Merck & Co. v. Mediplan Health Consulting, Inc.

425 F. Supp. 2d 402, 79 U.S.P.Q. 2d (BNA) 1744, 2006 U.S. Dist. LEXIS 14826, 2006 WL 800756
District Court, S.D. New York·Decided March 30, 2006·No. 05 CIV. 3650(DC), 05 CIV. 3696(DC), 05 CIV. 3698(DC), 05 CIV. 3699(DC), 05 CIV. 3700(DC), 05 CIV. 3701(DC)·Published·Cited by 82 cases

Opinion

OPINION

CHIN, District Judge.

In these six related cases, defendants operate Canadian online pharmacies. Through interactive websites, they offer for sale to U.S. consumers generic versions of plaintiffs’ popular cholesterol medication, Zocor. In listing their products, certain defendants use plaintiffs’ trademark ZOCOR, identifying their products as “generic ZOCOR” or some variation thereof. Certain defendants also use plaintiffs’ stylized ZOCOR logo, and several defendants also have purchased sponsored links from the Internet search companies Google and Yahoo, so that consumers who search the word “ZOCOR” will be offered links to these defendants’ websites.

Plaintiffs have not granted defendants permission to use their marks. They brought these lawsuits, alleging unfair competition, including, inter alia, trademark infringement, trademark dilution, and false advertising, under federal and state law. Defendants move to dismiss or for judgment on the pleadings, arguing, inter alia, that their use of plaintiffs’ marks is “fair use.” Defendants (with one exception) admit using the ZOCOR marks, but contend that they do it only to identify their products as more affordable generic versions of Zocor. They contend further that no reasonable consumer could be confused into believing that “generic ZOCOR” was anything other than a generic alternative to Zocoi\

For the reasons that follow, the motions are granted in part and denied in part.

BACKGROUND

A. Facts

For purposes of these motions, the facts alleged in the complaints are assumed to be true.

1. Plaintiffs and Zocor

Plaintiff Merck & Co. (“Merck”) is “one of the world’s leading pharmaceutical companies.” (Comply 12). 1 It invests billions *407 of dollars in research and development of prescription drugs, including Zocor. (Id. ¶¶ 12, 13). Merck owns U.S. trademark registration no. 1,457,984 for the word mark ZOCOR and trademark registration no. 1,749,211 for the design mark ZOCOR, which features the mark ZOCOR in a stylized logo. (Id. ¶ 16, Ex. B).

Merck developed, manufactures, and markets Zocor, which patients take to reduce the cholesterol and fatty substances in their blood. (Id. ¶¶ 13, 15). Simvasta-tin is the active ingredient in Zocor (id. ¶ 13), and, since November 1986, Merck has been the exclusive entity legally authorized by patent laws and the U.S. Food and Drug Administration (the “FDA”) to sell simvastatin products in the United States (id. ¶¶ 14,15). Plaintiff MSD Technology L.P. (“MSD”) is the assignee of U.S. Patent No. 4,444,784 (“the '784 patent”) for “Antihypercholesterolemic Compounds,” initially issued in 1984 to Merck. (Id. ¶¶ 3,11, & Ex. A).

2. Defendants and the Challenged Conduct

Defendants are Canadian entities that control and operate Internet pharmacies offering prescription drugs for sale to U.S. consumers. (See, e.g., id. ¶ 20). 2 Through their interactive, websites, defendants advertise and fill on-line orders for prescription drugs, including a generic simvastatin alternative to Zocor. (See, e.g., id. ¶¶ 18, 19, 21). In addition to their generic versions of simvastatin, defendants also offer for sale Zocor manufactured by Merck affiliates in Canada that are not party to these lawsuits. (Id. Ex. C). 3

Defendants’ websites target a U.S. clientele: prices are listed in U.S. dollars; discounts are listed in comparison to U.S. pharmacy prices; a large percentage of visitors are located in the United States; the sites boast substantial volumes in U.S. sales; and headlines on the sites’ main pages identify defendants’ intent to service a U.S. market. (See, e.g., id. ¶20). For example, a headline on the' erossborder-pharmacy.com homepage reads “A GLOBAL PHARMACY SERVING AMERICANS,” and text on the site explains that the business was built “for the sole purpose of providing Americans with safe affordable Canadian prescriptions.” (Cross-Border Compl. ¶¶ 19, 22 & Ex. C, at 1). CanadaPharmacy.com claims to be the most visited Canadian mail order pharmacy website, with more than 500,000 cus *408 tomers and one million prescriptions filled. (CanadaPharmacy Compl.. ¶ 20).

With the exception of RxNorth, all defendants utilize the ZOCOR word mark in connection with the sale of their generic simvastatin products. (See, e.g., Compl. ¶22). These defendants list the generic alternative to Zocor on their sites in combination with the ZOCOR word mark, and, in the case of CanadaPharmacy, Universal, and MedCenter, the ZOCOR design mark as well. For example, CanadaDrugs lists “Zocor” as one of the “most popular prescription drugs” on its home page. (Cana-daDrugs Compl. ¶ 22). Clicking on the listing “Zocor” or running a search for the word “Zocor” on the site links consumers to a page that offers “Zocor” and “Generic Zocor” products in five dosage levels. (Id.). By clicking on the desired dosage level and quantity, consumers are linked to pages where they may complete the sale. (Id. ¶ 22 & Ex. C).

Defendants’ sites differ in the way they list the generic simvastatin products and their proximity to the ZOCOR mark. On the Universal Drugstore site, for example, the ZOCOR design mark appears. Clicking on the logo takes a consumer to a page that offers “SIMVASTATIN (Zocor generic)” as well as “ZOCOR (simvastatin)” in various doses and quantities. (Universal Drug Compl. Ex. C). On the North Pharmacy site, consumers are shown the ZOCOR design mark and are taken to a page that features the design mark again above a box that offers a choice between “Generic” and “Brand” in varying doses and quantities. (North Pharmacy Compl. Ex. C). The site offers “brand Zocor,” made by Merck’s Canadian affiliate, as well as “generic Zocor.” (Id.).

The CrossBorder site is somewhat different. The home page lists a number of brand-name drugs, including “Zocor.” Clicking on the word “Zocor” takes the consumer to a page that is headed: “ZO-COR 80MG TABLET.” Underneath, in parentheses, is the word “SIMVASTA-TIN.” Underneath that the consumer is offered, on separate lines: “ZOCOR 80MG TABLET,” “GENERIC SIMVASTATIN 80 MG TABLET,” and “GENERIC SIM-VASTATIN 80 MG TABLET,” with different quantities for the latter two. (Cross-Border Compl. Ex. C). In other words, the site offers both Zocor (manufactured by a Merck Canadian affiliate) and generic simvastatin, but does not use the phrase “generic Zocor” or any iteration thereof.

CanadaPharmacy, MedCenter, and Universal have engaged Internet search engines Google and Yahoo to have links to their websites displayed, as sponsored links, among the first results returned when a consumer searches the keyword “Zocor.” (Compl. ¶ 19; CanadaPharmacy Compl. ¶ 19; Universal Compl. ¶ 19).

Merck & Co. v. Mediplan Health Consulting, Inc., 425 F. Supp. 2d 402, 79 U.S.P.Q. 2d (BNA) 1744, 2006 U.S. Dist. LEXIS 14826, 2006 WL 800756 (S.D.N.Y. 2006).

425 F. Supp. 2d 402 (Merck & Co. v. Mediplan Health Consulting, Inc.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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