In Belmora LLC v. Bayer Consumer Care AG, Bayer’s competitor filed in the USPTO an application for the trademark FLANAX, which Bayer had registered in Mexico but not in the States. In response to Bayer’s cease and desist demand, Belmora sued for a declaration that its registration was valid. Back in 2014, an enterprising competitor called Belmora registered in the USPTO the same trademark, FLANAX, for naproxen sodium. The FLANAX mark particularly appealed to U.S. consumers from Mexico and others who spent significant time in Latin America.
Bayer was none too happy with this clever use of the FLANAX trademark, and it brought a TTAB proceeding to cancel it — and they succeeded. Since the TTAB can only direct whether a mark is registered or not, Bayer then sued in the Central District of California to get results in the real world: injunctive relief and damages. Belmora sued to review the TTAB’s decisions in the Eastern District of Virginia, and the federal court in California transferred Bayer’s suit to the federal court in Virginia for consolidation with Belmora’s action.
Regardless of whether Bayer had a trademark in the U.S. for FLANAX (which it did not), Bayer argued that Belmora’s use of FLANAX in the U.S. creates the improper appearance that the product is sponsored by Bayer under Section 43(a) of the Lanham (Trademark) Act. That is, the relevant consumers would “falsely associate” Belmora’s product with Bayer’s. Although Bayer argued that there is no statute of limitations period for a Trademark Act claim, the Eastern District of Virginia dismissed Bayer’s lawsuit on the grounds that Bayer had “missed the statute of limitations by almost a decade.” That is, without a specific limitations period in the Lanahm Act, the district court used an analogous, state statute of limitations, starting in 2004 — the year that the USPTO rejected Bayer’s application to register FLANAX, because Belmora had already registered that mark.
On appeal, the Fourth Circuit said that, in other types of cases, the court might look to the state’s analogous statute of limitations — but a federal Trademark Act claim for false association is an equitable claim. That means using the doctrine of laches, an equitable means of determining whether the claim is brought too late, rather than using a statute of limitations. Laches means the defendant to its detriment reasonably relied on the plaintiff’s delay in starting a lawsuit. (Basically, a defendant after some “reasonable” length of time should have assurance that its trademark usage is not going to be challenged by a competitor who did not assert their rights.)
The court remanded the question of laches back to the district court to determine if Bayer “slept on its rights” for so long that it “inequitably” (unfairly) prejudiced the defendant, Belmora. Now the district court will have to make a fact-finding as to whether Bayer knew, or should have known, of the allegedly infringing mark earlier — in addition to determining whether Belmora was unfairly prejudiced by the delay in bringing the claim.
Important note: The appellate court explicitly said that a state’s statute of limitations can be used as only a factor in determining laches in certain situations, but that such factor is not automatically determinative.
The Fourth Circuit also affirmed dismissal of the counterclaims that Belmora brought against Bayer, which were not only creative, but relied heavily on the doctrine of chutzpah. With seven counterclaims, the most notable was Belmora’s accusation that Bayer was liable for unlawful importation and sale of its own FLANAX product into the gray market in the United States. The court said that there was no evidence of any unauthorized distribution, and if such distribution did exist, it certainly wouldn’t be a surprise considering the number of people crossing the border on a daily basis.
One counterclaim that was thrown out involved Bayer allegedly using its monopoly power to exert pressure on the sole authorized source of naproxen sodium liquid gel capsules. The court concluded that there was no evidence of that claim, especially because Belmora’s expert witness could not sufficiently identify the relevant market that Bayer allegedly monopolized.
The last counterclaim was for tortious interference. Belmora claimed it was blocked from buying naproxen sodium liquid gel capsules from that coveted sole manufacturer. The judge found that there simply was no evidence that Bayer knew about any such agreement or prospective business between Belmora and the third-party manufacturer.
It’s hard to predict what’s going to happen on remand, but the Fourth Circuit did not provide a lot of commentary that would encourage Bayer.
What’s the takeaway from this case? In connection with Lanham Act section 43(a), any court in the Fourth Circuit will not give you clear, bright-line guidance on the statute of limitations that might otherwise provide clarity. Instead, it could look to this equitable doctrine of laches. To me, that makes it more difficult to predict outcomes. All we can do is rely on the old adage:
When you don’t have the facts, argue the law. When you don’t have the law, argue the equities. And when you don’t have the equities, pound the table.
Mark S. Kaufman
Kaufman & Kahn
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