEVE product. The court, however, rejected this argument, stating that extending the Lanham Act to protect an international mark not used in US commerce would be contrary to the purpose of the Lanham Act, which seeks to protect US marks. The court noted two exceptions to this general rule, the famous marks doctrine stated in De Beers LV Trademark Ltd. v. DeBeers Diamond Syndicate, Inc., and the diversion of sales theory stated in McBee v. Delica Co., but declined to apply either exception as neither has been adopted by the US Court of Appeals for the Fourth Circuit (440 F. Supp.2d 249 (S.D.N.Y. 2006); 417 F.3d 107 (1st Cir. 2005)).
The court also found that Bayer failed to plead facts showing it suffered reputation harm as a result of Belmora's actions. Noting that mere confusion does not amount to reputational injury, the court pointed out that although the Lanham Act gives trademark owners the right to control the quality of its goods, Bayer must show actual reputational injury based on a protectable interest in the mark, which the court already determined Bayer did not have.
Holding that Bayer lacked standing, the court:
  • Granted Belmora's motions to dismiss Bayer's false designation of origin and false advertising claims.
  • Reversed the TTAB's holding that Bayer had standing to seek cancellation of Belmora's trademark registration.
  • Ordered the reinstatement of Belmora's FLANAX trademark registration.

State Law Claims

The court also dismissed Bayer's three state law claims because they were dependant on the federal claims for which Bayer lacked standing.

Article 6bis Counterclaim

In the underlying TTAB action, Bayer had asserted a violation of Article 6bis of the Paris Convention. The district court affirmed the TTAB dismissal of this claim.

Practical Implications

This decision is noteworthy for defining the Lanham Act's reach by reversing the TTAB's decision that allowed a foreign trademark owner to bring a Lanham Act misrepresentation claim even where it had not used or registered its own mark in the US.
For more information on practice before the TTAB, including standing and other procedural issues, see Practice Notes, TTAB Oppositions and Cancellations: Practice and Procedure and TTAB Oppositions and Cancellations: Grounds and Defenses.