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Pfizer to Pay $143 Million for Trademark Infringement

Courts: Jury said No. 2 U.S. drug maker committed fraud in taking Trovan name for its antibiotic. Experts call ruling 'staggering.'


In the nation's largest-ever trademark infringement award, a Los Angeles jury Tuesday ordered pharmaceutical giant Pfizer Inc. to pay a British company $143 million for stealing the Trovan name to market its controversial antibiotic.

Legal experts called the verdict "staggering," saying it raises the stakes for companies that deliberately infringe other companies' trademarks.

Jurors said Pfizer, the second-largest U.S. drug maker, committed "oppression, fraud and malice" in 1998 when it named its new antibiotic Trovan. Seven years earlier, Trovan Ltd., a British firm that makes implantable electronic identification devices mainly for pets, registered that name with the U.S. Patent and Trademark Office.

The jury's verdict represents the latest blow in Pfizer's efforts to market its powerful antibiotic. Analysts had projected that Trovan--which is effective against strains of bacteria that do not respond to other drugs--would become a blockbuster, raking in more than $1 billion a year for the New York-based firm. But in June the Food and Drug Administration instructed doctors to use Trovan only on patients with serious or life-threatening illnesses--after six patients died and four others needed liver transplants after taking the drug.

Pfizer executives in New York promised Tuesday to appeal the verdict, which included $135 million in punitive damages. The verdict is "not supported by either the law or the facts," said Paul S. Miller, the company's general counsel, "and we are confident that this decision will not be upheld."

Lawyers for Trovan Ltd. and its Santa Barbara-based distributor, Electronic Identification Devices Ltd., said jurors "did the right thing."

"We are pleased that the jury sent a message to Pfizer that it is not acceptable to steal someone else's famous trademark even when that someone else is a much smaller company," said William E. Levin, a Laguna Beach attorney for the plaintiffs.

During the two-month trial, Levin and his colleagues showed how Joseph Masin, president of the Santa Barbara firm, warned Pfizer's legal department not to use the Trovan name five months before the antibiotic was sold on the market.

Masin said he feared that customers who implanted Trovan microchips in their pets--so that they could identify them if the animals were lost or stolen--would become confused if Pfizer also called its drug Trovan.

Masin said his office received dozens of calls from pet owners after the negative publicity over the antibiotic. One pet owner, Mariel Benefiel of Corona, testified that she feared that her cats might be in danger after she read that the FDA had concerns about the antibiotic. Benefiel had her cats, Spitfire and Batty, electronically scanned in U.S. District Judge Lourdes Baird's courtroom to show that they had been implanted with the Trovan microchip.

Pfizer has insisted that consumers would not be confused, because Trovan microchips targeted animals, whereas its antibiotic targeted humans.

But jurors were not convinced. Jurors cited a letter Pfizer sent earlier this year to veterinarians touting "its groundbreaking pharmaceuticals like Trovan and Viagra."

"If they're sending this to veterinarians, there's no doubt that the name could be confusing," said one female juror who asked that her name not be used. "What Pfizer did, knowingly using Trovan's name, just wasn't right."

Jurors heeded Levin's request to punish Pfizer by making the company pay 1% of its $13.5-billion reported 1998 revenue. They also ordered Pfizer to pay $8 million in compensatory damages.

Before Tuesday's verdict, the largest trademark award was $24.7 million that Quaker Oats Co. was ordered to pay in 1990 to a small Vermont competitor.

Professor Daniel Klerman, who teaches intellectual property law at USC Law Center, said an appellate court "would give this verdict [against Pfizer] a lot of scrutiny."

John Shepard Wiley Jr., a UCLA professor who teaches trademark law to law students and federal judges, said the verdict raises the stakes in similar cases.

"One of the most important areas of trademark law relates to the Internet. People who infringe on others' trademarks may want to take note [of this verdict], or otherwise the price tag could be very high," Wiley said.

Judge Baird could decide as early as Friday whether to increase the award against Pfizer. Trovan's attorneys say Pfizer should be made to turn over some $60 million in profit earned through sales of the antibiotic. Pfizer has said Trovan should not receive another penny.

Pfizer's stock slipped 44 cents to close at $39.38 on the NYSE.

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