Cancellation action based on misrepresentation of source does not require use of mark in US commerce

In Bayer Consumer Care AG v Belmora LLC (Cancellation No 92047741, April 17 2014), the Trademark Trial and Appeal Board (TTAB) has clarified when a petitioner’s extraterritorial use of a mark may serve as a basis for cancelling a US trademark registration. 

Bayer owns a Mexican registration for FLANAX dating back to 1978. It did not use the FLANAX mark in the United States, choosing instead to market these analgesic naproxen sodium pills in the country under the ALEVE trademark. Bayer’s Flanax pills, however, are the best-selling analgesic in Mexico.  

In October 2003 Belmora registered FLANAX for analgesics with the US Patent and Trademark Office (USPTO), and began marketing these Flanax pain-killers to Hispanic-American consumers in the United States.

Bayer initiated cancellation proceedings in 2007, asserting that Belmora’s registration and use of the FLANAX mark in the United States:

• was likely to cause confusion in violation of Sections 2(d) and 44 of the Lanham Act;
• misrepresented the source of its goods in violation of section 14(3) of the Act; and
• constituted fraud.

The TTAB dismissed the Section 2(d) and fraud claims because Bayer lacked prior use in the United States. It also dismissed the Section 44 claim because that section did not provide an independent basis for cancellation.

The TTAB did, however, allow Bayer to go forward with its Section 14(3) misrepresentation of source claim. Section 14(3) permits the USPTO to cancel a mark that, among other things, “misrepresent[s] the source of the goods or services on or in connection with which the mark is used”.

At trial, Belmora argued that:

1. Bayer lacked standing because it did not own a US registration for FLANAX, never marketed FLANAX in the United States and never intended to begin doing so; and 
2. Belmora could not have misrepresented the source of its products because it prominently featured 'Belmora' in its packaging and marketing.

The TTAB ultimately concluded that Bayer had standing to seek cancellation of the FLANAX mark. Although Bayer never used FLANAX commercially in the United States, the evidence established that:

• Bayer used the mark extensively in Mexico;
• many Mexican-born individuals live in the United States; and
• Belmora’s use of FLANAX deprived Bayer of its ability to control the reputation of the FLANAX mark.

In granting Bayer standing, the TTAB clarified that not all US trademark rights need arise out of use of a mark in US commerce.   

Proceeding to the merits, the TTAB found that Belmora’s marketing constituted deliberate and “blatant misuse” of Bayer’s FLANAX mark with the purpose of misrepresenting the source of the marked goods. Specifically, the Board found that:

• Belmora knew how popular FLANAX was in Mexico;
• Belmora’s initial packaging directly copied the colour scheme, font and logo that Bayer used on its Mexican Flanax packaging; and 
• Belmora repeatedly invoked FLANAX’s reputation among Hispanics in its marketing literature.

Bayer v Belmora erodes the significance of territoriality in US trademark jurisprudence. Although the assertion of trademark rights in the United States generally requires use of a mark in commerce in the country, this decision confirms that certain rights can be asserted even if the petitioner’s use of the challenged mark does not actually occur in US commerce.

James L Bikoff, David K Heasley, Griffin M Barnett, Valeriya Sherman and Jared Stipelman, Silverberg Goldman & Bikoff, Washington DC