Belmora LLC v. Bayer Consumer Care AG

Rule of Law:

The Lanham Act permits a foreign owner of an unregistered mark, or its U.S. sister company, to bring false association and false advertising claims under § 43(a) and a cancellation claim under § 14(3) against a U.S. registrant whose deceptive use of the mark in U.S. commerce proximately causes economic injury, even if the plaintiff has not used its own mark in U.S. commerce.

Facts:

• Bayer Consumer Care AG (BCC) registered the trademark "FLANAX" in Mexico and has sold naproxen sodium pain relievers under that mark in Mexico and other Latin American countries since 1976.
• BCC's FLANAX brand is well-known in Mexico, other Latin American countries, and among Mexican-Americans and other Hispanics in the United States, with hundreds of millions of dollars in sales, including near the U.S.-Mexico border.
• BCC has never marketed or sold its FLANAX product in the United States, but its sister company, Bayer HealthCare LLC (BHC), sells naproxen sodium pain relievers under the brand ALEVE in the U.S. market.
• Belmora LLC began selling naproxen sodium tablets in the United States under the FLANAX name in 2004 and registered the FLANAX mark in the U.S. the following year.
• Belmora's initial and later FLANAX packaging closely mimicked BCC's Mexican FLANAX packaging, using a similar color scheme, font size, and typeface.
• Belmora circulated brochures and used telemarketers claiming its FLANAX was "the direct producers of FLANAX in the US" and that the product "has been used [for] many, many years in Mexico" and is "highly recognized [and] top-selling."
• Belmora's materials led distributors, vendors, and marketers to believe its FLANAX was the same as or affiliated with BCC’s FLANAX, and at least 30 purchasers believed Belmora's products were the same as those from Mexico.

Procedural Posture:

• In 2007, Bayer Consumer Care AG (BCC) petitioned the U.S. Trademark Trial and Appeal Board (TTAB) to cancel Belmora LLC’s registration for the FLANAX mark, asserting violations of Article 6bis of the Paris Convention and Section 14(3) of the Lanham Act.
• The TTAB dismissed BCC's Article 6bis claim, concluding it was not self-executing, but allowed the Section 14(3) claim to proceed.
• In 2014, after discovery and a hearing, the TTAB ordered the cancellation of Belmora’s FLANAX registration, finding Belmora had misrepresented the source of its goods.
• Following the TTAB’s ruling, Bayer filed a separate lawsuit in the Southern District of California, alleging false association under Lanham Act § 43(a)(1)(A) for BCC, and false advertising under § 43(a)(1)(B) for both BCC and Bayer HealthCare LLC (BHC), along with California state law claims.
• Belmora LLC appealed the TTAB’s cancellation order by electing to proceed with a civil action in the Eastern District of Virginia (as appellant), arguing the TTAB erred on BCC's standing and misrepresentation finding, and sought a declaratory judgment that its actions did not violate Lanham Act § 43(a).
• Bayer (as appellee and counterclaimant) filed a counterclaim in the Eastern District of Virginia challenging the TTAB’s dismissal of its Paris Convention treaty claims.
• The California case was transferred to the Eastern District of Virginia and consolidated with Belmora’s pending action.
• Belmora LLC moved the district court for dismissal of Bayer’s § 43(a) claims under Federal Rule of Civil Procedure 12(b)(6) and for judgment on the pleadings under Rule 12(c) on the § 14(3) claim.
• The district court granted Belmora's motions, dismissing Bayer’s false association and false advertising claims for lack of standing based on its reading of Lexmark International, Inc. v. Static Control Components, Inc., and reversed the TTAB’s § 14(3) cancellation order.