Health Law Daily Wrap Up, PRESCRIPTION DRUGS—E.D.N.Y.: Invalid pedigrees not material differences in Lanham Act claim, (Apr 4, 2025)

By Sherri M. Schroeder, J.D.

However, the court found triable issues as to whether selling drugs with missing and falsified pedigrees violated the drug manufacturer’s quality-control standards.

After a pharmaceutical conglomerate brought action against various downstream distributors that allegedly sold counterfeit medication, a district court in New York found genuine issues of material fact precluding summary judgment on all but three discrete issues. The court found the manufacturer was entitled to judgment as a matter of law that certain bottles were not genuine products and would, therefore, infringe on their trademarks if sold; that any ingenuine bottles were also counterfeits; and that the Lanham Act liability of the individuals named as defendants co-extended with their companies’ Lanham Act liability. However, issues of fact remained as to whether all identified bottles were infringing, how many of the infringing bottles the distributors sold, and whether the distributors acted willfully. When the manufacturer argued that each bottle it identified as a counterfeit infringed on its trademark under the Lanham Act because they were all sold without valid pedigrees, the court specifically held invalid pedigrees were not material differences under the Act, but there were triable issues as to whether selling drugs with missing and falsified pedigrees violated the manufacturer’s quality-control standards, which would be a violation of the Lanham Act (Janssen Sciences Ireland Unlimited Company v. TLC Xpress Pharmacy, Inc., No. 22-cv-1983 (BMC) (E.D.N.Y. Apr. 1, 2025)).

Claims. Janssen Sciences Ireland Unlimited Company, Janssen Products, L.P., and Johnson & Johnson (collectively, “Janssen”) develop and market medications. Beginning in November 2020, Janssen became aware of illicit suppliers that would pay patients cash for their prescriptions, repackage the pills, falsify documents to cover their tracks, and then resell the medications to wholesalers at a generous discount. The wholesalers would eventually sell the drugs to pharmacies and then patients would receive the black-market-sourced bottles. Janssen first brought suit against the wholesalers but eventually added other downstream distributors including defendants Cina Pharmaceuticals, Inc., SRX Specialty Care Pharmacy, TLC Xpress Pharmacy, Inc., and their principals, claiming Lanham Act trademark infringement and six related causes of action. The wholesalers settled the claims against them. Janssen then moved for summary judgment on its Lanham Act claims against Cina, SRX, and TLC—that the identified bottles infringed on Janssen’s trademark because they were all sold without valid pedigrees and that the bottles sold with missing outserts, damaged labels, fake caps, and incorrect pills were materially different and violative of its quality-control policies—and two related issues: that Cina and its principal willfully infringed on its trademark and that the identified bottles were “counterfeits.” SRX, TLC, and Cina cross-motioned for summary judgment.

Erroneous pedigrees. Janssen alleged that each identified bottle infringed on its mark because they were all sold without valid pedigrees. Here, the court first determined that bottles of medication sold with erroneous pedigrees were not “materially different” under the Lanham Act than ones sold with true pedigrees. According to the court, although the difference need not be tangible, a material difference must relate to some characteristic of the product that is relevant to a consumer. “Invalid pedigrees are quite simply not such a material difference,” stated the court. All else being equal, a medication with missing or falsified pedigrees has the exact same packaging, labelling, and pills as a medication with accurate pedigrees, meaning it is not any less appealing to a consumer. Furthermore, patients do not even receive pedigree information with their medication, according to the court. Although Janssen argued that the medications were materially different because every pharmacist who testified said they would not purchase the products if they knew they were sourced from black-market suppliers, the court noted that unauthorized distribution, standing alone, cannot constitute trademark infringement.

Other bottles. Janssen also sought summary judgment on its narrower theories of infringement targeting only a select few bottles it recovered—bottles with missing or fake outserts, visibly damaged labels, different caps, and wrong pills. “I have no trouble concluding as a matter of law that these bottles are materially different from the genuine medications,” stated the court. However, the court could not grant summary judgment even on these limited grounds because triable issues remained as to whether Cina, SRX, and TLC were liable for selling them.

Individual liability. The court granted Janssen’s motion for summary judgment that the liability of the defendant companies’ principals was co-extensive with their respective employers. Because none of the principals were sole shareholders, their individual liability turns on whether they were “direct participants” in the infringing activities, according to the court. Janssen set forth “substantial evidence” that each individual directly participated in the purchase and sale of the bottles, and the distributors did not provide any evidence controverting the inference that the individual defendants directly participated in the purchase and sales of the identified medications. It did not matter to the court whether or not the individuals knew or could have known that the products were counterfeit.

The case is No. 22-cv-1983 (BMC).

Judge: Cogan, B.

Attorneys: Andrew Robert Quirk (Patterson Belknap Webb & Tyler LLP) for Janssen Sciences Ireland UnLtd. Co. Danielle S. Futterman (Epstein Drangel LLP) for TLC Xpress Pharmacy Inc.

Companies: Janssen Sciences Ireland UnLtd. Co.; TLC Xpress Pharmacy Inc.

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