Assessing TM Confusion: Patients Matter

Novartis v. Biogen involves claims of trademark infringement, passing off and depreciation of goodwill and raises several interesting issues.

The Applicants, Novartis AG and Novartis Pharmaceuticals Canada Inc. (“Novartis”), sell a biologic drug called brolucizumab under the trademark BEOVU. It is an anti-vascular endothelial growth factor (anti-VEGF) and is approved in Canada for treating neovascular age-related macular degeneration or wet AMD. Novartis registered BEOVU as a trademark in Canada on February 11, 2020, in association with pharmaceutical preparations for use in ophthalmology and pharmaceutical preparations for prevention and treatment of ocular disorders and diseases.

Novartis took issue with the adoption and use of the trademark BYOOVIZ by the respondents (collectively “Biogen”) for a biosimilar product that is also an anti-VEGF drug used to treat wet AMD. The BYOOVIZ product was approved on March 8, 2022, but not as a biosimilar to BEOVU. It is equivalent to a different Novartis product called LUCENTIS that contains ranibizumab. All of these drugs must be administered by an ophthalmologist by injection into the eye. Due to potential risks associated with BEOVU, it is a drug of last resort. The LUCENTIS product, however, had a third of the market for treating wet AMD.

Infringement

Novartis claimed that Biogen’s use of BYOOVIZ infringed ss. 19 and 20 of the Trademarks Act (the “Act”). Section 19 gives the registered owner of a trademark the exclusive right to its use in Canada for the associated goods and services, while s. 20 deems that right to be infringed by a person who sells, distributes, or advertises goods or services in association with a confusing trademark or tradename. The Court agreed with Biogen that s. 19 was not relevant because it was not using the registered mark.

Citing the Supreme Court in the Veuve Clicquot and Masterpiece cases, the Court stated that “[t]he test to be applied is a matter of first impression in the mind of a casual consumer somewhat in a hurry who, in this case, sees the BYOOVIZ mark at a time when he or she has no more than an imperfect recollection of the BEOVU mark, and does not pause to give the matter any detailed consideration or scrutiny, nor to examine closely the similarities and differences between the marks”.

Siding with Novartis, the Court found that the relevant consumers for assessing confusion includes patients, not just pharmacists and doctors as Biogen asserted. While the anti-VEGF drug to be administered is determined by the ophthalmologist, often dictated by government regulations and policies, patients are told the brand name of the drug and have the option to refuse it or, in some cases, to choose a different drug if they are willing to pay for it. The Court held that “this choice is sufficient to make patients relevant consumers for the purpose of assessing the likelihood that trademarks may be confusing”.

The relevant time for assessing confusion is when consumers first encounter the trademark, i.e., their first impression, and that first encounter may not necessarily align with the alleged infringers “use” of the mark as per s. 4 of the Act. In this case, the patient will typically encounter the drug name after the drug has been selected by the physician. The fact that there may be checks and balances to ensure the proper drug is administered or that patients might become “unconfused” at a later point in time is not relevant.

The Court then looked at the factors set out in s. 6(5) of the Act. As a coined word, BEOVU was found to have inherent distinctiveness. That the respondent’s mark was also coined did not neutralize this factor. The Court also found that the BEOVU product, which had been on the market for three years, was well known among ophthalmologists and known to some extent by patients and, therefore, the mark had acquired distinctiveness. Section 6(5)(a), therefore, favoured Novartis.

Section 6(5)(b), the length of time the marks had been in use, was considered a neutral factor, while ss. 6(5)(c) and (d), the nature of the goods and the nature of the trade, both favoured Novartis. The respondents’ product falls within the description of the goods in the trademark registration and it is administered in the same way for the same condition by the same doctors, and is sold through the same channels. 

Section 6(5)(e), the degree of resemblance between the marks was also found to favour Novartis. As a preliminary matter, the Court found that the expert evidence of a linguist as to how the two marks would be pronounced was unnecessary, stating that she did “not have the relevant expertise to provide the Court with expert evidence about the special knowledge of an ophthalmologist or pharmacist, or how they would perceive the marks at issue”.

In assessing resemblance, the Court found that no element of either mark “stands out as being striking, unique, or dominant” and then stated:

BEOVU and BYOOVIZ resemble each other to at least a moderate degree in appearance and ideas suggested. Both are coined, three syllable words, with a similar sequence of letters. The common B-OV sequence provides a degree of resemblance – each syllable begins with the same letter, in the same sequence. Furthermore, both terms have a suffix that conveys a similar idea.

The Court also considered there to be a high degree of resemblance in sound between BEOVU and BYOOVIZ given that “both are three syllable words, and each syllable begins with the same or a very similar sound, in the same sequence” and that “the terms share a similar sound pattern, rhythm, and emphasis”. The Court agreed that as coined words there was variability in how they could be, and in fact are, pronounced. In the Court’s view, and contrary to Biogen’s position, this increased the likelihood of confusion.

The respondents were, therefore, found to be infringing the applicant’s registered mark, contrary to s. 20 of the Act.

Passing Off

The Court found that Novartis had made out the three elements for passing off under s. 7(b) of the Act. First, Novartis had established that it had goodwill in the BEOVU mark. The respondents argued that the BEOVU’s goodwill was diminished due to safety concerns, but the Court noted in response that “passing off is not limited to trademarks with a sterling reputation”. Second, as the Court had already found, there was a likelihood of confusion resulting from the respondents’ use of BYOOVIZ, i.e., a misrepresentation. Third, there was actual or potential harm: “loss of control of the BEOVU trademark by use of a confusingly similar trademark is sufficient to establish actual or potential damage”.

Depreciation of Goodwill

The Court set out the test under s. 22 of Act as follows:

(i) the respondents used the BEOVU trademark with goods or services; (ii) the BEOVU trademark is sufficiently well known to have significant goodwill attached to it; (iii) the respondents used the BEOVU trademark in a manner likely to have an effect on the goodwill; and (iv) the likely effect would be to depreciate the value of the goodwill.

The Court held that Novartis failed on the first part of the test:

Novartis has not established that the casual observer would recognize the BYOOVIZ trademark as the BEOVU trademark or make the necessary link, connection, or mental association to the registered BEOVU trademark, and for this reason, the section 22 claim must fail.

Conclusion

The Court ordered nominal damages of $20,000 and issued an injunction permanently enjoining the respondents and their licensees from using the BYOOVIZ mark. The Court refused to extend the injunction to “other groups of entities or individuals, including all affiliated companies, officers, [and] employees” as only the respondents and their licensees were authorized to sell the product.

A copy of the decision may be found here. The decision has been appealed and the injunction has been stayed by the Court of Appeal.