Opinion ID: 1483138
Heading Depth: 1
Heading Rank: 1

Heading: The Unfair Competition Cases

Text: The court below found Clark and Laboratories guilty of unfair competition and enjoined them perpetually from selling or otherwise dealing in amphetamine salts. It found that SKF had committed no acts of unfair competition against the defendants. Its conclusions on the latter point are so clear as not to require discussion herein. That portion of the decree dealing with the defendants' unfair practices requires some modification. SKF charged the defendants with manufacturing amphetamine sulphate tablets which so closely resembled SKF's tablets that they might be substituted for the latter by unscrupulous druggists; that the defendants deliberately embarked on the course of inducing druggists to substitute the defendants' tablets for those of SKF and were successful in this endeavor. Clark and Laboratories assert that the evidence demonstrates conclusively that only about 25% of their tablets had close resemblance to those of SKF. The accused tablets include a large number of 10 milligram double-scored tablets and a much smaller number of 5 milligram single-scored round white tablets. The defendants' double-scored 10 milligram tablets have concave bottoms and beveled edges. SKF's 10 milligram tablets also possess beveled edges and a lesser degree of concavity. The accused tablets can be distinguished from the SKF product but to do so requires a sharp eye and close examination. It must be conceded, however, that most tablets of 5 and 10 milligram size, whether made by SKF, the defendants or by other manufacturers, whether containing amphetamine sulphate or other drugs, look alike. It is common knowledge, moreover, that pharmacists do not ordinarily fill prescriptions by making close and individual examination of each tablet that goes to fill a prescription. The druggist takes tablets from carefully labeled bottles and makes certain that his supplies are not mixed. The single or double scoring of SKF's tablets is functional in order to facilitate the taking of a lesser dosage of a potent drug. The double-scored tablet may be broken into halves or quarters with much greater ease than would be the case if the scorings were absent. The beveled edges, the concavities of the bottoms of the tablets, and indeed the very shape of the tablets, are also functional. Beveled edges prevent crumbling; the concavity of bottoms aids breakage into lesser doses; roundness gives economy of manufacture. We do not state of course that all tablets are round. As a matter of fact there are tablets in evidence which are rectangular or nearly square in shape. Tablets frequently are colored, as for example are some of the defendants' Profetamine sulphate and Clark-o-Tabs, but the natural color of a tablet is white since the inactive ingredient which composes most of its bulk is sugar-milk. The whiteness of tablets therefore is functional. SKF did not stamp its initials on its tablets nor did the defendants put any distinguishing initials on theirs. [15] SKF seems to argue, and the court below found, that the accused tablets were intended to resemble and did resemble SKF's product so closely that substitution by the druggist or by the retailer was practicable. Even if the accused tablets had been exact copies of SKF's tablets, the so-called distinctive features of SKF's tablets upon which it relies would none the less be functional. It follows that SKF's contention that the defendants, in copying the features of its tablets were guilty of unfair trade practice, must fall before the decision of the Supreme Court in Warner & Co. v. Lilly & Co., 265 U.S. 526, 528-531, 44 S.Ct. 615, 68 L.Ed. 1161. In the cited case the defendant copied the plaintiff's chocolate-quinine preparation so exactly that it was in distinguishable from that of the plaintiff. The Supreme Court by Mr. Justice Sutherland said: Respondent has no exclusive right to the use of its formula. Chocolate is used as an ingredient, not alone for the purpose of imparting a distinctive color, but for the purpose of also making the preparation peculiarly agreeable to the palate, to say nothing of its effect as a suspending medium. While it is not a medicinal element in the preparation, it serves a substantial and desirable use, which prevents it from being a mere matter of dress. It does not merely serve the incidental use of identifying the respondent's preparation,   , and it is doubtful whether it should be called a nonessential. The petitioner or anyone else is at liberty under the law to manufacture and market an exactly similar preparation containing chocolate and to notify the public that it is being done. In the case at bar, the patent aside, SKF has no exclusive right to sell amphetamine sulphate and it may not preempt the market in that drug. It follows therefore, the patent aside, that SKF may not prevent the defendants from selling amphetamine sulphate tablets possessing the functional features referred to. The vice of the defendants' position lies elsewhere. To paraphrase the words of Mr. Justice Sutherland in the Lilly case, 265 U.S. 526 at page 530, 44 S.Ct. 615, 617, 68 L.Ed. 1161, the defendants sought to avail themselves of the favorable reputation which SKF had established for its amphetamine sulphate tablets. It is a fair inference from the evidence that at least some of the defendants' salesmen suggested that prescriptions for SKF's Benzedrine [16] sulphate, widely known and advertised as its brand of amphetamine sulphate, might be filled without danger of detection by the defendants' brand of amphetamine sulphate, Profetamine. The feasibility of substituting Profetamine sulphate for Benzedrine sulphate was brought to the mind of the druggist by the defendants' salesman pointing out the identity of the two preparations and the enhanced profit to be made by selling the former in lieu of the latter. For an analogy see the Lilly decision. This type of palming off was clearly a most important factor in the District Judge's decision that the defendants had been guilty of unfair competition. There were other unfair practices which need not be gone into. One of the most typical of them was the statement which Charles L. Morris, the moving force of the defendants' business made to the trade that Clark was the sole purveyor of amphetamine sulphate. This misstatement alone was sufficient to destroy Morris' credibility. None the less the decree of the court below goes too far in the light of the Lilly case. SKF will have no exclusive right to make and sell amphetamine sulphate when the monopoly of Alles' patent expires. Clark or Laboratories or anyone else will then be free to manufacture and market amphetamine sulphate in tablets resembling those of SKF and to notify the public that they are doing so. This does not mean, however, that when the patent has expired the defendants may palm off their amphetamine sulphate tablets as those of SKF. SKF is entitled to the reputation which its goods have acquired and the public is entitled to a means of distinguishing between SKF's tablets and those of the defendants'. The unfair competition consists in the unfair and fraudulent advantage taken by the defendants, as in the Lilly case, to pass off their product as that of SKF. As was said in the Lilly case, The use disassociated from the fraud is entirely lawful, and it is against the fraud which the injunction lies.