Fourth Circuit: Foreign-Market Prescription Drugs with Different Labeling and Quality Controls Are “Non-Genuine” Under the Lanham Act; Contributory Liability Requires Knowledge, Not Formal Notice

1. Introduction

This published Fourth Circuit decision arises from the growing use of “alternative funding programs” (“AFPs”) by self-funded employer health plans seeking to reduce U.S. prescription-drug costs by sourcing drugs intended for foreign markets. Gilead Sciences, Inc. and Gilead Sciences Ireland UC IDA (collectively, “Gilead”) alleged that an AFP network caused U.S. patients to receive foreign-market versions of Gilead-branded HIV and other medications—most prominently Biktarvy—packaged and labeled for foreign sale (e.g., Turkey) rather than the U.S. FDA-approved version.

The defendants fell into two functional groups:

• The “Quartet” (alleged direct infringers): Rx Valet, LLC; Advanced Pharmacy, LLC; Aqua Enterprise Inc. d/b/a Affordable RX Meds (“Affordable Rx”); and Gregory Santulli (executive of Rx Valet and Advanced Pharmacy).
• Alleged service-facilitators (contributory infringers): Meritain Health, Inc. (TPA) and ProAct, Inc. (carve-out PBM).

The immediate trigger was a Maryland patient (“John Doe”) receiving Turkish-market Biktarvy. Gilead’s investigation indicated the arrangement was broader, with hundreds of bottles shipped to U.S. patients. Gilead sued under the Lanham Act, seeking (among other relief) a preliminary injunction.

Key issues on appeal: (i) whether foreign-market, non-counterfeit Gilead drugs can nonetheless be “non-genuine” for Lanham Act purposes due to material differences and/or quality-control bypass; (ii) whether the FDCA precludes such Lanham Act claims; and (iii) what constitutes “knowledge” for contributory trademark infringement by entities supplying claims/data/referral infrastructure.

2. Summary of the Opinion

The Fourth Circuit affirmed the district court’s preliminary injunction barring the defendants from importing, advertising, selling, or facilitating the sale of imported Gilead-branded medications into the United States.

• Direct infringement (Quartet): Likely, because the imported drugs were not “genuine” under the Lanham Act. They materially differed from U.S.-authorized versions (language, warnings, NDC/Rx-only markings, patient information) and traveled outside Gilead’s quality-control system (temperature monitoring, traceability/pedigrees, recall integration, closed distribution).
• Contributory infringement (Meritain & ProAct): Likely, because they continued supplying services while knowing or having reason to know the Quartet was engaging in trademark infringement. The court rejected the contention that contributory liability requires prior, specific notice from the trademark owner and declined to impose an independent “degree of control” element.
• FDCA preclusion: Rejected; the Lanham Act claims could be resolved without interpreting or enforcing FDCA labeling rules as the predicate for liability.
• Irreparable harm: Presumed under the Trademark Modernization Act of 2020, 15 U.S.C. § 1116(a), and not rebutted by Gilead’s investigative delay.

3. Analysis

3.1 Precedents Cited

A. Preliminary injunction framework and standards of review

• Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7 (2008): Provides the four-factor test (likelihood of success, irreparable harm, balance of equities, public interest). The court applied Winter as the governing standard.
• Leaders of a Beautiful Struggle v. Baltimore Police Dep't, 2 F.4th 330 (4th Cir. 2021) (en banc): Confirms abuse-of-discretion review and deference to factual findings absent clear error.
• Mountain Valley Pipeline, LLC v. 6.56 Acres of Land, Owned by Sandra Townes Powell, 915 F.3d 197 (4th Cir. 2019): Reinforces the “plausible account of the evidence” deference principle on appeal.
• Salomon & Ludwin, LLC v. Winters, 150 F.4th 268 (4th Cir. 2025): Legal conclusions reviewed de novo.
• Jensen v. Md. Cannabis Admin., 151 F.4th 169 (4th Cir. 2025) and Visual Scis., Inc. v. Integrated Commc'ns Inc., 660 F.2d 56 (4th Cir. 1981): Clarify the “likely to succeed” / “reasonable probability of ultimate success” articulation within Fourth Circuit injunction doctrine.

B. Appellate jurisdiction and issue preservation

• Rux v. Republic of Sudan, 461 F.3d 461 (4th Cir. 2006); Indus. Servs. Grp., Inc. v. Dobson, 68 F.4th 155 (4th Cir. 2023); Scott v. Fam. Dollar Stores, Inc., 733 F.3d 105 (4th Cir. 2013): Govern pendent appellate jurisdiction; used to deny review of Santulli’s personal-jurisdiction denial.
• In re Under Seal, 749 F.3d 276 (4th Cir. 2014): Waiver/forfeiture—Santulli could not raise on appeal a personal-jurisdiction standard argument not presented below.
• Grayson v. Anderson, 816 F.3d 262 (4th Cir. 2016) and al-Suyid v. Hifter, 139 F.4th 368 (4th Cir. 2025): Personal jurisdiction is a waivable defense; courts need not police it sua sponte like subject-matter jurisdiction.

C. FDCA/Lanham Act interaction

• POM Wonderful LLC v. Coca-Cola Co., 573 U.S. 102 (2014): Central support for compatibility of FDCA regulation and Lanham Act enforcement; the Fourth Circuit analogized to reject FDCA preclusion in this drug-label context where the claim does not require FDCA interpretation.
• Sandoz Pharms. Corp. v. Richardson-Vicks, Inc., 902 F.2d 222 (3d Cir. 1990): Example where Lanham Act adjudication would require interpreting unsettled FDA regulatory questions (inactive ingredient labeling), warranting preclusion concerns; distinguished because Gilead’s theory turned on material differences, not FDCA compliance per se.
• Mylan Laboratories, Inc. v. Matkari, 7 F.3d 1130 (4th Cir. 1993): Rejected Lanham Act theories premised on an implied representation of FDA approval absent explicit claims; distinguished because Gilead did not proceed on an “implied FDA approval” theory.

D. Gray-market “genuineness,” material differences, and quality control

• K Mart Corp. v. Cartier, Inc., 486 U.S. 281 (1988): Defines gray-market goods as foreign-manufactured goods bearing a valid U.S. trademark imported without the trademark holder’s consent.
• Shell Oil Co. v. Com. Petroleum, Inc., 928 F.2d 104 (4th Cir. 1991): Fourth Circuit anchor for the quality-control doctrine; goods can be non-genuine if distributed outside the trademark owner’s quality-control system.
• Societe Des Produits Nestle, S.A. v. Casa Helvetia, Inc., 982 F.2d 633 (1st Cir. 1992): Seminal material-differences rationale (“bundle of characteristics” associated with the mark). The court relied on Nestle both for the doctrine and for examples where packaging/language differences are material despite identical ingredients.
• Iberia Foods Corp. v. Romeo, 150 F.3d 298 (3d Cir. 1998) and Weil Ceramics & Glass, Inc. v. Dash, 878 F.2d 659 (3d Cir. 1989): Support the proposition that material differences create consumer confusion and therefore infringement risk.
• Zino Davidoff SA v. CVS Corp., 571 F.3d 238 (2d Cir. 2009): “Low threshold of materiality” and the articulation of “established, legitimate, substantial, and nonpretextual” quality-control measures.
• Brilliance Audio, Inc. v. Haights Cross Commc'ns, Inc., 474 F.3d 365 (6th Cir. 2007): Materiality is fact-specific; the Fourth Circuit used this to emphasize market/product context.
• El Greco Leather Prods. Co. v. Shoe World, Inc., 806 F.2d 392 (2d Cir. 1986): The trademark owner’s right to control quality is a “valuable and important” protection; referenced for quality-control doctrine foundations.
• Am. Petroleum Inst. v. Cooper, 718 F.3d 347 (4th Cir. 2013): Cited for the principle that the question is compliance with the trademark owner’s quality controls, not whether the product is actually inferior.
• Original Appalachian Artworks, Inc. v. Granada Electronics, Inc., 816 F.2d 68 (2d Cir. 1987) and Lever Brothers Co. v. United States, 877 F.2d 101 (D.C. Cir. 1989): Reinforce that language, labeling, packaging, and consumer-support differences can be material even when the core product is identical.
• Matrix Essentials, Inc. v. Emporium Drug Mart, Inc., 988 F.2d 587 (5th Cir. 1993): Unauthorized distribution outside quality controls can create “latent product defect” and consumer deception.
• NEC Electronics v. CAL Circuit Abco, 810 F.2d 1506 (9th Cir. 1987): Invoked by defendants for “common control” arguments; distinguished because here the imported drugs materially differed and bypassed domestic distribution quality controls.
• Davidoff & Cie, S.A. v. PLD Int'l Corp., 263 F.3d 1297 (11th Cir. 2001): Used to explain the first sale/exhaustion doctrine and that it does not protect resale of non-genuine goods.

E. Contributory trademark infringement (services, knowledge, willful blindness)

• Inwood Lab'ys, Inc. v. Ives Lab'ys, Inc., 456 U.S. 844 (1982): Establishes inducement-or-knowledge standard (including “reason to know”). The court treated Inwood as the controlling test.
• Rosetta Stone Ltd. v. Google, Inc., 676 F.3d 144 (4th Cir. 2012): Applies Inwood to service providers and rejects mere generalized knowledge; the Fourth Circuit relied on it to reject a “must-have-prior-notice” rule.
• Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417 (1984): Quoted in Rosetta Stone for the “identified individuals” concept.
• Tiffany (NJ) Inc. v. eBay Inc., 600 F.3d 93 (2d Cir. 2010): Discussed and distinguished; the court read it as requiring knowledge of particular infringement, not formal notice as a prerequisite.
• Luxottica Grp., S.p.A. v. Airport Mini Mall, LLC, 932 F.3d 1303 (11th Cir. 2019) and Al-Sabah v. World Bus. Lenders, LLC, 160 F.4th 540 (4th Cir. 2025): Support the “willful blindness” route to constructive knowledge.
• Ives Lab'ys, Inc. v. Darby Drug Co., 601 F.2d 631 (2d Cir. 1979): Cited through Inwood to show the endorsed understanding of contributory liability without any “formal notice” requirement.

F. “Control” as a purported element (rejected in this circuit)

• Hard Rock Cafe Licensing Corp. v. Concession Services, Inc., 955 F.2d 1143 (7th Cir. 1992) and Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259 (9th Cir. 1996): Cited as out-of-circuit applications of Inwood to venue operators; the Fourth Circuit declined to treat them as adding an extra “control” element.
• Lockheed Martin Corp. v. Network Sols., Inc., 194 F.3d 980 (9th Cir. 1999) and Perfect 10, Inc. v. Visa Int'l Serv. Ass'n, 494 F.3d 788 (9th Cir. 2007): Noted for the Ninth Circuit’s “direct control and monitoring” gloss, which the Fourth Circuit declined to adopt.

G. Irreparable harm and delay

• 15 U.S.C. § 1116(a) (Trademark Modernization Act of 2020): Creates a rebuttable presumption of irreparable harm upon a showing of likely success on the merits in trademark cases.
• Lone Star Steakhouse & Saloon, Inc. v. Alpha of Va., Inc., 43 F.3d 922 (4th Cir. 1995): Recognizes that irreparable injury regularly follows trademark infringement.
• Tough Traveler, Ltd. v. Outbound Products, 60 F.3d 964 (2d Cir. 1995): Delay can undermine irreparable harm, but not when explained by good-faith investigation; used to uphold the district court’s approach.

3.2 Legal Reasoning

A. The core “new” application: gray-market doctrine in the prescription-drug setting

The opinion’s most consequential move is its forceful application of two “non-genuineness” pathways—material differences and quality-control bypass—to foreign-market prescription drugs that are non-counterfeit and chemically identical to U.S. versions. The court emphasized that “authentic” (non-counterfeit) is not synonymous with “genuine” for Lanham Act purposes.

B. Material differences: labeling, warnings, and patient information are product characteristics

The Fourth Circuit endorsed a low materiality threshold (tracking Zino Davidoff SA v. CVS Corp.) and held that differences in language, omission of the “Rx only” symbol, absence of the NDC number, different warnings and storage information, and missing U.S. patient information (including a black-box warning and FDA-related disclosures) are material to consumers of prescription drugs. The court treated these items as part of the “bundle of characteristics” consumers associate with the trademark (echoing Societe Des Produits Nestle, S.A. v. Casa Helvetia, Inc.), not as peripheral “paper” differences.

Notably, the court rejected the defense that consumers can “look up” missing information online. The relevant question is whether the consumer receives what the trademark signals at the point of receipt; requiring post hoc reconstruction (especially where the label is in Turkish) underscores—rather than cures—the likelihood of confusion.

C. Quality control: temperature monitoring, traceability, recall systems, and closed distribution

Independent of labeling, the court held the imported drugs were non-genuine because they reached patients outside Gilead’s domestic quality controls: sealed and temperature-controlled/monitored shipping, “quality event” investigation when excursions occur, U.S. pedigree/traceability, integration with recall protocols, and distribution through authorized channels intended to reduce counterfeit/adulteration risk.

Consistent with Shell Oil Co. v. Com. Petroleum, Inc. and Am. Petroleum Inst. v. Cooper, the court framed the inquiry as whether the trademark owner’s legitimate quality system was followed, not whether defendants believe their substitutes are “good enough” or whether actual harm has been proven. This is particularly salient in pharmaceuticals, where “latent” distribution defects (temperature excursions, broken chain of custody, recall blind spots) are often undetectable to patients.

D. FDCA does not preclude these Lanham Act claims on these facts

The court drew a line between (i) Lanham Act theories that would require courts to interpret or police FDCA compliance questions reserved to the FDA (as in Sandoz Pharms. Corp. v. Richardson-Vicks, Inc.), and (ii) claims that can be adjudicated by comparing products and distribution systems for material differences/quality-control bypass without determining FDCA violations. The opinion leans on POM Wonderful LLC v. Coca-Cola Co. to treat the statutes as complementary and distinguishes Mylan Laboratories, Inc. v. Matkari because Gilead did not premise liability on an implied representation of FDA approval.

E. Contributory infringement: knowledge does not require formal notice from the trademark owner

The opinion squarely rejects the argument that contributory trademark infringement requires a cease-and-desist letter (or similar “specific notice”) before liability can attach. Applying Inwood Lab'ys, Inc. v. Ives Lab'ys, Inc. and Rosetta Stone Ltd. v. Google, Inc., the court held the test is whether the defendant continued supplying services to identified direct infringers while it “knows or has reason to know” of infringement—including through constructive knowledge and willful blindness (with support from Luxottica Grp., S.p.A. v. Airport Mini Mall, LLC and Al-Sabah v. World Bus. Lenders, LLC).

On the record, Meritain’s internal emails, invoice processing for international-sourcing vendors, and contradictory marketing materials supported knowledge. ProAct’s client base, system edits steering patients to AFPs, internal projections of savings on Gilead drugs, awareness of foreign labeling differences, and exposure to an FDA warning-letter context involving CanaRx supported knowledge or “reason to know.”

F. No independent “degree of control” element in the Fourth Circuit

The court declined to add a separate “direct control and monitoring” requirement (associated with Lockheed Martin Corp. v. Network Sols., Inc. and Perfect 10, Inc. v. Visa Int'l Serv. Ass'n). In this circuit, contributory liability remains governed by Inwood’s two-prong test (inducement or knowledge). The court further observed that even if “control” were required, the alleged referral, data stream, claims processing, and invoice payment functions would likely satisfy it.

3.3 Impact

• AFPs and plan-design intermediaries face heightened Lanham Act exposure: The decision makes it harder to characterize foreign-market drugs as “the same product” merely because they are chemically identical and manufactured by (or with authorization from) the trademark owner.
• Labeling and patient-information differences become central in pharma gray-market cases: The opinion treats language, warnings, NDC identifiers, and FDA-related materials as quintessentially “material,” not ancillary. This gives brand manufacturers a strong trademark-based lever against importation programs even where the FDA does not act.
• Quality-control theories are strengthened for regulated products: Temperature excursions, traceability, and recall integration—logistics and systems rather than composition—are framed as core aspects of trademark goodwill in pharmaceuticals.
• Contributory infringement standards broaden practical risk for TPAs/PBMs and similar service providers: Entities cannot rely on the absence of a cease-and-desist letter if internal information, industry warnings, or operational realities provide “reason to know.”
• FDCA preclusion arguments are narrowed (at least on preliminary-injunction records): If plaintiffs can plead and prove material differences and quality-control bypass without asking a court to decide FDCA compliance, Lanham Act relief is more likely to proceed notwithstanding the FDCA’s exclusive enforcement provision.

4. Complex Concepts Simplified

• Gray market goods: Real (non-counterfeit) trademarked products made for one country and imported into another without the trademark owner’s permission.
• “Genuine” under the Lanham Act: Not merely “authentic.” A product can be real but still “non-genuine” if it materially differs from what the mark promises in the domestic market, or if it bypasses the trademark owner’s quality-control system.
• Material differences doctrine: Even “slight” differences can matter if consumers would consider them relevant to purchase/use—here, safety and regulatory information for prescription drugs.
• Quality-control doctrine: Trademark law protects the owner’s right to control how goods bearing its mark are handled and distributed; selling outside those controls can itself create infringement risk.
• Contributory trademark infringement: You can be liable for someone else’s infringement if you knowingly (or with reason to know) continue to supply them products or services that facilitate the infringement.
• Willful blindness: A form of constructive knowledge—suspecting wrongdoing but deliberately avoiding confirmation.
• Trademark Modernization Act presumption: If the plaintiff shows likely success on trademark infringement at the injunction stage, irreparable harm is presumed unless defendants rebut it.

5. Conclusion

Gilead Sciences, Inc. v. Meritain Health, Inc. cements a practical rule for modern healthcare supply chains: foreign-market prescription drugs may be “non-genuine” for Lanham Act purposes despite chemical identity and non-counterfeit status when they differ in labeling/patient information and reach U.S. patients outside the brand owner’s quality-control, traceability, and recall systems. The Fourth Circuit also clarifies that contributory trademark infringement—particularly for service providers like TPAs and PBMs—turns on knowledge or reason to know, not on receiving a formal notice letter, and it declines to graft an independent “control” element onto Inwood.

Educational commentary only; not legal advice.