456 U.S. 844 (1982), 80-2182, Inwood Laboratories, Inc. v. Ives Laboratories, Inc.

Docket Nº:No. 80-2182
Citation:456 U.S. 844, 102 S.Ct. 2182, 72 L.Ed.2d 606
Party Name:Inwood Laboratories, Inc. v. Ives Laboratories, Inc.
Case Date:June 01, 1982
Court:United States Supreme Court

Page 844

456 U.S. 844 (1982)

102 S.Ct. 2182, 72 L.Ed.2d 606

Inwood Laboratories, Inc.


Ives Laboratories, Inc.

No. 80-2182

United States Supreme Court

June 1, 1982

Argued February 22, 1982




Respondent manufactured and marketed the patented prescription drug cyclandelate to wholesalers, retail pharmacists, and hospitals in colored capsules under the registered trademark CYCLOSPASMOL. After respondent's patent expired, several generic drug manufacturers, including petitioner [102 S.Ct. 2184] manufacturers, began marketing the drug, intentionally copying the appearance of the CYCLOSPASMOL capsules. Respondent then brought an action against petitioner manufacturers and wholesalers in Federal District Court under, inter alia, § 32 of the Trademark Act of 1946, alleging that some pharmacists had dispensed generic drugs mislabeled as CYCLOSPASMOL and that petitioners' use of look-alike capsules and catalog entries comparing prices and revealing the colors of generic capsules contributed to the pharmacists' mislabeling. Respondent sought injunctive relief and damages. The District Court entered judgment for petitioners, finding that, although the pharmacists had violated § 32, respondent had not made the necessary factual showing that petitioners had intentionally induced the pharmacists to mislabel generic drugs or continued to supply cyclandelate to pharmacists who the petitioners knew or should have known were mislabeling generic drugs. The Court of Appeals reversed, rejecting the District Court's findings and holding that the District Court failed to give sufficient weight to the evidence respondent offered to show a pattern of illegal substitution and mislabeling. After completing its own review of the evidence, the Court of Appeals further held that the evidence was "clearly sufficient to establish a § 32 violation."

Held: The Court of Appeals erred in setting aside the District Court's findings of fact. Pp. 853-858.

(a) In reviewing such findings, the Court of Appeals was bound by the "clearly erroneous" standard of Federal Rule of Civil Procedure 52(a). P. 855.

(b) By rejecting the findings simply because it would have given more weight to evidence of mislabeling than did the trial court, the Court of

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Appeals clearly erred. Determining the weight and credibility of the evidence is the special province of the trier of fact. Because the District Court's findings concerning the significance of the instances of mislabeling were not clearly erroneous, they should not have been disturbed. Pp. 855-856.

(c) Moreover, each of the conclusions that the Court of Appeals made in holding that the evidence established a § 32 violation was contrary to the District Court's findings. An appellate court cannot substitute its interpretation of the evidence for that of the trial court simply because the reviewing court

might give the facts another construction, resolve the ambiguities differently, and find a more sinister cast to actions which the District Court apparently deemed innocent.

United States v. Real Estate Boards, 339 U.S. 485, 495. Pp. 856-85.

638 F.2d 538, reversed and remanded.

O'CONNOR, J., delivered the opinion of the Court, in which BURGER, C.J., and BRENNAN, BLACKMUN, POWELL, and STEVENS, JJ., joined. WHITE, J., filed an opinion concurring in the result, in which MARSHALL, J., joined, post, p. 859. REHNQUIST, J., filed an opinion concurring in the result, post, p. 864.

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O'CONNOR, J., lead opinion

JUSTICE O'CONNOR delivered the opinion of the Court.

This action requires us to consider the circumstances under which a manufacturer of a generic drug, designed to duplicate the appearance of a similar drug marketed by a competitor under a registered trademark, can be held vicariously liable for infringement of that trademark by pharmacists who dispense the generic drug.


In 1955, respondent Ives Laboratories, Inc. (Ives), received a patent on the drug cyclandelate, a vasodilator used in long-term therapy for peripheral and cerebral vascular diseases. Until its patent expired in 1972, Ives retained the exclusive right to make and sell the drug, which it did under the registered trademark CYCLOSPASMOL.1 Ives marketed the drug, a white [102 S.Ct. 2185] powder, to wholesalers, retail pharmacists, and hospitals in colored gelatin capsules. Ives arbitrarily selected

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a blue capsule, imprinted with "Ives 4124," for its 200 mg dosage and a combination blue-red capsule, imprinted with "Ives 4148," for its 400 mg dosage.

After Ives' patent expired, several generic drug manufacturers, including petitioners Premo Pharmaceutical Laboratories, Inc., Inwood Laboratories, Inc., and MD Pharmaceutical Co., Inc. (collectively the generic manufacturers), began marketing cyclandelate.2 They intentionally copied the appearance of the CYCLOSPASMOL capsules, selling cyclandelate in 200 mg and 400 mg capsules in colors identical to those selected by Ives.3

The marketing methods used by Ives reflect normal industry practice. Because cyclandelate can be obtained only by prescription, Ives does not direct its advertising to the ultimate consumer. Instead, Ives' representatives pay personal visits to physicians, to whom they distribute product literature and "starter samples." Ives initially directed these efforts toward convincing physicians that CYCLOSPASMOL is superior to other vasodilators. Now that its patent has expired and generic manufacturers have entered the market, Ives concentrates on convincing physicians to indicate on prescriptions that a generic drug cannot be substituted for CYCLOSPASMOL.4

The generic manufacturers also follow a normal industry practice by promoting their products primarily by distribution

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of catalogs to wholesalers, hospitals, and retail pharmacies, rather than by contacting physicians directly. The catalogs truthfully describe generic cyclandelate as "equivalent" or "comparable" to CYCLOSPASMOL.5 In addition, some of the catalogs include price comparisons of the generic drug and CYCLOSPASMOL, and some refer to the color of the generic capsules. The generic products reach wholesalers, hospitals, and pharmacists in bulk containers which correctly indicate the manufacturer of the product contained therein. A pharmacist, regardless of whether he is dispensing CYCLOSPASMOL or a generic [102 S.Ct. 2186] drug, removes the capsules from the container in which he receives them and dispenses them to the consumer in the pharmacist's own bottle with his

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own label attached. Hence, the final consumer sees no identifying marks other than those on the capsules themselves.



Ives instituted this action in the United States District Court for the Eastern District of New York under §§ 32 and 43(a) of the Trademark Act of 1946 (Lanham Act), 60 Stat. 427, as amended, 15 U.S.C. § 1051 et seq., and under New York's unfair competition law, N.Y.Gen.Bus.Law § 368-d (McKinney 1968).6

Ives' claim under § 32, 60 Stat. 437, as amended, 15 U.S.C. § 1114,7 derived from its allegation that some pharmacists had dispensed generic drugs mislabeled as CYCLOSPASMOL.8

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Ives contended that the generic manufacturers' use of look-alike capsules and of catalog entries comparing prices and revealing the colors of the generic capsules induced pharmacists illegally to substitute a generic drug for CYCLOSPASMOL and to mislabel the substitute drug CYCLOSPASMOL. Although Ives did not allege that the petitioners themselves applied the Ives trademark to the drug products they produced and distributed, it did allege that the petitioners contributed to the infringing activities of pharmacists who mislabeled generic cyclandelate.

Ives' claim under § 43(a), 60 Stat. 441, 15 U.S.C. § 1125(a),9 alleged that the petitioners falsely designated the origin of their products by copying the capsule colors used by Ives and by promoting the generic products as equivalent to CYCLOSPASMOL. In support of its claim, Ives argued that the colors of its capsules were not functional, [102 S.Ct. 2187]10 and that

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they had developed a secondary meaning for the consumers.11 Contending that pharmacists would continue to mislabel generic drugs as CYCLOSPASMOL so long as imitative products were available, Ives asked that the court enjoin the petitioners from marketing cyclandelate capsules in the same colors and form as Ives uses for CYCLOSPASMOL. In addition, Ives sought damages pursuant to § 35 of the Lanham Act, 60 Stat. 439, as amended, 15 U.S.C. § 1117.


The District Court denied Ives' request for an order preliminarily enjoining the petitioners from selling generic drugs identical in appearance to those produced by Ives. 455 F.Supp. 939 (1978). Referring to the claim based upon § 32, the District Court stated that, while the "knowing and deliberate instigation" by the petitioners of mislabeling by pharmacists would justify holding the petitioners as well as the pharmacists liable for trademark infringement, Ives had made no showing sufficiently to justify preliminary relief. Id. at 945. Ives had not established that the petitioners conspired with the pharmacists or suggested that they disregard physicians' prescriptions.

The Court of Appeals for the Second Circuit affirmed. 601 F.2d 631 (1979). To assist the District Court in the upcoming trial on the merits, the appellate court defined the elements of a claim based upon § 32 in some detail. Relying primarily upon Coca-Cola Co. v. Snow Crest Beverage, Inc., 64 F.Supp. 980 (Mass.1946), aff'd, 162 F.2d 280 (CA1), cert. denied, 332 U.S. 809 (1947), the court stated that the petitioners would be liable under § 32 either if they suggested, even by implication, that retailers fill bottles with generic cyclandelate and label the bottle with Ives' trademark, or if

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the petitioners continued to...

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