Flummoxed By Fame – Well-Known Marks & Flanax
The “well-known marks” doctrine (also known as the “famous marks” doctrine), protects a trademark in a country where it has never been used, so long as the mark enjoys fame and renown sufficient to cross borders. We previously discussed the well-known marks principle and the fact that U.S. courts disagree about its application in the United States. Well, thanks to a recent case involving pain relievers called FLANAX, the Supreme Court may soon accept an invitation to resolve this issue.
This is a pretty big deal for two reasons. First, this legal doctrine serves as an exception to the fundamental principle of trademark law – called the territoriality principle – that a trademark has a separate legal existence in each country. Second, the doctrine originated in a treaty signed by the United States. Owners of famous U.S. brands take advantage of this doctrine to enforce their trademark rights when they haven’t used their brand in other treaty countries.
So, the well-known marks doctrine turns the territorial, use-based protection standard we’ve been living with on its head when it comes to protection for a small list of exclusive and famous brands. It’s important to get it right.
The Fight for FLANAX
In late October, a company called Belmora asked the Supreme Court to review a decision from the U.S. Court of Appeals for the Fourth Circuit that cancelled Belmora’s U.S. trademark based on a competitor’s rights to the same mark in a different country.
Belmora owns a U.S. trademark registration for FLANAX for naproxen sodium pain reliever, and has used this mark in the U.S. for over ten years. Its competitor Bayer, however, has sold a naproxen sodium pain reliever under the FLANAX name since the 1970s – in Mexico.
Two years after Belmora received its U.S. registration for FLANAX, Bayer filed a petition to cancel Belmora’s registration with the Trademark Trial and Appeal Board (TTAB). Bayer based its trademark cancellation request on a variety of theories, including the well-known marks doctrine. Although the TTAB dismissed most of Bayer’s claims, it granted its petition to cancel Belmora’s trademark registration because – even though Bayer did not use the FLANAX mark in the U.S. – there was evidence of Belmora “invoking the reputation” of Bayer’s Mexican FLANAX product to sell Belmora’s FLANAX product in the United States.
After the TTAB canceled the registration, Belmora appealed to the district court in the Eastern District of Virginia, which consolidated the case with a separate lawsuit for unfair competition Bayer filed against Belmora. The district court disagreed with the TTAB’s cancellation of Belmora’s mark (and dismissed Bayer’s other claims) because Bayer does not use the FLANAX trademark in the United States.
Bayer successfully appealed to the Fourth Circuit Court of Appeals, which agreed with the TTAB’s cancellation of Belmora’s FLANAX registration.
Will the Supreme Court Heal this Headache?
Although Bayer’s did not rely on the well-known marks doctrine on appeal, both Belmora’s petition to the Supreme Court and a “friend of the court” brief filed by the International Trademark Association explicitly invite the Supreme Court to review the doctrine and resolve the current split among U.S. courts about whether it should be recognized in this country.
As we explained in our prior post, the lower courts disagree on this question. The Ninth Circuit’s decision in Grupo Gigante applied the well-known marks doctrine as a limited exception to the territoriality principle – the fundamental principle that a trademark has a separate legal existence in each sovereign territory. The Ninth Circuit applied this exception in Grupo Gigante because the Mexican trademark enjoyed cross-border recognition among a substantial percentage of U.S. consumers. In ITC v. Punchgini, however, the Second Circuit refused to apply the well-known marks exception because it determined that U.S. trademark law did not recognize the well-known marks doctrine and, therefore, could not be applied absent congressional action. In the Person’s case, the Federal Circuit similarly refused to recognize the well-known marks doctrine under U.S. law.
The Fourth Circuit decision in the FLANAX case adds to the disagreement among Federal appellate courts, and increases the legal confusion. Rather than adopt one of the existing appellate court rationales, the Fourth Circuit articulated yet a third way to analyze whether a foreign trademark owner may pursue claims under the U.S. trademark act. The Fourth Circuit found that Bayer’s allegation of lost sales in Mexico was sufficient to challenge Belmora’s U.S. trademark rights, and that Bayer need not demonstrate any rights or consumer recognition in the United States.
These varied and inconsistent decisions on the territorial limits of U.S. trademark law create significant uncertainty for brand owners. Brand owners are sure to be watching this case and the Supreme Court’s opportunity to bring clarity to this issue.