MiraLAX Won't "Loosen Up" Against OTC Store Brand Competition
Schering-Plough Healthcare, owner of the MiraLAX brand -- the top-selling OTC oral laxative ($360 Million in OTC sales since launching in February 2007) -- has pulled out all of the available stops and then some, in a pre-Thanksgiving Day federal district court action brought in the District of Delaware, asserting a variety of intellectual property and unfair competition claims under both federal and state law. Bloomberg.com's report on the case from yesterday is here. In addition, here is a link to the Complaint, with Exhibits A, B, and C.
As is typical when the manufacturer of a national brand wants to stop what it perceives as unfair retail store brand competition, Schering-Plough brought suit not against either of its retail customers Kroger or CVS -- despite both being mentioned in the complaint -- instead, it sued Perrigo the private label manufacturer who provided the competitive products bearing those retailers' well-known, if not famous store brand names.
Perrigo says it is "the world's largest manufacturer of OTC pharmaceutical products for the store brand market." Here is how Perrigo describes its business model:
The Perrigo Company manufactures products that compare to national brand products such as Tylenol®, Advil® or ONE-A-DAY®. For example, Tylenol® has acetaminophen as an active ingredient and is available in a store's analgesic (pain relief) section. Store brand acetaminophen is located right next to the national brand acetaminophen, offering the same active ingredient (acetaminophen) and the same relief.
Store brands and national brand products are both manufactured to meet or exceed quality standards set by the Food and Drug Administration (FDA). Store brand products are sold by retail stores under their own labels and compete with nationally advertised brands. All Perrigo products meet or exceed quality standards set by the Food and Drug Administration (FDA). Store brand OTC and nutritional products have saved consumers many millions of dollars in health-care costs over the past six years.
Although the national brand owner's strategy of not suing its retail customer directly may be attractive from a business relations perspective, unless the case is promptly resolved on an amicable basis, it will be hard to avoid having representatives of Kroger, CVS, and other retail customers of Schering-Plough, put on the "hot seat" in discovery depositions to determine who created, controlled, and/or approved the "look and feel" of the store brand packaging. It remains to be seen how this strategy will play out here for Schering-Plough.
Noticeably absent in the complaint are side-by-side comparisons of the MiraLAX product with the Kroger and CVS store brand versions. Instead, as you will see, Schering-Plough includes a photograph depicting the family of MiraLAX products together, then pages later in the complaint it shows a photograph of the family of CVS' PURELAX products together, and then later a photograph of the family of Kroger's GentleLax products. Why? Perhaps the many differences in the appearance and overall trade dress becomes more apparent when the national brand and competitive store brand products are placed side-by-side. However, as we have discussed before, while side-by-side comparisons are generally not appropriate for determining likelihood of confusion, they appear to be not only appropriate here, but necessary in this case, since the national brand MiraLAX and the various competitive store brands most likely are confronted by consumers side-by-side on the retail store shelves.
As Mark Prus, DuetsBlog GuestBlogger, recently depicted in his Naming the Store Brand post, typically there will be similarities in the appearance or "look and feel" of store brands as compared to their national brand counterparts. Perrigo's website reveals essentially the same point, here. What do you think, are the CVS and Kroger store brand laxative trade dresses close enough to the MiraLAX trade dress that consumers are likely to be confused? How many similarities will consumers merely understand to convey a comparable competitive product, before the line is crossed, and a likelihood of confusion results?
No design patent or bottle configuration trademark claims are included in the complaint, but one unique aspect of this OTC pharmaceutical trade dress packaging case, is Schering-Plough's inclusion of federal copyright infringement claims. Schering-Plough has applied for (but not yet received) copyright registrations on the shape of the "double-neck bottle" -- as a "sculptural work" -- and also on the artwork appearing on the MiraLAX product label. It will be interesting to see whether the Copyright Office refuses registration on the bottle shape, under the useful article exception to copyright.
Although no federal dilution claim has been asserted by Schering-Plough, it has asserted a Delaware State Dilution claim, probably because there is no requirement of "fame" under Delaware State law, as compared to the far more stringent Federal Trademark Dilution Act (FTDA) and Trademark Dilution Revision Act (TDRA).
Stay tuned on DuetsBlog for more thoughts and developments as this case progresses.
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