Ross-Whitney Corp. v. Smith Kline & French Lab.

• Decision Date: 20 October 1953
• Docket Number: No. 13420.,13420.
• Citation: 207 F.2d 190
• Parties: ROSS-WHITNEY CORP. et al. v. SMITH KLINE & FRENCH LABORATORIES.
• Court: U.S. Court of Appeals — Ninth Circuit

207 F.2d 190 (1953)

ROSS-WHITNEY CORP. et al. v. SMITH KLINE & FRENCH LABORATORIES.

No. 13420.

United States Court of Appeals Ninth Circuit.

September 16, 1953.

Rehearing Denied October 20, 1953.

Robert O. Whitney, Beverly Hills, California, in pro. per., Louis S. Edelberg and Samuel Greenfield, Los Angeles, Cal., for appellants.

Lyon & Lyon, Leonard S. Lyon, Reginald E. Caughey, Los Angeles, Cal., Ballard, Spahr, Andrews and Ingersoll, Charles I. Thompson, William S. Rawls, Philadelphia, Pa., for appellee.

Before DENMAN, Chief Judge, and STEPHENS and BONE, Circuit Judges.

STEPHENS, Circuit Judge.

Smith Kline & French Laboratories, known as SKF, is principally engaged in the manufacture of prescription drugs which are sold to pharmacists. In 1936 SKF obtained the patent¹ on the combination drug, benzyl methyl carbinimine, and put it on the market under the name "Benzedrine" which was registered as a trade-mark with the United States Patent Office.² In 1938 the American Medical Association adopted the name amphetamine sulfate as its official designation for the combination.

Some years after acquiring the patent on amphetamine sulfate, SKF developed through research the dextro-optical isomer of amphetamine sulfate, i. e., dextro-amphetamine sulfate, which it put on the market in 1939 under the name "Dexedrine" registered as a trade-mark with the United States Patent Office.³

At first, SKF marketed the Benzedrine in five or ten milligram dosage in the form of a round, white tablet with beveled edges and a concave bottom, and marketed the Dexedrine in a five milligram yellow tablet. In May 1949 SKF changed the form of its Benzedrine and Dexedrine tablets. The new Benzedrine tablet was colored pinkish-brown. It was in form similar to an equilateral triangle with sides slightly curved and points rounded. A straight furrow bisecting the tablet ran across it to one of the rounded corners. The tablet resembled what may be termed a Valentine heart. The new Dexedrine tablet had the same size and shape, but was colored orange. Between 1949 and 1951, SKF expended over $1,200,000 to advertise and publicize the new size, shape, and color combinations of its Benzedrine and Dexedrine tablets. SKF's patent expired on amphetamine sulfate and dextro-amphetamine sulfate in November, 1949, and other companies began to manufacture and sell the drugs under various brand names.⁴

In 1951, the Ross-Whitney Corporation, doing business as the Heart Pharmaceutical Co. of California, hereinafter referred to as appellants, began the manufacture, advertisement, and sale of a dextro-amphetamine sulfate tablet which in size, shape, and color exactly duplicated SKF's Dexedrine tablet. Appellants labeled their product "Heart Brand Dexedrine" and offered it for sale at a price considerably below that of SKF's Dexedrine.

In an action instituted against appellants in the United States District Court for the Southern District of California, SKF charged appellants with trade-mark infringement and unfair competition. In its complaint SKF prayed that the court issue a temporary restraining order and a preliminary and permanent injunction to prevent appellants from manufacturing, selling, offering for sale, advertising or otherwise dealing with medicinal tablets in imitation of SKF's Dexedrine or in using the trade-mark Dexedrine.

The District Court, Judge Leon B. Yankwich presiding, declined to issue an ex parte temporary restraining order, but entered a rule to show cause why a preliminary injunction should not issue. The matter was heard before Judge James M. Carter who ordered a preliminary injunction after making preliminary findings of fact and drawing preliminary conclusions of law which are summarized as follows:

Preliminary Findings of Fact

1. SKF is a citizen of Pennsylvania and appellant is a citizen of California, and the amount in controversy exceeds $3,000.

2. SKF is using Dexedrine as its trade-mark for dextro-amphetamine sulfate.

3. Dexedrine is marketed in a unique, distinctive, non-functional, well-advertised color and shape combination which has acquired a secondary meaning in the wholesale and retail drug trade.

4. Dextro-amphetamine sulfate is a potent drug which may be sold only on prescription.

5. Dexedrine is sold in bottles bearing SKF's trade-mark, but the tablets do not individually contain the trademark.

6. Appellants have duplicated the size, shape, and color of SKF's Dexedrine tablet.

7. Certain retail pharmacists have purchased appellants' tablets and "palmed

them off" as SKF's and appellants have made that possible with their counterfeit tablets in bottles labeled Heart Brand Dexedrine.

8. Dexedrine is a valid trade-mark and not a synonym for dextro-amphetamine sulfate or the generic name of a drug.

9. Some of appellants' tablets were not of the potency of SKF's Dexedrine.

10. SKF has suffered irreparable injury in that large quantities of appellants' tablets have been distributed throughout the United States and have enabled druggists to palm off appellants' product for SKF's.

Preliminary Conclusions of Law

1. The court has jurisdiction over the parties.

2. Dexedrine is SKF's valid trade-mark for dextro-amphetamine sulfate.

3. Neither the trade-mark Dexedrine nor the shape-color combination of SKF's tablets is in the public domain.

4. Appellants unfairly competed with SKF and infringed the Dexedrine trade-mark.

5. Some of appellants' tablets were misbranded in violation of the Food, Drug and Cosmetics Act.

6. SKF has suffered and will continue to suffer irreparable injury unless a preliminary injunction is granted; and therefore SKF is entitled to a preliminary injunction.

Accordingly, an order of preliminary injunction was entered by which appellants were enjoined, jointly and severally, until a final determination in the action,

"from making, advertising, offering for sale, delivering or selling dextroamphetamine sulfate, or any drug having similar therapeutic effects, in tablets having the combination of shape and color of plaintiff\'s product, or in any other shape and color so closely resembling the combination of shape and color of plaintiff\'s product as to be likely to enable druggists to palm off defendant\'s product as plaintiff\'s product; * * *."

Appellants were further ordered to obtain clearance from the court if they wished to market their product in a different shape and color, and they were enjoined from using the trade-mark Dexedrine. SKF was required to put up a $25,000 bond to secure appellants if they are subsequently found to have been "wrongfully enjoined". See Rule 65(c), Federal Rules of Civil Procedure, Title 28 U.S.C.A.

This appeal is from the preliminary injunction. See Title 28 U.S.C.A. § 1292.

Jurisdiction

In its complaint SKF alleges both infringement of a registered trade-mark and unfair competition. Title 15 U.S. C.A. § 1121 bestows upon the United States District Court original jurisdiction in civil suits for trade-mark infringement without regard to the amount in controversy or the lack of diversity of citizenship of the parties. And Title 28 U.S.C.A. § 1338(a) bestows jurisdiction on the District Court in civil cases affecting registered trade-marks. Thus, there can be no doubt that the suit for trade-mark infringement is properly before the District Court.

The suit for unfair competition is also properly before the District Court for several reasons, First, since there is an allegation of infringement of SKF's trade-mark Dexedrine before the District Court, Title 28 U.S.C.A. § 1338(b) gives the court jurisdiction to determine at the same time the substantial and related claim by SKF that appellants are guilty of unfair competition in copying the appearance and name of SKF's tablet. Furthermore, this court recently held in Stauffer v. Exley, 9 Cir., 1950, 184 F.2d 962, that the District Court has original jurisdiction over causes alleging unfair competition where the acts complained of affect interstate commerce even in the absence of diversity of citizenship of the parties and jurisdictional amount and where there is no substantial and related claim under the federal trade-mark laws. Citing 15 U.S.C.A. § 1126(b), (h) and (i).⁵

In any event, the District Court has jurisdiction under Title 28 U.S.C.A. § 1332. There is the required diversity of citizenship since SKF is a citizen⁶ of Pennsylvania and appellants are citizens of California. And the District Court's finding that the amount in controversy exceeds $3,000 is supported by the evidence that SKF had a substantial investment in Dexedrine and its peculiar shape-color-size combination by virtue of the $1,200,000 spent in advertising alone from May 1949 to September 1951.⁷

Limited Question Before Court of Appeal

The decision to grant or to refuse a preliminary injunction lies within the District Court's sound exercise of its discretion. In an appeal from the grant of a preliminary injunction, the question before this court is, did the District Court abuse its discretion in granting a preliminary injunction?⁸

The ruling on the motion for a preliminary injunction leaves open the final determination of the merits of the case. However, to the extent that the merits have been indicated by affidavit or testimony before the trial court, they must be considered in an appeal from the granting of a preliminary injunction since it is the rule in this circuit that the district court has not abused its discretion if "the possibility that the plaintiff may make out a case upon the merits" has been established. Northwestern Stevedoring Co. v. Marshall, 9 Cir., 1930, 41 F.2d 28, 29.

Trade-Mark⁹

Does SKF have a valid trade-mark in the name of Dexedrine? It is appellants' contention that the name Dexedrine became so identified with SKF's product during the period of the patent as to become the generic name of the product, and that upon the expiration of SKF's patent both the patent and its generic name...