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

• Decision Date: 15 April 1980
• Docket Number: No. 78 C 372.,78 C 372.
• Citation: 488 F. Supp. 394
• Parties: IVES LABORATORIES, INC., Plaintiff, v. DARBY DRUG CO., INC., Inwood Laboratories Incorporated, MD Pharmaceutical Company, Inc., Premo Pharmaceutical Company, Inc., Rugby Laboratories, Inc., and Sherry Laboratories Co., Inc., Defendants.
• Court: U.S. District Court — Eastern District of New York

488 F. Supp. 394

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

No. 78 C 372.

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

April 15, 1980.

Rogers, Hoge & Hills, New York City (Marie V. Driscoll, Charles J. Raubicheck, Egon E. Berg, Steven J. Baron, New York City, of counsel), for plaintiff.

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.

Bass, Ullman & Lustigman, New York City (Steven R. Trost, New York City, of counsel), for defendant Inwood.

MEMORANDUM AND ORDER

NICKERSON, District Judge.

Plaintiff Ives Laboratories, Inc. ("Ives"), which makes and sells the prescription drug cyclandelate under the registered trademark Cyclospasmol, brought this action seeking an injunction against defendants, manufacturers or wholesalers of generic cyclandelate. Ives claims violations of the Trademark Act of 1946, as amended, (the "Lanham Act"), 15 U.S.C. §§ 1051ff., and of New York statutory and common law. The court has jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1338.

On Ives' motion for a preliminary injunction this court temporarily enjoined defendant Sherry Pharmaceutical Co., Inc. ("Sherry") from using the name Spasmol, but otherwise denied Ives temporary relief, 455 F.Supp. 939 (D.C.N.Y.1978), and the Court of Appeals affirmed, 601 F.2d 631 (2d Cir. 1979). The case was then tried to the court. Familiarity with the prior opinions is assumed.

I

The drug cyclandelate, a white powder, is a peripheral vasodilator claimed to produce an increase in blood flow and thereby inhibit the progressive conditions caused by certain vascular diseases which tend to occur in the aged. Cyclandelate is therefore prescribed for a long period of time, generally for the rest of the patient's life. For some years Ives, its predecessors and its parent company American Home Products Corporation have sold the drug under the mark Cyclospasmol, and until the patent on cyclandelate expired in April 26, 1972, had the exclusive right to make and sell the drug in the United States. Ives has been marketing 200mg. dosages in a pale blue capsule imprinted "Ives 4124" since 1962, and 400mg. dosages in a red and blue capsule imprinted "Ives 4148" since 1975.

Because the drug may be dispensed only on prescription, Ives has directed its considerable advertising and promotion not to the general public but primarily to physicians. Some two hundred and thirty so-called "detail" men have made personal visits to doctors distributing numerous samples and various promotional materials. Advertising and promotional expenses have been in excess of $10,000,000. Ives' sales of the drug since 1962 have exceeded $106,000,000.

Of the defendants remaining in the case three are manufacturers, namely, Premo Pharmaceutical Laboratories, Inc. ("Premo"), Inwood Laboratories, Incorporated ("Inwood"), and MD Pharmaceutical Company, Inc. ("MD") (collectively "the manufacturers"). All three purchase cyclandelate powder and empty capsules and assemble the product for sale to wholesalers and hospitals. Inwood and MD also sell to retail pharmacies. Premo and Inwood sell 200mg. and 400mg. capsules in colors identical to those used by Ives. MD does the same with 200mg. capsules. Since the action was brought, Premo has imprinted the word Premo on its capsules and Inwood has imprinted "NDC 258" on its capsules. MD sells capsules bearing no imprint. Defendants Darby Drug Co., Inc. ("Darby"), Rugby Laboratories, Inc. ("Rugby"), and Sherry (collectively "the wholesalers") purchase capsules of the kind made by the manufacturers and sell them primarily to physicians and pharmacies.

All the defendants promote the generic product as "comparable" or "similar" or "equivalent" to Cyclospasmol, and in some catalogs refer to the color of the capsules. Defendants' cyclandelate contains the same active ingredient as Cyclospasmol, and Ives offered no proof at the trial that defendants' product had a therapeutic effect different from that of Cyclospasmol.

Sherry had offered the drug under the name Spasmol, but abandoned that name prior to the motion for a preliminary injunction. The remaining defendants do not sell under a brand name.

Ives sells to druggists and wholesalers in packages identifying its name and displaying the trademark Cyclospasmol. Pharmacists then dispense the capsules in smaller bottles with their own labels. In New York State the New York Drug Substitution Law spells out the pharmacist's duty. Section 6810(6) of the Education Law requires the prescription form to recite that it will be filled generically unless the doctor signs over the line stating "dispense as written". The other line which must appear on the form reads "substitution permissible". If the doctor signs over that line, Section 6816-a(1) requires the druggist to "substitute a less expensive drug" having the same active ingredients provided it appears on a list established under the New York Health Law. If the drug is not on the list, as cyclandelate is not, the druggist may but need not substitute the less expensive drug.

Unless the physician otherwise directs, the pharmacist must include on the label the strength of the drug and its brand name, if it has one, or, if it is sold under the generic name, that name and the name of the manufacturer. Thus, for example, if dispensing a 200mg. dosage of Ives' product the pharmacist should state on the label, "Cyclospasmol 200mg.", or, if dispensing Premo's product, "Cyclandelate 200mg. Premo".

Ives' chief objective in this action is to prohibit defendants from marketing cyclandelate in capsules of the same blue and blue and red colors as Ives uses.

II

There is no reason why the temporary injunction against Sherry prohibiting use of the name "Spasmol" should not be made permanent.

III

Ives' claim that defendants are guilty of contributory infringement under Section 32 of the Lanham Act, 15 U.S.C. § 1114, was not proven. The court finds that defendants did not suggest, even by implication, that pharmacists fill bottles with the generic drug cyclandelate and apply the trademark Cyclospasmol. Nor did Ives show that defendants continued to sell the generic drug to pharmacists who defendants knew or had reason to know were engaging in such a practice. 601 F.2d at 636.

Defendants do not "detail" their products by making personal visits to pharmacists, and defendants' names appear on their packages of cyclandelate capsules. Therefore any suggestion by defendants that pharmacists mislabel must be found in defendants' catalogs and promotional materials. These materials cannot fairly be read as suggesting to druggists that they affix Ives' mark to bottles containing defendants' capsules.

Moreover, such incidents of mislabeling as were proven were not shown to have been induced by defendants. There was no proof of illegal substitution accompanied by mislabeling beyond the few instances referred to on the motion for a preliminary injunction. Ives did offer evidence at trial of a few instances of legal substitution where the word Cyclospasmol was improperly used on the label. Some Ives test shoppers gave a prescription for Cyclospasmol signed on the line over "substitution permissible" to forty-two pharmacists in New York selected from a list supplied by Ives and forty-one from a list of drug stores in Hayes Directory. Of the forty-two on the Ives list twenty-four dispensed Cyclospasmol, and eighteen dispensed the generic product. Six of those eighteen included the word Cyclospasmol on the label. Of the forty-one on the Hayes Directory list twenty-four dispensed Cyclospasmol and seventeen dispensed the generic product. Four of those seventeen included the word Cyclospasmol on the label.

Of the total of ten pharmacists who dispensed generic cyclandelate and also used the word Cyclospasmol on the label, four used the term "generic Cyclospasmol" or "Cyclospasmol generic" and one the term "Cyclospasmol Gen." Nine of the ten informed the person buying the capsules that the generic product had been dispensed. Only one appears to have charged a higher "brand" price. This evidence hardly justifies an inference that defendants' catalogs impliedly invited druggists to mislabel.

To the extent the druggists who were test shopped by Ives mislabeled they appear not deliberately to have been attempting to pass off the generic product as Cyclospasmol but rather to have misunderstood the precise requirements of the New York Drug Substitution Law. Indeed, the misunderstanding of the law is confirmed by the numerous instances in which pharmacists dispensed Cyclospasmol and, although a generic substitution was permitted by the prescription, erroneously stated to the person presenting the prescription that New York law prohibited them from filling it with a generic product.

In accordance with the direction of the Court of Appeals this court has considered whether Ives should have limited relief of the sort mentioned in William R. Warner & Co. v. Eli Lilly & Co., 265 U.S. 526, 532-33, 44 S.Ct. 615, 618, 68 L.Ed. 1161 (1924). The court has concluded that it would not be useful to require defendants to recite on their packages that the product is not to be dispensed as Cyclospasmol. Defendants' packages do not represent that they contain Cyclospasmol, and the evidence shows that druggists are well aware of the difference between the brand and the generic product. As noted above, any mislabeling stemmed from doubt as to the requirements of the generic drug law, not from inducement by defendants. Statements on defendants' packages are hardly likely to deter those isolated instances...