Fourth Circuit Holds that Equitable Defense of Laches, Not Most Analogous Statute of Limitations, Applies to Section 43(a) Claims

June 2, 2021 – Article

Belmora LLC v. Bayer Consumer Care AG, 987 F.3d 284 (4th Cir. 2021)

This appeal is part of the long-running saga between Bayer Consumer Care AG and Belmora LLC alleging unfair competition for Belmora’s adoption and use in the U.S. of Bayer’s Mexican trademark FLANAX for an anti-inflammatory drug. In Bayer’s first appeal in this dispute, the Fourth Circuit held that that Bayer sufficiently pled a § 43(a) false association claim to survive Belmora’s Rule 12(b)(6) motion, and the district court erred in reversing the TTAB’s decision cancelling Belmora’s U.S. FLANAX registration because Bayer had pled a cognizable injury. Belmora LLC v. Bayer Consumer Care AG, 819 F.3d 697 (4th Cir. 2016).

In this current appeal, the Fourth Circuit reversed a district court’s holding that Bayer’s unfair competition claims under Section 43(a) – false association and false advertising – were time-barred under the most analogous state law statute of limitations. Belmora LLC v. Bayer Consumer Care AG, 987 F.3d 284 (4th Cir. 2021). The Fourth Circuit concluded that § 43(a) is a federal law for which a state statute of limitations would be an unsatisfactory vehicle for enforcement.  “Rather, the affirmative defense of laches, which applies to claims that are equitable in nature, . . . ‘provides a closer analogy than available state statutes.’” Id. at 293. The Fourth Circuit held that “laches is the appropriate defense to § 43(a) claims.” Id. at 294. The Court vacated the portion of the district court’s order granting summary judgment on Bayer’s § 43(a) claims and remanded for determination whether those claims are barred by laches and to make any further, necessary factual findings. Id.

The Fourth Circuit observed that on remand, the statute of limitations from the most analogous statute of limitations will continue to play an important role in the district court’s laches analysis. Id. Laches is presumed to bar § 43(a) claims filed outside the analogous limitations period. Id.  However, whether a claim is brought within the analogous state limitations period is not dispositive of whether laches should be applied. Id. at 295.

“Should the district court conclude that the presumption applies to Bayer’s § 43(a) claims, the district court should consider the following factors to determine if Bayer can overcome the presumption: (1) whether Bayer knew of Belmora’s adverse use of the FLANAX mark, (2) whether Bayer’s delay in challenging that use ‘was inexcusable or unreasonable,’ and (3) whether Belmora ‘has been unduly prejudiced’ by Bayer’s delay.  Id.

The Fourth Circuit also vacated that portion of the district court’s decision holding that Bayer’s state law unfair competition and false advertising claims were barred by the statute of limitations and remanded the case to the district court to determine whether those claims are subject to tolling based on Bayer’s 2004 TTAB cancellation petition. Id.

As for Belmora’s seven counterclaims, the Fourth Circuit held that the district court properly dismissed those counterclaims because of insufficient evidence supporting them. Id. at 295 – 298.

Finally, the Fourth Circuit rejected Belmora’s § 1071(b) challenge to the TTAB decision cancelling Belmora’s FLANAX registration because the facts demonstrated that Belmora blatantly misused Bayer’s FLANAX mark in a manner calculated to trade on Bayer’s goodwill and reputation. The Fourth Circuit affirmed the district court’s grant of summary judgment to Bayer on its request for affirmance of the TTAB decision. Id. at 299.