Jose Felgueroso
Abogado | Attorney
A Mark Registered in the United States is Cancelled Because of a False Connection with a Mexican Mark
info@josefelgueroso.com
2018-10-05
A judge has affirmed the cancellation of a trademark registered in the United States because the defendant had deceptively marketed its mark in that country as being the same brand that has been sold in Mexico for decades.
The application of a country's trademark law is generally limited to that country's territory. In this case involving the Flanax mark, the plaintiff was able to request the cancellation of a trademark registered in the United States based on the defendant's deceptive marketing, which created a false connection with an identical Mexican brand, even though the plaintiff had not used its mark in the United States, had not registered its mark there, and had no intention of doing so. The basis for the ruling of the Trademark Trial and Appeal Board of the United States Patent and Trademark Office (the "TTAB") was that the defendant's activities in the United States affected the reputation of the plaintiff's mark in Mexico, and that US residents had been deceived by the defendant's statements. A federal appeals court upheld the TTAB's ruling.
Background
Bayer (the plaintiff) has sold analgesics and similar products under the Flanax brand in Mexico since 1976; it has not registered or used that mark in the United States, where it uses the mark "Aleve" for analgesics. Flanax is a well-known mark in Mexico and Latin America, and among Latinos in the United States. Belmora LLC (the defendant) applied to register "Flanax" in the United States for analgesics in 2003, and started selling products in the United States under that mark in 2004, using product packaging that imitated Bayer Flanax's packaging. The US Patent and Trademark Office registered Belmora's Flanax mark in 2005.
Procedural History
Bayer brought a proceeding before the TTAB to cancel Belmora's trademark registration, alleging that (1) it created a likelihood of confusion, (2) its registration had been based on fraud, (3) it violated Bayer's rights under the Paris Convention for the Protection of Industrial Property, and (4) Belmora had made false statements about the source of its products ("misrepresentation of source"). The TTAB rejected the first two grounds because Bayer had not used or registered the mark in the United States, and it rejected the third ground because the Paris Convention does not provide an independent ground to file an action before the TTAB.
The TTAB ordered, however, the cancellation of Belmora's mark based on misrepresentation of source; it had previously ruled that Bayer had standing to bring an action based on that ground, because Belmora's activities in the United States affected the reputation of Bayer's Flanax in Mexico. The TTAB found that (1) Belmora had knowingly adopted the Flanax mark, (2) it had copied Bayer's Flanax packaging design (at least initially) and its logo, and (3) Belmora's agents had mentioned Bayer's Flanax reputation during the marketing of Belmora's Flanax in the United States.
Subsequently, Bayer sued Belmora in a federal district court in California, and Belmora appealed the TTAB's ruling to a federal district court in Virginia. Both cases were consolidated in the district court in Virginia, which reversed the TTAB's ruling. Bayer appealed to the US Court of Appeals for the Fourth Circuit, which vacated the district court's judgment and held that Bayer could bring an action against Belmora based on misrepresentation of source and unfair competition, and it remanded the case to the district court in Virginia.
The Judgment of the District Court in Virginia on Remand
On remand, the district court addressed the parties' motions for summary judgment, in which they raised new issues; the district court also addressed the TTAB's ruling on misrepresentation of source. Although the district court is located in Virginia, it applied California state law, in addition to the federal Trademark Act. Bayer brought claims based on state and federal laws on unfair competition and false advertising; Belmora brought actions against Bayer based on infringement of a registered mark, unfair competition, false advertising, importation of unauthorized and infringing goods, monopolization, and tortious interference with contract.
Belmora's Claims
The judge dismissed Belmora's trademark infringement and unfair competition claims. Someone infringes another's mark when that party uses the mark to cause consumer confusion or induces others to sell the mark in a manner that causes consumer confusion. In this case, the judge found that Belmora had not submitted any evidence that Bayer had used the Flanax mark in the United States or had induced others to use it.
The judge also rejected Belmora's claims regarding the importation of unauthorized or infringing goods, monopoly, and contract interference based again on Belmora's failure to submit relevant evidence.
Bayer's Claims
The judge dismissed Bayer's claims based on false advertising and unfair competition. Belmora had brought these claims based on federal and California law. If a claim is brought outside the legally-provided period, it will fail: the claim is barred by the statute of limitations. The federal Trademark Act has no statute of limitations, but federal courts usually borrow an analogous state statute of limitations; California law has two-year, three-year, or four-year statutes of limitations for different claims. The judge found that Bayer had known about Belmora's use of the Flanax mark for at least four years, and therefore its claims were barred by California's statutes of limitations.
The judge, however, affirmed the TTAB's ruling in favor of Bayer regarding misrepresentation of source. A reviewing court will review a decision of the reviewed court if a party submits new evidence or if the decision was arbitrary. Taking into account the TTAB's findings (Belmora's knowledge of Bayer's mark, its copying of Bayer's logo and packaging, and its mention of Bayer's Flanax reputation in its marketing), the judge found that the TTAB's ruling on misrepresentation of source was not arbitrary; in addition, Belmora had submitted no new evidence on this claim after the TTAB's ruling.
Significance of the Judgment
In general, the application of a country's trademark law is limited to the territory of that country. In the United States, courts have recognized that in certain situations the activities of a non-US party with no sales in the United States create indirect effects there. In Steele v. Bulova Watch Co., a US-citizen defendant sold counterfeit watches in Mexico using a US trademark; the US Supreme Court held that the defendant's activities violated US trademark law. Although the defendant had not sold its watches in the United States, the court found that US residents bought the defendant's watches in Mexico and took them to the United States; the reputation of the defendant's Mexican watches thus affected the reputation of the plaintiff's watches in the United States.
The Flanax case is the mirror image of the Bulova case: the activities of a US-based defendant affected the reputation of a Mexican mark. The TTAB stated in its ruling that although Bayer had not used its Flanax mark in the United States, Belmora had aimed its activities at deceiving consumers in that country. In addition to protecting the rights of trademark holders, trademark law also protects consumers from confusion and deception.
Cross-border travel and the global nature of the internet will probably lead to more situations like the one involving Flanax: the activities of someone in one country will affect the reputation of a mark in another country. Plaintiffs will still need to provide a basis for personal jurisdiction and meet certain substantive requirements (for example, that the activities have a substantial effect on US commerce), but they will have a cause of action in the United States.