Marty Schwimmer and John Welch, counsels for Belmora LLC brought our attention to a decision of the US District Court for the Eastern District of Virginia (Alexandria Division) earlier this month that was ruled in favour of Belmora. The case deals with the question of Art. 6bis of the Paris Convention (which deals with well known marks) and how it is accommodated within the overarching Principle of Territoriality. This post briefly analyses the case and looks into the equivalent position of law in India. (long post to follow)
The case dealt with Belmora LLC’s (Belmore) Motions to Dismiss Bayer Consumer Care AG and Bayer Healthcare’s (Bayer) Complaint and Counterclaim, and Motion for Judgment on Pleadings. Belmora’s FLANAX, which was trademarked and sold in the US had a similar trade dress to Bayer’s FLANAX. It was also marketed in a way that capitalized on the goodwill of Bayer’s FLANAX which is trademarked and sold in Mexico. As Belmore’s effort to register the mark were pending when Bayer attempted to register FLANAX in the US, the PTO rejected the latter’s application. While Bayer’s predecessor in interest promoted FLANAX in Mexico (even major cities near the US-Mexico border), it never had marketed or sold FLANAX in the US. In 2007, Bayer petitioned the TTAB to cancel the 2005 registration of Belmora’s FLANAX. In 2014, the TTAB issued a ruling canceling Belmora’s registration pursuant to the Lanham Act. Bayer claimed that Belmora’s FLANAX trademark should be cancelled because Belmora deceives consumers into thinking that its FLANAX brand of pain relief medicine is the same FLANAX brand under which Bayer sold its pain relied medicine in Mexico for decades. For this, among other things, Bayer relied on Art. 6bis of the Paris Convention. Art. 6bis, Paris Convention is the famous mark provision. This provision effectively grants protection to “well-known marks” in a country even if it is not used or registered there. This is in contrast with the principle of territoriality which ensures protection to marks only when registered in that country.
The issue of interest
While the Court noted six issues that were before it for consideration, it crystallized the main question quiet succinctly- “Does the Lanham Act allow the owner of a foreign mark that is not registered in the US and further has never used the mark in US commerce assert priority rights over a mark that is registered in the US by another party and used in US commerce?”
The Court answered its main question in the negative and reversed TTAB’s decision cancelling the registration of Belmora’s FLANAX mark and granted Belmora’s Motion to Dismiss Complaint, Motion to dismiss Bayer’s Counterclaim, and Motion for Judgment on the Pleadings.
A great deal of the judgment pertains to the standing of Bayer to sue under the Lanham Act. However, this post is more concerned with the interaction of Art. 6bis of the Paris Convention on which Bayer made its claim and the Principle of Territoriality. The Court ruled that Bayer’s claim under Art. 6bis against Belmora was implausible as the Paris Convention is not self-executing and the provisions under the Lanham Act do not make Art. 6bis a ground for contesting trademark registration. The Court observed that Bayer was asking the Court to infer from uncertain terms in the Lanham Act, a declaration from Congress adopting the famous marks exception captured in Art. 6bis therefore creating a cause of action. The Court found that this was an exception that would eviscerate the territoriality principle of trademark law. A principle that the Court noted had been accepted by the US Supreme court for nearly a hundred years. The Court opined that such a stark departure from the well-established principle of territoriality would require a much clearer expression of Congressional intent mandating such a departure than was present before the Court in the case.
Therefore, the essence of the Court’s ruling is that the Principle of Territoriality is not subservient to the principle of universaility that the Paris Convention seeks to enshrine. If at all, the provisions of the Convention are circumscribed by the overarching Principle of Territoriality. To quote the Court, “Though Belmora’s practices may seem unfair, the Lanham Act does not regulate all aspects of business morality”.
Corresponding Indian Jurisprudence
Comparing this to Indian jurisprudence on the point of trans-border reputation, the image is clear- India is at the other end of the spectrum. There is a long line of cases in India that have established that despite not being marketed in India (and since goodwill is not limited to a particular country), trademarks that acquire trans-border reputation will enjoy protection in India irrespective of its actual user or registration in India.
This case of the Supreme Court in Whirlpool was preceded by a landmark decision in Kamal Trading Co., v. Gillette, UK Ltd., [1988 PTC 1] of the Bombay High Court. Therein, the Court noted that goodwill is not limited to a particular country because trade is spread all over the world leading to goods being transported from country to country very rapidly. This goodwill is not limited to countries where goods are freely available because they are nonetheless widely advertized in the media of countries where they are not available. Therefore, the Court held that goodwill did not depend on its availability in a particular country. Therefore, when a manufacturer suspends its operations in a country for a short time, the reputation acquired does not stand destroyed.
The Supreme Court in NR Dongre v Whirlpool Corporation [(1996) 5 SCC 714 ] was concerned with a suit which was a passing off action brought by Whirlpool Corporation to restrain the Appellants from manufacturing, selling, advertising or in any way using the trade mark Whirlpool in respect of their goods. The claim of Whirlpool was based on prior user of the mark and a trans-border reputation indicating that any goods marketed with the use of the mark gave the impression of it being a good marketed by it. The Court found that the mark Whirlpool was associated for long with the respondents and that its trans-border reputation extended to India.
The decision of the Supreme Court in Milmet Oftho Industries v. Allergen Inc. [(2004) 12 SCC 624] further consolidates the position. Both an Indian pharmaceutical company and a foreign company were manufacturing Ocuflox – a medicine for eyes. The foreign company first used the mark in 1992 after which it marketed the product in countries around the world. However, it was yet to enter the Indian market. When the Indian company applied for registration of the mark in 1993, the foreign company filed a suit for injunction for passing off against the Indian manufacturer. The Court held that the non-use of the mark in India by the foreign company would be irrelevant if they had entered the world marker first.
More recent judgments that have relied on the Whirlpool decision include the Delhi High Court’s 2006 decision in Austin Nichols and Co. v. Arvind Behl, 2012 decision in Las Vegas Sands Corp v. Bhasin Infotech & Infrastructure, and 2014 decision Mind gym Ltd. v. Mindgym Kids Library Pvt. Ltd (the decision was discussed on this blog here). This also appears to be the case in the Delhi High Court’s injunction in 2005 against the use the mark Wal-mart even before Wal-mart entered the Indian market (the decision was discussed on this blog here).
The effect of law
Drawing from the dicta in these (and many other) cases adjudicated by Indian Courts, the crystallized position that India protects global reputation of goods that have not even entered the Indian market. Earlier on this blog it was argued that the same principle could be attracted to the iFon controversy. Further, maybe that is how the issue with Burger King (which was discussed here on this blog) will turn out.
While the position in the US as enunciated in Belmora may be correct when catering to the legal structure in the US, the India position is fairer and more in-tune with what Trademark law intended. Even in the words of the US Court, a company practicing in the manner that Belmora does would be unfair.