The U.S. District Court for the Southern District of New York issued its final consent judgment to the settlement agreement between GSK and Laclede, Inc. on Friday, May 24, 2019. By issuing its final consent judgment, the U.S. District Court for the Southern District of New York agreed to the settlement agreement between GSK and Laclede concluding the trademark infringement action over the BIOTENE trademarks.
Multinational pharmaceutical company, GSK, filed intellectual property claims against Laclede, a pharmaceutical company that researches, develops, and manufactures a variety of over-the-counter and prescription medications, after a $170 million dollar purchase of Laclede’s intellectual property that included various BIOTENE trademarks relating to eighteen products of Laclede’s “BIOTENE” dental product line used for treating dry mouth. The BIOTENE dental product line consists of over-the counter products including mouthwashes and toothpastes used for treating dry mouth. After purchasing the rights to the BIOTENE dental product line, GSK invested in advertising and promoting the BIOTENE product line. In 2017, GSK spent over $20 million advertising and promoting the BIOTENE product line. In addition to investing in advertisements and promotion for the BIOTENE product line, GSK also reformulated the BIOTENE dental product line.
Three years after transferring all of the intellectual property rights including the “BIOTENE” trademark, Laclede introduced its SALIVEA dental product line. The SALIVEA dental product line was a direct competitor with the BIOTENE dental product line, and included products such as mouthwash and toothpaste used for treating dry mouth. Court documents indicate that Laclede sent “approximately 100,000 mailers…to healthcare professionals and others” and advertised the SALIVEA product line through its website. Laclede’s advertisements listed trademarked phrases such as “#1 brand for dry mouth”, “ORIGINAL Biotene Formula” and featured trademarked logos such as the “blue-and-red BIOTENE logo” and the “BIOTENE droplet”. On June 4, 2018, GSK filed its trademark infringement claims against Laclede and its shareholders, Michael Pellico and Stephen Pellico, for using various BIOTENE trademarks.
A trademark is any word, name, symbol, and or device used by a trademark holder to identify and distinguish the trademark holder’s products from products manufactured and sold by others. In order for a trademark holder to register a trademark, a trademark must distinguish the trademark holder’s products from the products of others. Once a trademark holder registers a trademark with the Patent and Trademark Office, a trademark holder holds rights to the trademark in the U.S. if the trademark holder uses the trademark in commerce. A trademark holder maintains its rights in its trademark as long as the trademark holder uses the trademark to designate the origin of a product.
Trademark infringement refers to the unauthorized use of a trademark in connection with the sale, offering for sale, distribution, or advertising of any goods where such use is likely to cause confusion. A trademark holder may seek remedies in federal court for infringement under Section 32 of the Lanham Act. The Lanham Act is a federal statute that protects registered trademarks and that allows a trademark holder to file a civil action against an infringer for trademark infringement. In order to prevail in a trademark infringement action under Section 32 of the Lanham Act, a trademark holder, “must establish that the trademark holder possesses a valid, legally protectable trademark, and that the infringer’s subsequent use of a similar mark is likely to create confusion as to the origin of the product at issue.” Whether the infringer’s subsequent use of a similar mark is likely to create confusion as to the origin of the product at issue is guided by an eight factor balancing test first articulated by . The eight factors include: (1) the strength of the trademark; (2) the similarity of the marks; (3) the proximity of the productions and their competitiveness with one another; (4) evidence that the senior user may “bridge the gap” by developing a product for sale in the market of the alleged infringer’s product; (5) evidence of actual consumer confusion; (6) evidence that the imitative mark was adopted in bad faith; (7) the respective quality of the products; and (8) the sophistication (or lack thereof) of consumers in the relevant market.
In its January 23, 2019 Opinion and Order issued by United States District Judge Jesse M. Furman, the Court determined that GSK met the burden of showing that consumers are likely to be confused. The Court found that the first factor weighed in GSK’s favor, stating that there was no dispute that the BIOTENE trademark and BIOTENE droplet were both strong trademarks. The Court also found that the second factor favored GSK because Laclede conceded that its BIOTENE marks used in their advertising materials were identical to GSK’s trademarks. Since the SALIVEA product line is a direct competitor to the BIOTENE product line, the Court found this factor also favored GSK. The Court determined that the fifth factor weighed only slightly in favor of GSK, explaining that even though only twenty reported cases of actual confusion by healthcare professionals were reported, the relatively small number of declarations revealed actual consumer confusion. The Court also determined that Laclede acted in bad faith because some advertisements mentioned BIOTENE more frequently than they mentioned SALIVEA and because the advertisements created the impression that SALIVEA was an improved version of BIOTENE. With respect to the seventh factor, the Court concluded that it favored neither GSK nor Laclede because the quality of SALIVEA would neither create confusion, nor that such confusion would harm GSK’s reputation. Finally, the Court determined that the eighth factor favored Laclede indicating that both the ultimate consumer and healthcare professionals are sophisticated and familiar with the dental product market.
The Court ordered Laclede to refrain from using: the blue-and-red BIOTENE logo and confusingly similar variations; images of the packaging; and from advertising SALIVEA as a replacement for BIOTENE. Several months following the January 23, 2019 Opinion and Order, GSK and Laclede entered into a settlement agreement. The settlement agreement prohibits Laclede from making statements such as “#1 Brand for Dry Mouth” in connection with advertising and packaging its products.