Ives Laboratories, Inc. v. Darby Drug Co., Inc., 78 C 372.

• Decision Date: 02 August 1978
• Docket Number: No. 78 C 372.,78 C 372.
• Parties: IVES LABORATORIES, INC., Plaintiff, v. DARBY DRUG CO., INC., Inwood Laboratories Incorporated, Lowitt Laboratories, Inc., MD Pharmaceutical Company, Inc., Premo Laboratories, Inc., Rugby Laboratories, Inc., and Sherry Pharmaceutical Co., Inc., Defendants.
• Court: U.S. District Court — Eastern District of New York

455 F. Supp. 939

IVES LABORATORIES, INC., Plaintiff, v. DARBY DRUG CO., INC., Inwood Laboratories Incorporated, Lowitt Laboratories, Inc., MD Pharmaceutical Company, Inc., Premo Laboratories, Inc., Rugby Laboratories, Inc., and Sherry Pharmaceutical Co., Inc., Defendants.

No. 78 C 372.

United States District Court, E. D. New York.

August 2, 1978.

COPYRIGHT MATERIAL OMITTED

Egon E. Berg, New York City, and Rogers, Hoge & Hills, New York City, for plaintiff; Vito V. Bellino, Mortimer Altin, Steven J. Baron, William F. Weigel, Marie Driscoll, Charles J. Raubicheck, of counsel.

Salon, Bloustein & Raybin, New York City (Robert V. Marrow, New York City, of counsel), for defendants Darby, Rugby, Sherry, & MD.

Kirschstein, Kirschstein, Ottinger & Cobrin, P. C., New York City (Peter T. Cobrin, New York City, of counsel), for defendant Premo Pharmaceutical.

Bass, Ullman & Lustigman, New York City (Sheldon S. Lustigman, New York City, of counsel), for defendant Inwood Laboratories.

OPINION

NICKERSON, District Judge.

Plaintiff Ives Laboratories, Inc. ("Ives"), which manufactures and sells under the registered trademark "Cyclospasmol" a prescription drug of the generic name of "cyclandelate", brought this suit against defendants under the Trademark Act of 1946, as amended, (known as the "Lanham Act"), 15 U.S.C. §§ 1051ff., for trademark infringement and false designation of the origin of, and false description of, goods in commerce, and under New York common and statutory law for unfair competition. Plaintiff moves for an order preliminarily enjoining defendants from (1) using the trademark "Cyclospasmol" or any word confusingly similar including "Spasmol", (2) manufacturing and selling generic cyclandelate in capsules which are blue, red or a combination of blue and red, and (3) continuing other alleged acts of unfair competition.

I

Since 1958 plaintiff Ives, a New York corporation, and its predecessors and parent company American Home Products Corporation have sold cyclandelate under the registered trademark "Cyclospasmol". The drug is a so-called peripheral vasodilator said to produce an increase in blood flow and is administered not to cure but to inhibit the progressive and debilitating conditions caused by certain vascular diseases, generally in the aged. Its use is therefore long term, for most patients a lifetime.

Before the expiry date on April 26, 1972 of a patent protecting cyclandelate plaintiff or its predecessors had the exclusive right to sell the drug in the United States. Commencing in 1962 plaintiff has marketed dosages of 200mg. in a pale blue capsule having an imprint reading "Ives 4124". Since 1975 plaintiff has sold 400mg. dosages in a red and blue capsule with the imprint "Ives 4148". Plaintiff has directed its extensive advertising and promotion of "Cyclospasmol" primarily to physicians. In addition, on personal visits to doctors plaintiff's representatives have distributed more than two million "starter" samples. Some one hundred and twenty five million of the 200mg. and 400mg. capsules have been sold since 1962. Over the past ten years such sales have exceeded $65,000,000.

Defendants are three drug manufacturers, three wholesalers, and one retail pharmacy. The three manufacturers, Premo Pharmaceutical Company, Inc. ("Premo"), Inwood Laboratories, Incorporated ("Inwood"), and MD Pharmaceutical Company, Inc. ("MD"), purchase cyclandelate powder and empty capsules and fill and sell them as generic cyclandelate to wholesalers, hospitals, retail pharmacies and others.

Premo and Inwood, both New York corporations, and MD, a California corporation, distribute 200mg. capsules of a pale blue color identical or very similar to that used by plaintiff. Premo and Inwood also distribute 400mg. capsules identical or very similar in colors to plaintiff's 400mg. capsules. Until recently none of the capsules distributed by the manufacturers bore any name or other identification. On June 26, 1978 Premo filed an affidavit stating that it in the future would imprint "Premo" on its capsules and had discontinued using unmarked capsules.

The three wholesalers, Darby Drug Co., Inc. ("Darby"), Rugby Laboratories, Inc. ("Rugby"), and Sherry Pharmaceutical Co., Inc. ("Sherry") all New York corporations, are now under common ownership and management. They purchase generic cyclandelate capsules and resell them to wholesalers, doctors, pharmacies and others.

The manufacturers and the wholesalers promote the generic product as "comparable" or "similar" or "equivalent" to "Cyclospasmol". In some catalogs they refer to the color of the capsules. For purposes of the motion it is conceded that the cyclandelate sold by defendants has the same bioavailability as "Cyclospasmol" and that the two are bioequivalent, meaning that the therapeutic ingredients in both have an equivalent effect.

Recently Sherry, which had offered the drug under the name "Spasmol", abandoned that name. The other defendants have not sold under a brand name.

Defendant Lowitt Labs Inc. ("Lowitt"), a New York corporation, is a retail pharmacy. The complaint alleges that on receiving a prescription for "Cyclospasmol" Lowitt substituted generic cyclandelate and labelled the prescription bottle "Cyclospasmol". On consent the court entered a decree enjoining Lowitt from substituting cyclandelate from another source as plaintiff's "Cyclospasmol" and from using that trademark or one so similar as to be likely to cause confusion. The claim against Lowitt is thus not at issue, and the remaining defendants will be called "the defendants".

II

Plaintiff makes various contentions under both federal and New York State law. Plaintiff's first claim is under Section 32 of the Lanham Act, 15 U.S.C. § 1114(1)(a), which imposes liability for the use of a copy or colorable imitation of a registered mark in selling, distributing or advertising of goods where the use is likely to deceive or cause confusion or mistake. Plaintiff asserts two kinds of violation of this section: (1) that Sherry infringed the "Cyclospasmol" mark by using the name "Spasmol" and (2) that the defendants have been guilty of "contributory infringement" of the "Cyclospasmol" mark. The latter claim is based on the assertion that defendants have induced pharmacies such as Lowitt to label containers of generic cyclandelate as "Cyclospasmol".

Plaintiff further contends that defendants are violating Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), by adopting the colors used by plaintiff and by promoting their products as comparable or equivalent, thus making "a false designation of origin" and a "false description or representation" as to the goods.

Finally plaintiff claims that by duplicating the appearance of plaintiff's capsules thus "placing an instrument of fraud" into the hands of retail pharmacists, defendants are guilty of unfair competition under New York common and statutory law.

III

This court has jurisdiction of the Lanham Act claims under 28 U.S.C. § 1338(a) and, since more than $10,000 is in controversy, under 28 U.S.C. § 1331(a). Those claims are sufficiently substantial to give the court jurisdiction under 28 U.S.C. § 1338(b) of the related unfair competition claims. As to MD the court also has jurisdiction under 28 U.S.C. § 1332, there being diversity of citizenship. MD has made a motion, now returnable September 1, 1978, to dismiss for lack of personal jurisdiction.

IV

The criteria for issuance of a preliminary injunction have been stated by the Court of Appeals for the Second Circuit: a clear showing by plaintiff of possible irreparable injury and either (1) probable success on the merits or (2) sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly toward the plaintiff. Selchow & Righter Company v. McGraw-Hill Book Company, 580 F.2d 25, at p. 27 (1978).

Defendants contend that, even if these criteria are met, a preliminary injunction should not issue because of the delay in bringing the action. Plaintiff, which by the summer of 1976 knew of the existence, but perhaps not the extent and manner, of some of the defendants' sales, did not file the motion until March 20, 1978.

Certainly as to Sherry's alleged infringement of "Cyclospasmol" by using "Spasmol" laches should not bar relief. Sherry has discontinued the name, and delay in seeking to prohibit its use has caused no harm. As to the other claims it is in the interest of the litigants and the public to decide the motion on grounds addressing the merits.

For the reasons stated in this opinion the court holds that, except for the claim of trademark infringement against Sherry, plaintiff has not made the showing prerequisite to issuance of a preliminary injunction.

V

Since Sherry has discontinued the use of the name "Spasmol" the claim that it infringes "Cyclospasmol" is now of diminished significance. Sherry suggests, but does not press the point, that "Cyclospasmol" is not a valid trademark because merely descriptive of the functions of the medication. But at least in the absence of a contrary showing the court may presume a registered trademark to be valid. 15 U.S.C. § 1057(b). Maternally Yours, Inc. v. Your Maternity Shop, Inc., 234 F.2d 538, 542 (2d Cir. 1956).

Sherry also claims that the discontinuation of the name makes the matter moot. In 1977 Darby acquired Sherry and with it an inventory of cyclandelate which Sherry had been selling as "Spasmol". Assertedly that inventory has now been disposed of, orders have been and are being filled with cyclandelate sold under the Rugby name, and the name Spasmol has been deleted from the new Sherry catalog.

Even assuming what is stated, plaintiff is not bound to rely on Sherry's assurances. Consumers Union of United States, Inc. v. Admiral Corporation, 186 F.Supp. 800, 801 (S.D.N.Y.1960); Mercury Record Corp. v. Buckingham Record Co., 226 F.Supp. 427, 429 (S.D.N.Y.1963). Plaint...