Document: 456 U.S. 844 102 S.Ct. 2182 72 L.Ed.2d 606 INWOOD LABORATORIES, INC., et al.,v.IVES INC. DARBY DRUG CO., al. v. IVES Nos. 80-2182, 81-11. Argued Feb. 22, 1982. Decided June 1, Syllabus Respondent manufactured and marketed the patented prescription drug cyclandelate to wholesalers, retail pharmacists, hospitals in colored capsules under registered trademark CYCLOSPASMOL. After respondent's patent expired, several generic manufacturers, including petitioner began marketing drug, intentionally copying appearance of CYCLOSPASMOL capsules. then brought an action against manufacturers wholesalers Federal District Court under, inter alia, § 32 Trademark Act 1946, alleging that some pharmacists had dispensed drugs mislabeled as petitioners' use look-alike catalog entries comparing prices revealing colors contributed pharmacists' mislabeling. sought injunctive relief damages. The entered judgment for petitioners, finding although violated 32, respondent not made necessary factual showing petitioners induced mislabel or continued supply who knew should have known were mislabeling drugs. Appeals reversed, rejecting Court's findings holding failed give sufficient weight evidence offered show a pattern illegal substitution completing its own review evidence, further held was 'clearly establish violation.' Held: erred setting aside fact. Pp. 853-858. (a) In reviewing such findings, bound by erroneous' standard Rule Civil Procedure 52(a). P.855 (b) By simply because it would given more than did trial court, clearly erred. Determining credibility is special province trier Because concerning significance instances erroneous, they been disturbed. Pp.855-856 (c) Moreover, each conclusions established violation contrary findings. An appellate court cannot substitute interpretation 'might facts another construction, resolve ambiguities differently, find sinister cast actions which apparently deemed innocent.' United States Real Estate Boards, 339 485, 495, 70 711, 717, 94 L.Ed. 1007. 856-858. 638 F.2d 538, reversed remanded. Milton A. Bass, New York City, petitioners. Jerrold J. Ganzfried, amicus curiae, leave Court. Marie V. Driscoll, respondent. Justice O'CONNOR delivered opinion 1 This requires us consider circumstances manufacturer designed duplicate similar competitor trademark, can be vicariously liable infringement dispense drug. 2 * 1955, Ives Laboratories, Inc. (Ives), received on cyclandelate, vasodilator used long-term therapy peripheral cerebral vascular diseases. Until expired 1972, retained exclusive right make sell CYCLOSPASMOL.1 white powder, gelatin arbitrarily selected blue capsule, imprinted with 'Ives 4124,' 200 mg dosage combination blue-red 4148,' 400 dosage. 3 Ives' Premo Pharmaceutical Inc., Inwood MD Co., (collectively manufacturers), cyclandelate.2 They copied capsules, selling identical those Ives.3 4 methods reflect normal industry practice. obtained only prescription, does direct advertising ultimate consumer. Instead, representatives pay personal visits physicians, whom distribute product literature 'starter samples.' initially directed these efforts toward convincing physicians superior other vasodilators. Now has market, concentrates indicate prescriptions substituted CYCLOSPASMOL.4 5 also follow practice promoting their products primarily distribution catalogs hospitals, pharmacies, rather contacting directly. truthfully describe 'equivalent' 'comparable' CYCLOSPASMOL.5 addition, include price comparisons refer color reach bulk containers correctly contained therein. 6 A pharmacist, regardless whether he dispensing removes from container receives them dispenses consumer pharmacist's bottle his label attached. Hence, final sees no identifying marks themselves. II 7 instituted this Eastern §§ 43(a) 1946 (Lanham Act), 60 Stat. 427, amended, 15 U.S.C. 1051 seq., York's unfair competition law, N.Y.Gen.Bus. Law 368-d (McKinney 1968).6 8 claim 437, 1114,7 derived allegation CYCLOSPASMOL.8 contended manufacturers' illegally Although allege themselves applied produced distributed, infringing activities cyclandelate. 9 43(a), 441, 1125(a),9 alleged falsely designated origin capsule equivalent support claim, argued functional10 developed secondary meaning consumers.11 10 Contending continue so long imitative available, asked enjoin same form uses damages pursuant 35 Lanham Act, 439, 1117. B 11 denied request order preliminarily enjoining Ives. 455 F.Supp. 939(1978). Referring based upon stated that, while 'knowing deliberate instigation' justify well infringement, preliminary relief. Id., at 945. conspired suggested disregard physicians' prescriptions. 12 Second Circuit affirmed. 601 631 (1979). To assist upcoming merits, defined elements detail. Relying Coca-Cola Co. Snow Crest Beverages, 64 980 (Mass.1946), aff'd, 162 280 (CA1), cert. denied, 332 809, 68 110, 92 386 (1947), either if suggested, even implication, retailers fill bottles reason know engaging practices. F.2d, 636. C 13 bench remand, 488 394 (1980). Applying test approved found incorrectly identified CYCLOSPASMOL.12 14 reaching conclusion, first looked infringement. Since do position directly suggest improper substitutions. Cf. William R. Warner & Eli Lilly 265 526, 530-531, 44 615, 617, 1161 (1924); Smith, Kline French Laboratories Clark Clark, 157 725, 731 (CA3), 329 796, 67 482, 91 681 (1946). Therefore, concluded, suggestions, any, must come promotional materials. determined, however, materials could 'fairly read' F.Supp., 397. next considered actual since frequent substitutions provide circumstantial merely making available conjunction comparative advertising, implicitly improperly. incidents mislabeling, concluded occurred too infrequently inference 'impliedly invited' druggists mislabel. Ibid. extent occurred, resulted misunderstanding requirements Drug Substitution Law, attempts pass off 16 43(a). functional patients doctors hospitals: many elderly associate therapeutic effect; commingle medications rely differentiate one another; are some, limited, help emergency situations; brand name equivalents helps avoid confusion part responsible 398-399. indicated drug's origin, acquired meaning. 399. 17 Without expressly stating reasons we discuss below, 32. 538 (1981). claims. We granted certiorari, 454 891, 386, 205 (1981), now reverse Appeals. III 18 As lower courts discerned, liability extend beyond actually goods mark another. Even control others chain distribution, certain circumstances. Thus, distributor induces infringe continues knows contributorially any harm done result deceit.13 See supra; supra. 19 It undisputed 32.14 However, acts depended whether, fact, or, neither showings. 20 Court, 52(a), Rules Procedure. Pullman-Standard Swint, 273, 1781, 66 (1982). That recognizes rests unique opportunity afforded judge evaluate witnesses weigh evidence. Zenith Radio Corp. Hazeltine Research, 395 100, 123, 89 1562, 1576, 23 129 (1969). deference due judge, unless left 'definite firm conviction mistake committed,' Gypsum 333 364, 395, 525, 542, 746 (1948), accept court's findings.15 IV 21 reversing judgment, 'pattern York. . .'16 543. 22 Next, after influenced factors. First, thought reasonably anticipated misconduct substantial number provided imitative, priced which, higher without passing savings consumers, economic advantage pharmacists. Ibid.17 Second, disagreed occur reflected about state law requirements. 544.18 Third, neitherde minimis nor inadvertent. Ibid.19 Finally, fact offer 'any persuasive legitimate unrelated CYCLOSPASMOL' producing product. Ibid.20 Each 1007 (1950). V 24 erroneous. Accordingly, reversed. 25 dismissed claims address prohibits broader range practices may decision dismissing statutes independently reviewed. remand proceedings consistent opinion. 26 Reversed 27 WHITE, MARSHALL joins, concurring result. 28 certiorari cases legal employed committed endorses purportedly Appeals, ante, 853-854, but finds question misapplied clearly-erroneous rule, presented petitions certiorari. conceded oral argument.1 Tr. Oral Arg. 69. Our 21.1(a) states '[o]nly questions set forth petition fairly included therein will Court.' majority suggests ignoring our Rule. Furthermore, issue standard, properly invoked, erroneously applied, doubtful my mind fact-bound warranted I nevertheless concur reversal believe watered down impermissible 1114. 29 litigation, 'manufacturer wholesaler retailer apply label, containing facilitated druggist just described.' 631, 636 (1979) (Ives II). shown. On appeal trial, defendants contributory revising expanding doctrine (1981) IV): 30 'By using color, size, shape, together describing listing comparable appellees anticipate amounted suggestion, least take engage misconduct.' 543 (emphasis added). 31 required intended knowingly palming CYCLOSPASMOL; satisfied failure 'reasonably anticipate' likely. view, erroneous construction statutory governing protection. (1924), clear proof intent induce sales particular customers engaged off. case, shown manufacturer's salesmen actively induced, terms insinuation, filling requests Coco-Quinine Quin-Coco. 'The wrong designedly enabling dealers palm preparation respondent.'2 530, S.Ct., 617. 980, 989 case relied II, stands very proposition. There Crest's manufacture Coca-Cola. Judge Wyzanski observed 33 man common sense line business there unscrupulous persons, who, when financial so, different ordered customer.' 988-989. 34 These general consensus. McCarthy, Trademarks Unfair Competition 252 (1973): ('[T]he supplier's duty go far require him refuse might goods'). mere company unspecified extent, unknown itself predicate liability. thus am inclined silently acquiesces significant change Diluting requirement establishing prima facie particularly unjustified field. Preventing become accustomed prior interferes important policy, expressed 47 States, formulations. Warner, Consumer Protection Prescription Drugs: Generic Laws, Ky.L.J. 384 (1978-1979). 36 'persuasive reason' colors. purposes functional. With respect functionality, fully agree respects: patient anxiety likely medicine color; correct pill take; identify involved overdose.3 Clearly, reject viewed less 52(a) imposes stricter standard. 37 'finding functionality relevant involving 32,' explicate relationship case. view offers complete affirmative defense fringement predicated solely reproduction attribute characteristic 'an ingredient commercial success product,' 643, and, expiration patent, property originator itself. makes base formulation market place. sure, existence 'facilitates' substitution. But longer 'and reproduce nearly can.' Saxlehner Wagner, 216 375, 380, 298, 54 525 (1910) (Holmes, J.). Reproduction competitive activity. 38 mindful suit competitor's 'false designation origin' good.4 package design producer confuse purchasers product's source constitute within Act.5 noted 'goes types federal torts,' 641. Section protection interest surprising primary genre. anomalous imitation feature activity 43(a).6 39 principles above. 40 REHNQUIST, 41 having disagree, determining think usual best decided appeals, good deal experience application principle do, see exception 42 assume, hope, discussion trials, 855, limited erroneous.' relies, establishes authority where determined latter 43 remanded dismissal state-law Under term 'trade-mark' includes word, name, symbol, device thereof adopted merchant distinguish sold others.' 1127. 'registered mark' Patent Office 'or March 3, 1881, February 20, 1905, 19, 1920.' purchase empty assemble sale hospitals. Darby Rugby Sherry turn, pharmacies. Initially, place initiated action, 'Premo' 'Inwood 258.' early 1970's, most enacted laws allowing conditions. generally Note, typical laws. forms contain two lines, prescribing physician sign. N.Y.Educ. 6810 Supp. 1981-1982). If signs over words 'substitution permissible,' mandatory list, N.Y. Educ. 6816-a Supp.1981-1982); N.Y.Pub. Health 206.1(o) Supp.1981-1982), permissible available. Unless directs otherwise, pharmacist strength label. 6816-a(1)(c). specifically above 'dispense written,' filled generically. 6810(6)(a). mislabels improperly substitutes, guilty misdemeanor subject fine, 6811, 6815, 6816, revocation license. 6808. bioequivalent bioavailability. 939, 942 (EDNY 1978), 394, 396 1980). Bioavailability absolute measures both rate amount reaches circulation Drugs 'bioequivalent' if, administered equal amounts individual, relative extent. Remington's Sciences 1368 (15th ed. 1975). discussed review, reference here. 1114, provides part: '(1) Any person shall, consent registrant—— '(a) commerce reproduction, counterfeit, copy, colorable connection sale, offering services cause confusion, mistake, deceive; '(b) reproduce, colorably imitate labels, signs, prints, packages, wrappers, receptacles advertisements deceive, 'shall civil registrant remedies hereinafter provided. subsection section, shall entitled recover profits knowledge deceive.' infringements. 'direct' allegedly marked written' second, 'intermediate' authorized substitute, pharmacy originally named defendant consented entry decree repeating actions. 942. 1125(a), provides: affix, apply, annex, services, goods, false description representation, symbols tending represent same, enter into commerce, falsity representation procure transported deliver carrier used, doing locality region said situated, believes damaged representation.' terms, essential purpose article affects cost quality article. Sears, Roebuck Stiffel 376 225, 232, 84 784, 789, 661 (1964); Kellogg National Biscuit 305 111, 122, 59 109, 115, 83 73 (1938). meaning, minds public, supra, 118, 113. finding, it. result, voices concern 'silently acquiesce[d] infringement.' Post, 861. His derives perception abandoned enunciated Friendly opinion, WHITE approve, post, 859-860. premised second 'the Friendly's earlier appeal, (2d Cir. 1979),' explicitly claimed rendered '[a]pplying principles. .' 542 WHITE's comment 'could statement define controlling indeed 'watered down' incorrect read Appeals' buttress conclusion defined, met. infra, 1289-1290. Such blatant inhibits subverts goals Act. applying trademark's owner, infringer deprives owner goodwill spent energy, time, money obtain. S.Rep. No. 1333, 79th Cong., 2d Sess., At consumers ability among competing manufacturers. H.R.Rep. 944, 76th 1st (1939.) Of course, bases mistaken impression applicable principles, Singer Manufacturing 374 174, 194, n. 9, 1773, 1784, 823 (1963). instance precise Compare (1979), opinions reveal, drawn presented. Prior shoppers hired gave permissible' signed Forty-eight rest Ten thirty-five word 'generic.' Nine ten told Only charged invite emphasizing CYCLOSPASMOL, dissenting panel, attempted reaped profit possible imitation, supported considerations. 546. basis record before us, inferences not, matter unreasonable. cited assumption unable resist temptation far-reaching conclusion. inconsistent 'few instances,' number, mislabelings occurred. characterized resting 'a short casual exchange witness ..' 544. understand rested numerous instances, prohibited products, though 397-398. took judicial notice May 1980, six indictments handed City charging substituting note convictions decision. error determination, allow U.S., 291-292, 1791. reached despite express 853. dissent below noted, disregarded 545, (Mulligan, J., dissenting), rejected 'persuasive.' id., 547. While ruling unclear, functionality. related Problem Functional Features: Trade Dress Infringement 82 Colum.L.Rev. 77 (1982), satisfaction uniform served purpose, Nor dismiss error. third Co.'s embraced observe overturning Judge's invocation 52 aspect below. enacted, codify unify S.Rep.No. Sess. suggestion Congress depart contemporary precedents. reality every link distributive (from consumer) shape perform function. For them, convenient shorthand code milligram mistakes avoided interests pharmaceutical precaution safety. patient-user, constancy psychologically reassuring therefore medically beneficial itself; serve ingestion. '[I]f constrained adopt substantially value seriously impaired level compounded redemption.' Callmann, Competition, Monopolies 82.1(m), pp. 217, 213 (Supp.1981). See, e.g., International Order Job's Daughters Lindeburg 633 912, 917 (CA 1980), 452 941, 101 3086, 69 956 (1981); Keebler Rovira Corp., 624 366, 378 77, 81 (1982) ('Over past three years rule bars section trade dress plurality view'). Truck Equip. Serv. Fruehauf 536 1210 8), 429 861, 97 164, 50 139 (1976); Bros., Gay Toys, 658 76 1981). Colum.L.Rev., 78-80. protects active inducement reproduced nonfunctional features.

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