Background
Gilead develops and sells prescription medications, including the HIV drug Biktarvy, in the United States and abroad. After a Maryland patient received Turkish-market Biktarvy through his employer’s self-funded health plan, Gilead investigated and found that Rx Valet, Advanced Pharmacy, Affordable Rx, and Gregory Santulli had arranged for hundreds of bottles of foreign-market Gilead medications to be shipped to U.S. patients. Although the Turkish Biktarvy was manufactured with Gilead’s authorization and chemically identical to the U.S. product, its labeling and patient information were in Turkish and omitted warnings and other information accompanying the domestic version.
Gilead sued the four direct participants, along with third-party administrator Meritain Health and pharmacy benefit manager ProAct, under the Lanham Act. Gilead alleged that the four participants directly infringed its trademarks and that Meritain and ProAct contributed to the infringement by supplying patient data, referrals, claims processing, and payment services. The district court entered a preliminary injunction barring the defendants from importing, advertising, selling, or facilitating the importation of products bearing specified Gilead marks.
The Court’s Holding
The Fourth Circuit affirmed. Adopting the material-differences doctrine for gray-market goods, the court held that Gilead was likely to prove direct infringement because the imported medications were not genuine for Lanham Act purposes. Their foreign-language labels, omitted warnings and prescribing information, missing National Drug Code numbers, and other regulatory differences met the doctrine’s low materiality threshold. The drugs also bypassed Gilead’s domestic temperature monitoring, chain-of-custody, recall, and authorized-distribution safeguards. Chemical identity did not eliminate those differences, and the first-sale doctrine therefore did not defeat Gilead’s claims.
The court also held that Gilead was likely to establish contributory infringement by Meritain and ProAct. In the Fourth Circuit, a service provider may be liable when it continues supplying services to identified direct infringers whom it knows or has reason to know are infringing; prior specific notice from the trademark owner is not required, and degree of control is not a separate element. The record supported findings that both companies knew or had reason to know that they were facilitating international sourcing of materially different Gilead drugs.
The Federal Food, Drug, and Cosmetic Act did not preclude the claims because deciding whether the products materially differed under trademark law did not require finding or enforcing an FDCA violation. The court further upheld the findings of irreparable harm, favorable equities, and public interest. It declined to review the denial of Santulli’s personal-jurisdiction motion through pendent appellate jurisdiction and treated as forfeited his distinct argument about the jurisdictional showing required for preliminary relief.
Key Takeaways
- Foreign-market goods bearing authentic trademarks may still be non-genuine under the Lanham Act when they materially differ from domestic goods or bypass the trademark owner’s legitimate quality controls.
- For prescription drugs, differences in language, warnings, identifying information, traceability, transportation controls, and recall coverage can be material even when the medications are chemically identical.
- Contributory trademark liability for service providers does not require prior notice from the trademark owner or proof of a separate degree-of-control element in the Fourth Circuit.
Why It Matters
The decision gives trademark owners in the Fourth Circuit a framework for challenging unauthorized gray-market imports based on relatively slight but consumer-relevant differences and deviations from legitimate quality controls. It is especially consequential for alternative funding programs that reduce health-plan costs by directing patients to foreign-market prescription drugs.
The ruling also clarifies that administrators, pharmacy benefit managers, and other intermediaries may face contributory liability when they knowingly continue providing services essential to identified infringers, even without first receiving a cease-and-desist letter or other specific notice from the trademark owner.