Sterling Drug, Incorporated v. Bayer Ag

14 F.3d 733 (2nd Cir. 1994)

Purchase the Printed Copy at bsmsphd.com

Nature of the Case

To access this section all you need to do is click here and register.

Facts

At the turn of the century, the rights to the 'Bayer' name and mark in the United States were owned by D. It lost those rights during World War I when D's United States subsidiary, The Bayer Company, Inc., was seized by the United States Alien Property Custodian. In 1918, P acquired rights to the 'Bayer' name and mark by purchasing The Bayer Company from the Alien Property Custodian. P manufactures and sells prescription drugs and over-the-counter medicines, as well as home and personal care products. P has sold aspirin and related products in the United States under the 'Bayer' trademark. Sterling's total sales in 1989 were $1.6 billion, of which $125 million was attributable to aspirin and related products using the 'Bayer' trademark. P has spent approximately $ 50 million a year in promoting and advertising its 'Bayer' trademark and products. D is a large multinational corporation headquartered in Germany, with worldwide sales in 1990 of $25.7 billion. The United States is D's largest single market. D owns Miles, Inc., a pharmaceutical company, and Mobay Corporation, a chemical company. D also owns Bayer USA Inc., a Delaware corporation. D no longer uses 'Bayer' as part of the name of any subsidiary in the United States. In 1955, D sued P in an unsuccessful effort to regain the right to use the 'Bayer' mark in the United States. The Third Circuit ruled that P had 'acquired absolute rights to the exclusive use of the trademarks in question by its purchase of [The Bayer Company, Inc.]' P and D signed a contract in 1964 governing D's use of the Bayer mark in the United States. The 1964 Agreement prohibited D from using the Bayer name 'in connection with Aspirin or other analgesics … [or] in the course of trade in any other goods.' In 1970, they signed another agreement, this time dealing with the use of the 'Bayer' name and mark in all countries other than the United States and Cuba. Under this agreement, in return for a payment of $2.8 million, P recognized D's exclusive rights in the 'Bayer' name and mark everywhere except the United States, Canada, and some Caribbean nations. A 1986 Agreement permitted D to change the name of its U.S. holding company to 'Bayer USA Inc.' so long as this company remained 'a non-operating holding company, i.e., [a company] not trading in goods.' D began by obtaining federal registrations for the 'Bayer' mark for industrial and agricultural chemicals and related products. It advertised these products in trade journals. From charitable donations to billboards, D put a full-court press on the use of the Bayer mark. P sued D alleging a violation of the 1964 and 1986 Agreements. P asked for injunctive relief and damages. The District Court held in favor of P. The District Court broadly enjoined D in the United States, or even abroad if such foreign use might make its way to the American public. D appealed. D complains that the injunction's extraterritorial provisions interfere impermissibly with its rights under foreign laws. D owns rights to the 'Bayer' name and mark in its home country of Germany, as well as in over one hundred other countries. Germany, as amicus curiae, contends that the extraterritorial prohibitions of the injunction fail to respect its sovereign rights.