Belmora LLC v. Bayer Consumer Care AG

PUBLISHED

UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 15-1335

BELMORA LLC,

Plaintiff - Appellee,

v.

BAYER CONSUMER CARE AG, a Swiss corporation; BAYER
HEALTHCARE LLC, a Delaware Limited Liability Company,

Defendants - Consolidated Plaintiffs - Appellants,

v.

BELMORA LLC, a Virginia Limited Liability Company; JAMIE
BELCASTRO, an individual; DOES, 1-10, inclusive,

Consolidated Defendants - Appellees,

and

MICHELLE K. LEE, Undersecretary for Intellectual Property
and Director of the United States Patent and Trademark
Office (Director),

Intervenor.

---------------------

AMERICAN INTELLECTUAL PROPERTY LAW ASSOCIATION,

Amicus Curiae.

Appeal from the United States District Court for the Eastern
District of Virginia, at Alexandria. Gerald Bruce Lee, District
Judge. (1:14-cv-00847-GBL-JFA)
Argued: October 27, 2015 Decided: March 23, 2016

Before AGEE, FLOYD, and THACKER, Circuit Judges.

Vacated and remanded by published opinion. Judge Agee wrote the
opinion, in which Judge Floyd and Judge Thacker joined.

ARGUED: Bradley Louis Cohn, PATTISHALL, MCAULIFFE, NEWBURY,
HILLIARD & GERALDSON LLP, Chicago, Illinois, for Appellants.
Martin Schwimmer, LEASON ELLIS LLP, White Plains, New York, for
Appellee. Lewis Yelin, UNITED STATES DEPARTMENT OF JUSTICE,
Washington, D.C., for Intervenor. ON BRIEF: Phillip Barengolts,
Andrew R.W. Hughes, PATTISHALL, MCAULIFFE, NEWBURY, HILLIARD &
GERALDSON LLP, Chicago, Illinois; Robert J. Shaughnessy, Eric C.
Wiener, WILLIAMS & CONNOLLY LLP, Washington, D.C., for
Appellants. Craig C. Reilly, Alexandria, Virginia; John L.
Welch, WOLF, GREENFIELD & SACKS, P.C., Boston, Massachusetts;
Lauren B. Sabol, LEASON ELLIS LLP, White Plains, New York;
Rebecca Tushnet, GEORGETOWN UNIVERSITY LAW CENTER, Washington,
D.C., for Appellees. Mark R. Freeman, Civil Division, UNITED
STATES DEPARTMENT OF JUSTICE, Washington, D.C.; Dana J. Boente,
United States Attorney, Benjamin C. Mizer, Principal Deputy
Assistant Attorney General, OFFICE OF THE UNITED STATES
ATTORNEY, Washington, D.C.; Nathan K. Kelley, Solicitor,
Christina J. Hieber, Associate Solicitor, Mary Beth Walker,
Associate Solicitor, Benjamin T. Hickman, Associate Solicitor,
UNITED STATES PATENT AND TRADEMARK OFFICE, Alexandria, Virginia,
for Intervenor. Sharon A. Israel, President, AMERICAN
INTELLECTUAL PROPERTY LAW ASSOCIATION, INC., Arlington,
Virginia; Jennifer L. Kovalcik, STITES & HARBISON, PLLC,
Nashville, Tennessee, for Amicus Curiae.

2
AGEE, Circuit Judge:

In this unfair competition case, we consider whether the

Lanham Act permits the owner of a foreign trademark and its

sister company to pursue false association, false advertising,

and trademark cancellation claims against the owner of the same

mark in the United States. Bayer Consumer Care AG (“BCC”) owns

the trademark “FLANAX” in Mexico and has sold naproxen sodium

pain relievers under that mark in Mexico (and other parts of

Latin America) since the 1970s. Belmora LLC owns the FLANAX

trademark in the United States and has used it here since 2004

in the sale of its naproxen sodium pain relievers. BCC and its

U.S. sister company Bayer HealthCare LLC (“BHC,” and

collectively with BCC, “Bayer”) contend that Belmora used the

FLANAX mark to deliberately deceive Mexican-American consumers

into thinking they were purchasing BCC’s product.

BCC successfully petitioned the U.S. Trademark Trial and

Appeal Board (“TTAB”) to cancel Belmora’s registration for the

FLANAX mark based on deceptive use. Belmora appealed the TTAB’s

decision to the district court. In the meantime, BCC filed a

separate complaint for false association against Belmora under

§ 43 of the Lanham Act, 15 U.S.C. § 1125, and in conjunction

with BHC, a claim for false advertising. After the two cases

were consolidated, the district court reversed the TTAB’s

3
cancellation order and dismissed the false association and false

advertising claims.

Bayer appeals those decisions. For the reasons outlined

below, we vacate the judgment of the district court and remand

this case for further proceedings consistent with this opinion.

I. Background

This appeal comes to us following the district court’s

grant of Belmora’s Federal Rule of Civil Procedure 12(b)(6)

motion to dismiss Bayer’s complaint and Belmora’s Rule 12(c)

motion for judgment on the pleadings on the trademark

cancellation claim. In both circumstances, we “assume all well-

pled facts to be true and draw all reasonable inferences in

favor of” Bayer as the plaintiff. Cooksey v. Futrell, 721 F.3d

226, 234 (4th Cir. 2013). 1

A. The FLANAX Mark

BCC registered the trademark FLANAX in Mexico for

pharmaceutical products, analgesics, and anti-inflammatories.

It has sold naproxen sodium tablets under the FLANAX brand in

Mexico since 1976. FLANAX sales by BCC have totaled hundreds of

millions of dollars, with a portion of the sales occurring in

1 We have omitted internal quotation marks, alterations, and
citations here and throughout this opinion, unless otherwise
noted.

4
Mexican cities near the United States border. BCC’s FLANAX

brand is well-known in Mexico and other Latin American

countries, as well as to Mexican-Americans and other Hispanics

in the United States, but BCC has never marketed or sold its

FLANAX in the United States. Instead, BCC’s sister company,

BHC, sells naproxen sodium pain relievers under the brand ALEVE

in the United States market.

Belmora LLC began selling naproxen sodium tablets in the

United States as FLANAX in 2004. The following year, Belmora

registered the FLANAX mark in the United States. Belmora’s

early FLANAX packaging (below, left) closely mimicked BCC’s

Mexican FLANAX packaging (right), displaying a similar color

scheme, font size, and typeface.

5
J.A. 145. Belmora later modified its packaging (below), but the

color scheme, font size, and typeface remain similar to that of

BCC’s FLANAX packaging.

Id.

In addition to using similar packaging, Belmora made

statements implying that its FLANAX brand was the same FLANAX

product sold by BCC in Mexico. For example, Belmora circulated

a brochure to prospective distributors that stated,

For generations, Flanax has been a brand that Latinos
have turned to for various common ailments. Now you
too can profit from this highly recognized topselling
brand among Latinos. Flanax is now made in the U.S.
and continues to show record sales growth everywhere
it is sold. Flanax acts as a powerful attraction for
Latinos by providing them with products they know,
trust and prefer.

J.A. 196. Belmora also employed telemarketers and provided them

with a script containing similar statements. This sales script

stated that Belmora was “the direct producers of FLANAX in the

US” and that “FLANAX is a very well known medical product in the

Latino American market, for FLANAX is sold successfully in

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Mexico.” Id. Belmora’s “sell sheet,” used to solicit orders

from retailers, likewise claimed that “Flanax products have been

used [for] many, many years in Mexico” and are “now being

produced in the United States by Belmora LLC.” Id.

Bayer points to evidence that these and similar materials

resulted in Belmora’s distributors, vendors, and marketers

believing that its FLANAX was the same as or affiliated with

BCC’s FLANAX. For instance, Belmora received questions

regarding whether it was legal for FLANAX to have been imported

from Mexico. And an investigation of stores selling Belmora’s

FLANAX “identified at least 30 [purchasers] who believed that

the Flanax products . . . were the same as, or affiliated with,

the Flanax products they knew from Mexico.” J.A. 416.

B. Proceedings Below

1.

In 2007, BCC petitioned the TTAB to cancel Belmora’s

registration for the FLANAX mark, arguing that Belmora’s use and

registration of the FLANAX mark violated Article 6bis of the

Paris Convention “as made applicable by Sections 44(b) and (h)

of the Lanham Act.” J.A. 89. BCC also sought cancellation of

Belmora’s registration under § 14(3) of the Lanham Act because

Belmora had used the FLANAX mark “to misrepresent the source of

7
the goods . . . [on] which the mark is used.” Id.; see also

Lanham Act § 14(3), 15 U.S.C. § 1064(3).

The TTAB dismissed BCC’s Article 6bis claim, concluding

that Article 6bis “is not self-executing” and that § 44 of the

Lanham Act did not provide “an independent basis for

cancellation.” J.A. 95. However, the TTAB allowed Bayer’s

§ 14(3) claim to proceed. In 2014, after discovery and a

hearing, the TTAB ordered cancellation of Belmora’s FLANAX

registration, concluding that Belmora had misrepresented the

source of the FLANAX goods and that the facts “d[id] not present

a close case.” J.A. 142. The TTAB noted that Belmora 1) knew

the favorable reputation of Bayer’s FLANAX product, 2) “copied”

Bayer’s packaging, and 3) “repeatedly invoked” that reputation

when marketing its product in the United States. J.A. 143-45.

2.

Shortly after the TTAB’s ruling, Bayer filed suit in the

Southern District of California, alleging that 1) BCC was

injured by Belmora’s false association with its FLANAX product

in violation of Lanham Act § 43(a)(1)(A), and 2) BCC and BHC

were both injured by Belmora’s false advertising of FLANAX under

§ 43(a)(1)(B). The complaint also alleged three claims under

California state law.

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 Belmora meanwhile appealed the TTAB’s cancellation order

and elected to proceed with the appeal as a civil action in the

Eastern District of Virginia. 2 It argued that the TTAB erred in

concluding that Bayer “had standing and/or a cause of action”

under § 14(3) and in finding that Belmora had misrepresented the

source of its goods. J.A. 218. Belmora also sought a

declaration that its actions had not violated the false

association and false advertising provisions of Lanham Act

§ 43(a), as Bayer had alleged in the California district court

proceeding. Bayer filed a counterclaim challenging the TTAB’s

dismissal of its Paris Convention treaty claims.

The California case was transferred to the Eastern District

of Virginia and consolidated with Belmora’s pending action.

Belmora then moved the district court to dismiss Bayer’s § 43(a)

claims under Rule 12(b)(6) and for judgment on the pleadings

under Rule 12(c) on the § 14(3) claim. On February 6, 2015,

after two hearings, the district court issued a memorandum

opinion and order ruling in favor of Belmora across the board.

The district court acknowledged that “Belmora’s FLANAX

. . . has a similar trade dress to Bayer’s FLANAX and is

2A party to a cancellation proceeding who is dissatisfied
with the TTAB’s decision may either “appeal to” the U.S. Court
of Appeals for the Federal Circuit, 15 U.S.C. § 1071(a), or
elect to “have remedy by a civil action” in the district court,
id. § 1071(b). Belmora chose the latter option.

9
marketed in such a way that capitalizes on the goodwill of

Bayer’s FLANAX.” J.A. 475. It nonetheless “distilled” the case

“into one single question”:

Does the Lanham Act allow the owner of a foreign mark
that is not registered in the United States and
further has never used the mark in United States
commerce to assert priority rights over a mark that is
registered in the United States by another party and
used in United States commerce?

J.A. 476. The district court concluded that “[t]he answer is

no” based on its reading of the Supreme Court’s decision in

Lexmark International, Inc. v. Static Control Components, Inc.,

134 S. Ct. 1377 (2014). J.A. 476. Accordingly, the district

court dismissed Bayer’s false association and false advertising

claims for lack of standing. At the same time, it reversed the

TTAB’s § 14(3) cancellation order.

Bayer filed a timely notice of appeal, and we have

jurisdiction under 28 U.S.C. § 1291. The U.S. Patent and

Trademark Office (“USPTO”) intervened to defend the TTAB’s

decision to cancel Belmora’s registration and to argue that the

Lanham Act conforms to the United States’ commitments in Article

6bis of the Paris Convention. 3

3 The district court had agreed with the TTAB that Article
6bis does not create an independent cause of action for the
cancellation of Belmora’s FLANAX registration. Because Bayer
appears to have abandoned its treaty claims on appeal and their
resolution is not necessary to our decision, we do not address
any issue regarding the Paris Convention arguments.

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 II. Discussion

We review de novo the district court’s decision to dismiss

a proceeding under Rules 12(b)(6) and 12(c), accepting as true

all well-pleaded allegations in the plaintiff’s complaint and

drawing all reasonable factual inferences in the plaintiff’s

favor. Priority Auto Grp., Inc. v. Ford Motor Co., 757 F.3d

137, 139 (4th Cir. 2014); see also Bell Atl. Corp. v. Twombly,

550 U.S. 544, 555–56 (2007). In ruling on a motion to dismiss,

“a court evaluates the complaint in its entirety, as well as

documents attached or incorporated into the complaint.” E.I. du

Pont de Nemours & Co. v. Kolon Indus., Inc., 637 F.3d 435, 448

(4th Cir. 2011).

A. False Association and False Advertising Under Section 43(a)

The district court dismissed Bayer’s false association 4 and

false advertising claims because, in its view, the claims failed

to satisfy the standards set forth by the Supreme Court in

Lexmark. At the core of the district court’s decision was its

conclusion that 1) Bayer’s claims fell outside the Lanham Act’s

“zone of interests” –- and are not cognizable -- “because Bayer

4As the district court pointed out, we have sometimes
denominated Lanham Act § 43(a)(1)(A) claims as “false
designation” claims. We think it preferable to follow the
Supreme Court’s terminology in Lexmark and instead refer to such
claims as those of “false association,” although the terms can
often be used interchangeably.

11
does not possess a protectable interest in the FLANAX mark in

the United States,” J.A. 485, and 2) that a “cognizable economic

loss under the Lanham Act” cannot exist as to a “mark that was

not used in United States commerce.” J.A. 488-89.

On appeal, Bayer contends these conclusions are erroneous

as a matter of law because they conflict with the plain language

of § 43(a) and misread Lexmark.

1.

“While much of the Lanham Act addresses the registration,

use, and infringement of trademarks and related marks, § 43(a)

. . . goes beyond trademark protection.” Dastar Corp. v.

Twentieth Century Fox Film Corp., 539 U.S. 23, 28-29 (2003).

Written in terms of the putative defendant’s conduct, § 43(a)

sets forth unfair competition causes of action for false

association and false advertising:

Any person who, on or in connection with any goods or
services, or any container for goods, uses in commerce
any word, term, name, symbol, or device, or any
combination thereof, or any false designation of
origin, false or misleading description of fact, or
false or misleading representation of fact, which --

(A) [False Association:] is likely to cause
confusion, or to cause mistake, or to deceive as
to the affiliation, connection, or association of
such person with another person, or as to the
origin, sponsorship, or approval of his or her
goods, services, or commercial activities by
another person, or

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 (B) [False Advertising:] in commercial
advertising or promotion, misrepresents the
nature, characteristics, qualities, or geographic
origin of his or her or another person’s goods,
services, or commercial activities,

shall be liable in a civil action by any person who
believes that he or she is or is likely to be damaged
by such act.

Lanham Act § 43(a)(1), 15 U.S.C. § 1125(a)(1). Subsection A,

which creates liability for statements as to “affiliation,

connection, or association” of goods, describes the cause of

action known as “false association.” Subsection B, which

creates liability for “misrepresent[ing] the nature,

characteristics, qualities, or geographic origin” of goods,

defines the cause of action for “false advertising.”

Significantly, the plain language of § 43(a) does not

require that a plaintiff possess or have used a trademark in

U.S. commerce as an element of the cause of action. Section

43(a) stands in sharp contrast to Lanham Act § 32, which is

titled as and expressly addresses “infringement.” 15 U.S.C.

§ 1114 (requiring for liability the “use in commerce” of “any

reproduction, counterfeit, copy, or colorable imitation of a

registered mark” (emphasis added)). Under § 43(a), it is the

defendant’s use in commerce -- whether of an offending “word,

term, name, symbol, or device” or of a “false or misleading

description [or representation] of fact” -- that creates the

injury under the terms of the statute. And here the alleged

13
offending “word, term, name, symbol, or device” is Belmora’s

FLANAX mark.

What § 43(a) does require is that Bayer was “likely to be

damaged” by Belmora’s “use[] in commerce” of its FLANAX mark and

related advertisements. The Supreme Court recently considered

the breadth of this “likely to be damaged” language in Lexmark,

a false advertising case arising from a dispute in the used-

printer-cartridge market. 134 S. Ct. at 1383, 1388. The lower

courts in Lexmark had analyzed the case in terms of “prudential

standing” -– that is, on grounds that are “prudential” rather

than constitutional. Id. at 1386. The Supreme Court, however,

observed that the real question in Lexmark was “whether Static

Control has a cause of action under the statute.” Id. at 1387.

This query, in turn, hinged on “a straightforward question of

statutory interpretation” to which it applied “traditional

principles” of interpretation. Id. at 1388. As a threshold

matter, the Supreme Court noted that courts must be careful not

to import requirements into this analysis that Congress has not

included in the statute:

We do not ask whether in our judgment Congress should
have authorized Static Control’s suit, but whether
Congress in fact did so. Just as a court cannot apply
its independent policy judgment to recognize a cause
of action that Congress has denied, it cannot limit a
cause of action that Congress has created merely
because ‘prudence’ dictates.

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Id. The Court concluded that § 43(a)’s broad authorization --

permitting suit by “any person who believes that he or she is or

is likely to be damaged” -- should not be taken “literally” to

reach the limits of Article III standing, but is framed by two

“background principles,” which may overlap. Id.

First, a plaintiff’s claim must fall within the “zone of

interests” protected by the statute. Id. The scope of the zone

of interests is not “especially demanding,” and the plaintiff

receives the “benefit of any doubt.” Id. at 1389. Because the

Lanham Act contains an “unusual, and extraordinarily helpful”

purpose statement in § 45, identifying the statute’s zone of

interests “requires no guesswork.” Id. Section 45 provides:

The intent of this chapter is to regulate commerce
within the control of Congress by making actionable
the deceptive and misleading use of marks in such
commerce; to protect registered marks used in such
commerce from interference by State, or territorial
legislation; to protect persons engaged in such
commerce against unfair competition; to prevent fraud
and deception in such commerce by the use of
reproductions, copies, counterfeits, or colorable
imitations of registered marks; and to provide rights
and remedies stipulated by treaties and conventions
respecting trademarks, trade names, and unfair
competition entered into between the United States and
foreign nations.

Lanham Act § 45, 15 U.S.C. § 1127. 5

5In the same section, the Lanham Act defines “commerce” as
“all commerce which may lawfully be regulated by Congress.”
Lanham Act § 45, 15 U.S.C. § 1227. We have previously construed
this phrase to mean that the term is “coterminous with that
(Continued)
15
 The Supreme Court observed that “[m]ost of the enumerated

purposes are relevant to a false-association case,” while “a

typical false-advertising case will implicate only the Act’s

goal of ‘protecting persons engaged in commerce within the

control of Congress against unfair competition.’” Lexmark, 134

S. Ct. at 1389. The Court concluded “that to come within the

zone of interests in a suit for false advertising under

[§ 43(a)], a plaintiff must allege an injury to a commercial

interest in reputation or sales.” Id. at 1390.

The second Lexmark background principle is that “a

statutory cause of action is limited to plaintiffs whose

injuries are proximately caused by violations of the statute.”

Id. The injury must have a “sufficiently close connection to

the conduct the statute prohibits.” Id. In the § 43(a)

context, this means “show[ing] economic or reputational injury

flowing directly from the deception wrought by the defendant’s

advertising; and that that occurs when deception of consumers

causes them to withhold trade from the plaintiff.” Id. at 1391.

commerce that Congress may regulate under the Commerce Clause of
the United States Constitution.” Int’l Bancorp, LLC v. Societe
des Bains de Mer et du Cercle des Etrangers a Monaco, 329 F.3d
359, 363-64 (4th Cir. 2003). “Commerce” in Lanham Act context
is therefore an expansive concept that “necessarily includes all
the explicitly identified variants of interstate commerce,
foreign trade, and Indian commerce.” Id. at 364 (citing U.S.
Const. art. I, § 8, cl.3); see also infra n.6).

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 The primary lesson from Lexmark is clear: courts must

interpret the Lanham Act according to what the statute says. To

determine whether a plaintiff, “falls within the class of

plaintiffs whom Congress has authorized to sue,” we “apply

traditional principles of statutory interpretation.” Id. at

1387. The outcome will rise and fall on the “meaning of the

congressionally enacted provision creating a cause of action.”

Id. at 1388.

We now turn to apply these principles to the case before

us.

2.

a.

We first address the position, pressed by Belmora and

adopted by the district court, that a plaintiff must have

initially used its own mark in commerce within the United States

as a condition precedent to a § 43(a) claim. In dismissing

BCC’s § 43(a) claims, the district court found dispositive that

“Bayer failed to plead facts showing that it used the FLANAX

mark in commerce in [the] United States.” J.A. 487. Upon that

ground, the district court held “that Bayer does not possess a

protectable interest in the [FLANAX] mark.” Id.

As noted earlier, such a requirement is absent from

§ 43(a)’s plain language and its application in Lexmark. Under

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the statute, the defendant must have “use[d] in commerce” the

offending “word, term, name, [or] symbol,” but the plaintiff

need only “believe[] that he or she is or is likely to be

damaged by such act.” Lanham Act § 43(a), 15 U.S.C. § 1125(a).

It is important to emphasize that this is an unfair

competition case, not a trademark infringement case. Belmora

and the district court conflated the Lanham Act’s infringement

provision in § 32 (which authorizes suit only “by the

registrant,” and thereby requires the plaintiff to have used its

own mark in commerce) with unfair competition claims pled in

this case under § 43(a). Section 32 makes clear that Congress

knew how to write a precondition of trademark possession and use

into a Lanham Act cause of action when it chose to do so. It

has not done so in § 43(a). See Russello v. United States, 464

U.S. 16, 23 (1983) (“[W]here Congress includes particular

language in one section of a statute but omits it in another

section of the same Act, it is generally presumed that Congress

acts intentionally and purposely in the disparate inclusion or

exclusion.”).

Given that Lexmark advises courts to adhere to the

statutory language, “apply[ing] traditional principles of

statutory interpretation,” Lexmark, 134 S. Ct. at 1388, we lack

authority to introduce a requirement into § 43(a) that Congress

plainly omitted. Nothing in Lexmark can be read to suggest that

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§ 43(a) claims have an unstated requirement that the plaintiff

have first used its own mark (word, term, name, symbol, or

device) in U.S. commerce before a cause of action will lie

against a defendant who is breaching the statute.

The district court thus erred in requiring Bayer, as the

plaintiff, to have pled its prior use of its own mark in U.S.

commerce when it is the defendant’s use of a mark or

misrepresentation that underlies the § 43(a) unfair competition

cause of action. Having made this foundational error, the

district court’s resolution of the issues requires reversal. 6

Admittedly, some of our prior cases appear to have treated

a plaintiff’s use of a mark in United States commerce as a

6
Even though the district court’s error in transposing
§ 43(a)’s requirements for a defendant’s actions upon the
plaintiff skews the entire analysis, the district court also
confused the issues by ill-defining the economic location of the
requisite unfair competition acts. As noted earlier, supra n.5,
a defendant’s false association or false advertising conduct
under § 43(a) must occur in “commerce within the control of
Congress.” Such commerce is not limited to purchases and sales
within the territorial limits of the United States as the
district court seems to imply at times with regard to § 43(a)
and § 14(3) claims. See J.A. 483, 506 (as to § 14(3), stating
that “Bayer did not use the FLANAX mark in the United States”);
J.A. 487 (as to § 43(a), stating that “Bayer failed to plead
facts showing that it used the FLANAX mark in commerce in [the]
United States”). Instead, as we explained in International
Bancorp, Lanham Act “commerce” includes, among other things,
“foreign trade” and is not limited to transactions solely within
the borders of the United States. Int’l Bancorp, 329 F.3d at
364. Of course, any such “foreign trade” must satisfy the
Lexmark “zone of interests” and “proximate cause” requirements
to be cognizable for Lanham Act purposes.

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prerequisite for a false association claim. See Lamparello v.

Falwell, 420 F.3d 309, 313 (4th Cir. 2005) (“Both infringement

[under § 32] and false designation of origin [under § 43(a)]

have [the same] five elements.”); People for the Ethical

Treatment of Animals v. Doughney, 263 F.3d 359, 364 (4th Cir.

2001) (same); Int’l Bancorp, 329 F.3d 361 n.2 (“[T]he tests for

trademark infringement and unfair competition . . . are

identical.”); Lone Star Steakhouse & Saloon v. Alpha of Va.,

Inc., 43 F.3d 922, 930 (4th Cir. 1995) (“[T]o prevail under

§§ 32(1) and 43(a) of the Lanham Act for trademark infringement

and unfair competition, respectively, a complainant must

demonstrate that it has a valid, protectible trademark[.]”).

However, none of these cases made that consideration the ratio

decidendi of its holding or analyzed whether the statute in fact

contains such a requirement. See, e.g., 5 J. Thomas McCarthy,

Trademarks and Unfair Competition § 29:4 (4th ed. 2002)

(observing that International Bancorp merely “assumed that to

trigger Lanham Act § 43(a), the plaintiff’s mark must be ‘used

in commerce’”). Moreover, all of these cases predate Lexmark,

which provides the applicable Supreme Court precedent

interpreting § 43(a). See U.S. Dep’t of Health & Human Servs.

v. Fed. Labor Relations Auth., 983 F.2d 578, 581 (4th Cir. 1992)

(“A decision by a panel of this court, or by the court sitting

20
en banc, does not bind subsequent panels if the decision rests

on authority that subsequently proves untenable.”).

Although the plaintiffs’ use of a mark in U.S. commerce was

a fact in common in the foregoing cases, substantial precedent

reflects that § 43(a) unfair competition claims come within the

statute’s protectable zone of interests without the

preconditions adopted by the district court and advanced by

Belmora. As the Supreme Court has pointed out, § 43(a) “goes

beyond trademark protection.” Dastar Corp., 539 U.S. at 29.

For example, a plaintiff whose mark has become generic –- and

therefore not protectable –- may plead an unfair competition

claim against a competitor that uses that generic name and

“fail[s] adequately to identify itself as distinct from the

first organization” such that the name causes “confusion or a

likelihood of confusion.” Blinded Veterans Ass’n v. Blinded Am.

Veterans Found., 872 F.2d 1035, 1043 (D.C. Cir. 1989); see also

Kellogg Co. v. Nat’l Biscuit Co., 305 U.S. 111, 118-19 (1938)

(requiring the defendant to “use reasonable care to inform the

public of the source of its product” even though the plaintiff’s

“shredded wheat” mark was generic and therefore unprotectable);

Singer Mfg. Co. v. June Mfg. Co., 163 U.S. 169, 203-04 (1896)

(same, for “Singer” sewing machines).

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 Likewise, in a “reverse passing off” case, the plaintiff

need not have used a mark in commerce to bring a § 43(a) action. 7

A reverse-passing-off plaintiff must prove four elements: “(1)

that the work at issue originated with the plaintiff; (2) that

origin of the work was falsely designated by the defendant; (3)

that the false designation of origin was likely to cause

consumer confusion; and (4) that the plaintiff was harmed by the

defendant’s false designation of origin.” Universal Furniture

Int’l, Inc. v. Collezione Europa USA, Inc., 618 F.3d 417, 438

(4th Cir. 2010). Thus, the plaintiff in a reverse passing off

case must plead and prove only that the work “originated with”

him -- not that he used the work (which may or may not be

associated with a mark) in U.S. commerce. Id.

The generic mark and reverse passing off cases illustrate

that § 43(a) actions do not require, implicitly or otherwise,

that a plaintiff have first used its own mark in United States

commerce. If such a use were a condition precedent to bringing

a § 43(a) action, the generic mark and reverse passing off cases

could not exist.

7
Reverse passing off occurs when a “producer misrepresents
someone else’s goods or services as his own,” in other words,
when the defendant is selling the plaintiff’s goods and passing
them off as originating with the defendant. Universal Furniture
Int’l, Inc. v. Collezione Europa USA, Inc., 618 F.3d 417, 438
(4th Cir. 2010) (quoting Dastar Corp., 539 U.S. at 28 n.1).

22
 In sum, the Lanham Act’s plain language contains no

unstated requirement that a § 43(a) plaintiff have used a U.S.

trademark in U.S. commerce to bring a Lanham Act unfair

competition claim. The Supreme Court’s guidance in Lexmark does

not allude to one, and our prior cases either only assumed or

articulated as dicta that such a requirement existed. Thus, the

district court erred in imposing such a condition precedent upon

Bayer’s claims. 8

As Bayer is not barred from making a § 43(a) claim, the

proper Lexmark inquiry is twofold. Did the alleged acts of

unfair competition fall within the Lanham Act’s protected zone

of interests? And if so, did Bayer plead proximate causation of

8 A plaintiff who relies only on foreign commercial activity
may face difficulty proving a cognizable false association
injury under § 43(a). A few isolated consumers who confuse a
mark with one seen abroad, based only on the presence of the
mark on a product in this country and not other misleading
conduct by the mark holder, would rarely seem to have a viable §
43(a) claim.
The story is different when a defendant, as alleged here,
has -- as a cornerstone of its business -- intentionally passed
off its goods in the United States as the same product
commercially available in foreign markets in order to influence
purchases by American consumers. See M. Kramer Mfg. Co. v.
Andrews, 783 F.2d 421, 448 (4th Cir. 1986) (“[E]vidence of
intentional, direct copying establishes a prima facie case of
secondary meaning sufficient to shift the burden of persuasion
to the defendant on that issue.”). Such an intentional
deception can go a long way toward establishing likelihood of
confusion. See Blinded Veterans, 872 F.2d at 1045 (“Intent to
deceive . . . retains potency; when present, it is probative
evidence of a likelihood of confusion.”).

23
a cognizable injury? We examine the false association and false

advertising claims in turn.

b.

i.

As to the zone of interests, Lexmark advises that “[m]ost

of the [Lanham Act’s] enumerated purposes are relevant to false-

association cases.” 134 S. Ct. at 1389. One such enumerated

purpose is “making actionable the deceptive and misleading use

of marks” in “commerce within the control of Congress.” Lanham

Act § 45, 15 U.S.C. § 1127; see also Two Pesos, Inc. v. Taco

Cabana, Inc., 505 U.S. 763, 784 n.19 (1992) (Stevens, J.,

concurring) (“Trademark law protects the public by making

consumers confident that they can identify brands they prefer

and can purchase those brands without being confused or

misled.”). As pled, BCC’s false association claim advances that

purpose.

The complaint alleges Belmora’s misleading association with

BCC’s FLANAX has caused BCC customers to buy the Belmora FLANAX

in the United States instead of purchasing BCC’s FLANAX in

Mexico. For example, the complaint alleges that BCC invested

heavily in promoting its FLANAX to Mexican citizens or Mexican-

24
Americans in border areas. 9 Those consumers cross into the

United States and may purchase Belmora FLANAX here before

returning to Mexico. And Mexican-Americans may forego

purchasing the FLANAX they know when they cross the border to

visit Mexico because Belmora’s alleged deception led them to

purchase the Belmora product in the United States.

In either circumstance, BCC loses sales revenue because

Belmora’s deceptive and misleading use of FLANAX conveys to

consumers a false association with BCC’s product. Further, by

also deceiving distributors and vendors, Belmora makes its

9 Bayer alleges in its complaint that:

11. [BCC] has sold hundreds of millions of dollars of
its FLANAX medicines in Mexico. This includes
substantial sales in major cities near the U.S.-Mexico
border.

12. [BCC] has spent millions of dollars promoting and
advertising the FLANAX brand in Mexico, including in
major cities near the U.S.-Mexico border.

13. As a result of [BCC’s] extensive sales and
marketing, the FLANAX brand is extremely well known in
Mexico and to Mexican-American consumers in the United
States.

. . . .

30. Defendants have marketed Belmora’s FLANAX products
by targeting Hispanic consumers likely to be familiar
with [BCC’s] FLANAX products and deliberately
attempting to deceive those consumers into believing
that Belmora’s FLANAX products are the same thing as
the FLANAX medicines they know and trust from Mexico.

J.A. 156, 159 (Compl. ¶¶ 11-13, 30).

25
FLANAX more available to consumers, which would exacerbate BCC’s

losses. See J.A. 196 (stating in a brochure for distributors

that “Flanax is now made in the U.S.” and “acts as a powerful

attraction for Latinos”); J.A. 410 (noting a distributor’s

concern that the product “is legal to sell in the US”). In each

scenario, the economic activity would be “within the control of

Congress” to regulate. Lanham Act § 45, 15 U.S.C. § 1127.

We thus conclude that BCC has adequately pled a § 43(a)

false association claim for purposes of the zone of interests

prong. Its allegations reflect the claim furthers the § 45

purpose of preventing “the deceptive and misleading use of

marks” in “commerce within the control of Congress.”

ii.

Turning to Lexmark’s second prong, proximate cause, BCC has

also alleged injuries that “are proximately caused by

[Belmora’s] violations of the [false association] statute.” 134

S. Ct. at 1390. The complaint can fairly be read to allege

“economic or reputational injury flowing directly from the

deception wrought by the defendant’s” conduct. Id. at 1391. As

previously noted, BCC alleges “substantial sales in major cities

near the U.S.-Mexico border” and “millions of dollars promoting

and advertising” its FLANAX brand in that region. J.A. 156

(Compl. ¶¶ 11-12). Thus, BCC may plausibly have been damaged by

26
Belmora’s alleged deceptive use of the FLANAX mark in at least

two ways. As reflected in the zone of interests discussion, BCC

FLANAX customers in Mexico near the border may be deceived into

foregoing a FLANAX purchase in Mexico as they cross the border

to shop and buy the Belmora product in the United States.

Second, Belmora is alleged to have targeted Mexican-Americans in

the United States who were already familiar with the FLANAX mark

from their purchases from BCC in Mexico. We can reasonably

infer that some subset of those customers would buy BCC’s FLANAX

upon their return travels to Mexico if not for the alleged

deception by Belmora. Consequently, BCC meets the Lexmark

pleading requirement as to proximate cause.

BCC may ultimately be unable to prove that Belmora’s

deception “cause[d] [these consumers] to withhold trade from

[BCC]” in either circumstance, Lexmark, 134 S. Ct. at 1391, but

at the initial pleading stage we must draw all reasonable

factual inferences in BCC’s favor. Priority Auto Grp., 757 F.3d

at 139. Having done so, we hold BCC has sufficiently pled a §

43(a) false association claim to survive Belmora’s Rule 12(b)(6)

motion. The district court erred in holding otherwise.

c.

BCC and BHC both assert § 43(a)(1)(B) false advertising

claims against Belmora. BHC’s claim represents a “typical”

27
false advertising case: it falls within the Act’s zone of

interests by “protecting persons engaged in commerce within the

control of Congress against unfair competition.” Lexmark, 134

S. Ct. at 1389 (quoting 15 U.S.C. § 1127). As a direct

competitor to Belmora in the United States, BHC sufficiently

alleges that Belmora engaged in Lanham Act unfair competition by

using deceptive advertisements that capitalized on BCC’s

goodwill. See J.A. 163 (Compl. ¶ 54) (asserting that Belmora

was deceptive with “claims in their marketing materials and

communications with distributors”); Appellees’ Br. 77

(acknowledging that “BHC is a competitor of Belmora’s in the

United States naproxen sodium market” and “can in theory bring a

false advertising action against a competitor”). If not for

Belmora’s statements that its FLANAX was the same one known and

trusted in Mexico, some of its consumers could very well have

instead purchased BHC’s ALEVE brand. These lost customers

likewise satisfy Lexmark’s second prong: they demonstrate an

injury to sales or reputation proximately caused by Belmora’s

alleged conduct.

BCC’s false advertising claim is perhaps not “typical” as

BCC is a foreign entity without direct sales in the territorial

United States. Nonetheless, BCC’s claim advances the Act’s

purpose of “making actionable the deceptive and misleading use

of marks.” Lanham Act § 45, 15 U.S.C. § 1127. As alleged,

28
Belmora’s advertising misrepresents the nature of its FLANAX

product in that Belmora implies that product is the same as

consumers purchased in Mexico from BCC and can now buy here.

To be sure, BCC’s false advertising claim overlaps to some

degree with its false association claim, but the two claims

address distinct conduct within the two subsections of § 43(a).

Belmora’s alleged false statements go beyond mere claims of

false association; they parlay the passed-off FLANAX mark into

misleading statements about the product’s “nature,

characteristics, qualities, or geographic origin,” all hallmarks

of a false advertising claim. Lanham Act 43(a)(1)(B), 15 U.S.C.

1125(a)(1)(B). 10

Belmora’s alleged false statements intertwine closely with

its use of the FLANAX mark. The FLANAX mark denotes history:

Belmora claims its product has been “used [for] many, many years

in Mexico” and “Latinos have turned to” it “[f]or generations.”

J.A. 196. FLANAX also reflects popularity: Belmora says the

product is “highly recognized [and] top-selling.” Id. And

FLANAX signifies a history of quality: Belmora maintains that

Latinos “know, trust and prefer” the product. Id. Each of

these statements by Belmora thus directly relates to the

10 Because each of these claims is anchored as a factual
matter to the FLANAX mark’s history “in the Latino American
market,” we disagree with Belmora’s argument that the statements
amount to mere puffery. See J.A. 160.

29
“nature, characteristics, qualities, or geographic origin” of

its FLANAX as being one and the same as that of BCC. Lanham Act

§ 43(a)(1)(B), 15 U.S.C. § 1125(a)(1)(B). Because these

statements are linked to Belmora’s alleged deceptive use of the

FLANAX mark, we are satisfied that BCC’s false advertising

claim, like its false association claim, comes within the Act’s

zone of interests. As we can comfortably infer that the alleged

advertisements contributed to the lost border sales pled by BCC,

the claim also satisfies Lexmark’s proximate cause prong (for

the same reasons discussed above regarding the false association

claim).

d.

We thus conclude that the Lanham Act permits Bayer to

proceed with its claims under § 43(a) –- BCC with its false

association claim and both BCC and BHC with false advertising

claims. It is worth noting, as the Supreme Court did in

Lexmark, that “[a]lthough we conclude that [Bayer] has alleged

an adequate basis to proceed under [§ 43(a)], it cannot obtain

relief without evidence of injury proximately caused by

[Belmora’s alleged misconduct]. We hold only that [Bayer] is

entitled to a chance to prove its case.” 134 S. Ct. at 1395.

In granting Bayer that chance, we are not concluding that

BCC has any specific trademark rights to the FLANAX mark in the

30
United States. Belmora owns that mark. But trademark rights do

not include using the mark to deceive customers as a form of

unfair competition, as is alleged here. Should Bayer prevail

and prove its § 43(a) claims, an appropriate remedy might

include directing Belmora to use the mark in a way that does not

sow confusion. See Lanham Act § 34(a), 15 U.S.C. § 1116(a)

(authorizing injunctions based on “principles of equity”). Of

course, the precise remedy would be a determination to be made

by the district court in the first instance upon proper

evidence. 11 We leave any potential remedy to the district

court’s discretion should this case reach that point. We only

note that any remedy should take into account traditional

trademark principles relating to Belmora’s ownership of the

mark.

B. Cancellation Under Section 14(3)

The TTAB ordered the cancellation of Belmora’s FLANAX

trademark under § 14(3), finding that the preponderance of the

11
For example, a remedy might include altering the font and
color of the packaging or the “ready remedy” of attaching the
manufacturer’s name to the brand name. Blinded Veterans, 872
F.2d at 1047. Another option could be for the packaging to
display a disclaimer -- to correct for any deliberately created
actual confusion. See id. (“The district court could, however,
require [Blinded American Veterans Foundation] to attach a
prominent disclaimer to its name alerting the public that it is
not the same organization as, and is not associated with, the
Blinded Veterans Association.”).

31
evidence “readily establishe[d] blatant misuse of the FLANAX

mark in a manner calculated to trade in the United States on the

reputation and goodwill of petitioner’s mark created by its use

in Mexico.” J.A. 142. In reversing that decision and granting

Belmora’s motion for judgment on the pleadings, the district

court found that BCC, as the § 14(3) complainant, “lack[ed]

standing to sue pursuant to Lexmark” under both the zone of

interests and the proximate cause prongs. J.A. 505. The

district court also reversed the TTAB’s holding that Belmora was

using FLANAX to misrepresent the source of its goods “because

Section 14(3) requires use of the mark in United States commerce

and Bayer did not use the FLANAX mark in the United States.”

J.A. 505-06.

On appeal, Bayer argues that the district court erred in

overturning the TTAB’s § 14(3) decision because it “read a use

requirement into the section that is simply not there.”

Appellants’ Br. 49. For reasons that largely overlap with the

preceding § 43(a) analysis, we agree with Bayer.

1.

Section 14(3) of the Lanham Act creates a procedure for

petitioning to cancel the federal registration of a mark that

the owner has used to misrepresent the source of goods:

A petition to cancel a registration of a mark, stating
the grounds relied upon, may . . . be filed as follows

32
 by any person who believes that he is or will be
damaged . . . by the registration of a mark . . .

. . . .

(3) At any time . . . if the registered mark is
being used by, or with the permission of, the
registrant so as to misrepresent the source of
the goods or services on or in connection with
which the mark is used.

Lanham Act § 14(3), 15 U.S.C. § 1064(3). The petitioner must

establish that the “registrant deliberately sought to pass off

its goods as those of petitioner.” See 3 McCarthy, § 20:30 (4th

ed. 2002).

If successful, the result of a § 14(3) petition “is the

cancellation of a registration, not the cancellation of a

trademark.” Id. § 20:40. Cancellation of registration strips

an owner of “important legal rights and benefits” that accompany

federal registration, but it “does not invalidate underlying

common law rights in the trademark.” Id. § 20:68; see also B &

B Hardware Inc. v. Hargis Indus., Inc., 135 S. Ct. 1293, 1300

(2015).

To determine what parties § 14(3) authorizes to petition

for cancellation, we again apply the Lexmark framework. The

relevant language in § 14(3) closely tracks similar language

from § 43(a) that the Supreme Court considered in Lexmark:

“[A]ny person who believes that he is or will be damaged” by the

mark’s registration may petition for cancellation under § 14(3),

33
just as “any person who believes that he or she is or is likely

to be damaged” may bring an unfair competition action under

§ 43(a). The same two-prong inquiry from Lexmark provides the

mode of analysis.

To determine if a petitioner falls within the protected

zone of interests, we note that § 14(3) pertains to the same

conduct targeted by § 43(a) false association actions -- using

marks so as to misrepresent the source of goods. Therefore,

“[m]ost of the [Lanham Act’s] enumerated purposes are relevant”

to § 14(3) claims as well. See Lexmark, 134 S. Ct. at 1389. As

for proximate cause, we once again consider whether the

plaintiff has “show[n] economic or reputational injury flowing

directly from the deception wrought by the defendant’s

[conduct].” 12 Id. at 1391. As with § 43(a), neither § 14(3) nor

Lexmark mandate that the plaintiff have used the challenged mark

in United States commerce as a condition precedent to its claim.

See Empresa Cubana Del Tabaco v. Gen. Cigar Co., 753 F.3d 1270,

1278 (Fed. Cir. 2014) (“In the proceedings before the Board,

12
The USPTO suggests that § 14(3) might require a lesser
showing of causation because it sets forth an administrative
remedy, whereas the Supreme Court based its Lexmark analysis on
common law requirements for judicial remedies. See Empresa
Cubana Del Tabaco v. Gen. Cigar Co., 753 F.3d 1270, 1275 (Fed.
Cir. 2014) (“A petitioner is authorized by statute to seek
cancellation of a mark where it has both a real interest in the
proceedings as well as a reasonable basis for its belief of
damage.”). We need not resolve this issue for purposes of the
current decision.

34
however, Cubatabaco need not own the mark to cancel the

Registrations under [Section 14(3)].”).

2.

Applying the framework from Lexmark, we conclude that the

Lanham Act authorizes BCC to bring its § 14(3) action against

Belmora. BCC’s cancellation claim falls within the Lanham Act’s

zone of interests because it confronts the “deceptive and

misleading use of marks.” Lanham Act § 45, 15 U.S.C. § 1127.

And BCC has also adequately pled a proximately caused injury to

survive Belmora’s Rule 12(c) motion for the same reasons

previously discussed for the false association and false

advertising claims. The district court thus erred in reversing

the TTAB’s decision cancelling the registration of Belmora’s

FLANAX mark.

III.

For the foregoing reasons, we conclude that Bayer is

entitled to bring its unfair competition claims under Lanham Act

§ 43(a) and its cancellation claim under § 14(3). The district

court’s judgment is vacated and the case remanded for further

proceedings consistent with this opinion.

VACATED AND REMANDED

35