Ciba-Geigy Corp. v. Bolar Pharmaceutical Co., Inc.
| Decision Date | 11 August 1982 |
| Docket Number | Civ. A. No. 82-788. |
| Citation | 547 F. Supp. 1095 |
| Parties | CIBA-GEIGY CORPORATION, Plaintiff, v. BOLAR PHARMACEUTICAL CO., INC., Defendant. |
| Court | U.S. District Court — District of New Jersey |
COPYRIGHT MATERIAL OMITTED
Pitney, Hardin, Kipp & Szuch by Frederick L. Whitmer, Morristown, N. J., Kaye, Scholer, Fierman, Hays & Handler by Randolph S. Sherman, New York City, for plaintiff.
Bendit, Weinstock & Sharbaugh by James F. Keegan, West Orange, N. J., Fitch, Even, Tabin, Flannery & Welsh by Robert B. Jones, Chicago, Ill., for defendant.
Although the battle over "look-alike" drugs raises difficult legal issues, the realities of these repeated skirmishes should not be ignored. The brand name companies have spent years and substantial monies in developing and promoting their product. They not only create the drug but establish a market for it. By virtue of their advertising campaigns, doctors become aware of the drug and its benefits and are encouraged to prescribe it.
The generic "look-alike" drug enters the marketplace with a substantial advantage. The predecessor manufacturer has performed the necessary research and development and has created the market. Therefore, the generic drug can be produced and sold at a much lower cost. The "look-alike" drug becomes more saleable, because it makes it easier for both the doctor and pharmacist to substitute the generic drug. A patient who has utilized the brand name drug over a period of time may accept the generic drug more readily if it looks the same as the brand name. The patient may resist such substitution, if it does not. Most often that anxiety can be dispelled by a simple explanation by the physician or pharmacist regarding the substitution of a generic drug with a different appearance.
On the other hand, the brand name manufacturer contends that the identity of appearance facilitates negligent and intentional substitution without authorization from either the doctor or the patient. To permit the generic drug to copy the appearance of the brand name product increases sales by the generic manufacturer and erodes those of the brand name manufacturer. Although both seek to rest their cause on the public good, it is profit and the desire to earn it which is at the core of this dispute. The generic manufacturer wishes to benefit from the efforts and expense of the brand name manufacturer. The latter wishes to prevent and prohibit such intrusion and retain the benefits for itself.
With this general introduction the court will consider the specific factual and legal issues presented by this matter.
Plaintiff CIBA-GEIGY Corporation ("CIBA-GEIGY") commenced this action on March 12, 1982, alleging that defendant Bolar Pharmaceutical Co., Inc. ("Bolar") had violated both the federal and state law of unfair competition by intentionally duplicating the physical appearance (i.e., trade dress) of CIBA-GEIGY's brand name prescription drug APRESAZIDE.® On March 17, 1982, following notice to Bolar, the defendant was temporarily restrained from selling its generic versions of the products in suit in trade dress confusingly similar to that of CIBA-GEIGY's APRESAZIDE products and Bolar was ordered to show cause on March 22, 1982, why such conduct should not be preliminarily enjoined.
Bolar then moved to dismiss the complaint for lack of personal jurisdiction and improper venue. On March 22, 1982, in order to permit development of the jurisdictional facts relative to Bolar's New Jersey contacts and to enable both parties to conduct discovery attendant to CIBA-GEIGY's preliminary injunction motion, the court adjourned the hearing until April 22, 1982 and, with Bolar's consent, continued the temporary restraining order until that date. On April 21, 1982, Bolar advised the court that it was withdrawing its motions.1
Evidence with respect to the preliminary injunction motion was taken on April 22, May 12 and June 15, 1982.2 CIBA-GEIGY called three witnesses as part of its affirmative case and two rebuttal witnesses; in addition, plaintiff introduced numerous exhibits into evidence, including designated portions of two depositions. Bolar called three witnesses as part of its defense and introduced numerous exhibits into evidence. As to all exhibits accepted into evidence, the court reserved ruling on relevancy objections pending review of the parties' posthearing submissions, and repeatedly observed that its determination would be based only upon relevant and material evidence.3
The temporary restraining order was continued through the May 12 hearing upon Bolar's consent. Thereafter, upon good cause shown, the court continued the order over Bolar's objection.
The following findings of fact and conclusions of law are based upon a careful review of the entire record, an appraisal of the witnesses' credibility and demeanor and the reasonable inferences to be drawn therefrom, and the proposed findings of fact and conclusions of law submitted by both parties.
CIBA-GEIGY, a New York corporation with a principal place of business in Summit, New Jersey, is engaged, among other things, in the research, development, manufacture and sale of prescription pharmaceutical products, and in particular the research and development of new prescription drugs for the treatment of hypertension (commonly referred to as high blood pressure). CIBA-GEIGY devoted a significant portion of its annual research and development budget to research specifically directed at the treatment of hypertension.
CIBA-GEIGY markets brand name pharmaceutical products through two separate divisions, the CIBA Pharmaceutical Company and GEIGY Pharmaceuticals, each having responsibility for the marketing and sale of its own product line. The CIBA Pharmaceutical Company currently markets approximately forty-one prescription pharmaceuticals, ten of which are prescribed for the treatment of hypertension (i.e., anti-hypertensives). The promotion of these products is carried on throughout the United States through a network of some 400 CIBA sales representatives, thirty eight district sales managers, and six regional sales managers. The sales representatives, also known as detail men, personally call upon physicians, retail pharmacists and hospital pharmacies to promote the CIBA line of products through the use of written brochures, reminder or "leave" items (such as pens, rulers and scratch pads) and free drug samples. CIBA-GEIGY does not generally advertise its prescription products directly to the consumer.
Bolar, a New York corporation with its principal place of business in Copiague, New York, is what is known in the pharmaceutical industry as a generic drug manufacturer; that is, it makes and markets under generic names, prescription pharmaceuticals which duplicate the active ingredients of products already researched, developed and sold under brand name by companies such as CIBA-GEIGY. Because their research, development and clinical expenses are generally much less than those of brand name companies, generic drug manufacturers are usually able to sell their products at prices lower than their brand name counter-parts.4
Bolar markets its generic pharmaceuticals directly to approximately 400 active customers throughout the United States. These customers are comprised of private label distributors, drug wholesalers and distributors, and federal government agencies. Bolar does not sell its products directly to retail pharmacies; rather, pharmacies purchase Bolar's products through drug whole-salers and distributors which, in turn, buy directly from Bolar. Nor does Bolar promote its generic products directly to physicians and pharmacists, as does CIBA-GEIGY. It is primarily the promotional effort by brand name companies which creates the demand for new prescription drugs.
In 1959, CIBA-GEIGY, with the approval of the Food and Drug Administration ("FDA"), began manufacturing and selling a combination prescription drug under the registered trademark APRESOLINE-ESIDRIX for the treatment of hypertension. CIBA-GEIGY's APRESOLINE-ESIDRIX product, which it makes and markets in orange, dry-coated tablets, contains two active ingredients: hydralazine hydrochloride and hydrochlorothiazide, in a fixed ratio of 25 mg. to 15 mg. per tablet.
Two factors often responsible for hypertension are vasoconstriction (i.e., constriction of the blood vessels) and excessive fluid volume. Hydrochlorothiazide is a diuretic which reduces excess sodium and fluid volume. However, because hydrochlorothiazide basically treats only the excessive fluid problem, it often proves therapeutically inadequate once hypertension has progressed beyond its milder forms. Hydralazine hydrochloride is a vasodilator which treats vasoconstriction by directly relaxing and dilating arterioles, thereby decreasing peripheral resistance. By combining hydralazine hydrochloride and hydrochlorothiazide, both factors can be treated in a single product. In obtaining FDA approval to market its APRESOLINE-ESIDRIX product, CIBA-GEIGY became the first drug manufacturer to establish the safety and efficacy of a fixed combination of hydralazine hydrochloride and hydrochlorothiazide for the treatment of hypertension. Subsequent to CIBA-GEIGY's introduction of its APRESOLINE-ESIDRIX product, other drug companies, including Bolar, began selling a combination of 25 mg. of hydralazine hydrochloride and 15 mg. of hydrochlorothiazide in tablet form.
In 1974, faced with the possible market withdrawal or decreased sales of its leading anti-hypertensive product SER-AP-Es, due to an alleged link between one of its active ingredients, reserpine, and breast cancer, CIBA-GEIGY determined that hydralazine hydrochloride, alone and in combination with hydrochlorothiazide, offered the company "the greatest promotional opportunity in a non-reserpine antihypertensive...
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