Belmora LLC v. Bayer Consumer Care AG
Filing
PUBLISHED AUTHORED OPINION filed. Originating case number: 1:14-cv-00847-GBL-JFA. [999780321]. [15-1335]
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PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 15-1335
BELMORA LLC,
Plaintiff - Appellee,
v.
BAYER
CONSUMER
CARE
AG,
a
Swiss
corporation;
HEALTHCARE LLC, a Delaware Limited Liability Company,
BAYER
Defendants - Consolidated Plaintiffs - Appellants,
v.
BELMORA LLC, a Virginia Limited Liability Company;
BELCASTRO, an individual; DOES, 1-10, inclusive,
JAMIE
Consolidated Defendants - Appellees,
and
MICHELLE K. LEE, Undersecretary for Intellectual Property
and Director of the United States Patent and Trademark
Office (Director),
Intervenor.
--------------------AMERICAN INTELLECTUAL PROPERTY LAW ASSOCIATION,
Amicus Curiae.
Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria. Gerald Bruce Lee, District
Judge. (1:14-cv-00847-GBL-JFA)
Appeal: 15-1335
Argued:
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October 27, 2015
Decided:
March 23, 2016
Before AGEE, FLOYD, and THACKER, Circuit Judges.
Vacated and remanded by published opinion. Judge Agee wrote the
opinion, in which Judge Floyd and Judge Thacker joined.
ARGUED: Bradley Louis Cohn, PATTISHALL, MCAULIFFE, NEWBURY,
HILLIARD & GERALDSON LLP, Chicago, Illinois, for Appellants.
Martin Schwimmer, LEASON ELLIS LLP, White Plains, New York, for
Appellee.
Lewis Yelin, UNITED STATES DEPARTMENT OF JUSTICE,
Washington, D.C., for Intervenor. ON BRIEF: Phillip Barengolts,
Andrew R.W. Hughes, PATTISHALL, MCAULIFFE, NEWBURY, HILLIARD &
GERALDSON LLP, Chicago, Illinois; Robert J. Shaughnessy, Eric C.
Wiener,
WILLIAMS
&
CONNOLLY
LLP,
Washington,
D.C.,
for
Appellants.
Craig C. Reilly, Alexandria, Virginia; John L.
Welch, WOLF, GREENFIELD & SACKS, P.C., Boston, Massachusetts;
Lauren B. Sabol, LEASON ELLIS LLP, White Plains, New York;
Rebecca Tushnet, GEORGETOWN UNIVERSITY LAW CENTER, Washington,
D.C., for Appellees.
Mark R. Freeman, Civil Division, UNITED
STATES DEPARTMENT OF JUSTICE, Washington, D.C.; Dana J. Boente,
United States Attorney, Benjamin C. Mizer, Principal Deputy
Assistant Attorney General, OFFICE OF THE UNITED STATES
ATTORNEY,
Washington,
D.C.;
Nathan
K.
Kelley,
Solicitor,
Christina J. Hieber, Associate Solicitor, Mary Beth Walker,
Associate Solicitor, Benjamin T. Hickman, Associate Solicitor,
UNITED STATES PATENT AND TRADEMARK OFFICE, Alexandria, Virginia,
for
Intervenor.
Sharon
A.
Israel,
President,
AMERICAN
INTELLECTUAL
PROPERTY
LAW
ASSOCIATION,
INC.,
Arlington,
Virginia; Jennifer L. Kovalcik, STITES & HARBISON, PLLC,
Nashville, Tennessee, for Amicus Curiae.
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AGEE, Circuit Judge:
In this unfair competition case, we consider whether the
Lanham Act permits the owner of a foreign trademark and its
sister company to pursue false association, false advertising,
and trademark cancellation claims against the owner of the same
mark in the United States.
Bayer Consumer Care AG (“BCC”) owns
the trademark “FLANAX” in Mexico and has sold naproxen sodium
pain relievers under that mark in Mexico (and other parts of
Latin America) since the 1970s.
Belmora LLC owns the FLANAX
trademark in the United States and has used it here since 2004
in the sale of its naproxen sodium pain relievers.
U.S.
sister
company
Bayer
HealthCare
LLC
BCC and its
(“BHC,”
and
collectively with BCC, “Bayer”) contend that Belmora used the
FLANAX mark to deliberately deceive Mexican-American consumers
into thinking they were purchasing BCC’s product.
BCC successfully petitioned the U.S. Trademark Trial and
Appeal Board (“TTAB”) to cancel Belmora’s registration for the
FLANAX mark based on deceptive use.
decision to the district court.
Belmora appealed the TTAB’s
In the meantime, BCC filed a
separate complaint for false association against Belmora under
§ 43 of the Lanham Act, 15 U.S.C. § 1125, and in conjunction
with BHC, a claim for false advertising.
were
consolidated,
the
district
3
court
After the two cases
reversed
the
TTAB’s
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cancellation order and dismissed the false association and false
advertising claims.
Bayer appeals those decisions.
For the reasons outlined
below, we vacate the judgment of the district court and remand
this case for further proceedings consistent with this opinion.
I. Background
This
grant
of
appeal
comes
Belmora’s
to
Federal
us
following
Rule
of
the
Civil
district
Procedure
court’s
12(b)(6)
motion to dismiss Bayer’s complaint and Belmora’s Rule 12(c)
motion
for
judgment
cancellation claim.
on
the
pleadings
on
the
trademark
In both circumstances, we “assume all well-
pled facts to be true and draw all reasonable inferences in
favor of” Bayer as the plaintiff.
Cooksey v. Futrell, 721 F.3d
226, 234 (4th Cir. 2013). 1
A. The FLANAX Mark
BCC
registered
pharmaceutical
the
products,
trademark
analgesics,
FLANAX
and
in
Mexico
for
anti-inflammatories.
It has sold naproxen sodium tablets under the FLANAX brand in
Mexico since 1976.
FLANAX sales by BCC have totaled hundreds of
millions of dollars, with a portion of the sales occurring in
1
We have omitted internal quotation marks, alterations, and
citations here and throughout this opinion, unless otherwise
noted.
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Mexican cities
brand
is
near
the
well-known
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United
in
States
Mexico
and
border.
other
BCC’s
Latin
FLANAX
American
countries, as well as to Mexican-Americans and other Hispanics
in the United States, but BCC has never marketed or sold its
FLANAX in the United States.
Instead, BCC’s sister company,
BHC, sells naproxen sodium pain relievers under the brand ALEVE
in the United States market.
Belmora LLC began selling naproxen sodium tablets in the
United States as FLANAX in 2004.
registered
early
the
FLANAX
Mexican
FLANAX
mark
packaging
FLANAX
packaging
in
The following year, Belmora
the
(below,
left)
(right),
scheme, font size, and typeface.
5
United
States.
closely
displaying
Belmora’s
mimicked
a
BCC’s
similar
color
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J.A. 145.
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Belmora later modified its packaging (below), but the
color scheme, font size, and typeface remain similar to that of
BCC’s FLANAX packaging.
Id.
In
addition
to
using
similar
packaging,
Belmora
made
statements implying that its FLANAX brand was the same FLANAX
product sold by BCC in Mexico.
For example, Belmora circulated
a brochure to prospective distributors that stated,
For generations, Flanax has been a brand that Latinos
have turned to for various common ailments.
Now you
too can profit from this highly recognized topselling
brand among Latinos.
Flanax is now made in the U.S.
and continues to show record sales growth everywhere
it is sold. Flanax acts as a powerful attraction for
Latinos by providing them with products they know,
trust and prefer.
J.A. 196.
Belmora also employed telemarketers and provided them
with a script containing similar statements.
This sales script
stated that Belmora was “the direct producers of FLANAX in the
US” and that “FLANAX is a very well known medical product in the
Latino
American
market,
for
FLANAX
6
is
sold
successfully
in
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Mexico.”
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Id.
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Belmora’s “sell sheet,” used to solicit orders
from retailers, likewise claimed that “Flanax products have been
used
[for]
many,
many
years
in
Mexico”
and
produced in the United States by Belmora LLC.”
are
“now
being
Id.
Bayer points to evidence that these and similar materials
resulted
in
Belmora’s
distributors,
vendors,
and
marketers
believing that its FLANAX was the same as or affiliated with
BCC’s
FLANAX.
For
instance,
Belmora
received
questions
regarding whether it was legal for FLANAX to have been imported
from Mexico.
And an investigation of stores selling Belmora’s
FLANAX “identified at least 30 [purchasers] who believed that
the Flanax products . . . were the same as, or affiliated with,
the Flanax products they knew from Mexico.”
J.A. 416.
B. Proceedings Below
1.
In
2007,
BCC
petitioned
the
TTAB
to
cancel
Belmora’s
registration for the FLANAX mark, arguing that Belmora’s use and
registration of the FLANAX mark violated Article 6bis of the
Paris Convention “as made applicable by Sections 44(b) and (h)
of the Lanham Act.”
J.A. 89.
BCC also sought cancellation of
Belmora’s registration under § 14(3) of the Lanham Act because
Belmora had used the FLANAX mark “to misrepresent the source of
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the goods . . . [on] which the mark is used.”
Id.; see also
Lanham Act § 14(3), 15 U.S.C. § 1064(3).
The
TTAB
dismissed
BCC’s
Article
6bis
claim,
concluding
that Article 6bis “is not self-executing” and that § 44 of the
Lanham
Act
did
cancellation.”
not
J.A.
§ 14(3)
claim
to
hearing,
the
TTAB
registration,
provide
95.
However,
proceed.
ordered
concluding
“an
In
independent
the
2014,
after
cancellation
that
Belmora
TTAB
allowed
for
Bayer’s
discovery
and
Belmora’s
of
had
basis
FLANAX
misrepresented
a
the
source of the FLANAX goods and that the facts “d[id] not present
a close case.”
J.A. 142.
The TTAB noted that Belmora 1) knew
the favorable reputation of Bayer’s FLANAX product, 2) “copied”
Bayer’s packaging, and 3) “repeatedly invoked” that reputation
when marketing its product in the United States.
J.A. 143-45.
2.
Shortly after the TTAB’s ruling, Bayer filed suit in the
Southern
District
of
California,
alleging
that
1)
BCC
was
injured by Belmora’s false association with its FLANAX product
in violation of Lanham Act § 43(a)(1)(A), and 2) BCC and BHC
were both injured by Belmora’s false advertising of FLANAX under
§ 43(a)(1)(B).
The complaint also alleged three claims under
California state law.
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Belmora
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meanwhile
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appealed
the
TTAB’s
cancellation
order
and elected to proceed with the appeal as a civil action in the
Eastern District of Virginia. 2
It argued that the TTAB erred in
concluding that Bayer “had standing and/or a cause of action”
under § 14(3) and in finding that Belmora had misrepresented the
source
of
its
goods.
declaration
that
association
and
its
J.A.
218.
actions
false
Belmora
had
advertising
not
also
violated
provisions
of
sought
the
a
false
Lanham
Act
§ 43(a), as Bayer had alleged in the California district court
proceeding.
Bayer filed a counterclaim 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 then moved the district court to dismiss Bayer’s § 43(a)
claims under Rule 12(b)(6) and for judgment on the pleadings
under Rule 12(c) on the § 14(3) claim.
On February 6, 2015,
after
issued
two
hearings,
the
district
court
a
memorandum
opinion and order ruling in favor of Belmora across the board.
The
. . .
has
district
a
court
similar
acknowledged
trade
dress
2
to
that
“Belmora’s
Bayer’s
A party to a cancellation proceeding who
with the TTAB’s decision may either “appeal to”
of Appeals for the Federal Circuit, 15 U.S.C.
elect to “have remedy by a civil action” in the
id. § 1071(b). Belmora chose the latter option.
9
FLANAX
FLANAX
and
is
is dissatisfied
the U.S. Court
§ 1071(a), or
district court,
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marketed
in
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such
Bayer’s FLANAX.”
a
way
that
J.A. 475.
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capitalizes
on
the
goodwill
of
It nonetheless “distilled” the case
“into one single question”:
Does the Lanham Act allow the owner of a foreign mark
that is not registered in the United States and
further has never used the mark in United States
commerce to assert priority rights over a mark that is
registered in the United States by another party and
used in United States commerce?
J.A. 476.
The district court concluded that “[t]he answer is
no” based on its reading of the Supreme Court’s decision in
Lexmark International, Inc. v. Static Control Components, Inc.,
134 S. Ct. 1377 (2014).
J.A. 476.
Accordingly, the district
court dismissed Bayer’s false association and false advertising
claims for lack of standing.
At the same time, it reversed the
TTAB’s § 14(3) cancellation order.
Bayer
filed
jurisdiction
Trademark
under
Office
a
timely
28
notice
U.S.C.
(“USPTO”)
§
of
1291.
intervened
appeal,
The
to
and
U.S.
defend
we
have
Patent
the
and
TTAB’s
decision to cancel Belmora’s registration and to argue that the
Lanham Act conforms to the United States’ commitments in Article
6bis of the Paris Convention. 3
3
The district court had agreed with the TTAB that Article
6bis does not create an independent cause of action for the
cancellation of Belmora’s FLANAX registration.
Because Bayer
appears to have abandoned its treaty claims on appeal and their
resolution is not necessary to our decision, we do not address
any issue regarding the Paris Convention arguments.
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II. Discussion
We review de novo the district court’s decision to dismiss
a proceeding under Rules 12(b)(6) and 12(c), accepting as true
all well-pleaded allegations in the plaintiff’s complaint and
drawing
all
reasonable
factual
inferences
in
the
plaintiff’s
favor.
Priority Auto Grp., Inc. v. Ford Motor Co., 757 F.3d
137, 139 (4th Cir. 2014); see also Bell Atl. Corp. v. Twombly,
550 U.S. 544, 555–56 (2007).
In ruling on a motion to dismiss,
“a court evaluates the complaint in its entirety, as well as
documents attached or incorporated into the complaint.”
E.I. du
Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435, 448
(4th Cir. 2011).
A. False Association and False Advertising Under Section 43(a)
The district court dismissed Bayer’s false association 4 and
false advertising claims because, in its view, the claims failed
to
satisfy
Lexmark.
the
standards
set
forth
by
the
Supreme
Court
in
At the core of the district court’s decision was its
conclusion that 1) Bayer’s claims fell outside the Lanham Act’s
“zone of interests” –- and are not cognizable -- “because Bayer
4
As the district court pointed out, we have sometimes
denominated
Lanham
Act
§
43(a)(1)(A)
claims
as
“false
designation” claims.
We think it preferable to follow the
Supreme Court’s terminology in Lexmark and instead refer to such
claims as those of “false association,” although the terms can
often be used interchangeably.
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does not possess a protectable interest in the FLANAX mark in
the United States,” J.A. 485, and 2) that a “cognizable economic
loss under the Lanham Act” cannot exist as to a “mark that was
not used in United States commerce.”
J.A. 488-89.
On appeal, Bayer contends these conclusions are erroneous
as a matter of law because they conflict with the plain language
of § 43(a) and misread Lexmark.
1.
“While much of the Lanham Act addresses the registration,
use, and infringement of trademarks and related marks, § 43(a)
. . .
goes
beyond
trademark
protection.”
Dastar
Corp.
v.
Twentieth Century Fox Film Corp., 539 U.S. 23, 28-29 (2003).
Written in terms of the putative defendant’s conduct, § 43(a)
sets
forth
unfair
competition
causes
of
action
for
false
association and false advertising:
Any person who, on or in connection with any goods or
services, or any container for goods, uses in commerce
any word, term, name, symbol, or device, or any
combination thereof, or any false designation of
origin, false or misleading description of fact, or
false or misleading representation of fact, which -(A) [False Association:] is likely to cause
confusion, or to cause mistake, or to deceive as
to the affiliation, connection, or association of
such person with another person, or as to the
origin, sponsorship, or approval of his or her
goods, services, or commercial activities by
another person, or
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(B)
[False
Advertising:]
in
commercial
advertising
or
promotion,
misrepresents
the
nature, characteristics, qualities, or geographic
origin of his or her or another person’s goods,
services, or commercial activities,
shall be liable in a civil action by any person who
believes that he or she is or is likely to be damaged
by such act.
Lanham Act § 43(a)(1), 15 U.S.C. § 1125(a)(1).
Subsection A,
which
“affiliation,
creates
liability
for
statements
as
to
connection, or association” of goods, describes the cause of
action
creates
known
as
“false
liability
characteristics,
association.”
for
qualities,
Subsection
“misrepresent[ing]
or
geographic
B,
the
origin”
which
nature,
of
goods,
defines the cause of action for “false advertising.”
Significantly,
the
plain
language
of
§
43(a)
does
not
require that a plaintiff possess or have used a trademark in
U.S. commerce as an element of the cause of action.
Section
43(a) stands in sharp contrast to Lanham Act § 32, which is
titled as and expressly addresses “infringement.”
15 U.S.C.
§ 1114 (requiring for liability the “use in commerce” of “any
reproduction,
counterfeit,
copy,
or
registered mark” (emphasis added)).
colorable
imitation
of
a
Under § 43(a), it is the
defendant’s use in commerce -- whether of an offending “word,
term, name, symbol, or device” or of a “false or misleading
description [or representation] of fact” -- that creates the
injury under the terms of the statute.
13
And here the alleged
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offending “word, term, name, symbol, or device” is Belmora’s
FLANAX mark.
What § 43(a) does require is that Bayer was “likely to be
damaged” by Belmora’s “use[] in commerce” of its FLANAX mark and
related advertisements.
The
Supreme
Court
recently
considered
the breadth of this “likely to be damaged” language in Lexmark,
a false advertising case arising from a dispute in the usedprinter-cartridge market.
134 S. Ct. at 1383, 1388.
The lower
courts in Lexmark had analyzed the case in terms of “prudential
standing” -– that is, on grounds that are “prudential” rather
than constitutional.
Id. at 1386.
The Supreme Court, however,
observed that the real question in Lexmark was “whether Static
Control has a cause of action under the statute.”
Id. at 1387.
This query, in turn, hinged on “a straightforward question of
statutory
interpretation”
to
which
principles” of interpretation.
it
applied
Id. at 1388.
“traditional
As a threshold
matter, the Supreme Court noted that courts must be careful not
to import requirements into this analysis that Congress has not
included in the statute:
We do not ask whether in our judgment Congress should
have authorized Static Control’s suit, but whether
Congress in fact did so. Just as a court cannot apply
its independent policy judgment to recognize a cause
of action that Congress has denied, it cannot limit a
cause of action that Congress has created merely
because ‘prudence’ dictates.
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The Court concluded that § 43(a)’s broad authorization --
permitting suit by “any person who believes that he or she is or
is likely to be damaged” -- should not be taken “literally” to
reach the limits of Article III standing, but is framed by two
“background principles,” which may overlap.
Id.
First, a plaintiff’s claim must fall within the “zone of
interests” protected by the statute.
Id.
The scope of the zone
of interests is not “especially demanding,” and the plaintiff
receives the “benefit of any doubt.”
Id. at 1389.
Because the
Lanham Act contains an “unusual, and extraordinarily helpful”
purpose statement in § 45, identifying the statute’s zone of
interests “requires no guesswork.”
Id.
Section 45 provides:
The intent of this chapter is to regulate commerce
within the control of Congress by making actionable
the deceptive and misleading use of marks in such
commerce; to protect registered marks used in such
commerce from interference by State, or territorial
legislation; to protect persons engaged in such
commerce against unfair competition; to prevent fraud
and deception in such commerce by the use of
reproductions,
copies,
counterfeits,
or
colorable
imitations of registered marks; and to provide rights
and remedies stipulated by treaties and conventions
respecting
trademarks,
trade
names,
and
unfair
competition entered into between the United States and
foreign nations.
Lanham Act § 45, 15 U.S.C. § 1127. 5
5
In the same section, the Lanham Act defines “commerce” as
“all commerce which may lawfully be regulated by Congress.”
Lanham Act § 45, 15 U.S.C. § 1227. We have previously construed
this phrase to mean that the term is “coterminous with that
(Continued)
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The Supreme Court observed that “[m]ost of the enumerated
purposes are relevant to a false-association case,” while “a
typical
goal
false-advertising
of
‘protecting
case
persons
will
engaged
implicate
in
only
commerce
control of Congress against unfair competition.’”
S. Ct. at 1389.
zone
of
the
Act’s
within
the
Lexmark, 134
The Court concluded “that to come within the
interests
in
a
suit
for
false
advertising
under
[§ 43(a)], a plaintiff must allege an injury to a commercial
interest in reputation or sales.”
The
statutory
second
cause
Lexmark
of
Id. at 1390.
background
action
is
principle
limited
to
is
that
plaintiffs
“a
whose
injuries are proximately caused by violations of the statute.”
Id.
the
The injury must have a “sufficiently close connection to
conduct
the
statute
prohibits.”
Id.
In
the
§ 43(a)
context, this means “show[ing] economic or reputational injury
flowing directly from the deception wrought by the defendant’s
advertising; and that that occurs when deception of consumers
causes them to withhold trade from the plaintiff.”
Id. at 1391.
commerce that Congress may regulate under the Commerce Clause of
the United States Constitution.” Int’l Bancorp, LLC v. Societe
des Bains de Mer et du Cercle des Etrangers a Monaco, 329 F.3d
359, 363-64 (4th Cir. 2003).
“Commerce” in Lanham Act context
is therefore an expansive concept that “necessarily includes all
the explicitly identified variants of interstate commerce,
foreign trade, and Indian commerce.”
Id. at 364 (citing U.S.
Const. art. I, § 8, cl.3); see also infra n.6).
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The
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primary
lesson
from
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Lexmark is
clear:
courts
must
interpret the Lanham Act according to what the statute says.
To
determine
of
whether
plaintiffs
whom
traditional
1387.
a
plaintiff,
Congress
principles
has
of
“falls
within
authorized
statutory
to
the
sue,”
class
we
interpretation.”
“apply
Id.
at
The outcome will rise and fall on the “meaning of the
congressionally enacted provision creating a cause of action.”
Id. at 1388.
We now turn to apply these principles to the case before
us.
2.
a.
We
adopted
first
by
address
the
the
district
position,
court,
that
pressed
a
by
Belmora
plaintiff
must
and
have
initially used its own mark in commerce within the United States
as a condition precedent to a § 43(a) claim.
In dismissing
BCC’s § 43(a) claims, the district court found dispositive that
“Bayer failed to plead facts showing that it used the FLANAX
mark in commerce in [the] United States.”
J.A. 487.
Upon that
ground, the district court held “that Bayer does not possess a
protectable interest in the [FLANAX] mark.”
As
noted
earlier,
such
a
Id.
requirement
is
absent
§ 43(a)’s plain language and its application in Lexmark.
17
from
Under
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the statute, the defendant must have “use[d] in commerce” the
offending “word, term, name, [or] symbol,” but the plaintiff
need
only
“believe[]
damaged by such act.”
It
is
important
that
he
or
she
is
or
is
likely
to
be
Lanham Act § 43(a), 15 U.S.C. § 1125(a).
to
emphasize
that
this
is
an
competition case, not a trademark infringement case.
unfair
Belmora
and the district court conflated the Lanham Act’s infringement
provision
in
§ 32
(which
authorizes
suit
only
“by
the
registrant,” and thereby requires the plaintiff to have used its
own mark in commerce) with unfair competition claims pled in
this case under § 43(a).
Section 32 makes clear that Congress
knew how to write a precondition of trademark possession and use
into a Lanham Act cause of action when it chose to do so.
has not done so in § 43(a).
U.S.
16,
23
(1983)
It
See Russello v. United States, 464
(“[W]here
Congress
includes
particular
language in one section of a statute but omits it in another
section of the same Act, it is generally presumed that Congress
acts intentionally and purposely in the disparate inclusion or
exclusion.”).
Given
statutory
that
Lexmark
language,
advises
“apply[ing]
courts
to
traditional
adhere
to
principles
the
of
statutory interpretation,” Lexmark, 134 S. Ct. at 1388, we lack
authority to introduce a requirement into § 43(a) that Congress
plainly omitted.
Nothing in Lexmark can be read to suggest that
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§ 43(a) claims have an unstated requirement that the plaintiff
have
first
device)
in
used
its
own
U.S.
commerce
mark
(word,
before
a
term,
cause
of
name,
symbol,
action
will
or
lie
against a defendant who is breaching the statute.
The district court thus erred in requiring Bayer, as the
plaintiff, to have pled its prior use of its own mark in U.S.
commerce
when
it
is
the
defendant’s
use
of
a
mark
or
misrepresentation that underlies the § 43(a) unfair competition
cause
of
action.
Having
made
this
foundational
error,
the
district court’s resolution of the issues requires reversal. 6
Admittedly, some of our prior cases appear to have treated
a plaintiff’s use of a mark in United States commerce as a
6
Even though the district court’s error in transposing
§ 43(a)’s requirements for a defendant’s actions upon the
plaintiff skews the entire analysis, the district court also
confused the issues by ill-defining the economic location of the
requisite unfair competition acts. As noted earlier, supra n.5,
a defendant’s false association or false advertising conduct
under § 43(a) must occur in “commerce within the control of
Congress.” Such commerce is not limited to purchases and sales
within the territorial limits of the United States as the
district court seems to imply at times with regard to § 43(a)
and § 14(3) claims.
See J.A. 483, 506 (as to § 14(3), stating
that “Bayer did not use the FLANAX mark in the United States”);
J.A. 487 (as to § 43(a), stating that “Bayer failed to plead
facts showing that it used the FLANAX mark in commerce in [the]
United States”).
Instead, as we explained in International
Bancorp, Lanham Act “commerce” includes, among other things,
“foreign trade” and is not limited to transactions solely within
the borders of the United States.
Int’l Bancorp, 329 F.3d at
364.
Of course, any such “foreign trade” must satisfy the
Lexmark “zone of interests” and “proximate cause” requirements
to be cognizable for Lanham Act purposes.
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prerequisite for a false association claim.
See Lamparello v.
Falwell, 420 F.3d 309, 313 (4th Cir. 2005) (“Both infringement
[under § 32] and false designation of origin [under § 43(a)]
have
[the
same]
five
elements.”);
People
for
the
Ethical
Treatment of Animals v. Doughney, 263 F.3d 359, 364 (4th Cir.
2001) (same); Int’l Bancorp, 329 F.3d 361 n.2 (“[T]he tests for
trademark
infringement
and
unfair
competition
. . .
are
identical.”); Lone Star Steakhouse & Saloon v. Alpha of Va.,
Inc., 43 F.3d 922, 930 (4th Cir. 1995) (“[T]o prevail under
§§ 32(1) and 43(a) of the Lanham Act for trademark infringement
and
unfair
demonstrate
competition,
that
it
has
respectively,
a
valid,
a
complainant
protectible
must
trademark[.]”).
However, none of these cases made that consideration the ratio
decidendi of its holding or analyzed whether the statute in fact
contains such a requirement.
Trademarks
and
Unfair
See, e.g., 5 J. Thomas McCarthy,
Competition
§ 29:4
(4th
ed.
2002)
(observing that International Bancorp merely “assumed that to
trigger Lanham Act § 43(a), the plaintiff’s mark must be ‘used
in commerce’”).
which
provides
Moreover, all of these cases predate Lexmark,
the
interpreting § 43(a).
applicable
Supreme
Court
precedent
See U.S. Dep’t of Health & Human Servs.
v. Fed. Labor Relations Auth., 983 F.2d 578, 581 (4th Cir. 1992)
(“A decision by a panel of this court, or by the court sitting
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en banc, does not bind subsequent panels if the decision rests
on authority that subsequently proves untenable.”).
Although the plaintiffs’ use of a mark in U.S. commerce was
a fact in common in the foregoing cases, substantial precedent
reflects that § 43(a) unfair competition claims come within the
statute’s
protectable
preconditions
Belmora.
adopted
zone
by
the
of
interests
district
court
without
and
advanced
the
by
As the Supreme Court has pointed out, § 43(a) “goes
beyond trademark protection.”
Dastar Corp., 539 U.S. at 29.
For example, a plaintiff whose mark has become generic –- and
therefore not protectable –- may plead an unfair competition
claim
against
“fail[s]
a
competitor
adequately
to
that
identify
uses
that
generic
name
and
itself
as
distinct
from
the
first organization” such that the name causes “confusion or a
likelihood of confusion.”
Blinded Veterans Ass’n v. Blinded Am.
Veterans Found., 872 F.2d 1035, 1043 (D.C. Cir. 1989); see also
Kellogg Co. v. Nat’l Biscuit Co., 305 U.S. 111, 118-19 (1938)
(requiring the defendant to “use reasonable care to inform the
public of the source of its product” even though the plaintiff’s
“shredded wheat” mark was generic and therefore unprotectable);
Singer Mfg. Co. v. June Mfg. Co., 163 U.S. 169, 203-04 (1896)
(same, for “Singer” sewing machines).
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Likewise, in a “reverse passing off” case, the plaintiff
need not have used a mark in commerce to bring a § 43(a) action. 7
A reverse-passing-off plaintiff must prove four elements: “(1)
that the work at issue originated with the plaintiff; (2) that
origin of the work was falsely designated by the defendant; (3)
that
the
false
designation
of
origin
was
likely
to
cause
consumer confusion; and (4) that the plaintiff was harmed by the
defendant’s false designation of origin.”
Universal Furniture
Int’l, Inc. v. Collezione Europa USA, Inc., 618 F.3d 417, 438
(4th Cir. 2010).
Thus, the plaintiff in a reverse passing off
case must plead and prove only that the work “originated with”
him -- not that he used the work (which may or may not be
associated with a mark) in U.S. commerce.
Id.
The generic mark and reverse passing off cases illustrate
that § 43(a) actions do not require, implicitly or otherwise,
that a plaintiff have first used its own mark in United States
commerce.
If such a use were a condition precedent to bringing
a § 43(a) action, the generic mark and reverse passing off cases
could not exist.
7
Reverse passing off occurs when a “producer misrepresents
someone else’s goods or services as his own,” in other words,
when the defendant is selling the plaintiff’s goods and passing
them off as originating with the defendant. Universal Furniture
Int’l, Inc. v. Collezione Europa USA, Inc., 618 F.3d 417, 438
(4th Cir. 2010) (quoting Dastar Corp., 539 U.S. at 28 n.1).
22
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In
sum,
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the
Lanham
Act’s
Pg: 23 of 35
plain
language
contains
no
unstated requirement that a § 43(a) plaintiff have used a U.S.
trademark
in
U.S.
competition claim.
commerce
to
bring
a
Lanham
Act
unfair
The Supreme Court’s guidance in Lexmark does
not allude to one, and our prior cases either only assumed or
articulated as dicta that such a requirement existed.
Thus, the
district court erred in imposing such a condition precedent upon
Bayer’s claims. 8
As Bayer is not barred from making a § 43(a) claim, the
proper Lexmark inquiry is twofold.
Did the alleged acts of
unfair competition fall within the Lanham Act’s protected zone
of interests?
And if so, did Bayer plead proximate causation of
8
A plaintiff who relies only on foreign commercial activity
may face difficulty proving a cognizable false association
injury under § 43(a).
A few isolated consumers who confuse a
mark with one seen abroad, based only on the presence of the
mark on a product in this country and not other misleading
conduct by the mark holder, would rarely seem to have a viable §
43(a) claim.
The story is different when a defendant, as alleged here,
has -- as a cornerstone of its business -- intentionally passed
off its goods in the United States as the same product
commercially available in foreign markets in order to influence
purchases by American consumers.
See M. Kramer Mfg. Co. v.
Andrews, 783 F.2d 421, 448 (4th Cir. 1986) (“[E]vidence of
intentional, direct copying establishes a prima facie case of
secondary meaning sufficient to shift the burden of persuasion
to the defendant on that issue.”).
Such an intentional
deception can go a long way toward establishing likelihood of
confusion.
See Blinded Veterans, 872 F.2d at 1045 (“Intent to
deceive . . . retains potency; when present, it is probative
evidence of a likelihood of confusion.”).
23
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a cognizable injury?
Pg: 24 of 35
We examine the false association and false
advertising claims in turn.
b.
i.
As to the zone of interests, Lexmark advises that “[m]ost
of the [Lanham Act’s] enumerated purposes are relevant to falseassociation cases.”
134 S. Ct. at 1389.
One such enumerated
purpose is “making actionable the deceptive and misleading use
of marks” in “commerce within the control of Congress.”
Lanham
Act § 45, 15 U.S.C. § 1127; see also Two Pesos, Inc. v. Taco
Cabana,
Inc.,
concurring)
505
U.S.
(“Trademark
763,
law
784
n.19
protects
(1992)
the
(Stevens,
public
by
J.,
making
consumers confident that they can identify brands they prefer
and
can
purchase
misled.”).
those
brands
without
being
confused
or
As pled, BCC’s false association claim advances that
purpose.
The complaint alleges Belmora’s misleading association with
BCC’s FLANAX has caused BCC customers to buy the Belmora FLANAX
in
the
Mexico.
United
States
instead
of
purchasing
BCC’s
FLANAX
in
For example, the complaint alleges that BCC invested
heavily in promoting its FLANAX to Mexican citizens or Mexican-
24
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Americans
United
in
Filed: 03/23/2016
border
States
returning
to
and
areas. 9
may
Mexico.
Pg: 25 of 35
Those
purchase
And
consumers
Belmora
cross
FLANAX
Mexican-Americans
into
the
here
before
may
forego
purchasing the FLANAX they know when they cross the border to
visit Mexico because Belmora’s alleged deception led them to
purchase the Belmora product in the United States.
In
either
Belmora’s
circumstance,
deceptive
and
BCC
loses
misleading
sales
use
of
revenue
FLANAX
consumers a false association with BCC’s product.
also
deceiving
9
distributors
and
vendors,
Belmora
because
conveys
Further, by
makes
Bayer alleges in its complaint that:
11. [BCC] has sold hundreds of millions of dollars of
its FLANAX medicines in Mexico.
This includes
substantial sales in major cities near the U.S.-Mexico
border.
12. [BCC] has spent millions of dollars promoting and
advertising the FLANAX brand in Mexico, including in
major cities near the U.S.-Mexico border.
13. As a result of [BCC’s] extensive sales and
marketing, the FLANAX brand is extremely well known in
Mexico and to Mexican-American consumers in the United
States.
. . . .
30. Defendants have marketed Belmora’s FLANAX products
by targeting Hispanic consumers likely to be familiar
with
[BCC’s]
FLANAX
products
and
deliberately
attempting to deceive those consumers into believing
that Belmora’s FLANAX products are the same thing as
the FLANAX medicines they know and trust from Mexico.
J.A. 156, 159 (Compl. ¶¶ 11-13, 30).
25
to
its
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FLANAX more available to consumers, which would exacerbate BCC’s
losses.
See J.A. 196 (stating in a brochure for distributors
that “Flanax is now made in the U.S.” and “acts as a powerful
attraction
for
Latinos”);
J.A.
410
(noting
a
distributor’s
concern that the product “is legal to sell in the US”).
In each
scenario, the economic activity would be “within the control of
Congress” to regulate.
Lanham Act § 45, 15 U.S.C. § 1127.
We thus conclude that BCC has adequately pled a § 43(a)
false association claim for purposes of the zone of interests
prong.
Its allegations reflect the claim furthers the § 45
purpose
of
preventing
“the
deceptive
and
misleading
use
of
marks” in “commerce within the control of Congress.”
ii.
Turning to Lexmark’s second prong, proximate cause, BCC has
also
alleged
injuries
that
“are
proximately
caused
[Belmora’s] violations of the [false association] statute.”
S. Ct. at 1390.
“economic
or
by
134
The complaint can fairly be read to allege
reputational
injury
flowing
directly
deception wrought by the defendant’s” conduct.
from
Id. at 1391.
the
As
previously noted, BCC alleges “substantial sales in major cities
near the U.S.-Mexico border” and “millions of dollars promoting
and advertising” its FLANAX brand in that region.
(Compl. ¶¶ 11-12).
J.A. 156
Thus, BCC may plausibly have been damaged by
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Belmora’s alleged deceptive use of the FLANAX mark in at least
two ways.
As reflected in the zone of interests discussion, BCC
FLANAX customers in Mexico near the border may be deceived into
foregoing a FLANAX purchase in Mexico as they cross the border
to
shop
and
buy
the
Belmora
product
in
the
United
States.
Second, Belmora is alleged to have targeted Mexican-Americans in
the United States who were already familiar with the FLANAX mark
from their purchases from BCC in Mexico.
We can reasonably
infer that some subset of those customers would buy BCC’s FLANAX
upon
their
deception
return
by
travels
Belmora.
to
Mexico
if
Consequently,
not
the
alleged
meets
BCC
for
the
Lexmark
pleading requirement as to proximate cause.
BCC
may
deception
ultimately
“cause[d]
be
[these
unable
to
consumers]
prove
to
that
Belmora’s
withhold
trade
from
[BCC]” in either circumstance, Lexmark, 134 S. Ct. at 1391, but
at
the
initial
pleading
stage
we
factual inferences in BCC’s favor.
at 139.
must
draw
all
reasonable
Priority Auto Grp., 757 F.3d
Having done so, we hold BCC has sufficiently pled a §
43(a) false association claim to survive Belmora’s Rule 12(b)(6)
motion.
The district court erred in holding otherwise.
c.
BCC
claims
and
BHC
against
both
Belmora.
assert
§ 43(a)(1)(B)
BHC’s
27
claim
false
represents
advertising
a
“typical”
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false
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advertising
case:
it
Pg: 28 of 35
falls
within
the
Act’s
zone
of
interests by “protecting persons engaged in commerce within the
control of Congress against unfair competition.”
Lexmark, 134
S.
As
Ct.
at
1389
(quoting
15
U.S.C.
§ 1127).
a
direct
competitor to Belmora in the United States, BHC sufficiently
alleges that Belmora engaged in Lanham Act unfair competition by
using
deceptive
goodwill.
was
advertisements
that
capitalized
on
BCC’s
See J.A. 163 (Compl. ¶ 54) (asserting that Belmora
deceptive
with
communications
“claims
with
in
their
marketing
distributors”);
materials
Appellees’
Br.
and
77
(acknowledging that “BHC is a competitor of Belmora’s in the
United States naproxen sodium market” and “can in theory bring a
false advertising action against a competitor”).
If not for
Belmora’s statements that its FLANAX was the same one known and
trusted in Mexico, some of its consumers could very well have
instead
purchased
likewise
satisfy
BHC’s
ALEVE
Lexmark’s
brand.
second
These
prong:
they
lost
customers
demonstrate
an
injury to sales or reputation proximately caused by Belmora’s
alleged conduct.
BCC’s false advertising claim is perhaps not “typical” as
BCC is a foreign entity without direct sales in the territorial
United
States.
Nonetheless,
BCC’s
claim
advances
the
Act’s
purpose of “making actionable the deceptive and misleading use
of marks.”
Lanham Act § 45, 15 U.S.C. § 1127.
28
As alleged,
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Belmora’s
Filed: 03/23/2016
advertising
Pg: 29 of 35
misrepresents
the
nature
of
its
FLANAX
product in that Belmora implies that product is the same as
consumers purchased in Mexico from BCC and can now buy here.
To be sure, BCC’s false advertising claim overlaps to some
degree
with
its
false
association
claim,
but
the
two
claims
address distinct conduct within the two subsections of § 43(a).
Belmora’s
alleged
false
statements
go
beyond
mere
claims
of
false association; they parlay the passed-off FLANAX mark into
misleading
statements
about
the
product’s
“nature,
characteristics, qualities, or geographic origin,” all hallmarks
of a false advertising claim.
Lanham Act 43(a)(1)(B), 15 U.S.C.
1125(a)(1)(B). 10
Belmora’s alleged false statements intertwine closely with
its use of the FLANAX mark.
The FLANAX mark denotes history:
Belmora claims its product has been “used [for] many, many years
in Mexico” and “Latinos have turned to” it “[f]or generations.”
J.A. 196.
FLANAX also reflects popularity: Belmora says the
product
“highly
is
recognized
[and]
top-selling.”
Id.
And
FLANAX signifies a history of quality: Belmora maintains that
Latinos “know, trust and prefer” the product.
these
statements
by
Belmora
thus
10
directly
Id.
relates
Each of
to
the
Because each of these claims is anchored as a factual
matter to the FLANAX mark’s history “in the Latino American
market,” we disagree with Belmora’s argument that the statements
amount to mere puffery. See J.A. 160.
29
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“nature,
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characteristics,
Pg: 30 of 35
qualities,
or
geographic
origin”
its FLANAX as being one and the same as that of BCC.
§
43(a)(1)(B),
15
U.S.C.
§ 1125(a)(1)(B).
of
Lanham Act
Because
these
statements are linked to Belmora’s alleged deceptive use of the
FLANAX
mark,
we
are
satisfied
that
BCC’s
false
advertising
claim, like its false association claim, comes within the Act’s
zone of interests.
As we can comfortably infer that the alleged
advertisements contributed to the lost border sales pled by BCC,
the claim also satisfies Lexmark’s proximate cause prong (for
the same reasons discussed above regarding the false association
claim).
d.
We
thus
conclude
that
the
Lanham
Act
permits
Bayer
to
proceed with its claims under § 43(a) –- BCC with its false
association claim and both BCC and BHC with false advertising
claims.
It
is
worth
noting,
as
the
Supreme
Court
did
in
Lexmark, that “[a]lthough we conclude that [Bayer] has alleged
an adequate basis to proceed under [§ 43(a)], it cannot obtain
relief
without
evidence
of
injury
[Belmora’s alleged misconduct].
proximately
caused
by
We hold only that [Bayer] is
entitled to a chance to prove its case.”
134 S. Ct. at 1395.
In granting Bayer that chance, we are not concluding that
BCC has any specific trademark rights to the FLANAX mark in the
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United States.
Pg: 31 of 35
Belmora owns that mark.
But trademark rights do
not include using the mark to deceive customers as a form of
unfair competition, as is alleged here.
and
prove
its
§
43(a)
claims,
an
Should Bayer prevail
appropriate
remedy
might
include directing Belmora to use the mark in a way that does not
sow confusion.
See Lanham Act § 34(a), 15 U.S.C. § 1116(a)
(authorizing injunctions based on “principles of equity”).
Of
course, the precise remedy would be a determination to be made
by
the
district
evidence. 11
first
trademark
principles
should
relating
take
to
remedy
into
to
upon
proper
We only
remedy
potential
instance
court’s discretion should this case reach that point.
any
any
the
district
that
leave
in
the
note
We
court
account
Belmora’s
traditional
ownership
of
the
mark.
B. Cancellation Under Section 14(3)
The
TTAB
ordered
the
cancellation
of
Belmora’s
FLANAX
trademark under § 14(3), finding that the preponderance of the
11
For example, a remedy might include altering the font and
color of the packaging or the “ready remedy” of attaching the
manufacturer’s name to the brand name.
Blinded Veterans, 872
F.2d at 1047.
Another option could be for the packaging to
display a disclaimer -- to correct for any deliberately created
actual confusion. See id. (“The district court could, however,
require [Blinded American Veterans Foundation] to attach a
prominent disclaimer to its name alerting the public that it is
not the same organization as, and is not associated with, the
Blinded Veterans Association.”).
31
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evidence
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“readily
Pg: 32 of 35
establishe[d]
blatant
misuse
of
the
FLANAX
mark in a manner calculated to trade in the United States on the
reputation and goodwill of petitioner’s mark created by its use
in Mexico.”
J.A. 142.
In reversing that decision and granting
Belmora’s motion for judgment on the pleadings, the district
court found
that
BCC,
as
the
§
14(3)
complainant,
“lack[ed]
standing to sue pursuant to Lexmark” under both the zone of
interests
and
the
proximate
cause
prongs.
J.A.
505.
The
district court also reversed the TTAB’s holding that Belmora was
using FLANAX to misrepresent the source of its goods “because
Section 14(3) requires use of the mark in United States commerce
and Bayer did not use the FLANAX mark in the United States.”
J.A. 505-06.
On appeal, Bayer argues that the district court erred in
overturning the TTAB’s § 14(3) decision because it “read a use
requirement
into
the
Appellants’ Br. 49.
section
that
is
simply
not
there.”
For reasons that largely overlap with the
preceding § 43(a) analysis, we agree with Bayer.
1.
Section 14(3) of the Lanham Act creates a procedure for
petitioning to cancel the federal registration of a mark that
the owner has used to misrepresent the source of goods:
A petition to cancel a registration of a mark, stating
the grounds relied upon, may . . . be filed as follows
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by any person who believes that he is or will
damaged . . . by the registration of a mark . . .
be
. . . .
(3) At any time . . . if the registered mark is
being used by, or with the permission of, the
registrant so as to misrepresent the source of
the goods or services on or in connection with
which the mark is used.
Lanham Act § 14(3), 15 U.S.C. § 1064(3).
The petitioner must
establish that the “registrant deliberately sought to pass off
its goods as those of petitioner.”
See 3 McCarthy, § 20:30 (4th
ed. 2002).
If successful, the result of a § 14(3) petition “is the
cancellation
of
a
registration,
trademark.”
Id. § 20:40.
not
the
cancellation
of
a
Cancellation of registration strips
an owner of “important legal rights and benefits” that accompany
federal
registration,
but
it
“does
common law rights in the trademark.”
not
invalidate
underlying
Id. § 20:68; see also B &
B Hardware Inc. v. Hargis Indus., Inc., 135 S. Ct. 1293, 1300
(2015).
To determine what parties § 14(3) authorizes to petition
for cancellation, we again apply the Lexmark framework.
The
relevant language in § 14(3) closely tracks similar language
from
§ 43(a)
that
the
Supreme
Court
considered
in
Lexmark:
“[A]ny person who believes that he is or will be damaged” by the
mark’s registration may petition for cancellation under § 14(3),
33
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Doc: 57
Filed: 03/23/2016
Pg: 34 of 35
just as “any person who believes that he or she is or is likely
to
be
damaged”
§ 43(a).
may
bring
an
unfair
competition
action
under
The same two-prong inquiry from Lexmark provides the
mode of analysis.
To determine if a petitioner falls within the protected
zone of interests, we note that § 14(3) pertains to the same
conduct targeted by § 43(a) false association actions -- using
marks so as to misrepresent the source of goods.
Therefore,
“[m]ost of the [Lanham Act’s] enumerated purposes are relevant”
to § 14(3) claims as well.
for
proximate
cause,
we
See Lexmark, 134 S. Ct. at 1389.
once
again
consider
whether
As
the
plaintiff has “show[n] economic or reputational injury flowing
directly
from
[conduct].” 12
the
deception
Id. at 1391.
wrought
by
the
defendant’s
As with § 43(a), neither § 14(3) nor
Lexmark mandate that the plaintiff have used the challenged mark
in United States commerce as a condition precedent to its claim.
See Empresa Cubana Del Tabaco v. Gen. Cigar Co., 753 F.3d 1270,
1278 (Fed. Cir. 2014) (“In the proceedings before the Board,
12
The USPTO suggests that § 14(3) might require a lesser
showing of causation because it sets forth an administrative
remedy, whereas the Supreme Court based its Lexmark analysis on
common law requirements for judicial remedies.
See Empresa
Cubana Del Tabaco v. Gen. Cigar Co., 753 F.3d 1270, 1275 (Fed.
Cir. 2014) (“A petitioner is authorized by statute to seek
cancellation of a mark where it has both a real interest in the
proceedings as well as a reasonable basis for its belief of
damage.”).
We need not resolve this issue for purposes of the
current decision.
34
Appeal: 15-1335
Doc: 57
however,
Filed: 03/23/2016
Cubatabaco
need
not
Pg: 35 of 35
own
the
mark
to
cancel
the
Registrations under [Section 14(3)].”).
2.
Applying the framework from Lexmark, we conclude that the
Lanham Act authorizes BCC to bring its § 14(3) action against
Belmora.
BCC’s cancellation claim falls within the Lanham Act’s
zone
interests
of
because
misleading use of marks.”
it
confronts
the
“deceptive
and
Lanham Act § 45, 15 U.S.C. § 1127.
And BCC has also adequately pled a proximately caused injury to
survive
Belmora’s
previously
Rule
discussed
advertising claims.
the
TTAB’s
decision
12(c)
for
motion
the
for
false
the
same
association
reasons
and
false
The district court thus erred in reversing
cancelling
the
registration
of
Belmora’s
FLANAX mark.
III.
For
the
foregoing
reasons,
we
conclude
that
Bayer
is
entitled to bring its unfair competition claims under Lanham Act
§ 43(a) and its cancellation claim under § 14(3).
The district
court’s judgment is vacated and the case remanded for further
proceedings consistent with this opinion.
VACATED AND REMANDED
35
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