Kos Pharm Inc v. Andrx Corp

• Court: Court of Appeals for the Third Circuit
• Decided: May 24, 2004
• Docket: 03-3977
• Status: Published

Opinion

Opinions of the United 2004 Decisions States Court of Appeals for the Third Circuit

5-24-2004

Kos Pharm Inc v. Andrx Corp Precedential or Non-Precedential: Precedential

Docket No. 03-3977

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Recommended Citation "Kos Pharm Inc v. Andrx Corp" (2004). 2004 Decisions. Paper 649. http://digitalcommons.law.villanova.edu/thirdcircuit_2004/649

This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova University School of Law Digital Repository. It has been accepted for inclusion in 2004 Decisions by an authorized administrator of Villanova University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu. PRECEDENTIAL Richard W. Young (Argued) Liisa M. Thomas UNITED STATES COURT OF Nicole M. Murray APPEALS Gardner Carton & Douglas LLP FOR THE THIRD CIRCUIT 191 N. Wacker Drive, Suite 3700 Chicago, Illinois 60606

No. 03-3977 Mark S. Olinsky James M . Hirschhorn Sills Cummis Radin Tischman Epstein & KOS PHARM ACEUTICALS, INC., Gross, P.A. One Riverfront Plaza Appellant Newark, New Jersey 07102-5400

v. Attorneys for Appellant

ANDRX CORPORATION; ANDRX Allyn Z. Lite (Argued) LABORATORIES, INC. Joseph J. DePalma Michael E. Patunas Lite DePalma Greenberg & Rivas, LLC Two Gateway Center, 12th Floor On Appeal from the United States Newark, New Jersey 07102 District Court for the District of New Jersey James V. Costigan (District Court No. 03-cv-03714) Martin P. Endres District Court Judge: Honorable Dennis Kathleen A. Costigan M. Cavanaugh Hedman & Costigan, P.C. 1185 Avenue of the Americas New York, New York 10036 Argued: March 9, 2004 Attorneys for the Appellees Before: SLOVITER, NYGAARD, Circuit Judges, and OBERDORFER,* District Judge. OPINION OF THE COURT

(Opinion Filed: May 24, 2004) OBERDORFER, Senior District Judge.

This is an appeal from the denial of * The Honorable Louis F. Oberdorfer, preliminary relief in a trademark Senior District Judge for the District of infringement action. Plaintiff-appellant Columbia, sitting by designation. Kos Pharmaceuticals, Inc. (“Kos”) owns the mark ADVICOR, which it uses in drug, Advicor. 1 connection with cholesterol-altering drugs Shortly after Kos began marketing available by prescription. Kos sought a Advicor, it learned that Andrx planned to preliminary injunction preventin g use the mark ALTOCOR for its own new defendants-appellees Andrx Corporation anticholesterol medication, which would and Andrx Laboratories, Inc. (collectively, contain only a single active ingredient, an “Andrx”) from using the mark ALTOCOR extended-release form of lovastatin, in in connection with sales of Andrx’s own varying strengths (10, 20, 40 or 60 cholesterol-altering prescription drugs. milligrams). Andrx announced on January The district court denied the requested 31, 2002 that it had received preliminary relief, and this appeal followed. Because marketing approval for Altocor from the the denial of the preliminary injunction United States Food and Dru g was premised on legal errors, we reverse. Administration (the “FDA”). On February We remand the case to the district court 5, 2002, the PTO published for opposition with directions to enter a preliminary the ALTOCOR mark, which Andrx had injunction on an expedited basis. applied to register in December 2000. I. BACKGROUND Kos tried to dissuade or otherwise Unless otherwise noted, the prevent Andrx from using the ALTOCOR following facts are undisputed. On mark several times, both before and after October 3, 2000, Kos filed an application Andrx began selling its new drug. On with the United States Patent and April 1, 2002, Kos wrote to Andrx that, in Trademark Office (the “PTO”) to register its view, the proposed use of the mark ADVICOR as the mark for a new ALTOCOR “would constitute trademark m e d i c a t ion designed to improve infringement and unfair competition.” JA cholesterol levels. This new drug at 273. It advised Andrx to “refrain from combines 20 milligrams of lovastatin using ALTOCOR or any other mark which (which lowers LDL, or “bad” cholesterol) is likely to cause confusion with with varying strengths (500, 750, or 1000 A D V I CO R f o r p h ar m aceutic al milligrams) of an extended-release preparations.” Id. Kos described its prior formulation of niacin (which increases use of ADVICOR for its own cholesterol- HDL, or “good” cholesterol). Kos has altering medication and stated further that: been selling its proprietary extended- If Andrx were to use the release form of niacin under the trade name Niaspan since 1997. In July 2001 Kos began advertising, and in December 1 To distinguish the marks from the 2001 began selling, its new combination drugs they identify, we use all capital letters to refer to the marks, but capitalize only the first letter when referring to the drugs.

2 mark ALTOCOR for Kos also expressed its concerns [the described] about potential confusion to the FDA pha r m a c e utical division responsible for reviewing preparations, proposed new drug names from a public consumers and health perspective, the Office of Drug m e d i c a l Safety’s Division of Medication Errors and professionals would Technical Support (the “Division of inevitably believe Medication Errors”). The Division of that Andrx’s product Medication Errors had preliminarily originates with or is approved the name Altocor in November authorized by, 2001.3 At that time, the Division stated sponsored by, or in that the “name Advicor looks and sounds some way connected similar [to] Altocor,” but concluded that with Kos and its the “difference in the written strengths” of A D V I C O R the drugs reduced the risk of “error . . . p h a r m a ceutical between the two products.” Id. at 269. products. . . . The After Kos learned of the preliminary similarity betw een approval, it sent a letter to the FDA, dated the marks and the March 6, 2002, stating that it was goods may create “concerned that the similarity in the confusion among proprietary names of these two products health care may create confusion among health care practitioners in terms practitioners in terms of both prescribing of both prescribing and dispensing these medications.” Id. at a n d dispen s i n g, 250. resulting in In April 2002, the Division of d a n g e r o u s Medication Errors reiterated its opinion medication errors. that “the difference in the strengths Id. at 272-73. A similar letter followed on (combination vs. single) will help ensure April 15, 2002. Id. at 362. Andrx that medication errors do not occur responded to neither letter. 2 between the two products.” Id. at 261. At the same time, however, it concluded that “the name, Altocor, [is] no longer 2 At oral argument, counsel for Andrx -- apparently and inexplicably 3 unaware of these letters -- incorrectly The Division of Medication stated that Kos did not inform Andrx Errors was then known as the Office of directly of its view that Andrx’s Post-Marketing Drug Risk Assessment. proposed mark was confusingly similar For ease of reference, we use the current to its own before Altocor went to market. name.

3 acceptable due to the potential for opposition is susp ende d pen din g confusion with” a third, unrelated drug. disposition of this civil litigation. Id. at 258. When Andrx objected to In July 2002, Andrx began changing the name of its product, the marketing Altocor. Thereafter, Kos Division of Medication Errors, while “not “advised Andrx of the growing number of recommend[ing] the use of the proposed instances of actual confusion” on multiple name, Altocor,” gave conditional approval occasions. Id. at 75. For example, on to using the name so long as Andrx January 10, 2003, Kos sent Andrx’s “commit[ed] to submitting all potential counsel a chart “setting forth . . . and actual errors involving Altocor . . . occurrences of actual consumer confusion” [and] to changing the proprietary name, reported to it. Id. at 368. On February 20, Altocor, if two or more reports of actual 2003, Kos sent an updated chart, entitled errors occur.” Id. at 256.4 “Summary of Confusion Involving Kos next raised its concerns with Advicor and Altocor,” that listed 39 the PTO. In May 2002, Kos filed an discrete instances of purported confusion. opposition to Andrx’s application to Id. at 304-08 (listing incidents between register the mark ALTOCOR. Some September 2, 2002 and February 12, discovery has been conducted in that 2003). proceeding, but no decision has been In the meantime, on December 5, issued. According to the PTO docket, the 2002, Andrx filed with the FDA a “supplemental new drug application 4 propos[ing] three alternate proprietary The precise terms of the names” for Altocor. Id. at 380. On April conditional FDA approval are in some 11, 2003, Andrx filed an application with dispute, but are only tangentially relevant the PTO to register the mark ALTOPREV. to issues raised here. Andrx claims it And Andrx’s 2002 Annual Report, issued needed to change its mark only if there in the spring of 2003, stated: were four actual errors the first year Altocor was sold, and then only if the Andrx’s application for a errors were between Altocor and the registered trademark for unrelated drug about which the FDA Altocor has been opposed expressed concern. JA at 345 (citing a by Kos Pharmaceuticals, letter Andrx sent the FDA shortly before who alleges that there is a the April 2002 Division of Medication likelihood of confusion Errors document was issued). In that between Kos’ trademark, letter, however, Andrx agreed to “submit Advicor, and Altocor. all reports” of medication errors “related Andrx has requested FDA to Altocor” that it receives, not just those guidance on other names, involving Altocor and one particular and may seek to change the drug. Id. at 348. name of Altocor.

4 Id. at 374. The FDA approved Andrx’s issue here. Neither party requested an supplemental application on August 20, opportunity to adduce oral testimony on 2003, stating that “the proprietary name, the application. Altoprev, is acceptable.” Id. at 380.5 The documentary evidence before By August 2003, Kos had spent the district court included the following: more than $ 40 million on promotion and Evidence Regarding Actual advertising, and Advicor had been Confusion prescribed more than 350,000 times, grossing approximately $ 70 million in Kos submitted the Certification of sales. Andrx had spent more than $ 21 its Vice President of Marketing, Aaron million on promotion and advertising, and Berg, dated August 5, 2003 (“Berg Altocor had been prescribed more than Certification”), 6 which stated, inter alia, 300,000 times, grossing more than $ 27 that Andrx’s use of the mark ALTOCOR million. has caused confusion. Berg further stated that “over 60 instances of actual confusion On August 6, 2003, Kos filed a between the two drugs have been verified complaint, claiming that Andrx’s documented and reported to [him] by [his] use of the mark ALTOCOR on its staff,” including “six patients [who] anticholesterol drugs constituted trademark received the wrong medication, either infringement and unfair competition under because they had been given a sample of the federal Lanham Act, and under state one drug instead of the other, or because a and common law equivalents. Kos pharmacist filled a prescription with the accompanied the complaint with the wrong drug.” Id. at 69. Based on his application for a preliminary injunction at “personal knowledge or [his] review of the business records of Kos,” Berg described 5 Andrx claims that it no longer has “representative . . . instances” of the FDA approval to use this name, but incidents reported to him. Id. at 68, 71. submitted no evidence to support that These included, for example, doctors claim. complaining to Kos representatives about the pricing or insurance coverage of According to records available on Advicor, when their complaints were in the PTO website, a Notice of Allowance fact about Altocor, as well as medical for the ALTOPREV mark was issued on professionals identifying Altocor samples February 24, 2004. We may take judicial notice of such public records. See, e.g., 6 Hoganas AB v. Dresser Indus., Inc., 9 Andrx challenged the F.3d 948, 954 n.27 (Fed. Cir. 1993); admissibility and probative value of the Standard Havens Prods., Inc. v. Gencor Berg Certification. JA at 41-44. The Indus., Inc., 897 F.2d 511, 514 n.3 (Fed. district court never ruled on Andrx’s Cir. 1990). objection.

5 as Adv i co r s am p le s, Altocor doing well on the Advicor . representatives as Advicor representatives, . . no reason to change! A l t o c o r c o nfere nces as A dvic o r Id. at 340. Andrx also countered the Berg conferences, and vice versa. Certification with the declaration of its Andrx submitted excerpts from Vice President for Regulatory Affairs, Berg’s deposition testimony, taken on June Nicholas Farina, whose job requires him to 12, 2003 in the PTO opposition report to the FDA “every incidence of proceeding. There, Berg said he had not actual confusion” involving Andrx in had “direct contact” with the medical which “a product other than the one professionals involved in any of the prescribed by a physician is dispensed by reported incidents of confusion, but had a pharmacist and the patient leaves the learned of those incidents primarily pharmacy.” Id. at 345. Farina said no through voice-mail or e-mail. Id. at 291. such incidents relating to Altocor had been Andrx contrasted Berg’s characterization reported to Andrx as of the date of his of one incident -- where, Berg said, a declaration, August 26, 2003. Id. at 346. patient whose “condition was improving . Medical Evidence . . asked his cardiologist for more of the” Advicor his doctor had prescribed, but the The parties submitted competing “cardiologist refilled the prescription with medical affidavits to support their Altocor,” id. at 71 -- with the following respective views as to the nature and more detailed description of the same severity of potential consequences of mis- incident, sent to Berg by e-mail: filled prescriptions.7 Per Kos, niacin -- and thus Advicor, but not Altocor -- may [A doctor] said that he had a cause serious injury, or even death, to patient that he had put on patients with various conditions or Advicor and when he went sensitivities to the drug. Other, less to his cardiologist, . . . he serious, side effects of niacin may worry was due for a refill on patients who have not been warned of Advicor. The patient those effects, and who may thus returned . . . and [the doctor] discontinue needed treatment. Patients notice[d] that the medicine who mistakenly receive Altocor rather listed was not Advicor, but Altocor! . . . [T]he patient told him that [th e 7 Kos initially relied on the Berg cardiologist] renewed his Certification for these medical issues, but Rx. [The doctor] did not supplemented this -- at the hearing -- question [the cardiologist] with a physician’s certification. The directly . . . ‘not my place to district court’s order, issued the day after ? a cardiologist’. Up to that the hearing, mentions only the initial point, the patient had been certification.

6 than Advicor are also at risk, says Kos, ALTOCOR was one of many . . . since the conditions the niacin is meant to generated by” an outside firm. Id. at 342. address will remain untreated. Andrx, on the other hand, claims that the “safety profile of both products is similar” and that there need not be “any unusual concern” about “harm to the public if the Andrx product is substituted for the KOS product.” Id. at 226. Evidence Regarding Adoption of Marks The Berg Certification also addressed selection of the ADVICOR and ALTOCOR marks. Berg stated that Kos chose ADVICOR as “a fanciful, made-up name” that would be “an unusual, distinctive name to make the drug stand out to doctors as unique.” Id. at 73. He asserted that a former Kos product manager, Charles Schneider, “who was actively participating in [Kos’s] naming initiative” left Kos for Andrx during the “naming process.” Id. at 73-74. Kos submitted an e-mail, sent to Schneider before his departure, that listed 42 possible names that it was considering, of which 12 -- including ADVICOR and AVICOR -- were “already picked” by it as possible names, and asked Schneider and one other Kos employee to select ten “back up names.” Id. at 356-57. Berg said Andrx then applied to register “two closely similar trademarks: AVICOR and ALTOCOR” “[a]lmost immediately after” Schneider arrived there. Id. at 74. Andrx submitted a declaration from Schneider stating that he “was never involved with nor aware of the selection of the name AD VICO R,” and that the “name

7 Evidence R egarding Other court held that Kos had not shown that it Proceedings was likely to succeed on the merits, and found, based in large part on its negative Andrx submitted letters Kos sent assessment of Kos’s likelihood of success, the European Community Trademark that Kos did not satisfy the other Office in support of its application to prerequisites for extraordinary relief. Kos register ADVICOR over the mark filed this interlocutory appeal, and we ACTIVOR, which was being used, not on granted Kos’s request for an expedited prescription anticholesterol drugs, but appeal schedule. rather on over-the-counter “stimulants and preparations used to build up vitality.” Id. II. LEGAL STANDARDS AND at 329, 333. Kos argued there, inter alia, JURISDICTION that (1) the “opening syllable[s]” of the The test for preliminary relief is a marks (AD v. AC) are “not identical,” familiar one. A party seeking a which is important “since attention to a preliminary injunction must show: (1) a polysyllabic word is normally focused on likelihood of success on the merits; (2) that the beginning,” id. at 328; (2) neither the it will suffer irreparable harm if the middle (VI v. TI) nor final (COR v. VOR) injunction is denied; (3) that granting syllables are identical; (3) the “suffix COR preliminary relief will not result in even . . . is very common in the pharmaceutical greater harm to the nonmoving party; and Class 5 category,” id. at 329; (4) the (4) that the public interest favors such “functions [of the products] do not relief. Allegheny Energy, Inc. v. DQE, overlap,” id.; (5) “there is little chance that Inc., 171 F.3d 153, 158 (3d Cir. 1999). any doctor would confuse a prescription Preliminary injunctive relief is “an cholesterol altering medication with an extraordinary remedy” and “should be over the counter product,” or that a granted only in limited circumstances.” “qualified pharmacist” would do so, id. at American Tel. & Tel. Co. v. Winback & 333; and (6) “the channels of distribution, Conserve Program, Inc., 42 F.3d 1421, method of purchase and the targeted 1427 (3d Cir. 1994) (quotation omitted). customer is different in relation to the two “[O]ne of the goals of the preliminary products,” id. injunction analysis is to maintain the status On September 17, 2003, after quo, defined as the last, peaceable, hearing argument, the district court denied noncontested status of the parties.” Kos’s application for a preliminary Opticians Ass’n of Am. v. Indep. injunction from the bench. The court Opticians of Am., 920 F.2d 187, 197 (3d issued a supplemental memorandum the Cir. 1990) (citation and quotation following day that incorporated the omitted); see also 5 J. Thomas McCarthy, “reasons . . . stated on the record during McCarthy on Trademarks and Unfair oral argument” and provided additional Competition § 30:50 (4th ed. 2003) (“The reasons for its decision. Id. at 13. The status quo to be preserved is not the

8 situation of contested rights . . . . In a appeal pursuant to 15 U.S.C. § 1121(a) trademark case, [it] is the situation prior to and 28 U.S.C. § 1292(a). the time the junior user began use of its III. LIKELIHOOD OF SUCCESS ON contested mark: the last peaceable, non- THE MERITS contested status.”). To prevail on a claim for trademark We review the denial of a infringement or unfair competition under preliminary injunction for “an abuse of the Lanham Act, the owner of a valid and discretion, an error of law, or a clear legally protectable mark, such as Kos, mistake in the consideration of proof.” must show that a defendant’s use of a Winback, 42 F.3d at 1427 (quotation similar mark for its goods “causes a omitted). “[A]ny determination that is a likelihood of confusion.” A & H prerequisite to the issuance of an Sportswear, Inc. v. Victoria’s Secret injunction . . . is reviewed according to the Stores, Inc., 237 F.3d 198, 210 (3d Cir. standard applicable to that particular 2000). 8 This Court has adopted a non- determination.” Id. (second alteration in exhaustive list of factors to consider in original, quotation omitted). “Thus, we evaluating likelihood of confusion, exercise plenary review over the district commonly referred to as the “Lapp court’s conclusions of law and its factors.” See Interpace Corp. v. Lapp, application of law to the facts, but review Inc., 721 F.2d 460, 463 (3d Cir. 1983). its findings of fact for clear error, which These factors were developed for cases occurs when we are left with a definite and involving non-competing products. Id. at firm conviction that a mistake has been committed.” Duraco Prods., Inc. v. Joy 8 Plastic Enters., Ltd., 40 F.3d 1431, 1438 See 15 U.S.C. § 1114(1)(a) (3d Cir. 1994) (citations and quotation (defining infringement as the omitted). “Despite oft repeated statements unauthorized use of a “colorable that the issuance of a preliminary imitation of a registered mark in injunction rests in the discretion of the trial connection with the sale, offering for judge[,] whose decisions will be reversed sale, distribution or advertising of any only for ‘abuse,’ a court of appeals must goods or services on or in connection reverse if the district court has proceeded with which such use is likely to cause on the basis of an erroneous view of the confusion, or to cause mistake, or to applicable law.” Apple Computer, Inc. v. deceive”); 15 U.S.C. § 1125(a)(1) Franklin Computer Corp., 714 F.2d 1240, (creating cause of action for use “in 1242 (3d Cir. 1983) (quotation omitted). connection with any goods . . . [of] any word, term [or] name . . . likely to cause The district court had original confusion, or to cause mistake, or to jurisdiction pursuant to 15 U.S.C. § deceive as to . . . the origin, sponsorship, 1121(a) and 28 U.S.C. § 1338, and we or approval of [those] goods . . . by have jurisdiction over this interlocutory another person”).

9 462. Although we have held that courts same channels of trade and “‘need rarely look beyond the mark itself’” advertised through the same in cases involving competing goods, we media; recently recognized that “consideration of (8) the extent to which the the Lapp factors . . . can be quite useful for targets of the parties’ sales determining likelihood of confusion even efforts are the same; when the goods compete directly.” A & H, 237 F.3d at 212 (quoting Lapp, 721 (9) the relationship of the F.2d at 462). Because some of the initial goods in the minds of Lapp factors were “not apposite for consumers, whether because directly competing goods,” we “adapted of the near-identity of the [them] to make them applicable whether products, the similarity of the products directly compete or not.” Id. function, or other factors; at 212-13. As adapted, the factors are: (10) other facts suggesting (1) the degree of similarity that the consuming public between the owner’s mark might expect the prior and the alleged infringing owner to manufacture both mark; products, or expect the prior owner to manufacture a (2) the strength of the product in the defendant’s owner’s mark; market, or expect that the (3) the price of the goods prior owner is likely to and other factors indicative expand into the defendant’s of the care and attention market. expected of consumers Id. at 215. “None of these factors is when making a purchase; determinative in the likelihood of (4) the length of time the confusion analysis and each factor must be defendant has used the mark weighed and balanced one against the without evidence of actual other.” Checkpoint Sys., Inc. v. Check confusion arising; Point Software Techs., Inc., 269 F.3d 270, 280 (3d Cir. 2001). Each factor is (5) the intent of the “weighed . . . separately,” which “is not to defendant in adopting the say that all factors must be given equal mark; weight.” Fisons Horticulture, Inc. v. (6) the evidence of actual Vigoro Indus., Inc., 30 F.3d 466, 476 & confusion; n.11 (3d Cir. 1994). “[T]he different factors may properly be accorded different (7) whether the goods, weights depending on the particular factual competing or not competing, setting. A district court should utilize the are marketed through the

10 factors that seem appropriate to a given situation.” A & H, 237 F.3d at 215. The Lapp factors are best understood as “tools to guide a qualitative decision.” Id. at 216. Here, the district court held that two of the factors -- strength of the owner’s mark, and the extent to which the parties’ sales efforts are the same -- favored Kos, but that “the remaining Lapp factors do not.” JA at 10-11. The court found “[s]uccess on these two Lapp factors . . . insufficient to persuade [it] that confusion is likely to occur.” Id. at 9. It further found that Kos “failed to convince [it] that the selective consumers in this case, physicians and pharmacists, will suffer from a likelihood of confusion.” Id. at 9. The opinion analyzed only the two factors the court found weighed in Kos’s favor. As to the remaining factors, the court said only that, “[a]fter carefully evaluating the Lapp test in its entirety, [it] concludes that there is no likelihood of confusion.” Id. at 11. We recognize that district courts must exercise their discretion on an expedited basis in deciding whether to grant preliminary relief. Although we ordinarily defer to that discretion, we cannot do so if it was exercised under a mistaken view of the law. Here, two fundamental errors of law taint the district court opinion: (1) the court used an overly narrow definition of confusion, in effect evaluating the likelihood of misdispensing rather than confusion; (2) the court did not properly analyze or weigh the Lapp factors.

11 First, the hearing transcript betrays pharmacist cannot fill the a focus on whether prescriptions are likely wrong prescription. It’s to be mis-filled, to the apparent exclusion impossible to fill the wrong of all other types of confusion with which prescription. the Lanham Act is concerned. For THE COURT: That’s my example: point: . . . that because of MR. YOUNG [Counsel for the types of dosages, if they Kos]: . . . The Lanham Act have the wrong name, if doesn’t require they have a name with the misdispensing. What we wrong dos age , they have seen is, a lot of doctors wouldn’t . . . be able to fill are saying -- that prescription. THE COURT: Yes, but MR. LITE: T h a t ’ s misdispensing is the basis absolutely correct, Your for confusion. Honor. MR. YOUNG: That’s THE COURT: So there p o w erf ul evidence of can’t be confusion, you’re confusion. But what’s also saying. happening in the MR. LITE: Well, I don’t marketplace is, doctors are t h i n k t h e r e ca n b e saying, Look, I’m not going confusion. There can’t, to prescribe either drug certainly, be confusion in because I can’t keep them the prescribing or straight. . . . dispensing of these drugs. . ... .. THE COURT: Well, if that Id. at 39-40. Much of the balance of the were the case, then I guess colloquy focused on the possibility, and there’s no concern about potential danger, of misdispensing.9 As adverse health effects to the patient, because they’re not 9 getting the wrong drug; The court’s extensive focus on they’re getting another drug misdispensing may reflect consideration that the doctor wants them of Kos’s “public interest” argument (that to have. the chance of serious injury made preliminary relief essential) as well as a JA at 52 (emphasis added). Similarly: narrow view of the element of confusion. MR. LITE [Counsel for See, e.g., JA at 20:20; id. at 21:3-22; id. Andrx]: . . . A prudent at 25:4-14, id. at 31:4-33:20; id. at 34:5-

12 noted above, the district court opinion The Act is now broad enough to incorporates the reasons articulated by the cover “the use of trademarks which are court at oral argument. These statements likely to cause confusion, mistake, or are thus a powerful indicator that the deception of any kind, not merely of court’s “likelihood of confusion” analysis purchasers nor simply as to source of rested substantially, if not entirely, on origin.” Syntex Labs., Inc. v. Norwich misdispensing as the confusion at issue. Pharmacal Co., 437 F.2d 566, 568 (2d Cir. This is not the law. It is clear error to treat 1971) (emphasis added); see, e.g., misdispensing as the only relevant Lanham Checkpoint, 269 F.3d at 295 (overly Act confusion. narrow view of confusion “would undervalue the importance of a company’s The Lanham Act defines trademark g o o d w i l l w i th it s c u st om e r s ” ); infringement as use of a mark so similar to Morningside Group Ltd. v. Morningside that of a prior user as to be “likely to cause Capital Group, L.L.C., 182 F.3d 133, 141 confusion, or to cause mistake, or to (2d Cir. 1999) (reversing due to lower deceive.” 15 U.S.C. § 1114(1). court’s use of “inordinately narrow Likelihood of confusion under the Lanham definition of actual confusion” that Act is not limited to confusion of products, ignored “actual confusion regarding as in misdispensing. Confusion as to affiliation or sponsorship”); Meridian source is also actionable. See, e.g., Fisons, Mutual Ins. Co. v. Meridian Insurance 30 F.3d at 472 (“[L]ikelihood of confusion Group, Inc., 128 F.3d 1111, 1118 (7th Cir. . . . exists when the consumers viewing the 1997) (context of confusion “immaterial” mark would probably assume that the because any injury to goodwill or loss of product . . . it represents is associated with control over reputation is actionable); the source of a different product . . . Champions Golf Club, Inc. v. Champions identified by a similar mark.”) (quotation Golf Club, Inc., 78 F.3d 1111, 1119-20 omitted). We recently described how the (6th Cir. 1996) (relevant evidence of 1962 amendments to the Lanham Act confusion goes beyond purchaser broadened the scope of trademark confusion and includes “confusion among protection beyond the traditional source- nonpurchasers” in order to “protect the of-origin confusion. Checkpoint, 269 F.3d manufacturer’s reputation”); Fuji Photo at 295 (citing deletion of the phrase Film Co. v. Shinohara Shoji Kabushiki “purchasers as to the source of origin of Kaisha, 754 F.2d 591, 596 (5th Cir. 1985) such goods or services” from the end of (actionable confusion includes any use the former definition, which now reads “likely to confuse purchasers with respect “likely to cause confusion, or to cause to . . . [a product’s] endorsement by . . ., or mistake, or to deceive”). its connection with[,] the plaintiff”). Second, the district court failed to 13; id. at 35:4-36:20; id. at 37:19-40:15; “employ all the relevant Lapp factors and id. at 42:10-18; id. at 48:16-52:25. weigh each factor to determine whether in

13 the totality of the circumstances When reviewing an order that does marketplace confu sio n is like ly.” not adequately support the resolution of a Checkpoint, 269 F.3d at 296 (emphasis motion for preliminary injunction, we may added). Despite recognizing that “‘each vacate and remand for additional findings factor must be weighed and balanced,’” or may “first look[] to see whether the the court did not perform the requisite record provides a sufficient basis to weighing and balancing on the record. JA ascertain the legal and factual grounds for at 8 (quoting Checkpoint, 269 F.3d at the grant or denial of the injunction.” 280). The Lapp test is not a mechanistic Bradley v. Pittsburgh Bd. of Educ., 910 one. It need not be “followed precisely so F.2d 1172, 1178 (3d Cir. 1990). Although long as the relevant comparisons suggested a district court’s application of an incorrect by the test are made.” A & H, 237 F.3d at legal standard “would normally result in a 207. But if a district court finds “certain remand, we need not remand” if of the Lapp factors are inapplicable or application of the correct standard could unhelpful in a particular case,” that court should “explain its choice not to employ runs afoul of Rule 52(a), which requires those factors.” Id. at 214 n.8. Here, the courts to “set forth the findings of fact court analyzed only two of the ten Lapp and conclusions of law which constitute factors -- both of which it found favored the grounds” for “granting or refusing Kos. The court’s conclusory statement interlocutory injunctions.” Fed. R. Civ. that “the remaining Lapp factors do not P. 52(a). “[F]air compliance with Rule [weigh in Petitioner’s favor],” JA at 10-11, 52(a)” is “of the highest importance to a does not explain the basis for its holding as proper review of the action of a court in to each factor, whether it viewed each as granting or refusing a preliminary neutral, irrelevant, or favorable to Andrx, injunction.” Mayo v. Lakeland or how it weighed and balanced the Highlands Canning Co., 309 U.S. 310, combined factors. The opinion thus does 316 (1940). A district court’s factual not make the “relevant comparisons” findings and legal conclusions must which the Lapp test identifies. Compare “explain the basis for” and “permit Fisons, 30 F.3d at 481 (reversing because meaningful review of its ruling.” Elliott “district court misapplied some [Lapp v. Kiesewetter, 98 F.3d 47, 55 (3d Cir. factors] and did not consider others”) with 1996) (quotation omitted). “[T]he A& H, 237 F.3d at 215-16 (affirming since conclusions of law must carefully “ostensibly missing Lapp factors appear to enunciate and explain the trial court’s be incorporated into the District Court’s resolution of questions of law, so that the test,” which was “functionally similar to appellate court is able to conduct a just the Lapp test”).10 and orderly review of the rights of the parties.” 9 James Wm. M oore et al., 10 The court’s failure to explain its Moore’s Federal Practice § 52.15[3] (3d conclusions as to each Lapp factor also ed. 2000).

14 support only one conclusion. Duraco mark similarity.” A & H, 237 F.3d at 216; Prods., Inc. v. Joy Plastic Enters., Ltd., 40 see also id. at 214 (“[W]hen goods are F.3d 1431, 1451 (3d Cir. 1994) (affirming directly competing, both precedent and denial of preliminary injunction where common sense counsel that the similarity plaintiff could not demonstrate likelihood of the marks takes on great prominence.”). of success even “with the evidence viewed Marks “are confusingly similar if ordinary in the light most favorable to it”); see also consumers would likely conclude that [the Opticians, 920 F.2d at 198; Lapp, 721 F.2d two products] share a common source, at 460 (reversing and directing entry of affiliation, connection or sponsorship.” judgment). Our holding in Opticians is Fisons, 30 F.3d at 477. The proper test is instructive. There, we reversed due to “not side-by-side comparison” but legal error and went on to assess the “whether the labels create the same overall likelihood of confusion, which the district impression when viewed separately.” Id. court had not addressed. Id. at 194-95 (quotation and citation omitted). Courts (“Likelihood of confusion is a fact should “compare the appearance, sound normally reviewable under the clearly and meaning of the marks” in assessing erroneous standard. Our review, however, their similarity. Checkpoint, 269 F.3d at is plenary since there is no dispute as to 281 (quotation omitted). There is no the facts relevant to this issue.”). Rather simple rule as to when marks are too than remanding for the district court to similar. “The degree of similarity . . . exercise its discretion in the first instance, needed to prove likely confusion will vary we determined that plaintiff had made all with the difference in the goods . . . of the necessary showings on the undisputed parties. Where the goods . . . are directly facts of record and directed entry of a competitive, the degree of similarity preliminary injunction. Id. at 196-98. required to prove a likelihood of confusion is less than in the case of dissimilar Here, we will review the findings products.” 3 McCarthy, supra, § 23:20.1. and conclusions of the district court and the factual assertions and contentions of The district court made no findings the parties in light of the controlling legal as to the degree of similarity of the principles to see whether the facts and law ADVICOR and ALTOCOR marks; it compel a particular result. If so, it would merely concluded that this factor does not be a waste of judicial resources to remand favor Kos. for reweighing. The facts predicate to this analysis A. The Individual Lapp Factors are manifest and undisputed. The facial similarity of the marks is apparent “on 1. Degree of Similarity of the their face.” Both are seven-letter, three- Marks syllable words that begin and end with the “The single most important factor same letters and the same sounds. The in determining likelihood of confusion is marks are also similar in that both are

15 “coined word[s], not found even in the marks; the overarching question is approximation in the English or any other whether the marks, “viewed in their familiar language.” Telechron, Inc. v. entirety,” are confusingly similar. A & H, Telicon Corp., 198 F.2d 903, 905 (3d Cir. 237 F.3d at 216 (emphasis added). Cf. 1952). “Fanciful marks are . . . given an Fisons, 30 F.3d at 478 (“[T]he district expansive scope of judicial protection . . . court misapprehended the legal standard as to more variations of format.” 2 when it undertook a detailed analysis of McCarthy, supra, § 11:6. Two names that the differences in the marks rather than look and sound similar will naturally seem focusing on the overall impression created even more similar where there are no by them.”). differences in meaning to distinguish Andrx attempts to, but cannot, them. Nor can the similarity of coined justify its approach by characterizing marks be explained by, or ameliorated by statements Kos made in European virtue of, any relationship between the trademark proceedings as “admissions that marks and the products identified. See, directly contradict its position before this e.g., Telechron, 198 F.2d at 909 Court and the district court.” Appellees’ (Defendant “cannot claim that he is Br. at 10. The European proceeding exercising the normal privilege of using involved different marks (ADVICOR v. ordinary language . . . [in] a case of a first ACTIVOR), different goods, and different coined word and a second coined word legal standards than those at issue here. resembling it.”); Lambert Pharmacal Co. v. Kos’s statements in those proceedings Bolton Chem. Corp., 219 F. 325, 326 show that the material facts are not (S.D.N.Y. 1915) (Hand, J.) (One who has equiv alent. For e x a m p l e , K os “adopt[ed a] . . . trade name, arbitrary in distinguished Advicor from the over-the- character, . . . has the right to insist that counter “stimulants and preparations to others in making up their arbitrary names build up vitality” at issue there by arguing, should so certainly keep away from his inter alia, that “their functions do not customers as to raise no question.”). overlap,” and that they have different Andrx would differentiate the “channels of distribution, method[s] of marks by distinguishing what it deems purchase and . . . targeted customer[s].” unimportant features (namely, “the first JA at 329, 333. More importantly, Kos’s letter ‘A’ and the suffix ‘COR’”) from claims in those proceedings are all those that are “salient” (the “first premised on European Community law. syllables”). Appellees’ Br. at 19-20. Trademark standards do not traverse Andrx argues that the “first syllables (AD international borders. “The concept of compared to AL) . . . create a completely territoriality is basic to trademark law; different sight, sound and impression.” Id. trademark rights exist in each country at 20 (emphasis added). But the proper solely according to that country’s statutory legal test is not whether there is some scheme.” Fuji Photo, 754 F.2d at 599 confusing similarity between sub-parts of (finding it “error to admit evidence of the

16 parties’ foreign trademark practices”); see Second, the PTO has not allowed also E. Remy Martin & Co. v. Shaw-Ross Andrx to register the ALTOCOR mark. Int’l Imports, Inc., 756 F.2d 1525, 1531 As stated above, Kos’s opposition remains (11th Cir. 1985) (district court erred in pending. Andrx’s claim about a favorable considering status of parties’ marks in PTO determination presumably rests on France; “Our concern must be the business the examining attorney’s decision and goodwill attached to United States approving publication of the ALTOCOR trademarks, not French trademark rights mark for opposition.11 The record contains under French law.”) (quotation omitted); no information about the basis for the Vanity Fair Mills v. T. Eaton Co., 234 publication decision or about what F.2d 633, 639 (2d Cir. 1956) (“[W]hen information was before the examining trade-mark rights within the United States attorney at that time. Thus, the record are being litigated in an American court, does not show that the PTO actually the decisions of foreign courts concerning considered the registrability of ALTOCOR the respective trade-mark rights of the over ADVICOR, much less that it found parties are irrelevant and inadmissible.”). the marks not to be confusingly similar. Cf. Marketing Displays, Inc. v. TrafFix Andrx also claims that “[t]he FDA Devices, Inc., 200 F.3d 929, 934 (6th Cir. and the USPTO have determined that the 1999) (rejecting claim that registration of marks are not confusingly similar.” allegedly infringing mark creates inference Appellees’ Br. at 19. But neither of those that “the trademark examining attorney at proceedings can supplant the required the PTO actually examined the [earlier] Lanham Act analysis. First, the FDA mark and found that the [registered] mark applies a standard different from the Lanham Act “likelihood of confusion” test 11 at issue here. The FDA reviews proposed We caution that Andrx’s apparent drug names “to predict potential confusion shorthand characterization of this low- that may arise in the actual prescription level decision as a PTO determination process.” 3 McCarthy, supra, § 19:149 seems somewhat misleading, as do such (emphasis added); see also id. at § 19:150 statements as, for example, “the USPTO (FDA “likelihood of confusion test [is] approved the mark.” Appellees’ Br. at wholly distinct from the test employed by 35. Publication of a mark is not the PTO”). As discussed above, equivalent to its allowance or misdispensing is not the only type of registration; the PTO issues a Certificate confusion actionable under the Lanham of Registration only if “all oppositions Act. Indeed, to the extent that the FDA’s filed” after publication are dismissed. 37 proprietary name review is relevant here, C.F.R. § 2.81. Reference to PTO action the reviewing division’s statement that the is more naturally understood as “name Advicor looks and sounds similar allowance (or denial) of an application [to] Altocor” actually supports Kos’s rather than publication of a mark, claim. See JA at 269. especially where an opposition is filed.

17 did not infringe it”), rev’d on other receive less protection from strong grounds, 532 U.S. 23 (2001). Indeed, even infringing marks than weak ones. Indeed, where the record shows that an examining it might be argued that a stronger junior attorney has explicitly considered a prior mark is more likely to cause confusion, at mark, we have held that an “initial PTO least where, as here, both marks are being determination . . . may be considered [but] used in the same market. need not be given weight when the PTO 3. Factors Indicative of the attorney did not review all the evidence Care and A ttentio n available to the District Court.” A & H, Expected of Consumers 237 F.3d at 221 (affirming decision that gave “no weight” to “low-level The third Lapp factor weighs preliminary decision” even though against finding a likelihood of confusion examiner assessed likelihood of confusion “[w]hen consumers exercise heightened with prior mark). care in evaluating the relevant products before making purchasing decisions.” We hold that the district court Checkpoint, 269 F.3d at 284. The district clearly erred in failing to recognize that court held that Kos did not “convince [it] this factor weighs in Kos’s favor. It does. that the selective consumers in this case, 2. Strength of the Owner’s physicians and pharmacists, will suffer Mark from a likelihood of confusion.” JA at 9. The opinion provided no basis for this The record supports the district conclusion, but did incorporate the court’s finding that this factor weighs in “reasons . . . stated on the record during favor of Kos. The court properly analyzed oral argument.” Id. at 13. There, the both the conceptual and commercial judge stated that he thought the differences strength of the ADVICOR mark. Andrx in the dosage of each drug made errors in argues that this factor does not favor Kos filling prescriptions unlikely. E.g., id. at because ALTOCOR and ADVICOR are 49 (“[I]t seems to me because of the similarly distinctive and have similar dosage that has to be made part of the strength in the marketplace. But the prescription that the pharmacist would relative strength of the Andrx’s mark is not have to ignore some aspect of such a relevant here. The second Lapp factor prescription to make a mistake.”). The looks to “the strength of the owner’s court did not analyze the likelihood of any mark.” Lapp, 721 F.2d at 463 (emphasis t yp e o f c o n f u s i o n o t h e r t h a n added). “Under the Lanham Act, stronger misdispensing. marks receive greater protection” because they “carry greater recognition, [so that] a The district court and the parties similar mark is more likely to cause treated medical professionals, such as confusion.” A & H, 237 F.3d at 222. It doctors, nurses and pharmacists, as the would not serve the purposes of the Lanham Act for trademark owners to

18 relevant consumers. 12 These trained Morgenstern Chem. Co. v. G.D. Searle & professionals may be expected to be Co., 253 F.2d 390, 393 (3d Cir. 1958) knowledgeable about, and to exercise care (quotation omitted). “[P]hysicians are not in distinguishing between, medicines. We immune from confusion or mistake.” Id. have emphasized a countervailing concern (quotation omitted); see also Syntex Labs., that weighs against allowing the expertise Inc. v. Norwich Pharmacal Co., 437 F.2d of physicians and pharmacists to trump 566, 569 (2d Cir. 1971) (since confusion other factors in assessing the likelihood of of prescription drugs “could result in confusion in drug cases. “Prevention of physical harm to the consuming public,” a confusion and mistakes in medicines is too “stricter standard in order to prevent vital to be trifled with” since “[c]onfusion likelihood of confusion seems desirable”). in such products can have serious Other jurisdictions and a uthorities consequences for the pa tient.” similarly recognize that “greater care should be taken to avoid confusion in 12 connection with medications which affect We note that neither the parties the health of the patient.” 3A Louis nor the court below addressed the Altman, Callman on Unfair Competition, possible confusion of ultimate Trademarks & Monopolies § 21:10 & nn. consumers. While doctors and 121-132 (4th ed. 2003) (collecting cases pharmacists play a gate-keeping role and authorities). between patients and prescription drugs, they are not the ultimate consumers. In assessing how customer Patients are. Courts have noted that sophistication should be weighed “[w]ith drugs are increasingly marketed directly respect to pharmaceuticals,” the “expertise to potential patients through, for of the physicians and pharmacists may be example, “ask-your-doctor-about-Brand- outweighed by” this need for heightened X” style advertising. See, e.g., Puritan- care. Id. at § 21:12 & n.24 (emphasis Bennett Corp. v. Penox Techs. Inc., No. added). Where both professionals and the IP 02-0762-C, 2004 WL 866618, at * 4 general public are relevant consumers, (S.D. Ind. Mar. 2, 2004) (admitting “the standard of care to be exercised . . . evidence of patient confusion as to will be equal to that of the least medical devices available only by sophisticated consumer in the class.” prescription but advertised directly to Checkpoint, 269 F.3d at 285. In patients because patients “are a part of, Morgenstern, we criticized the district although not the entire, relevant court for weighing the “high standards of market”); Upjohn Co. v. American Home care” expected of “physicians and Prods. Corp., No. 1:95CV237, 1996 WL pharmacists” more heavily than the 33322175, at *4 (W.D. Mich. Apr. 5, “obvious similarity in derivation, 1996) (patients are among relevant suggestiveness, spelling, and sound in consumers for prescription drugs whose careless pronunciation between [the marketing targets them). marks] as applied to pills to be taken by

19 mouth for therapeutic purposes.” 253 F.2d supra, § 23:32 (“[I]t is proper to require a at 392. Recognizing that doctors and lesser quantum of proof of confusing pharmacists “are carefully trained to detect similarity for drugs and m edicinal differences in the characteristics of preparations. . . . [For] prescription drugs, pharmaceutical products,” we held that [this] rule . . . should control over the this “does not open the door to the supposed ‘sophistication’ of physicians adoption by manufacturers of medicines of and pharmacists.”) (emphasis added). trade-marks or names which would be Andrx argues that confusion is even confusingly similar to anyone not less likely here than in other cases exercising such great care.” Id. at 393 involving medical professionals since (emphasis added).13 See also 3 McCarthy, prescriptions must reflect the different chemical composition of the drugs, with 13 At oral argument, the question Advicor prescriptions specifying strengths was raised whether Morgenstern creates of two active ingredients, and Altocor only a different standard for drug cases -- one. Of course, this difference in “possibility of confusion” rather than prescribing is not relevant to the common “likelihood of confusion” -- and, if so, practice of providing samples or to any whether it is good law. Compare typ e of confusion other than Morgenstern, 253 F.2d at 394 (“If there misdispensing. There is no reason to is any possibility of . . . confusion in the believe that medical expertise as to case of medicines public policy requires products will obviate confusion as to that the use of the confusingly similar source or affiliation or other factors name be enjoined.”) with A & H affecting goodwill. “It is well settled that Sportswear, Inc. v. Victoria’s Secret expertise in the field of trademarks cannot Stores, Inc., 166 F.3d 197, 205 (3d Cir. 1999) (en banc) (“[T]he appropriate standard for determining trademark relying on Morgenstern for the infringement under the Lanham Act is proposition that “the potential harm from the likelihood of confusion.”). But cf. a mistake warrants closer scrutiny” in Morgenstern, 253 F.2d at 392 (test for such cases. Audio Tape of Oral infringement is whether marks are so Argument before Court of Appeals for similar “that ordinary purchasers, buying the Third Circuit (Mar. 9, 2004) (on file with ordinary caution, are likely to be with Court). Morgenstern’s holding -- misled”) (quotation omitted, emphasis that drug manufacturers cannot use added). marks that would be confusingly similar We need not consider the to non-experts -- may be best understood applicability of the discredited as a warning that medical expertise is not “possibility of confusion” standard. Kos enough, in and of itself, to lessen the conceded at oral argument that the proper likelihood of confusion in prescription standard is “likelihood of confusion,” drug cases.

20 be inferred from expertise in another area.” confused either.” Fisons, 30 F.3d at 476. Fuji Photo, 754 F.2d at 595 (collecting The sixth Lapp factor looks at evidence of cases); see also Altman, supra, § 21:10 & actual confusion. n.139 (“[I]t has been held that the care The district court recited Kos’s with which consumers select a product claim that, in the thirteen months since does not impact the association they may ALTOCOR was first sold,14 “at least six make regarding sponsorship of another patients have received the wrong product or service; therefore even a high medication due to confusion between the degree of care would have little effect on drugs’ names” and “over sixty instances of confusion of sponsorship.”); cf. Sterling actual confusion [have been] reported to Drug Inc. v. Lincoln Labs., Inc., 322 F.2d [Kos].” JA at 6. Yet the court 968, 971 (7th Cir. 1963) (that defendant’s conspicuously failed to analyze either product requires prescription does not Lapp factor concerned with actual “eliminat[e] the likelihood of confusion as confusion or to explain why these factors to source of origin” for medical products did not favor Kos in light of the incidents “designed to remedy the same condition in Kos identified. . . . [and] purchased and used by the same classes of persons”); Champions, 78 F.3d a. Admissibility of Berg at 1121 (6th Cir. 1996) (sophistication of Certification consumers, who exercise great care in Before we reach the substantive joining golf club, does not preclude issue of actual confusion, we must confusion “about affiliation between the consider the evidentiary status of the Berg two clubs”). Certification on which Kos’s claims about The district court did not err in such confusion rest. Andrx challenges the holding that this factor does not favor Kos. admissibility and reliability of the Berg We conclude, however, that no reasonable Certification, which it deems “self-serving, factfinder could weigh it heavily for unreliable and uncorroborated hearsay” Andrx. that “is an insufficient basis for the issuance of preliminary relief in a 4/6. Length of Time Defendant’s Mark Has Been Used Without Confusion / Evidence of Actual Confusion 14 Per the fourth Lapp factor, two Compare Scott Paper Co. v. parties’ concurrent use of “similar marks Scott’s Liquid Gold, Inc., 589 F.2d 1225, for a sufficient period of time without 1230 (3d Cir. 1978) (citing “over forty evidence of consumer confusion about the years” of concurrent use “without any source of the products” allows “an evidence of actual confusion” in finding inference that future consumers will not be no likelihood of confusion).

21 trademark matter.” Appellees’ Br. at 25.15 trial on the merits.” University of Texas v. Camenisch, 451 U.S. 390, 395 (1981). In We have considered the possibility keeping with this principle, many of our that the district court’s conclusory finding sister Circuits have recognized that as to these Lapp factors was based on its “[a]ffidavits and other hearsay materials acceptance of the objections Andrx raised are often received in preliminary below to the Berg Certification. While it injunction proceedings.” Asseo v. Pan is implicit in the district court’s holding Am. Grain Co., 805 F.2d 23, 26 (1st Cir. that it found the Berg Certification 1986); see also Ty, Inc. v. GMA insufficient to show actual confusion, Accessories, Inc., 132 F.3d 1167, 1171 nothing in the record suggests that it (7th Cir. 1997) (citing Asseo); Levi sustained Andrx’s objections to the Strauss & Co. v. Sunrise Int’l Trading, admissibility or credibility of the document Inc., 51 F.3d 982, 985 (11th Cir. 1995) itself. See, e.g., JA at 41. Indeed, in its (“At the preliminary injunction stage, a opinion, the court twice took cognizance district court may rely on affidavits and of the Certification with no indication that hearsay materials which would not be it viewed the document as inadmissible, admissible evidence for a permanent inherently unreliable, or otherwise injunction . . . .”); Sierra Club, Lone Star unworthy of consideration. Id. at 6, 12. Chapter v. FDIC, 992 F.2d 545, 551 (5th Nor do we agree with Andrx that Cir. 1993) (courts at preliminary injunction the Berg Certification is an inadequate stage “may rely on otherwise inadmissible basis for preliminary relief because it evidence, including hearsay”); Flynt contains multiple levels of hearsay and is Distrib. Co. v. Harvey, 734 F.2d 1389, not based solely on personal knowledge. 1394 (9th Cir. 1984) (“The urgency of It is well established that “a preliminary obtaining a preliminary injunction . . . injunction is customarily granted on the makes it difficult to obtain affidavits from basis of procedures that are less formal and persons who would be competent to testify evidence that is less complete than in a at trial. The trial court may even give inadmissible evidence some weight . . . .”); 15 cf. Heideman v. South Salt Lake City, 348 Our holding in Versa Products. F.3d 1182, 1188 (10th Cir. 2003) (“The Co. v. Biford Co., 50 F.3d 189 (3d Cir. Federal Rules of Evidence do not apply to 1995) does not support Andrx’s preliminary injunction hearings.”). argument that “[such] double hearsay is an insufficient basis for . . . preliminary These cases are consistent with the relief in a trademark matter.” See lack of any rule in the preliminary Appellees’ Br. at 25 (citing Versa Prods., injunction context akin to the strict rules 50 F.3d at 212). Versa Products was an governing the form of affidavits that may appeal from a final judgment after a be considered in summary judgment bench trial; its holding is not relevant in proceedings. Compare Fed. R. Civ. P. the preliminary injunction context. 56(e) (affidavits on summary judgment

22 “shall be made on personal knowledge, Under the circumstances here, we find that shall set forth such facts as would be the district court’s implicit admission of admissible in evidence, and shall show the Berg Certification for use at this affirmatively that the affiant is competent preliminary stage was not clearly to testify to the matters stated therein”) erroneous. with Fed. R. Civ. P. 65 (no similar Moreover, we note that some of the provision in rule governing preliminary evidence of actual confusion in the Berg injunctions). See also 11A Charles Alan Certification would be admissible even if Wright et al., Federal Practice & compliance with the Federal Rules of Procedure § 2949 (2d ed. 1995) (“[A] Evidence or the strictures governing Rule consideration of the different policies that 56(e) affidavits were required. The first underlie Rules 56 and 65 indicates [that level of hearsay analysis concerns the the Rule 56(e) standard] should not be underlying statements said to show imposed on applications under the latter confusion. Such statements fall into two rule.”). categories -- those exhibiting confusion District courts must exercise their and those proclaiming it. Statements of discretion in “weighing all the attendant the first type (Dr. A 17 says “We have factors, including the need for expedition,” plenty of Advicor” but points to Altocor to assess whether, and to what extent, samples) are not hearsay because they are affidavits or other hearsay materials are “appropriate given the character and objectives of the injunctive proceeding.” hearing; indeed, neither party asked for a Asseo, 805 F.2d at 26. The weight to hearing. which such materials are entitled may of 17 course vary greatly depending on the facts We note that one of Andrx’s and circumstances of a given case.16 complaints is that the Berg Certification does not identify the doctors involved in each incident. This does not affect its 16 We note that such assessments admissibility. See Callahan v. A.E.V., must be made in light of the rule that it Inc., 182 F.3d 237, 252 n.11 (3d Cir. may be improper to resolve a preliminary 1999) (“In a practical sense, the[] injunction motion on a paper record identities [of the customers who made alone; where the motion turns on a the statements at issue] are not important. disputed factual issue, an evidentiary The relevance of their statements hearing is ordinarily required. See, e.g., depends only on the fact that they were Sims v. Greene, 161 F.2d 87, 88 (3d Cir. the plaintiffs’ customers . . . . 1947) (evidentiary hearing needed in Furthermore, we do not think that the light of conflicting claims in pleadings admissibility of their statements under and affidavits). Neither party claims the the Rule 803(3) hearsay exception district court erred here by not holding a depends on their being identified.”).

23 not submitted for their truth; indeed, it is marketplace.” JA at 68-69. He certified their falsity that shows the speaker’s that his staff has reported more than 60 confusion. Statements of the second type incidents of actual confusion to him. He (Dr. B says “I find these names describes a range of “representative . . . c o n f u s i n g . ” ) a r e a d m i s si b l e as i n s ta n c es,” i n c l u d i n g : m e d i c al “statement[s] of the declarant’s then professionals providing patients the wrong existing state of mind.” Fed. R. Civ. P. drug samples and, on one occasion, 803(3). To the extent such statements improperly filling a prescription; doctors address the speaker’s plans (Dr. C says complaining to Kos representatives about “Because these names are confusing, I will “Advicor,” when their complaints really not prescribe either drug.”), they create an c on c e r ne d Altoc or ; a nd me dic al inference “that the declarant acted in professionals confusing Altocor samples accord with that plan.” See, e.g., United w i t h A d v i c o r s a m p l e s, A l t o co r States v. Donley, 878 F.2d 735, 738 (3d r e p r e se n t a tives with Ad vico r Cir. 1989). The second level is the report representatives, or Altocor-sponsored of the marketing representative to Berg events with Advicor-sponsored events. Id. (Employee D: “Dr. A told me . . . .”). at 69-71. There is a factual dispute as to whether It may be that the Berg Certification some, all, or none of these reports satisfy is not competent proof or reliable evidence the “business records” exception to the of any particular incident that it describes. hearsay rule. Even if the reports are not However, as noted above, Berg is garden variety business records, however, competent to attest that he received over Berg could attest to having received more 60 reports of alleged confusion, and his than 60 reports of confusion in his official credibility as to this assertion has been capacity. Berg’s direct testimony that he tested by deposition in the PTO opposition received numerous and varied reports of proceedings. Moreover, the very number alleged confusion is not hearsay but a of reports Berg says he received, and the factual claim that, as discussed below, has variety of sources and types of confusion independent evidentiary significance reported, bolster the reliability of the tending to show actual confusion. reports as a whole. Courts are entitled to b. Probative Value of Berg view such diverse reports of confusion as Certification as to Actual mutually reinforcing, particularly where, Confusion as here, the names and products are so similar as to make the reported confusion As Vice President of Marketing, plausible. Indeed, the reverse may be true Berg is responsible for Kos’s “overall as well: here, for example, the 60 reported marketing strategy” and receives reports instances of confusion tend to confirm our from “district managers who oversee the determination that the names are distribution of [Kos’s] drugs . . . about confusingly similar. significant issues occurring in the

24 Andrx argues that Kos cannot show confusion”) (emphasis added); cf. Sara trademark confusion because the 60 Lee Corp. v. Kayser-Roth Corp., 81 F.3d alleged incidents of confusion comprise 455, 466 (4th Cir. 1996) (“[W]e can but too small a perc entag e of th e wonder how often the experiences related appr oxim ately 350,000 Adv icor by the trial witnesses have been repeated -- prescriptions, or the approximately but not reported -- in stores across the 650,000 combined prescriptions.18 We country.”). have recognized, however, that evidence The Berg Certification provides of actual confusion “is difficult to find . . more than enough evidence of actual . because many instances are unreported.” confusion to support weighing the fourth Checkpoint, 269 F.3d at 291. W ithout and sixth Lapp factors in Kos’s favor. knowing how many, or what percent of, Nonetheless, because there is room for incidents go unreported, anecdotal differing views as to the weight to which evidence of confusion cannot usefully be the document is entitled, and because some compared to the universe of potential of the underlying facts are disputed,19 we incidents of confusion. The rarity of such decline to hold that the record evidence evidence makes even a few incidents compels weighing these factors in Kos’s “highly probative of the likelihood of favor as a matter of law. On the other confusion.” Id. (Because “reliable hand, it would be clear error to weigh evidence of actual confusion is difficult to either factor against Kos on the present obtain in trademark and unfair competition record. cases, any such evidence is substantial evidence of likelihood of confusion.”) 5. Defendant’s Intent in (quotation omitted, emphasis added); see Adopting the Mark also Country Floors, Inc. v. Partnership of “[E]vidence of intentional, willful Gepner & Ford, 930 F.2d 1056, 1064 (3d and admitted adoption of a mark closely Cir. 1991) (quoting cases holding that similar to the existing mark[] weighs “very little proof of actual confusion strongly in favor of finding [a] likelihood would be necessary to prove likelihood of of confusion.” Checkpoint, 269 F.3d at 286 (quotation omitted). This inquiry

18 The district judge commented on 19 these figures, but did not analyze them or For example, Andrx claims that otherwise indicate whether he saw them Berg’s characterization of one incident as as legally or factually significant. See, evincing confusion is belied by the e- e.g., JA at 19 (“So we’re talking about mail describing that incident, which, something in the vicinity for both Andrx claims, shows only that a prescriptions of 650,000 drugs, of which cardiologist overrode the prescription you’re aware of approximately 60 choice made by a patient’s non-specialist instances of confusion.”). physician. See supra p. 6.

25 extends beyond asking whether a allegedly infringing mark “was specifically defendant purposely chose its mark to considered by the USPTO, the FDA and a “promot[e] confusion and appropriat[e] the district court and found not to be prior user’s good will.” Fisons, 30 F.3d at confusingly similar.” Appellees’ Br. at 24. 479 (quotation omitted). The adequacy As stated previously, Andrx is not and care with which a defendant entitled to rely on the PTO or FDA actions investigates and evaluates its proposed to justify its own. See supra pp. 16-17. mark, and its knowledge of similar marks Andrx’s attempt to justify its conduct by or allegations of potential confusion, are reference to the district court decision is highly relevant. See, e.g., id. at 480 puzzling; that decision was obviously not (directing district court to consider issued when Andrx adopted th e defend ant’s trademark search and ALTOCOR mark. Andrx chose to use this investigation of similar marks to determine mark with clear notice of Kos’s objections if it was “careless in its evaluation of the and its successful prior use of the likelihood of confusion”); Lapp, 721 F.2d ADVICOR mark for similar goods. There at 463 (relying on district court’s finding was, in the words of Judge Learned Hand, that while defendant “may have acted “no reason whatever why [defendant] innocently, [it] was careless in not should have selected [an arbitrary, made- conducting a thorough name search for up trade-name] which bore so much A m e r i c a n us e s o f th e n a m e ” ); resemblance to the plaintiff’s.” See Morgenstern, 253 F.2d at 394 (citing Lambert Pharmacal Co. v. Bolton Chem. finding that defendant “trod a very narrow Corp., 219 F. 325, 326 (S.D.N.Y. 1915). course when it adopted the name Mictine Andrx’s use of ALTOCOR for its anti- with full knowledge of the prior use of the cholesterol drug was at least reckless, at name Micturin by the plaintiff”). A worst a deliberate appropriation of the defendant that “persisted in its plan” to goodwill Kos had generated for its anti- adopt a mark “after being warned of too cholesterol product, Advicor. close resemblance between” its proposed mark and plaintiff’s mark is not We therefore conclude that the “blameless[].” Telechron, Inc. v. Telicon district court clearly erred in failing to Corp., 198 F.2d 903, 908 (3d Cir. 1952). weigh this factor for Kos.20 The district court did not analyze 20 this factor on the record or make relevant In view of this conclusion, it is factual findings. Kos argues that Andrx’s unnecessary to address the factual intent to trade on Kos’s goodwill may be dispute between the parties as to whether inferred from Andrx’s insistence on using Andrx deliberately chose the ALTOCOR this particular made-up (and meaningless) mark knowing Kos would be using mark despite being warned of the ADVICOR for its own similar product in likelihood of confusion before beginning order to trade on the goodwill it expected to sell Altocor. Andrx responds that its Kos’s new product to generate.

26 7. Whether Goods A re the same channels and advertised through Marketed Through the Same the same media.” Lapp, 721 F.2d at 463. Channels of Trade and Advertised There are other Lapp factors that take in the Same Media those issues into account. “[W]e [do] not discount the strength of plaintiff’s case in “[T]he greater the similarity in one area because of weakness in another; advertising and marketing campaigns, the we weigh[] each factor separately.” greater the likelihood of confusion.” Fisons, 30 F.3d at 476 (holding district Checkpoint, 269 F.3d at 288-89 (quotation court erred in “fail[ing] to count the omitted). This is a “fact intensive inquiry” similarities in channels of trade and target that requires a court to examine the “media audience” for plaintiff due to district the parties use in marketing their products court’s view that other Lapp factors as well as the manner in which the parties weighed against plaintiff). use their sales forces to sell their products to consumers.” Id. at 289. The district We find that the district court court did not address this factor directly, clearly erred in failing to recognize that but implicitly found that it did not favor this factor favors Kos. It does. Kos. Nonetheless, the court’s statement, 8. Extent to Which Targets of when analyzing the eighth Lapp factor, the Parties’ Sales Efforts Are that both parties’ “sales representatives the Same visit physicians with drug samples and related information” is relevant here, and The record supports the district supports weighing this factor in Kos’s court’s finding that this factor supports favor. JA at 10. Kos because the “‘parties target their sales efforts to the same consumers,’” namely, Andrx concedes that the “goods are “physicians and pharmacists.” JA at 10 marketed through the same channels,” but (quoting Checkpoint, 269 F.3d at 289). argues that confusion is not likely since the Andrx again argues that “any potential “channels of trade and marketing efforts confusion” is “obviate[d]” because the are directed to a very educated and highly target audience is “a highly educated and sophisticated group.” Appellees’ Br. at 30. sophisticated group.” Appellees’ Br. at 30. Andrx also claims that this factor favors it The district court properly rejected this “because the products are not in direct argu men t, recogn izing th at it competition” since each should be impermissibly conflated different Lapp prescribed under somewhat different factors. Cf. Fisons, 30 F.3d at 476. circumstances. Id. 9. Relationship of the Goods The problem with Andrx’s approach is that neither customer “The closer the relationship sophistication nor the relationship between between the products, . . . the greater the the goods is relevant to determining likelihood of confusion.” Lapp, 721 F.2d whether the goods are “marketed through at 462. The question is how similar, or

27 closely related, the products are. Fisons, factor to support finding a likelihood of 30 F.3d at 481 (describing cases where confusion. See, e.g., A & H, 237 F.3d at “the relationship of the products was close 224 (affirming holding that “product enough to lead to the likelihood of similarity factor favored [plaintiff]” where confusion” and “the goods were similar p r o d u c t s w e r e o n l y “ s o m e w ha t enough that a consumer could assume they interchangeable” due to “slightly different were offered by the same source”). This functions”). The question is not whether it factor focuses on the nature of the is possible to distinguish between the products themselves, asking whether it products but whether, and to what extent, would be reasonable for consumers to the products seem related, “whether associate them or see them as related. We because of [their] near-identity, . . . or have recognized that “the near-identity of similarity of function, or other factors.” the products” or their “similarity of Id. at 215; see also Fisons, 30 F.3d at 481 function” are key to assessing whether (equating factor with Sixth Circuit test for consumers may see them as related. A & “Relatedness of the Goods”). Courts may H, 237 F.3d at 215. consider here “whether buyers and users of each parties’ goods are likely to encounter The district court did not analyze the goods of the other, creating an this factor. It did, however, make assumption of com mon sourc e[,] potentially relevant findings about affiliation or sponsorship.” Checkpoint, similarities and differences in the usage 269 F.3d at 286. and composition of the drugs. JA at 6 (“While both drugs are used to treat Advicor and Altocor are both elevated cholesterol levels, their chemical prescription drugs used to improve compositions differ in such a way that cholesterol levels. The products are of the there are different active ingredients, same type and serve the same function in dosages, and side effects.”). Andrx slightly different (but overlapping) ways maintains that doctors will necessarily that may be appropriate for slightly “distinguish the two products in their different (but overlapping) sets of patients. minds” because they will need to decide That doctors will need to decide which which to prescribe since Advicor, but not drug to prescribe does not mean they Altocor, contains niacin. Appellees’ Br. at won’t see the drugs as related or otherwise 30-31. Kos argues that the “differences in associate them. Indeed, it could be argued active ingredients,” which make the drugs that the opposite is true, that is, that they appropriate “for treatment of different will associate the products because they types of patients with the same ailment[,] must consider both to decide which to . . . do not negate a likelihood of prescribe. See, e.g., Syntex Labs., Inc. v. confusion.” Appellant’s Br. at 25-26. Norwich Pharmacal Co., 437 F.2d 566, 568-69 & n.1 (2d Cir. 1971) (affirming finding that drugs for “treatment of closely Goods need not be identical for this parallel and medically related conditions”

28 -- which had different compositions such expertise” to enter defendant’s field due to that each was contraindicated for some “highly specialized and technical nature” patients who could take the other drug -- of defendant’s products); Fisons, 30 F.3d “are likely to be closely associated in the at 480 (evidence that products “are closely minds of those who prescribe and dispense related and are used together” and that them”); Sterling Drug Inc. v. Lincoln “other companies market both products” Labs., Inc., 322 F.2d 968, 971 (7th Cir. supports finding that public might expect 1963) (confusion likely as to medicines senior user to offer products of junior “designed to remedy the same condition in user); Lapp, 721 F.2d at 464 (close [and] purchased and used by the same relationship between products that may be class of persons,” even though products used together supports finding that “even had different active ingredients, and were sophisticated customers . . . would find it used and sold in different ways) (reversing natural or likely” that plaintiff might offer and directing entry of permanent product similar to defendant’s); McNeil injunction); Ortho Pharm. Corp. v. Labs., Inc. v. American Home Prods. American Cyanamid Co., 361 F. Supp. Corp., 416 F. Supp. 804, 806-07 (D.N.J. 1032, 1040 (D.N.J. 1973) (medical 1976) (consumer might reasonably think personnel likely to “mentally . . . TYLENOL manufacturer used associate” products even though unlikely EXTRANOL mark for extra-strength to dispense one thinking it is the other). version of its drug); Ortho Pharm., 361 F. Supp. at 1040 (while purchasing agents are Accordingly, we hold that the “likely to know that [drugs] are the district court clearly erred in holding that products of two separate companies” since this factor does not weigh in Kos’s favor. they typically order “face-to-face” with a It does. sales representative, medical professionals 10. Other Facts Suggesting the will likely “associate with [defendant] the Public Might Expect the goodwill and the high reputation which Prior Owner To Manufacture [plaintiff] has acquired”). Both Products The district court did not discuss In assessing this factor, courts may this factor, but held that it did not favor look at the nature of the products or the Kos. relevant market, the practices of other In light of the close relationship companies in the relevant fields, or any between the drugs, customers could easily other circumstances that bear on whether expect the maker of one to make the other. consumers might reasonably expect both Cf. Checkpoint, 269 F.3d at 290 products to have the same source. This (“Evaluating this factor, courts look to issue is highly context-dependent. See, evidence that . . . the products at issue are e.g., Checkpoint, 269 F.3d at 291 so closely related that the consuming (affirming finding that consumers were public might find it natural for one unlikely to expect plaintiff to “have the

29 company to” sell both.). In addition, Kos appearance, and neither has any meaning argues that medical professionals might that could distinguish between them or expect it to make a drug akin to Altocor in lead customers to associate them with light of how well such a drug would fit distinct products. The ADVICOR mark is into Kos’s product line. Kos sells “two entitled to broad protection because it is a prescription drugs for the treatment of coined term and because it is a strong chronic . . . cholesterol disorders” -- mark, both conceptually and commercially. Niaspan, which contains only niacin, and The products in question are closely Advicor, which contains both lovastatin related and are marketed and sold to and niacin. JA at 69. A lovastatin-only practically identical audiences in anticholesterol drug could easily be a seen practically identical ways. These are as a natural brand extension. products customers could easily expect to be manufactured by a single source. Also Andrx responds that doctors choose in Kos’s favor is Andrx’s deliberate which drug to prescribe “based upon a decision to use a name dangerously close patient’s particular needs, not based upon to that of a competing drug, with no who manufactures the drug.” Appellees’ apparent reason for choosing an arbitrary Br. at 31. This response is wholly mark so similar to its competitor’s and irrelevant to the question whether despite being warned of the confusing customers might expect Kos to offer a similarity. Accordingly, the first, second, product like Altocor. Andrx’s argument fifth, seventh, eighth, ninth, and tenth seems premised on the idea that goodwill Lapp factors unquestionably weigh in is virtually irrelevant for prescription favor of Kos as a matter of law. drugs. Andrx does not point to any evidence in support of such a novel There is a factual dispute as to how position, which is counter to the purposes Kos’s evidence of actual confusion affects and assumptions of the Lanham Act. the analysis of the fourth and sixth Lapp factors. We conclude that while the Because Andrx has done nothing to evidence Kos submitted is undoubtedly rebut Kos’s showing that customers could sufficient to support weighing these easily and naturally assume that Kos factors in its favor, it is not so great as to manufactures both products, we find that compel that result. But the best Andrx this factor favors Kos as a matter of law on could hope for on the present record is that the present record. The district court these factors be found in equipoise; no clearly erred in not weighing this factor for reasonable factfinder could find that they Kos. weigh against finding a likelihood of B. Weighing the Lapp Factors confusion here. Only the third Lapp factor arguably weighs against finding a The most important factor -- mark likelihood of confusion. It would, similarity -- favors Kos. ADVICOR and however, be clear error to allow this one ALTOCOR are similar in sound and factor to outweigh Kos’s strong showing

30 on the key factor of mark similarity and on IV. IRREPARABLE HARM the remaining factors, particularly in light The district court held that Kos had of our earlier discussion of the dangers of not shown it would suffer irreparable harm relying too heavily on m edical absent an injunction because Kos’s sophistication in prescription drug cases. product had been on the market “less than We have carefully considered two years.” JA at 11. The court whether to direct the district court on apparently deemed this an insufficient time remand to weigh the Lapp factors anew in in which to establish the goodwill needed light of the proper legal standards. On to show such harm, as compared with the reflection, however, we conclude that “over sixteen years” during which the doing so would serve no useful purpose. goods were marketed in the case on which The undisputed facts weigh heavily in Kos relied. Id. (comparing Merrell- favor of Kos as a matter of law. National Labs., Inc. v. Zenith Labs., Inc., Regardless of how the factual disputes 194 U.S.P.Q. 157, 161 (D.N.J. 1977)). might be resolved, any reasonable “Grounds for irreparable injury factfinder weighing the Lapp factors in include loss of control of reputation, loss accordance with the correct legal standards of trade, and loss of good will.” Pappan would hold that Kos is likely to succeed on Enters., Inc. v. Hardee’s Food Sys., Inc., the merits. Because the record could not 143 F.3d 800, 805 (3d Cir. 1998). Lack of support a contrary holding, a remand for control over one’s mark “creates the reweighing would waste judicial resources potential for damage to . . . reputation[, and unnecessarily delay the proceedings which] constitutes irreparable injury for further. Cf. Fisons, 30 F.3d at 482 (Garth, the purpose of granting a preliminary J., concurring in part and dissenting in injunction in a trademark case.” Opticians part) (“I can see no purpose in remanding Ass’n of Am. v. Indep. Opticians of Am., for retrial of Fisons’ Lanham Act claims 920 F.2d 187, 196 (3d Cir. 1990). Thus, when it is so evident that the marks at “trademark infringement amounts to issue here are confusingly similar.”). irreparable injury as a matter of law.” S & Compare A & H, 237 F.3d at 238 R Corp. v. Jiffy Lube Int’l, Inc., 968 F.2d (remanding where court could “not say as 371, 378 (3d Cir. 1992); see also Times a matter of law that a different weighing of Mirror Magazines, Inc. v. Las Vegas the factors could not have influenced the Sports News, L.L.C., 212 F.3d 157, 169 District Court to make a different finding (3d Cir. 2000) (“potential damage to . . . of ultimate fact”) with Tanimura & Antle, reputation or goodwill or likely confusion Inc. v. Packed Fresh Produce, Inc., 222 between parties’ marks” is irreparable F.3d 132, 140 (3d Cir. 2000) (reversing injury). “[O]nce the likelihood of and directing entry of preliminary c o n f u s i o n c a u s e d b y tr a d e m a rk injunction after finding “the four factors infringement has been established, the required to grant a preliminary injunction inescapable conclusion is that there was are apparent on the record before us”).

31 also irreparable injury.” Pappan, 143 F.3d not depend on the length of time it has at 805. been using that mark. The district court’s erroneous Nor can we accept Andrx’s holding that Kos had not proven that it was argument that Kos’s delay -- filing suit likely to succeed on its trademark claims after Altocor had been on the market for deprived Kos of the benefit of this rule. 13 months -- shows that Kos is not being As we have already found that Kos has irreparably harmed.21 The claim that this shown a likelihood of success, we hold it delay bars preliminary relief is not is entitled to a presumption that it will consistent with the law of this Circuit or suffer irreparable harm absent an the facts of this case. The Third Circuit injunction. case Andrx cites for the proposition that “delay alone defeats Kos’ assertions of We see nothing in the record that irreparable harm” -- indeed, the only Third could overcome this presumption. Circuit case Andrx relies on for this Although we need not defer to the district argument -- does not support its claim. court’s holding since it was premised on Appellees’ Br. at 32 (citing Times Mirror, an error of law, we have considered 212 F.3d at 161). In that case, we whether the length of time Advicor was considered -- and rejected -- the argument marketed weakens Kos’s showing of that a 15-month filing delay showed irreparable harm. We conclude that it does plaintiff’s injury was “not immediate and not. First, the district court’s view that the irreparable,” finding the argument relatively short time Advicor was on the unpersuasive since the “delay was market shows that Kos had not generated sufficient goodwill to suffer irreparable harm seems inconsistent with its holding 21 Andrx’s other argument -- that that -- over the same time period -- Kos Kos will suffer no irreparable harm developed a “high level of commercial because prescriptions will not be mis- strength” based on sales grossing more filled, and, even if they are, there will be than $ 70 million on more than 350,000 no “dire” medical consequences -- is prescriptions. JA at 9. Second, we do not clearly disposed of by our earlier holding agree that a company’s goodwill is less that the Lanham Act covers likelihood of likely to be irreparably harmed if it has confusion of all types, and not just the used its mark for only a short time. likelihood that one product will be Indeed, it could be argued that irreparable mistakenly substituted for another. harm is more likely where a “young” mark, Kos’s loss of control over its mark is rather than an old and well-established irreparable harm regardless of whether mark, is infringed. Most importantly, resulting confusion might lead to further however, a company’s right to control its injuries. Cf. Jiffy Lube, 968 F.2d at 378 own mark so it can avoid potential damage (irrelevant whether “infringer is putting to its goodwill or possible confusion does the mark to better use”).

32 attributable to negotiations between the be understood as a suggestion by Andrx parties.” Times Mirror, 212 F.3d at 169. that the matter might be resolved absent a lawsuit. Under these circumstances, no While Times Mirror may imply that reasonable factfinder could find that Kos inexcusable delay could defeat the had waived its rights or conceded that it presumption of irreparable harm in an was not irreparably harmed by filing when appropriate case, it makes clear that the it did. present case is not an appropriate one. Kos sought relief directly and through Accordingly, we find that, given the administrative proceedings from the time undisputed facts of record, this factor it learned of the proposed use of the weighs in favor of injunctive relief as a ALTOCOR mark through the time it filed matter of law. this suit. Andrx’s conduct -- submitting V. BALANCE OF HARDSHIPS alternate names to the FDA and the PTO, and stating in its 2002 Annual Report that The district court held that Kos had opposed its application to register “granting relief will result in greater harm ALTOCOR and, in the next sentence, that to” Andrx than Kos would suffer absent an it might “seek to change the name of injunction. JA at 12. The court found that Altocor,” JA at 37422 -- could reasonably an injunction would “significantly affect” the “considerable time and expense” Andrx had spent “developing the market 22 At argument, Andrx’s counsel for [its] drug.” Id. The court rejected represented that Andrx applied for Kos’s argument that the harm to Andrx alternate names “to be used only if” at would be minimal since Andrx could least four incidents of actual confusion continue to market its successful product, between Altocor and a third, unrelated albeit under a different, non-infringing drug were reported the first year Altocor name. This claim failed, according to the was sold. Audio Tape of Oral Argument district court, because “there is no before Court of Appeals for the Third trademark infringement.” Id. We cannot Circuit (Mar. 9, 2004) (on file with base our analysis on, or defer to, the Court) (emphasis added). Andrx points district court’s balancing of the equities to no record evidence that shows that because that analysis is premised on possible confusion with a drug other than holdings we have already found clearly Advicor was its only concern in erroneous, namely, that Kos has shown considering a name change, and this neither trademark infringement nor representation seems inconsistent with irreparable harm. the juxtaposition of the Kos Opposition The question is whether, and to and the possible name change in the what “extent[,] . . . the defendants will same paragraph of the 2002 Annual suffer irreparable harm if the preliminary Report, with no mention of any other injunction is issued.” Opticians, 920 F.2d basis for the name change.

33 at 192. If temporary relief would Jobbers Ass’n v. FPC, 259 F.2d 921, 925 irreparably harm an alleged infringer (D.C. Cir. 1958)). The costs in time and pending final disposition of the case, the money associated with adopting a new court should “balanc[e] the hardships” to mark are not “injuries . . . that could not be “ensure that the issuance of an injunction remedied by money damages.” Pappan, would not harm the infringer more than a 143 F.3d at 805-6 (“significant financial denial would harm the mark’s owner.” Id. injuries,” including costs of replacing at 197. “Irreparable harm must be of a “several months worth of logoed product,” peculiar nature, so that compensation in do not constitute irreparable harm). money alone cannot atone for it.” Pappan, Andrx also argues that an injunction 143 F.3d at 805 (quotation omitted). would “destroy the market” it has District courts should consider financial developed and would cause it to lose the damages when establishing and setting the goodwill associated with the ALTOCOR bond for an injunction, not when deciding mark. Appellees’ Br. at 34. Kos responds whether to grant it. See Fed. R. Civ. P. that this harm would be minimal since 65(c) (“No . . . preliminary injunction shall Andrx already has an alternate mark issue except upon the giving of security by already in place. Appellant’s Br. at 34. the applicant, in such sum as the court Although Andrx denies that it has an deems proper, for the payment of such approved alternate name available,23 its costs and damages as may be incurred . . . vague, unsubstantiated representation that by any party who is found to have been the FDA approval is no longer valid wrongfully enjoined.”). cannot create a factual dispute in the face Andrx states that “if required to of record evidence that the FDA approved rename the product, [it will] incur its use of the ALTOPREV mark and the significant time and expense in obtaining judicially noticeable fact that the PTO has trademark clearance services, changing the labeling and product inserts, product re- 23 l a u n c h a d v e rtising and the r e - Nor is it clear that the alleged establishment of goodwill,” and perhaps in expiration of FDA approval would weigh “destroying inventory or recalling the in Andrx’s favor. Even on Andrx’s products already distributed.” Appellees’ account, the lapse of approval is the Br. at 35. Such costs, however, are consequence of Andrx’s own actions in compensable by money damages and thus that approval supposedly expired “when do not constitute irreparable harm as a we didn’t use the name.” See Audio matter of law. “Mere injuries, however Tape of Oral Argument before Court of substantial, in terms of money, time and Appeals for the Third Circuit (Mar. 9, energy necessarily expended in the 2004) (on file with Court). Moreover, absence of a stay, are not enough.” Andrx has never alleged that there would Sampson v. Murray, 415 U.S. 61, 90 be any barrier to its seeking reapproval (1974) (quoting Virginia Petroleum of the mark if it has indeed elapsed.

34 issued a Notice of Allowance for this Andrx took a deliberate risk by proceeding mark.24 despite being warned that its mark was dangerously close to that of a competing Injury to goodwill does constitute product, and is thus “not in position to irreparable harm. See, e.g., Opticians, 920 urge its original blamelessness as a F.2d at 195. But, when the potential harm consideration which should be persuasive to each party is weighed, a party “can to a court of equity.” Telechron, 198 F.2d hardly claim to be harmed [where] it at 908; see also Novartis, 290 F.3d at 596. brought any and all difficulties occasioned by the issuance of an injunction upon One other factor we have held itself.” Id. at 197 (directing entry of weighs in the balance of hardships analysis preliminary injunction). We have often is the “goal[] of the preliminary injunction recognized that “the injury a defendant analysis [of] maintain[ing] the status quo, might suffer if an injunction were imposed defined as the last peaceable, noncontested may be discounted by the fact that the status of the parties.” Opticians, 920 F.2d defendant brought that injury upon itself.” at 197 (directing entry of injunction where Novartis Consumer Health, Inc. v. Johnson such relief would restore status quo since & Johnson-Merck Consumer Pharm. Co., defendant could not use mark “[b]efore 290 F.3d 578, 596 (3d Cir. 2002). Indeed, this controversy began”) (citation and a different rule would allow “a knowing quotation omitted). This factor favors Kos infringer [that] construct[s] its business since it objected to Andrx’s adoption of around its infringement” to avoid an the ALTOCOR mark before Andrx had injunction by claiming it would have a begun to use it in commerce. “devastating effect” on that business, “a We recently rejected an argument -- result we cannot condone.” Apple similar to one Andrx makes here -- that the Computer, Inc. v. Franklin Computer harm a defendant would suffer if enjoined Corp., 714 F.2d 1240, 1255 (3d Cir. 1983). from selling its product under its current Andrx knew before its drug was first sold name “outweigh[ed] the potential harm to that Kos viewed ALTOCO R and [its competitor] from losing market share ADVICOR as confusingly similar when if the injunction were not issued.” used to identify competing prescription Novartis, 290 F.3d at 596 (affirming drugs for patients with high cholesterol. preliminary injunction in false advertising case). We emphasized that the injunction 24 did “not require [defendant] to abandon its Our review of the record and the product name forever[, but] only [to] cease parties’ arguments convinces us that the shipping the [] product under that name facts relevant to balancing the hardships until the end of the litigation on the are undisputed. Cf. Opticians, 920 F.2d merits.” Id. at 597. The same is true here. at 197 (conducting own assessment of We also stated that the defendant could the balance of hardships where facts still “ship[] the product currently in were not in dispute).

35 inventory under a different name [and] Kos would continue to suffer absent an label” or ship that product without any injunction. Cf. Tenafly Eruv Ass’n, Inc. such change if it were to prevail on the v. Borough of Tenafly, 309 F.3d 144, 178 merits. Id. Again, the same is true here.25 (3d Cir. 2002) (assessing balance of We note that Kos may be in an even hardships based on own “review of the stronger position than was the plaintiff in record”) (reversing and directing entry of Novartis. The false advertising claim in injunction); Meridian Mutual Ins. Co. v. Novartis was not based on any confusing Meridian Insurance Group, Inc., 128 F.3d similarity between the plaintiff’s and 1111, 1121 (7th Cir. 1997) (“Our defendant’s marks; thus, the plaintiff there examination of the record shows that . . . -- unlike Kos -- was not threatened with a the harm to the plaintiff if no injunction is likelihood of confusion or with loss of issued therefore outweighs any harm to the control over its own mark, which can lead defendants if one is entered.”) (reversing to loss of reputation, loss of trade, and loss and directing entry of injunction); Jiffy of goodwill. See Opticians, 920 F.2d at Lube, 968 F.2d at 379 (balancing harms in 195. first instance and holding that “self- inflicted harm” to alleged infringer “is far We have recognized that “[t]he outweighed by the immeasurable damage more likely the plaintiff is to win, the less done [plaintiff] by the infringement of its heavily need the balance of harms weigh trademark,” despite “sympathetic position” in his favor.” Novartis, 290 F.3d at 597. of defendant who would have to change In light of Kos’s strong showing of its name under which it was operating its likelihood of success, and the fact that business) (reversing and directing entry of Andrx accepted the risk of injury to its injunction); Opticians, 920 F.2d at 197 goodwill when it ignored Kos’s claim of (finding on undisputed facts that “grant of infringement, we hold that no reasonable an injunction would impose no greater factfinder could conclude that the harm on [defendant] than would be irreparable harm Andrx might suffer imposed upon the [plaintiff] by the denial pending resolution of this matter on the of an injunction”) (reversing and directing merits outweighs the irreparable harm that entry of injunction). Accordingly, we find that this 25 We note that the graphic Andrx factor weighs in favor of injunctive relief submitted of its product does not show as a matter of law. the ALTOCOR mark on the pills VI. PUBLIC INTEREST themselves. See Appellees’ Br. at 28. Cf. Opticians, 920 F.2d at 197 (noting The district court held that the that defendant could continue to sell its “public interest does not favor” injunctive product since the challenged mark was relief because Kos “failed to persuade [it] not placed on the “primary trade . . . that the public is at a serious health product” but on “promotional material”). risk if this Court does not grant a

36 permanent [sic] injunction.” JA at 12. C on ve rse ly, a p r o h i b it i o n u p o n [defendant’s] use of [its] mark[] would Kos claims that the public interest eliminate that confusion.” Opticians, 920 “demands entry of a preliminary F.2d at 198. Ordinarily, this might be the injunction” here because “[n]o public extent of the relevant analysis. Weighing interest is greater than the public interest to the public interest in preliminary relief is preserve lives.” Appellant’s Br. at 35. often fairly routine. See American Tel. & Andrx responds that Kos’s “self-serving, Tel. Co. v. Winback & Conserve Program, inflammatory rhetoric” is belied by the Inc., 42 F.3d 1421, 1427 n.8 (3d Cir. 1994) “neutral” conclusion of the FDA that it is (“As a practical matter, if a plaintiff unlikely that a patient will receive the demonstrates both a likelihood of success wrong prescription. Appellees’ Br. at 37. on the merits and irreparable injury, it Andrx also argues that the public would be almost always will be the case that the harmed by an injunction because those public interest will favor the plaintiff.”). patients who depend on Altocor would be “deprive[d] . . . of a drug product that has Here, however, we must confront been incorporated into their daily routine,” the question whether the parties’ claims as and would suffer “unnecessary worry and to specific harms to the public change the anxiety when their prescriptions cannot be usual calculus. refilled and their doctors need to start them We first consider Kos’s claim that on a new drug regimen.” Id. at 38. the interest in “preserv[ing] lives” requires These are not your usual Lanham injunctive relief. There is a factual dispute Act public interest arguments. Indeed, as to this issue. The parties submitted neither the district court nor the parties competing medical affidavits to support even mentions the most basic public their respective views as to the nature and interest at stake in all Lanham Act cases: severity of the potential consequences of a the interest in prevention of confusion, mis-filled prescription.26 Andrx also particularly as it affects the public interest in truth and accuracy. We have often 26 We note that the affidavit Andrx recognized that “[p]ublic interest . . . in a submitted focused on the potential harm trademark case . . . is most often a of substituting Altocor for Advicor, synonym for the right of the public not to while the more serious harms Kos be deceived or confused.” Pappan, 143 identified are those that may occur in the F.3d at 807 (quoting Opticians, 920 F.2d at reverse case, that is, when Advicor is 197). substituted for Altocor. See supra p. 6. In light of our holding that “there is Although the Andrx affidavit cannot a likelihood of consumer confusion created create a factual dispute as to the type of by” the use of confusingly similar marks, substitution it does not address, we “it follows that if such use continues, the hesitate to draw conclusions from the public interest would be damaged. “undisputed” fact that serious harm may

37 disputed Kos’s allegations as to the risks clearly erroneous.27 of misdispensing by arguing it is extremely We must, however, distinguish unlikely that a pharmacist would between the court’s finding that Kos did improperly fill a prescription. The district not establish a “serious health risk” and its court resolved this dispute in Andrx’s conclusion that “[t]herefore, the public favor, holding that Kos had not proven that interest does not favor” injunctive relief. the public would face a serious health risk JA at 12 (emphasis added). While we absent an injunction. The colloquy at the defer to the former, the court’s ultimate hearing shows that the court was assessment of the public interest is clearly impressed by the FDA’s statement that the erroneous because it does not take into “possibility of confusion was minimal,” account the “right of the public not to be and was persuaded that “it would be deceived or confused.” Opticians, 920 difficult to imagine a situation” where the F.2d at 197. As stated above, that right is drugs would be confused “when a implicated here. pharmacist is filling a prescription.” JA at 25, 51. We note that, although the FDA’s The remaining question is whether inquiry is not equivalent to the Lanham this public interest is outweighed by the Act “likelihood of confusion” test, its potential public harm of “depriv[ing]” review of proprietary drug names is patients of Altocor. Appellees’ Br. at 38. relevant in assessing the health risks of Andrx claims that an injunction would mis-filled prescriptions. Indeed, the mean that Altocor “prescriptions [could] purpose of FDA review is “to predict not be refilled and . . . doctors [would] potential confusion that may arise in the need to start [patients] on a new drug actual prescription process.” 3 M cCarthy, regimen.” Id. The factual predicate for supra, § 19:149 (4th ed. 2003). We defer this claim seems to be the Declaration of to the district court’s resolution of this Charles Schneider, which states that “[i]f factual dispute because its finding is Andrx is forced to suspend sales of supported by the record and is thus not ALTOCOR, [it] will suffer great economic harm by losing sales of an existing product and by a loss of good will with its

27 result from substituting Advicor for We do not suggest that the district Altocor. The most serious risks Kos court or the FDA (or, for that matter, this identifies were mentioned for the first Court) is careless or insensitive to the time in the affidavit Kos submitted at the potentially serious health risks of mis- hearing. See JA at 28-29. Since the filled prescriptions. Nonetheless, the district court ruled from the bench, recognition that the stakes are high does Andrx had no chance to respond to these not mean that disputed claims about the new claims and cannot be said to have possibility for such harm must be conceded them. credited.

38 customers due to an interruption in the lovastatin medication.28 supply of an existing product.” JA at 343. Andrx’s broad claims that it would have to “suspend” sales and “deprive” patients of Altocor ignore the fact that it is only the ALTOCOR mark and not the drug itself that an injunction should address. Andrx has provided no evidence to show that temporarily ceasing use of the ALTOCOR mark would cause “an interruption in the supply” of its extended- release lovastatin product. The record is bare of information as to how long it would take Andrx to provide new labels or label information for pharmacies to use when dispensing the drugs, to replace branded samples in physician’s offices, to re-package its existing product as needed for pharmacies, or to take other necessary steps to suspend use of the mark ALTOCOR. Andrx has thus introduced no evidence from which a reasonable factfinder could find that the public would 28 be harmed by the proposed injunction. We note that the district court will be setting such bond as it determines to Accordingly, we find that this be appropriate to secure payment to factor weighs in favor of injunctive relief Andrx of any compensable money as a matter of law. damages that it may incur prior to final VII. disposition of this matter should it be determined that Andrx was erroneously In light of the foregoing analysis, enjoined. In determining the amount of we conclude that the district court clearly such bond, the district court should, of erred in denying Kos’s motion for a course, take into account Andrx’s ability preliminary injunction. We therefore to minimize the potential for such reverse and remand with instructions that damages. See supra p. 61. To that end, the district court fashion and enter, on an the court may wish to shape the expedited basis, an order preliminarily preliminary injunction, or set its effective enjoin ing Andrx from using the date, to allow Andrx to take reasonable, ALTOCOR mark in connection with the expeditious steps to begin marketing its marketing and sale of its extended-release product under another name.