Grey-market seller had unfair advantage with 'no-fleas.com'

In Bayer Corporation v Custom School Frames LLC (2003 US Dist LEXIS 6850 (ED La)), a US district court in Louisiana has issued a strong decision for trademark owners, ordering (i) an injunction that prohibits the defendant from selling the plaintiff's foreign-made flea control products in the United States, and (ii) the transfer of 'no-fleas.com' to the plaintiff.

German company Bayer manufactures the Advantage flea control product for animals and owns a US trademark registration for the ADVANTAGE mark. It tailors the manufacture of the Advantage product to suit the requirements and regulations of specific countries, and it prohibits the sale of the product outside of these specific geographic regions. In the United States, it only sells the product through authorized and licensed veterinarians for resale to their pet-owner clients. Bayer also advertises the product over the Internet at nofleas.com.

Custom School Frames (CSF) registered 'no-fleas.com' and used the domain name to sell direct to consumers an ADVANTAGE marked product manufactured by Bayer but not intended for sale in the United States.

The court found that the foreign-made product was materially different from the product destined for sale in the United States because it:

• had not been registered with the US Environmental Protection Agency or the Louisiana Department of Agriculture & Forestry;
  
  
• did not feature proper warning labels or safety information; and
  
  
• contained instructional pamphlets not designed for use in the US market.

The court determined that sale of the materially different grey-market Advantage product constituted a violation of the Lanham Act, stating:

"The likelihood of confusion caused by these material differences provides a basis for finding trademark infringement and unfair competition under federal and Louisiana law."

CFS's use of the ADVANTAGE mark on its 'no-fleas.com' website also violated Bayer's rights by creating a likelihood of confusion among internet users as to the source and affiliation of the defendant's website with Bayer.

This is a very favourable court decision for trademark owners against the unauthorized sale of grey-market products in the United States, and it should serve as powerful precedent in future trademark enforcement actions.

James L Bikoff and Patrick L Jones, Silverberg Goldman & Bikoff, Washington DC