Bayer AG has long sold its ALEVE brand pain reliever under the FLANAX trademark outside the United States. That includes in Mexico, where Bayer owns a Mexican registration for FLANAX for pain relievers. Its FLANAX analgesic has been sold in Mexico since 1976 and ranks as the country's top-selling pain reliever.
Belmora LLC registered FLANAX in the U.S. in 2004 for use in connection with “orally ingestible tablets of Naproxen Sodium for use as an analgesic” that Belmora was selling in the U.S. Bayer recently moved to cancel Belmora’s registration at the Trademark Trial and Appeal Board (TTAB), arguing that Belmora’s use of FLANAX here in the U.S. was a “blatant” attempt to confuse Latin American consumers.
In granting Bayer's bid to cancel the registration, the TTAB agreed, holding that Belmora was violating Section 14(3) of the Lanham Act by “misrepresenting the source of its goods” — linking its pain reliever with Bayer’s well-known brand name.
Noteworthy about the Board’s holding is that there is a higher bar to prove misrepresentation under Section 14(3) than to proving a likelihood of confusion under Section 2(d). Petitioners who, like Bayer, are trying to prove misrepresentation need to show that the defendant made attempts to “deliberately pass off its goods as those of petitioner” or committed “blatant misuse” of the mark. Interestingly, even with that heightened standard, the TTAB held in its opinion that the situation involving Belmora's FLANAX mark did “not present a close case.” Instead, it held that Bayer’s evidence readily established blatant misuse of the FLANAX mark in a manner calculated to trade in the U.S. on the reputation and goodwill of Bayer’s mark created by its use in Mexico.
Evidence cited by Bayer was enough to convince the Board that Belmora knew about the widespread marketing of naproxen under Bayer's FLANAX name in Mexico and other Latin American countries when Belmora selected the name for its own U.S. product, and that Belmora almost identically copied Bayer's packaging.
Even more egregious, the Board said, was that Belmora marketed its FLANAX product in the U.S. with specific allusions to the fame and success of Bayer's overseas version. One brochure said the FLANAX name was a “highly recognized top-selling brand among Latinos” and that an American version would have a “powerful attraction for Latinos by providing them with products they know, trust and prefer.” The Board felt that Belmora's repeated invocation of the reputation of Bayer's mark when marketing Belmora’s own product in the United States should be seen as an admission on Belmora’s part that Bayer's FLANAX mark was well known among U.S. retailers and Hispanic consumers to whom Belmora markets its own products.
In response, Belmora argued that it had changed its packaging and discontinued its attempts to link its FLANAX product to Bayer's product. Despite this, the TTAB found that, even if those assertions were true, Belmora's continued use of the FLANAX mark, coupled with its earlier deceptive marketing over several years as it built its business, constituted misrepresentation of the source of Belmora’s goods within the meaning of Section 14(3). In other words, Belmora had achieved a head start by initially relying on Bayer’s mark and reputation; just because Belmora may not need to rely on those unfair advantages any longer does not make Belmora less guilty of misrepresentations at the outset.
Based on the weight of this evidence, the TTAB said there was no doubt retail customers and consumers exposed to Belmora's marketing of its FLANAX product in the U.S. would draw the logical conclusion that the product was licensed or produced by the source of the same product sold under the FLANAX brand for decades south of the border. The Board stated that it had no doubt that Belmora deliberately and intentionally encouraged its customers to reach such a conclusion.
One other thing made this opinion unique. Not only did Bayer prove that Belmora deliberately tried to pass off its goods as Bayer’s, but the German company did so without owning a FLANAX trademark registration in the U.S., without ever having used the FLANAX mark in the U.S., and without having any plans to start using the FLANAX mark in the U.S. Belmora made a big argument over this when trying to convince the Board that Bayer lacked standing to cancel Belmora’s FLANAX trademark registration. In response, Bayer successfully convinced the TTAB that a misrepresentation claim under Section 14(3) — as opposed to a confusion claim Section 2(d) — does not require that same kind of use.
In explaining its rationale, the TTAB held that if Belmora is using FLANAX in the U.S. to misrepresent to U.S. consumers the source of Belmora’s products as Bayer’s Mexican products, it is Bayer who loses the ability to control its reputation and thus suffers damage. As such, the Board concluded that Bayer has a real interest in seeing Belmora’s FLANAX registration cancelled. Bayer had previously brought the case as a more conventional likelihood of confusion proceeding under Section 2(d) in 2009 but the Board dismissed it.
The Board’s decision leaves several interesting open questions for trademark practitioners to ponder. First, if Bayer had brought a civil action in an attempt to enjoin Belmora's use of FLANAX or to obtain damages in the U.S., what damages could the former claim? Would Bayer be entitled to a reasonable royalty? Would it have been entitled to recover lost profits and, if so, how could it demonstrate those lost profits?
Second, what effects if any will this decision have on the “well-known mark” doctrine? In brief, this doctrine provides for the protection of well-known marks that are neither registered nor used in the jurisdiction where protection is sought. U.S. courts, fiercely protective of the U.S.’s sovereignty, have historically been reluctant to recognize the well-known marks doctrine in cases where a company outside the U.S. seeks to rely on it. Does the Board’s decision in Bayer signal a changing of the guard regarding the U.S.’s acceptance of this highly controversial doctrine? Only time will tell, but it's certainly a decision worth noting: it cancelled an existing U.S. trademark registration for a mark that is in use, in favor of the non-domestic owner of a trademark registration — one with no use and no planned use in the U.S. For that reason alone, this is an interesting case, and a truly unique one.