Unfair Competition without U.S. Competition? Yes.March 2016
Businesses marketing their products under one mark in the United States and a different mark in foreign countries have a new weapon against American competitors. Previously, it was understood that to stop competing use of a foreign mark in the United States, there must have been state side use of the foreign mark as well. Now, the Fourth Circuit Court of Appeals has broadened the ability to stop competitor use of a foreign mark in the United States. In the case Belmora LL v. Bayer Consumer Care AG, No. 15-1335 (4th Cir. 2016), the Fourth Circuit Court of Appeals held that Section 43 of the Lanham Act does not require prior use of a trademark in the United States before suing for unfair competition in the United States.
The case involved the FLANAX mark used in connection with the sale of naproxen sodium tablets in Mexico, including communities bordering the United States, since 1976. While the FLANAX mark was well known not only in Mexico but also by Mexican-Americans in the United States, the mark itself was never used on products sold in the United States. In the United States, the same company (through its corporate affiliate) used the brand ALEVE to sell the same naproxen sodium tablets. In 2004, a competitor began selling naproxen sodium tablets in the United States under the mark FLANAX, and with similar packaging to that used in Mexico by the competing company. It suggested in its advertising that it was the same product that had been marketed in Mexico for decades.
Multiple legal proceedings ensued before the U.S. Patent and Trademark Office's Trademark Trial and Appeal Board and in the United States District Courts. Initially, it was determined that absent use in the United States, there was no standing under Section 43 of the Lanham Act to allege unfair competition or bring other claims. After nine years of litigation, in its opinion issued March 23, 2016, the Fourth Circuit Court of Appeals disagreed and broadened the scope of potential claims.
The Fourth Circuit's reasoning was multi-layered. First, it found that the Lanham Act's plain language for unfair competition claims does not require trademark use in the United States. Second, it concluded that what the Lanham Act does require is use likely to damage the foreign trademark holder in the United States. Third, the Fourth Circuit identified that the "zone of interest" protected by the Lanham Act's unfair competition provisions is to prevent "injury to a commercial interest in reputation or sales," which could arise without United States use. For all these reasons, it held that there is no requirement that a plaintiff first use its own mark in the United States before bringing a cause of action to stop damaging unfair competition in United States venues.