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Fairness Is the Limit for Asserting False Advertising Claims

Addressing whether Lanham Act claims for false advertising or false association under § 43(a) (15 USC § 1125(a)) are subject to a statute of limitations, the US Court of Appeals for the Fourth Circuit concluded that the sole time limit on bringing such claims is the equitable doctrine of laches. Belmora LLC v. Bayer Consumer Care AG, Case No. 18-2183 (4th Cir. Feb. 2, 2021) (Floyd, J.)

The facts of the underlying dispute are straightforward. Bayer has sold the pain reliever naproxen as FLANAX in Mexico since 1972 and in the United States as ALEVE. Belmora began selling naproxen under the name FLANAX in the United States in 2004, where it used similar packaging and described the drug as one sold successfully in Mexico. Both companies tried to register the mark with the US Patent & Trademark Office, where proceedings unfolded. Ultimately, in April 2014, the Trademark Trial and Appeal Board cancelled Belmora’s trademark registration, finding that Belmora had blatantly misused FLANAX by drawing on the popularity of Bayer’s Mexican product. Two months later, Bayer brought claims against Belmora under § 43(a) of the Lanham Act and California unfair competition law in the US District Court for the Central District of California. The suit was transferred to the Eastern District of Virginia, where Belmora moved to dismiss, arguing that § 43(a) and state law claims were barred by the statute of limitations. Bayer replied that § 43(a) had no statute of limitations, and that the time to bring the state law claims had been tolled during the Board’s proceedings. The district court granted both of Belmora’s motions, and the appeal followed.

Because there is no express statute of limitations for a § 43(a) claim, the question before the Court was whether to assume that Congress intended that the most analogous state law statute of limitations apply, or to apply either the most analogous federal statute or common law laches doctrine. “Conclud[ing] that § 43(a) is one such federal law for which a state statute of limitations would be an unsatisfactory vehicle for enforcement,” the Court held that laches was more appropriate, for primarily two reasons. First, the statutory text provides that § 43(a) damages are subject to the principles of equity, which would include the doctrine of laches. Second, the Court found persuasive the law of the Third, Seventh and Ninth Circuits, which each apply laches as to restrict the timeliness of as § 43(a) action. That said, the Court emphasized that on remand, the district court should consider the period for bringing a similar state action as part of the laches analysis, especially because the Fourth Circuit employs a presumption that claims brought after the expiration of the most-analogous statute-of-limitations are barred by laches.

The Court noted that Bayer could overcome a presumption of laches, and cited three factors for the district court to consider:

Bayer’s knowledge (or lack thereof) of Belmora’s adverse use
Whether Bayer’s delay was inexcusable or unreasonable
Whether Belmora had been unduly prejudiced by [...]

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Sticky Situation? Circumstantial Evidence Can Support Intent to Confuse in Trade Dress Claims

The US Court of Appeals for the 11th Circuit reversed a district court’s grant of summary judgment for the defendant on trade dress infringement and trade dress dilution claims, finding that evidence relating to the likelihood of confusion was not viewed in the light most favorable to the plaintiff. However, the Court affirmed the grant of summary judgment for the defendant on the plaintiff’s false advertising claims because the allegedly deceptive advertising was not material to consumer purchasing decisions. J-B Weld Co., LLC v. Gorilla Glue Co., Case No. 18-14975 (11th Cir. Oct. 20, 2020) (Tjoflat, J.) (Carnes, J., concurring).

J-B Weld and Gorilla Glue are competitors specializing in heavy-duty adhesive products. Gorilla Glue introduced an adhesive under the brand name GorillaWeld that mimicked the packaging of a J-B Weld product. Gorilla Glue advertised GorillaWeld as a steel bond epoxy based on the strength of the bond and its similarity to an epoxy-group polymer, even though the product was not a chemical epoxy and did not contain any steel. J-B Weld sued, alleging trade dress infringement based on the Lanham Act and Georgia law, trade dress dilution based on Georgia law, and false advertising under the Lanham Act. The district court granted Gorilla Glue summary judgment on all claims, finding no trade dress infringement or dilution based on insufficient evidence of likelihood of confusion, and no false advertising because the evidence did not demonstrate that Gorilla Glue’s steel bond epoxy claim was material to consumer purchasing decisions. J-B Weld appealed, arguing that the district court did not properly view the evidence in the light most favorable to J-B Weld.

The 11th Circuit reversed on the trade dress infringement and dilution claims and affirmed on the false advertising claim. On the trade dress infringement claims, the 11th Circuit found that the district court did not view the evidence in the light most favorable to J-B Weld in analyzing the likelihood of confusion between the respective trade dress of J-B Weld and GorillaWeld, as required in the context of summary judgment. The 11th Circuit found that the district court did not properly credit evidence relevant to the similarity of the designs, Gorilla Glue’s intent and instances of actual confusion. For example, despite multiple similarities between the J-B Weld and GorillaWeld packages (including a V-shape tube arrangement and the use, emphasis and location of certain text), the district court found that the presence of the Gorilla Glue logo, brand name and color scheme negated a finding of similarity. The 11th Circuit deemed this finding error in the context of summary judgment. The Court also determined that communications from Gorilla Glue’s packaging design team that repeatedly referenced J-B Weld’s packaging and expressed a desire to use similar elements (including a communication in which a Gorilla Glue employee referred to the GorillaWeld design as a “knock off”) were improperly ascribed to innocuous motives based on self-serving testimony from a Gorilla Glue employee. As the Court explained, summary judgment required drawing all inferences in the light [...]

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