U.S. SUPREME COURT REPORTS 72L Ed 2d (Inwood Laboratories, Inc. v Ives Laboratories v Darby Drug Co.)

    U.S. SUPREME COURT REPORTS 72LEa2n

[456 US 844]
INWOOD LABORATORIES, INC., et. al.,

v
MS LABORATORIES, INC. (No. 80-2182)

DARBY DRUG CO., INC., et al.

v
MS LABORATORIES, INC. (No. 81-11)

456 US 844,72 L Ed 2d 606, 102 S Ct 2182

[Nos. 80-2182, 81-11]

Argued February 22,7982. Decided June l, 1982.

Decision: Federal Court of Appeals' reversal of District court's findings as
to trademark infringement by generic drug manufacturers, held error
where "clearly erroneous" standard of FRCP 52 not followed.

SUM}lARY

A drug rrranufacturer patented a certain drug which it marketed under a
registered trademark. After the patent expired, several generic drug manu-
facturers began marketing the drug and intentionally copied the appiarance
of the trademarked drug capsules. The holder of the trademarlied drw
instituted an action in the United States District Court for the Eastern
District of New York under, among other things, g 32 of the Trademark Act
of 1946 (Lanham Act) (15 USCS g 1114), alleging infringement of trademarh.
The District Court found that the generic drug manufacturers had not
suggested, even by implication, that pharmieists should dispense generic
drugs incorrectly identified under the trademark name ol the original
patent holder of the drue and entered judgment for the ge
manufacturers. (488 F Supp'39a,. W)TEout &pressl.y st;M
courffiings \\'ere clearl.v erroneous, thg_U-nite_d StateJcourr o[ -{l,peais
Second Circuit concluded, on appeal. tEL tf_c91eri. a-ryg I"el,-"*
had violateil$ZrffiAfZd-53&. --_--

On certiorari. the United States Supreme Court reversed and

Briefs of Counsel, p 974, infra.
806

remanded



)RTS ?2LEdI

E

I

.!

C., et. al.,

o. 8G2182) \
d

*
et aI.

No. 81-11)

z s ct 2182

I

I June 1, 1982'

Hffi

, INWOOD LABORATORIES v MS LABORATORIES
456 US 814,72 L Ed % 606, r02 S Ct 2182

,i"."'if 
-tfr" tri-.f .o"*'s findilngs are not clearly e*oneous, they

SJa not be disturbed'

BrxNqurst, J., concurrit g il the judgment' expressed-t{e view that since

;uil-;d Appeals';;;-";id" tr'6 ri.t,rur findings of the qis-tfc.t *::*
S"i$'i#;"ff;e 61,"; to b. .l"urry erroneo,s as required bv Rule

A;,;;;""5 tr,o"ra -i;;i; L"" '"t"id"d t" l!: court of Appeals to

E;;-i;; whether the findings were clearly erroneous'

IIXiS'*;,,"i[3'#"YiTi;,.8+1;';""H"fr 'il'",11"?ii]f ffi""?:""#'J".Hi

*$";3:TT;"1"11tr,i*"I:f f :"Jr:B"P'1f"1"1"#€:r:J;#is,"i:f ii

#;gtr4fi1;tf;:l$'ffi [i'i#:*#*+k'##r}lTi

t District Court's findirgr
manufacturers, held er

i2 not followed'

z which it marketed undcr

I several generlc drw -T
onallY coPied the aPPea

,- oi"trrt trademarked
strict Court for the Ear

r", S bz-"r the Trademark
n'iiftit e"*ent of tradeu

i";;-;;"facturers had

:ists should disPense
:mark name of the
#""t for the generic

L""fv toti"g that the D

ii[6 st"t"s-court of

i-g"""ti. drug manufi

hurt reversed and

.a7



HEADNOTES
Classified to U.S. Supreme Court Digest, Lawyers. Edition

Appeal and Error $ 1477 - review of clusions that the manufacturers violatedFederar Disrrici c""*'r niii"i" i s2 of the i";;;; Act ,E usCSof fact - trademark infringemeit $ rtrat, *rre." th"- 6u.t or Appears rela-lc. on review of a Federar birt.i"t jlcted the Districi co*.t,. findings sim-court's finding that generic.a.yc,rn"..r- 'or, because ii *ourJ-r"ve given rnsysfacturers are not viiariousry u"aule io, i""igt t to evidence of misrabering thaninfringement of the trademark 
"f th; aia irr" iior ;;;;, 

" c.rrt of Appeals isoriginal drug by pharmacists who dis- bouna by the .tr"".ry erroneous,, stan_pense the generic drug, under the trade- ;;r.d;ih.r" szt"iiiii," Federar Ruresmark even though the manufacture.s or cilrit p;;"J;; 
""r"* the triar courtdesigaed rhe generic drug to d;rli.;;; iases. its findings upon a mistaken im-the appearance of the.oilginar ;;;;. ; i.essio., or 

"pptl""[r" tegat principres,federal court of eppeaF eirs jn ."i?ing rnd. the -court of Appear.s concrusionsaside District court findings of fact tha? made. in hoJding ;-ilfi" evidence estab-were not clearly erroneous and in con- rished a $ rt ;:i"il;;r,'*"." contrary to

U.S. SUPREME COURT REPORTS 72L&l2d

TOTAL CLIENT.SERVICE LIBRARY€ REFERENCES
5 Am Jur 2d, Appeal and^E-r-ror gg3g; 74 Am Jur 2d, Trade-marks and Tradenames $ gS

2 Federal Procedure, L Ed, Appeal, Certiorari and Review
$ 3:649

15 Federal Procedural Io.T". L Ed, Trademarks gg 64:141_64:161. G4:tB4;16 Federat procedurat i;;,-L il, i."a"Regulation and Unfair Trade p...U"". gg 65:6. OSZI, OS,Zb
18 Am Jur Proof of Facts 2d 265, Unfair Competition_Appro_priation of comoetitor's Advertiri"g rvrrii-"i,' ni"ir,"aIl 

".Slogan
8 Am Jur Trials 859, Trademark Infringement and UnfairCompetition Litigation
15 USCS g 1114; Federal Rules of Civil procedure, Rule 52(ar
US L Ed Digest, Appeal and Error g 147?
L Ed Index to Annos, Appeal and Error; Trademarks andTradenames
ALR Quick -Index, Appear_and Error; Trademarks, TradeNames and Unfair fiiae practices
Federal Quick Index,_Appear and Error: Trademarks, TradeNames and Unfair Trid^e practices

ANNOTATION REFERENCE
Application of "clearlv erroneous', test of Rule S2ra; of Federaj RujesProcedure to trial courti finding. ,] r".r'u*Jrn do.u,,,,"nrarr evidence.Fed 212

608



rs 72LEdu

re'Edition
re manufacturers violat€d
Lanham Act (15 USCS

the Court of APPeals rt'
;rict Court's findings ain'
would have given mort

ence of mislabeling than
rurt, a Court of APPeals ir
"clearly erroneous" StaD'

i2(a) of the Federal Rulee

lure unless the trial court
ngs uPon a mistaken in'
oplicable legal PrinciPIee,
t' of Appeal's conclusioru
rg that the evidence estab
violation were contrarY to

,CE

of Federal Rules of Crvii

nentarY evidence ll ALR

tbe District Court's findings'

-*s.*"it;rff;:r,":$Jf o;
"f ai"t"iUotion - intentronal rD'

Iucement infringement

"--;. LiabilitY for trademark in'

efi"tl""t can extend beyond those who

5f"fiv-.i"labeled goods with the mark

Tlioirr"t, and even if a manufacturer

IJ'i"i-ditectlv.control others in the

E:*i *'i,liil"i#'lH'" I" "T"$'x'P'*'- rstances; thus if a
under certaln clrcum
ililrrt*"t"r or distributor intention-

ffii;;;. another to infringe a trade-

#d'; if it continues to suPPlY. its

ilJiict to one whom it knows or has

ffi;toknow is engaging in trademark

ffiIru".""t, the..manufacturer or dis-

;;;;t is contributorially responsible

fi;;; harm done as a result of the

f."it, Uut a manufacturer is not respon-

ilf" 
-ii 

r, could only reasonably antici-

pate a legal infringement'

Ttademarks and Tradena-es $24 -"-ittf"ittg.ment 
- mislabeling of ge

neric drugs
g. FharmacGts who mislabel generic

drugs- with a registered trademark vio
f,,f S sz of the Lanham Act (15 USCS

! u14).

Appeal and Error $ f464 - "gt'i"-* --'clearlY erroneous standard

-i"t"f" of governing legal princi'
ples

{a; 4b. If a trial court bases its find-

ings upon a mistaken impression.of ap
oticaUi" legal principles, the reviewing
burt is noi bound by the clearly errone'
ous standard of Rule $)16t of the Federal

Bules of Civil Procedure'

Aoneal and Error $ 1699 - remand ---""o*ia"ration of relevant evi'
dence

S.lS[. tf a Federal District Court fails
to-consider relevant evidence, *!i+ '!
"" "tirt "t law, the reviewing f9de1{
C"""t 

"f 
Appeals, rather than making its

o*" f""tuiri determination, should--re'

-."a fot further proceedings to allow
l-he irial court to consider the evidence'

Apoeal and Enor $ 1464 - revier' -- -'-tpp"ff"te 
court;s interpretation of

evidence
6. An appellate court cannot substitut€

itr interiietation of the evidence for
lh.i;i tli" trial court simply because the

i"ri""'i"g court might give the facts. an-

other coistruction, resolve the ambigut-

ti". hin"t""tly, and find a more sinister

"""t 
t" actions which the trial court

apparentlY deemed innocent'

Aopeal and Error $ 1699 - remand -' 'additional clqirns
Z. 

-tfre United States Supreme C'ourt

oriii te-a"d to a Federal Court of -Ap
o""ts 

-consiaeration of claims of drug
manufacturers that generic drug manu-

facturers violated $ 43(a) of the Lanham
A"t tfS USCS $ 1125(a)) and the state

,"iuit 
"ot"p.titi-on 

law in their market-
i"g p."cticLs of a drug which was !h9
eu"rr"ii" equivalent of the drug manuiac-

il;;; ir-adematt ed drug' where' .al-
it ""-f, the Federal District Court dis-

;t#J the manufacturer's claims und-er

l;;;;";ii""s, the Court of APPeals. did

ttoi-uaat"t. those claims and where
di.q,"r orohibits a broader range of prac-

ii.".-tfi"n does $ 32 i5 USCS $ 11.14)'

*iri"f, tt" Court of Appeals addressed' as

mav the state unfair competition law'. eo

il;i ah; Ditt.i.t Court's decision dismiss-

il- ;h; manufacturer's claims based

ufon those statutes must be indepen-

dently reviewed.

INWOOD LABORATORIES v IVES LABORATORIES
456 Us 844, 72LFH 2d 606' 102 s ct 2182

.-i. -
:j{3-:#t
'.qt
.."j

'.,.dr

SYLLABUS BY REPORTER OF DECISIONS

Resoondent manufactured and mar'
keted'the patented prescription. drug cyc-

l,andelate'to wholesalers, retail pharma-

cists, and hospitals in colored capsule-s

u"a"t the t"gi"t"."d trademark CY-

CLOSPASMOL. After respondent's pa-

tent expired, several generic drug manu-

facturers, including petitioner manufac-

turers, began marketing the drug' inten-

tionally copying the appearance of the

CYCLOSPASMOL capsules' Respondent

TEFERENCBS

m Jur 2d, Trade-

rrari and Review

marks $$ 64:141-
rmg, L Ed, Trade
65:6, 65:23, 65:28

npetition-APPro-
tter, Methods, or

ment and Unfair

rdure, Rule 52(a)

Trademarks and

rademarks, Trade

'rademarks, Trade

609



then brought an action against peti- ,.crearry erroneous,, standard of Federaltioner manufacturers and wh.*olesal";s-i; Rule of Civil procedure b2(a).Federal District Court under, i"te. alia, . (b) By .;j;;i;;;he. findings simpty$ 32 of the Trademark Act of 19a0, aiiel_ because.it ;;;t;'iirr; srven more weight

E""i}il: .,T&'HilUl'"T'# [t*j"J to evidence or misrabering than diJ;i;
Fasnaor ri; ;h;; petitioners, use of trial court. the Court of Appeals ctea.ty
roor-arir," 

""p,"r"I"";a ""t,rl! *i.i". iiT$q?:H?ili:iJ"ri.1;,"r$":*.J.t:::#ru:X:iJffi.31"1:ffi3i1'":Y;i: ince or tr," t.i".""-r ract Because rhe
pharm"acists' 

-ili.i.Lfi"t- 
i".p";;;;; District Court's findings concernins the

ig"gLt injunctive 
-ielief "anJ- JI;;;;;: |]s_ni!3nce of the instances or misLuel-

The District Court entered jrdgm;;-f* rng were not clearly-. erroneous, they
petition;r;, nni"g tt.t ;t;;;il"rli; should not have been disturbed. ' --.'J

pharmacists had iiolated $tt,-?;;p;;: - 
(c) Moreover, each of.the conctusions

dent had not made the necessary factual that the Court of Appeals -"a" in hotJ
sfr.owlng that petitioners had intention- ing that the evidence established a g iZ
ally induced tlie pharmacists to mislabel violation was contrar.v to the Distiicl
generic- drugs oi continued t" ,rrrf" Court's findings. An appellat".ouJ""i-
cyclandelate to pharmacists who the 

,pj- not substitute its interpretation of thetitioners knew or should have known evidence for that of ths trial court si-m]

x1.:i ii.]"beling generic drugs. The ply because the reviewing court ..-ffi
uourt oI' Appeals reversed,_rejeciing the give the facts another construction, -re
District court's findings .na r,i,raindtn"i solve rhe ambiguities air".""1bL 

-'.ni
the District Court failed to give .u6.il"i find a more .i"irLr c""t to actions whichweight to the evidence respondent of- the District cou.t 

-upp.rently 
deemedfered to sfrow. g pattern of iliegal ruu.ii- innocent." u"itJ 

-stlru. 
v Real Esratetution and mislabeling. After c-omplsting g^"rya:. sss us 48s,'igs, gs r,Ea-iooiits ou'n review of the Eviden.", th" C;;;? 70 S Ct 711.of Appeals further held thai the eui- 63g F2d 53g. reversed and remanded.dence was "clearlv sufficient rc esrabhst, 

- O,Connor, ,1. j"fi**a the opinion ola $ 32 violation." the Court, il ;;;;h;rrger. C. J., andHeld: The court of. Appeals erred in Brennan, Bi".k;;;. poweil. and Ste-

ffiTjlf, 
aside the District c)ourt's findingi vens, JJ.. joined wr,ir", J., fired an opin_

^(a) In- reviewing such, findings, the il:,.Tlfi:T:j'",i,Xolni"l"#1.,]'r]lillcourt of Appeals was bound ttr iir" an opinion concurring in the resurt.

APPEARANCES OF COUNSEL
Milton A. Bass argued the cause for petitioners.
Jerrold J. Ganzfried argued the carJse for the united states asamicus curiae, by special leave of Court.
Marie V. Driscoll argued the cause for respondent.
Briefs of Counsel, p 97a, infra.

U.S. SUPREME COURT REPORTS 72 LEd 2d

OPINION OF THE COURT

[456 US &16]
Justice O'Connor delivered the

<.,pinion of the Court.

[1a] This action requires us to con-
sider the circumstances under whicha manufacturer of a generic drug,

6r0

desigaed to duplicate the appearanceof a similar drug markeiLd bv a
competitor under a registered trade-
mark, can be held viciriously liable
for infringement of that traiemarkby pharmacists u'ho dispense lhe
generic drug.



ORTS 7?LE6Z1

oneou6" standard of Federel
I Procedure 52(a).
rjecting the findings srmply
'ould have g"iven more *erShi
of mislabeling than did ah.
the Court of Appeals clearlv
mining the weight and credi.
evidence is the special pr*-
trier of fact. Because tlp

rrt's findings concerning tlp
of the instances of mislabel.
rot clearly erroneous, [,[gy
rave been disturbed.
ver, each of the conclusioru
"rrt of Appeals made in hol&
I evidence established a gg!
as contrary to the District
rngs. An appellate court can.
rte its interpretation of the
' that of the trial court sirD-
the reviewing court "might

:ts another construction, 1s
rmbiguities differently, and
sinister cast to actions which

Crcurt apparently deemed
Jnited States v Real Estate
US ,185, 495,94 L Ed 100?,

, reversed and remanded.
J., delivered the opinion of

.n which Burger, C. J., and
lackmun, Powell, and Ste
ned. White, J., filed an opin.
ing in the result, in which
, joined. Rehnquist, J., filed
oncurring in the result.

iL

ners.
the United States as

rondent.

duplicate the appearance
ar drug marketed b1' a

under a registered trade
be held vicariously liable
)ment of that trademark
lcists r+'ho dispense the
c.

I

In 1955, resPondent Ives Labora-

#r; Hi,':;:',)"ffi :';:1 ?"3ffifl:
il *"a in'longterm theraPY for

ru:"il,l"t,i"!1lJilr"T$"::uiX
ffii, Ives retained the exclusive
f-r't to make and sell the drug,

*i'hll-'t"ts1'd;,fffi :iilt''
i"if."t"a the drug, a white Powder,
f-wholesalers, retail -pharmacists,
Ind hospitals in colored gelqtin cap-

ires l"-es "'?i:[t3[?irected
a blue

capsule, imprinted with "Ives 4124,"

roi it" 2oo mg dosage and a combina-

tion blue-""d capsule, imprilted with
ives 4148," for its 400 mg dosage'

After Ives' Patent exPired, several
oeneric drug manufacturers, includ-
ine petitioners Premo Pharmaceuti'
ti LaUoratories, Inc., Inwood Labo-

otori"", Inc., and MD Pharmaceuti-
cal Co., Inc. (collectively the generic

manufacturers), began marketing
cyclandelate.'z They intentionll-ly
copied the appearance of the CY'
CLOSPASMOL capsules, selling cyc-
landelate in 20O mg and 400 mg
capsules in colors identical to those
selected by lves.s

The marketing methods used bY

Ives reflect normal industry practice.
Because cyclandelate can be ob-

tained only bY PrescriPtion, Ives
does not direct its advertising to the
ultimate consumer. Instead, Ives'
representatives pay personal visits
to physicians, to whom they distrib-
ute product literature and "starter
samples." Ives initially directed
these efforts toward convincing phy-
sicians that CYCIOSPASMOL is su-
perior to other vasodilators. Now
lhat its patent has exPired and ge'

neric minufacturers have entered
the market, Ives concentrates on
convincing physicians to indicate on
prescriptions that a generic- 

--dlqgcannot- be substituted for CYCI,O$
PASMOL.'

INWOOD LABORATORIES v MS LABORATORIES
456 US 844,72 L Ed 2d 606, 102 s ct 2182

l. Under the Trademark Act of 1946 (Lan-

ham Act), 60 Stat 42?, as amended, 15 USC

i l05l et eeq [15 USCS $S 1051 et seq']. the
Lrm "trademark" includes "an1' r*'ord, name'

rymbol, or device or any cothbination thereof
adopted and used by a manufacturer or mer-
chant to identify his goods and distinguish
them from those manufactured or sold by
others." 15 USC $ 1127 [15 USCS $ ll27), A
'registered mark" is one registered in- lhe
United States Patent and Trademark Office

under the terms of the Lanham Act "or under
the Act of March 3, 1881. or the Act of
February 20, 1905, or the Act of March 19'

1920." Ibid

2. The generic manufacturers purchase c1'c'

Iandelate and empty capsules and assemble
the product for sale to *'holesalers and hospi-
tais. The petitioner q'holesirie'r: Darbl' Drug
C,o., lnc.. Rugby Laboratories lrlc.. and Sherry
Pharmaceutical Co., lnc., in turn. sell to other
whoiesaiers, physicians. and phi-r'macies.

8. lnitially, the generic manufacturers did
aot place an-'- identifying mark on their cap
rules. After lves initiated this action, Premo

imprinted "Premo" on its capsules and In'
wood imprinted "Inwood 258 "

4. Since the early 1970's, most States have

enacted laws allowing pharmacists to substi-
tute generic drugs for brand name drugs un-
der iertain conditions. See general)y Note'
Consumer Protection and Prescription Drugs:
The Generic Drug Substitution l,aws, 67 Xy
lJ 384 (1978-19?9). The New York statutes
involved in this action are typical of these
generic sgbstitution laws. New York larr re
quires tliat prescription forms contain two
lines, one oi which a prescribing physician
must sign. NY Educ l,aq' S 6810 (McKinney

Supp tSSt-t982). If the physician signs over
the words "substitution permissible," substitu-
tion is mandatory if a substitut€ generic drug
is on an approved list, t'IY Educ l,au' $ 681q1
(McKinney-Supp 1981-1982r; NY Pub Heallh
l,aw $ 206.troi {McKinnev Supp 1981--1982.t'

and permissible if another generic drug is
available. Unless the physician direcls olher-
wise, the pharmacist must indicate the name
of the generic manufacturer and the strength
of the 

-drug 
dispensed on the Iabel NY Educ

Law $ 681&a(1Xc). In addition, the prescrip
tion form must specifically state that' unless

611



U.S. SUPREME COURT REPORTS 72LEd2d

- Ih" generic manufacturers also
follow a normal industry practice bvpromoting their produCts primarily
by distribution

[466 US E48]
. of catalogs to whole-

salers,' hospitals, and retiil pfrui-u-
cies, rather than by contactinJ phv_
sicians- directly. The catalogs "t.'ui[-
fully describe generic .v.Lnali.il
T__'le_qgivalent" or',comparable,;- if
CYCLOSPASMOL.6 In' addi;io;,
some of the catalogs include price
co-mparisons of the generic drug and
CYCLOSPASMOL a.,d some ."i", iothe color. of the generic ."p.ut"*
rne genertc products reach wholesal-
ers, hospitals, and pharmacists in
bulk containers which co"."ctty irrai_
cate the manufacturer of the proJ_
uct contained therein.

.A - pharmacist, regardless of
whether he is dispensing CyCLOS-
PASMOL or a generi" arig, ."rnoi.l
the capsules from the container in
which he receives them and dis-

penses them to the consumer in thepharmacist's own bottle witf, -f.,il

[456 US 84e]
own label attached. Hence, the final
consumer sees no identifying marksother than those on t[" ;"p;l;
themselves.

II

A

_ _ 
Ives instituted this action in theUnited States District Couri f;; ;il;

[astern District of New Vo.t 
"na".gg 32 and 4B(a) of tt e Trademaitr

Acl of 1946 (Lanham Act), 60-iG;
427, as_am-ended, 15 USC 

'S 
fOSi-"i

seq. [15-_USC! $$1051 et slq], a.,Junder Ner+' York,s unfair .;;;ii
t_ion_ law, Ny Gen Bus Law $ i'6gd(McKinney 1968).s

Ives'claim under $ 92, 60 Stat 4gZ-
as_ amended, 15 USC g t1l4 UsUSCS $ 11141, derived from its aile-gation that some pharmacists had

the physician signs above the line. ..dispense ,.(1) Any person who shall. without theas written," the prescription wilj t;-'fill"d consenr of the registrant_generically. g 6810(6Xar.- If a phu..riaclr--iJ"u.r. a drug or improp- 
''(a' use in commerce an-v 

. reproduction,
erly srrbstitutes. he is guilr.v of a .fiiJ"-"'""? counterfejt' copy. or colorable i-iLti".-.i',
and subject to a fine, F$sarr,6sit;aia,;; registered mark in connection *itri1r," ..r"]
to revoc-ation of his iicense g 6g0g. offering for sale, distribution, o. rar"Ji"irrg'oi

any gcods or senices on or in connection riith6. Ives conceded that CyCI,OSpASMOL and whjch such 
"." l. iit"ili to cause confusion, orthe petitioners' generic equi"ateni. a.e-uioe] to cause -irt"r.". ".'t"i"ceirre; o.quivalent and have the same bioavailabitiiy,. 

. 
"(b) reproduce, counterfeit, copv, or coror-See 455 F Supp sls. s42,rn xr rgiai';"d r-uU: i-l't [-i''."Jr!i"I*^mark and apptv488 F supp 394' 396 tED NY 1980, Iiio;;a]i;: such reproductron, Zou.,terrerr, copy. or color-bilitv is an absorure rerm which ;;;;; "ti" i;l;;;"'.'rrHill sig-ns, prints, pack_both the rate and the amounr of , d.;;;;iJ a€ies, wrappers, receptacles or advertisementsreaches the general circulation r-- 

"'a"nr"i ir-,"ra"a-'tJ u"',;;;"ff;"--erce upon or indosage. Drugs are "bioequivalenr" ii-*t", connection *rtt -iL-'."t", 
offering for sale,administered in equal amounts to the same distribuiion,""r'.i"".tTrrg of goods or ser-individual' thev reach general circutation'ai vices on o. in iorinl*ioi *i,r, which such usethe Eame rerative rare an-d to tt".",n".Lri- is.rikerr.;";";;';;;ilion, or ro cause mis,tive exter^t. Re.ming:ton's pfrrr-u"urti.u;'S.i- take. .r L. deceive.ences 1368 i15th ed tg?S). ,,shall 

be iiable in a civil action b1. the regis-
.6. The state law claim r+'a-. nor discussed in |far,: f o:. the .remedies hereinafter p.ouia?a.the decision under revreu. 

".d;;;;;; 
Uncier subsec,.ion r,br of this section, th;;;gi;.

reference *'ill be made to it here. t,rari si:ill not be entitled ro recover profits or

_7. Section 32 of the Hh:l-Act..60 Star ii;".;,;li1;*"'1Hit Jil-,*ru,rr*. ,*437. a-< amended, rs usc $ r1r4 tit uslt tencieri rc, b" ;";-; c"Juse confusion. or to$ ll14], provides in part: cause mistake or to deceive.,,
672



]S 72LEd?t

) the consumer in the
own bottle with his
168 US t49l
,ched. Hence, the final
no identifying marls

tose on the capsulea

II
A

ted this action in the
District Court for the

rct of New York under
(a) of the Trademark
l,anham Act), 60 Stat
aled, 15 USC $ 1051 et
i $$ 1051 et seq.l, and
fork's unfair competi-
Gen Bus Law $ 368d

68).6

under $ 32, 60 Stat 437,
15 USC $ 1114 [r5

, derived from its alle
rome pharmacists had

on who shall, without the
gistrant-
ommerce an,r- reproduction,
, or colorable imitation of e
in connection with the sale,

distribution, or advertising of
ricet on or in connection with
s likely' to csuse confusion, or
, or to deceive; or

, counterfeit, coPY' or color-
registered mark and aPPIY

n, 
-counterfeit, 

coPY, or color'
o labels, signs, Prints, Pack'
receptacles or advertisementl
taed in commerce uPon or m
the sale, offering for sale,

advertising of goods or eer'

nnection with which such ur
e confusion, or to cause mis
te.

in a civil action bY the regis'
:medies hereinafter Provided'
n (br of this section' the rq:ir'
)e entitled to recover Profits or

the acts have been committcd
, that such imitation is in'
red to cause confusion, or to
r to deceive."

diEpens g{ f: 1:T:^9'-"s'
mislabeled sule colors used bY Ives and bY Pro

-otit e the generic Pro-d-qc^tf P
;;;i;;""4 to -cvcl,osPAsMol'- In
il;;";;i its claim, Ives argued that
tfr!'coto"" of its capsules were not

functionalto and that
[456 us *t1"' 

had devel'

oped a secondarY meaning for the

consumers.rr

Contending that Pharmacists
*orrlJ continie to mislabel generic

J.*. as CYCLOSPASMOL 8o long

"" 

-i"-ituti"e products were available'

Ire. ask"d that the court enjoin the

p"litio""t. from marketing cyclande-

iate capsules in the same colors and

form as Ives uses for CYCLOSPA$
nfOf,. In addition, Ives sought dam-

ug"t p,rtt,rant to $ 35 of the Lanham

a.i, oo Stat 439, as amended' 15

usc $ 1117 [15 uscs $ 1117]'

B

The District Court denied Ives'

INWOOD LABORATORIES v IVES LIBORATORIES
456 us 844, 72LFA 2d 606' 102 S Ct 2182

'.i'df,

.f/g
::-ra.:}..!

:'.r]:

[6ict ostffiYror*les 
co,,te,, d ed

fi-ff,n";'ffifr:lllij'HT*H;

#*,*'l"xtrcrry*;$
;il a generic drug for -CYCIO?

i#fr ff "u'" *dlf;;lii6;*il:

fii"*f Iv-es did not allege that the

]iiii""".. themselves applied- the

iio li"a"*ark to- the drug products

iil-r ,;;a".ed and distributed' it did

rx*x"'H'.ff$l? :i:-T':l't1
Iil'"-t-".itt" who mislabeled generic

cyclandelate'

,'i"1 u'tlB."tu,%;, :ilil uu%*
ilrizst"rl,' alleged that the petition-

ers falsely desrgnated the origin of

it"li-ptoi"cts Ly copying the cap-

8- The claim involved two types of infringe-

-Jit" tf," 6rst was "direct" infringement' tn

liil,i a.,]egr.ts allegedlv 6lled CYCI,OSPAS

;I'6i' p;;;,piio""i"k"a "dispense T y'it'
ten" with a genenc orug and mislabeled the

;*d";i'; ticrosPe"suol The seiond'
f i.?.t-"il,"-'- inftin g"-"t't' occu rred when

":rr*.ir.i*, although authorized by the pre-

H;l;;; substitute, alleged-lv ^mislabeled 
a

l"!ii. a*e as CYCLOSPASMOL The one

?"iil' prt..ti"cy originally- named as a. def91;

dant cbnsented to entr.r- of a decree enJolnrng

iLtt" i"p."ting such actions 455 F Supp' at

%2.

0. Section 43(a) of the l'anham Act' 60 Smr
gi, G usc $ 1125iar [15 USCS $ 1125(a)]'

provides:'';i", enl' person who shall affix' appll or

lnnex. or'use in connection *'ith any goods-or

;;;;;.. - .n:' container or containers for

goocis. a false designatior' of origin' o.t 3nr-
iaise description or representation' including
;;;4,- ;, other symbols tending falsell' to

describe or represent lhe same' and shall

c"u* ,,-rch goods or sen'ices to enter into

@mmerce. ..rd tny person who shall with-

il;;iA;; Jir," r'r.iiv of such desisnation of

orisin or description or representstron cause

o. 
"pr*,rr" the same to be transporteo or uBeo

in commerce or deliver the same to any car-

;i;;;;nsPorted or used' ehall be liable

io , .i"il action by any person doing business

in the localit;- falsely indicated aE that ol

"rig* ".-i, 
th" tugion in which eaid locality

i.'?iir.,"a. or by any peraon who believes

;il;;"i.;; is likelv'to be damased bY the

r* of 
"ny 

such false description or represen-

tstion."

10. ln glneral terms' a product.feature is

f"".ii"".i if it is essential to the uae or

ii,.i"*'"r ihe article or if it affects the coet

or oualitt of the anrcte See Sears' no9U1c.k !
e:;'siihJ c" iio us 225' 232' 11 L Ed.?i
OOr. Aa S Ct 78n t1964': lieliogg Lo' v Y-
;i;.ii;.;i co eos LIS 111' 122' 83 L Ed

73,59 S Ct 109 t1938'

ll. To establish secondarv meaning' a Tqn-

"f;;;"*t";;i-.to*'ti''t 
in the minds of-the

;;i;. il ;;imar1 sig'''n'ance of a Product
leature or t€rm is to identill the source of the

o.oau., rather than the product itself See

i{"Iil; Co. v National Biscuit Co" supra' at

ll8. ttL Ed 73.59 S ct lo9'

6r3



U.S SUPREME COURT REPORTS 72LEaA!
request for an order preliminarilv
enjoining the petitioners from seli-
ing generic drugs identical in ap-
pearance to those produced by Ivei.
4-55 { Supp 939 (1928). Referiing to
the ckiim based upon $ 82, the -Dis-

trict Court stated that, while the
"knowing and deliberate instigation',
by the petirioners of mislabelins bv
pharmacists would justify trotiini
the petitioners as well as-the pharl
macists liable for trademark in-
fringement, Ives had made no show-
ing. sufficient to justify preliminary
relief. Id., at 945. Ives had not estab.
lished that the petitioners conspired
with the pharmacists or suggLsted
that they disregard physicians-' pre-
scriptions.

The Court of Appeals for the Sec-
ond Circuit affirmed. 601 F2d 631
(1979). To assist the District Court in
the upcoming trial on the merits.
the appellate court defined the ele-
ments of a claim based upon $ 82 in
some detail Relying primarily upon
Coca-Cola Co. v Snow Crest 

-Bever-

aq:.:, llc-.Q  F Supp 980 (Mass 1946r,
afPd, 162 F2d 280 (CAl), cert denied.
332 US 809, 92 L Ed 386, 68 S Ct
110 (1947), the court stated that the
petitioners would be liable under
$ 32 either if they suggested, even bv
implication, that retiilers fill bottles
with generic cyclandelate and label
the bottle with Ives' trademark or if

[456 US 852]
the petitioners continued to sell cyc_
landelate to retailers whom they
knew or had reason to know werl
erqgagrng in infringing practices 601
F2d, at 636.

C

After a bench trial on remand. the

District Court entered judgment forthe petitioners. 488 F Supp 89;(1980). Applying the test upp"or"a'
by th-e Court of Appeals to the claii
!*"9 upon g 82, the District Couri
found that the petitioners t"a noi
suggested, even by implication, thai
pharmacists should dispense g"nuJ.
{I"_St incorrectly identified * Ci
CLOSPASMOL."

In r-eaching that conclusion, the
court first looked for direct evidence
that the petitioners intentionally ip_duced trademark infringemeni.
Since the petitioners, ,"p."runt"_
tives do not make personal visits to
physicians and pharmacists, the oe
titioners were not in a position di_
rectly to suggest improper drug sub
stitutions. Cf. William R. Warner &
P: y_Eli Liily & Co. 26b US 526,
530-531, 68 L Ed LL6l, 44 S Ct 615
(7924t Smith, Kline & French Labo
ratories v Clark & Clark, tSZ F%l
725, 737 (CA3t, cert denied, 929 US
796, 91 L Ed 681, 67 S Ct 482 (7946,.
Therefore, the court concluded, im-
proper suggestions, if any. must
have come from catalogs and prome
tionai materials. The court deter-
mined, however, that those materi_
als could not "fairly be read" to
suggest trademark infringement. 4gg
F Supp, at 397.

TIE trial court next considered
evidence of actual instances of misla-
beling by pharmacists, since fre
quent improper substitutions of a
generic drug for CYCLOSPASMOL
could provide circumstantial evi-
dence that the petiti<iner s. merelv bv
making available imirarjve drugs in
conjunction u'ith con:parat.ive price

12. The Drstrrct Court also found that peti.
tioners did not continue to provide d.rgi. ioretailers r.r'hom ther. kneu or should iave
Known were engage<i in trademark infringe_

614

ment 486 F Supp. al 39?. Trrr, Coun of Ap
peals did nor discuss thar findrng, and we do
not address it.



ls 7zLEa?a

entered judgment fr;
€. 488 F SuPp S9{
ng the test approved
rf Appeals to the clairn
82, the District Coutt
Le petitioners had nC,
n by implication, thet
hould dispense generi
ctly identified as CY.
L.n

; that conclusion, thr
ked for direct evidene
ioners intentionally in-
rmark infringement.
etitioners' rePresenta-
nake personal visits to
,d pharmacists, the Pe
a not in a Position di'
lest improPer drug eub
William R. Warner O

ly & Co. 265 US 526,

, Ed 1161, 44 s ct 616

, Kline & French Labo
.ark & Clark, 157 Fzd

3), cert denied, 329 US

681, 6? s ct 482 (1946).

re court concluded, im'
estions, if aDY, mugt
om catalogs and Promo
'ials. The court deter-
ver, that those materi-
rt "fairly be read" to
rmark infringement. 488

t7.

court next considered
rctual instances of misla'
pharmacists, since fre
rper substitutions of a

z for CYCLOSPASMOL
l" circumstantial evi-

he petitioners, merelY b.Y

llable imitative drugs u
with comParative Price

I N w ooD .'#39*tT9lH?J#?|, 3t"?'lAroRIES

$ig#itfgi;1,*iff :trilt:l}Ttr**".:tr.?e"r:'*l}*":l

i a eiden ts or m islabel i n g' the D ist ri ct *YllYEt": f' :"fr:'J#:'il"t'iii:"tli;

H'*::T*'ii,.'},T"it,.i.'l'i'"ilEilI:x"?it*:n:ffi :l'Jlii=I
il infere,ce that. the petitioners' ;;.i;d;J'itttt tf,. petitioners vie
Bte '-- : .-^^ ^f imitative colors i
iuro. e, r-1, 1"i- 31 ;il a, u gei,t" to ffi l, ;"t 1 r.rr"t,31r 

t:3, 
1,'3;*li lTli

fit;#i:lffilil i['J-J;;"','t""?E :'' 1,n", craims w"- s:;;;'I"iii*"'i
ff.i'il'i.ruueling had occurred, the fiT'uffi;il zo l,"ra 2d 2o5, 102. s
*ii'-'i^I.a it rJsulted from pharma- &=gidOg8if, and now reverse the

3;I 'iltilrJe.sta"aing or the- re i*}["";;;1 Jhe court of Appeals'

ffiilffi";i-;h; New York Drug

ilm*$":,'*uil**:!.ii1fi?. III

$'if;;.ia"r"t" as cYCLoSPA$ A

iiOl,. 6ia. t2al As the lower courts correctly

The District court also found that di$;;;;' ti'uititv'rot trademark in-

m,'t[f i",]:i;*;[,ii'.'$Itl:*::tf ri:{H]'"$i'T:i:il;
conclusion' tt'" coutiio""a ir'ti tt'" ;;;k;ianother' Even if a manulac-

blue and bto"-'"o*"oro"t"'*"'" r"""- ffi;; ;;;oi^airecttv control others

ti-onal to patients * *Lil as to doc- i;1h" chain ofdistrilltion'
;;;"; iospitals: man.y- elderly pa- r4t. ui' ---r 

it can be

[i:;"S;":'m" Tl?i";l*n :["iil4 herd responsibre ror their inrringing

medications i" " ;;;#;;;il-;av il;td;= under certain circum-

on color to dinellniili"-o"" -rrori', Iir".".. tt,yt: i1..1 
manufacturer or

another; colors ";;';i;;-", 
if lim- iiri.ii"t"t intentionallv induces an-

ii,il 
"'r, 

a p 
- 1; rali ffi "'":d: i;i;* i:i: li T:i Ji'i$]?:: " 

:l i:emergency situations; and use o,'-:: '^'-:".'il";i L;G or has reason to
same color ro' f"t*i^;;; drugs one whom it--kl:l
and their g"r,uril';q;ir.i""L tair know is engaging in trademark in-

avoid confurion o"n"ti? ilii'11 tr,"i" ili;;";;;;,ii,!-1""rfacturer or dis-

responsible f", di:;;.iiJ'ir"g". ra., iiitito. i3 contributoriallr* responsr-

at 398-399. I" tiiiti';' f;""""i" r""t ;l;i;; t'v harm-done as a result or

had failed t" ,#;';h"I-ir,"-.oto.. ;;; i"""iil" see william R' warner

*r-.or 
^.,,." 

*n ,* I,: ""J.,:l:l ff:; ;:[:::'i-'i:ili1'.,:il:::"1:]::::;ii::l*'.ii#i.' ir,-" i".'rt' voices his. concern tha.r governrnpl teBar PrrrrLrr^'-

," -.--' have "slentrv *qli*!!l-d.'-11,,:.:.*,i *:?i, X;'i!:'.jltl;:'.;'il"I ""#'[,
icant change in the test for contrtDutorr trt-

fringement " Post. at tn' 'i: r--iJ ia "' o:r' ti:i;i: il#J to have rendered !15 s*"'nd

Hu concern dertres r'o,'' ii'iJ'-'Jpiio' tn"t 9;l'#::il:ial'rl;;ti:t*" 
principre'

*:fjfilli::?I;:';*i,::i l['iT'',"';1# -i"';" whrte's concern is based on i' ( ri:l

ion. a standard *'hich ;;i ;:";; Gl': -;ff;;:d;6"rt of Appeais that the senerlc

ffhite approve. Post' "t 
#;;6d ii\-w za -l'i'i;t*t"';rcould ieasonabiv anticrputt'

.r 61M20. The C-ourt oi epp"ut". however. ,riil;""iu""i",tion or their drugs ld ' at 543

615

uDD. at 39? The Court of AP

Litri* ir,", findins, and wP &



U.S. SUPREME COURT REPORTS 72LEd2d

& Co. v Eli Lilly & Co., supra; Coca-
Cola Co. v Snow Crest Beverages,
Inc., supra.

l3l It is undisputed that those
pharmacists who mislabeled generic
drugs widh Ives' registered trade-
mark violated $ 32.'.

[456 US E55]

However,
whether these petitioners were lia-
ble for the pharmacists' infringing
acts depended upon whether, in fact,
the petitioners intentionally induced
the pharmacists to mislabel generic
drugs or, in fact, continued to supply
cyclandelate to pharmacists whom
the petitioners knew were mislabel-
ing generic drugs. The District Court
concluded that Ives made neither of
those factual showings.

B

[1b, 4a] In reviewing the factual
findings of the District Court, the
Court of Appeals was bound by the
"clearly erroneous" standard of Rule
52(a), Federal Rules of Civil Proce-
dure. Pullman-Standard v Swint,

ante, p 273,72 L Ed 2d 66. 102 S *
1781. That Rule recognizes and r-d
|po-n . tle unique opportunity 

"f-forded the trial court judge to evali-
ate the credibility of witnesses ,n]
to weigh the evidence. Zenith Radi;
F^rp u Hazeltine Research, Inc. Sgi
u!_100, 123,23 L Ed 2d 129,89 $d
1562 (1969). Because of the deferenoe
due the trial judge, unless .n 

"ppet--late court is left with the ,,definitc
and firm conviction that a mistake
has been committed," United StaG
y_Unlted States Gypsum Co. 33g US
364, 395, 92 L A 746, 6g S Ct S2S
(1948), it must accept the trial
court's findings.ts

ry
[lc] In reversing the Distria

Con-rt's. judgment, the Court of Ap
peals initially held that the trial
court failed to give sufficient weight
to the evidence Ives offered to show
a "pattern of illegal substitution and
mislabeling in New York. .,,16

[456 US 856]

F2d, at 543. By rejecting th" Dirt:il?
Court's findings simply because it

If the Court of Appeals had relied upon that
Btat€ment to define the controlling legal stan-
dard, the court indeed n'ould have applied a
"watered down" and incorrect standard. As
we read the Court of Appeals' opinion, how-
ever, that statement was intended merelv to
buttress the court's conclusion that the legal
test for contributory infringement, as earlier
defined, had been met. See infra, at g5Gg57,
72LM 2d, at 6l?.

14. Such blatant trademark infringement
inhibits competition and subverts bot[ goals
of the Lanham Act. By applying a trademark
to goods produced b1. one other than the
trademark's owner, the infringer deprives the
owner of the goodwill which he spent energ1.,

!r-11g, qnd mone.t- ro obtain See S Rep No
1333. 79th Cong. 2d Sess, J (1946r. At rhe
same time, the infringer deprives consumers
of their ability to drstinguish among the goods
of competing manufacturers. See HR Rep N<r.
944,761h Cong, lst See6, B 0989r

15. [4b] Of course, if the trial court bases

616

it.s findings upon a mistaken impression of
applicable lega) principles, the reviewing
court is not bound by the clearly e..oneoG
atandard. United States v Singer Manufactur-
ilg-Co , 374 LIS 174. 194, n 9, l0 L Ed 2d BZ3,
83 S Cl 1773 (1963r. However, in this instanoe
the District C,ourt applied correct legal princi-
p)es when it adopted the precise test 

-devel-

9qed by the Court of Appeals. Compare 601
F2d 631,636 rt9T9,, with'488 F Supp, at 397.

16. As the opinions from the lower courts
reveal, more than one inference can be drawn
from the evidence presented. Prior to trial,
test shoppers hired b-r. lves gave CYCLOS
PASMOL prescriptions on which the .,substi-

tution permissible" line was signed to 83 New
Yorh pharmacists Forn.-eight of the pharma,
crsts dispensed CYCLC)SPAS\IOL: rhe nxt
dispensed a generrc drug Ten of the thirt.v-
five pharmacists who dispensed a generic
drug included the *,ord C'i'CLOSpASIIOL on
the label. although 5 of those I0 als<, included
some form of the word "generic." Nine of the



rs TzLFata

zLEd2d66,102Sq
le recognizes and 16r
rique opPortunitY d.
rl court judge to evalu,
rility of witnesses and
evidence. Zenith Radio
iine Research, Inc, 395
13 L &l 2d 129,89 S q
ecauge of the deferene
judge, unless an appel-
left with the "definitc
viction that a mistalr
rmitted," United State
es Gypsum Co. 333 Ug
L ?A 746,68 S Ct 526
rust accePt the trid
96.t'

Iv
'eversing the District
nent, the Court of Ap
,v held that the trid
o gir" sufficient weight
rce Ives offered to shor
' illegal substitution and
n New York. . ' ."to

t456 US E561 
6gt

By rejecting the Distric{
ings simplY because it

I N w ooD l,*39*tT9l#?,"# ?$ 
LABo RAToBI ES

- -i"^n more weight to macists who we-re provided imita'
rould hav"e_8rven ,iiig'rf,"" iia-,fr" ti;;, low"r priced products which, if
Id"n." :l t-'i:?1"r, 

of Appears ."uiiirt"a'for the higher priced

tri"l .:9'1:-i:' il;;r*i"i"i'tr," b;;;; name without passing on sav-

clearly er-req" ,YH;";I-J},Z 
"ri- ings to consumers, could provide an

IjfJt,r"l,l :ffii:il'r"-i"."'"r ir,L ec'onomic advantage to th; pharma-

l-' -- ^r fact' t'"tt-t'"" the trial cists' Ibid't? Second' it^
tner "^^ ^'::--- :^"."t"i"g the sig- t466 Us t571
rrurt's findtngs cot,

-i6cancg (.ll Lrrs 'r'

S'?i:::***utl"nt":*::ffi,ft'f l'*:":"::#;"r:i:Hli::
they shouto rruL 'q's - :;^':r .ioto lqw reouirements. Id', at

-Hl1?.h:'$,'""#31:!l:'#iTlHlift *;'JT',,;#;,i;1*:1
IJ*tft .."cluded that the evi4ence Y";k- ;;" neither de minimis n9r

tffil* Hifriti:#$l:;i* ffi3i:h,r'#'i#'li:3llr,*i
f 'iffi :",'-",!ffi 1"11.',:"x"lii!'::llilm#"r:il;1*l*T"Tlx
turi'-r,i"" ^?l,t,1fffis} #li?}i::: """"r"t"J 

l" cycr,o"siAsuor," ro'
by a substantral nt

rn a mistaken imPreesion of
rl princiPles. the reviewig
und bv the clearly erron€(rr
d StaGs v Singer Manufactur'
1te, tgt, n g, to L Ed 2d Ez[
963). However, in this instanc
irt applied correct legal Prirl
ioot d the Precise t€6t devG}

ruft of Appeals. ComPare d)l
sigr. "rtl'ies 

F SuPP, at 397'

oinions from the lower courtr
,n on" inference can be drartD

,n-.. 
-ot"."nt"a. 

Prior to trial
ii".a' bt lves gave CICLG
:rioti,-,::r' on which the "gubC'i'

blt' Irne u'as signed to 83 Na
rsi: For-t]-eight of the Pharml
I tlYt-L0SPASMOL: the rd
rnertr drug Ten of the thirtf
sLs n'ho disPensed a generr

the word CYCI,OSPASMOL 0
-ir, s or those lo also includd
.t i *ora "generic'" Nine of D

'al,:,#

-fl

v:'ij

g[ r1,",il?""#'.'t?frlrtii'i J;;;' ";3i'7 a"a ca"u"r exchange with a witness

The District Corrrt .or"tlili in"i','i,* "rl 
6# F2d,;t Snn. ttt" District Court' however'

dence did not justrr). .n"- iii"i"r"" that peti- d,"d 
-thti 

its conclusion that pharmacislc

tioners'catalogs 'n-*-pi"iti,ttitl 
it -itr"' afr1"'-'ii"**nd the'drug substitution law

h2l. Ibid. The Court 
" "ppt"[' "mphasizing 

i"'td t'pon the fact that' in numerous rn'

rhar t0 of the 35 aruggrJti *'ho dijnengd 3 roi"*., '" pf,"rmacist..told a consumer that

reneric drug mislaber*'"1? J'cidi'ospes ;;;"' 
';;hibit'ed 

filling prescriptions with

fiOi."f;;; a patrcrn of suEtitution and g"r,"ri. products. even.though..the consumer

Iii"U"fi"g, 038 F2d. ar 543. The dis"entini i"a presented a prescription allo*'ing generrc

iiIJ"""'"ti," appellate panel' emphasizing 
",ru"iltutlo" 

488 F Supp' at 397J98'
'ti-I-onty I of 83 pharmacists attempted an

illesal substitution and;;;;; Pt"d-t T"9" 19. [5b] In reaching.that conclusion' the

rcible bv the color '-';i; 
concluded -the ct'i '"iipotals took 5udlcial notice of the

ffi;-;;;r.;d the District Court's fr1dins i*'it"r, in't"try 1980, six indictments were

&; ;itiilling resulted from confusion ;;d"d--;;;, in Ne* York citv charsins

ffi;, ffi;ilit'ution.lawsrather than from H;;;;C with substituting cvclandelate

orofit considerations ld at Dao'

on the basis of ,i," .ilo'#u"fore us, rhe i". cvt-l,ospAsMol -we 
not€ that the evi-

inferences drawn by.r,"-iiirtri"t Court are i"ri-"i*iich the Court of Appeals took

Dot.asamatterofta*,u.,reasonaute.5.,ai.i'rnoticenotonl.r-invo}vednoconvrc.
l?.TheCourtofAppealscitednoevidenceli"""-U"talsoreflectedknowledgethatwas

to rupport its conclusili,"*'fr.-5'lpparenlfl ,,oi- tu"iftUfe when the District Court ren-

reats uDoD the assumption that a pharmacist i".J * a**isn. Iv[61eover. even if the Dis'

rho has been provided - i-it tin" generic arl*-corr", failed to. consider relevant evr-

dnrc will be unable to t*]'i i-r'" t"-pt"tion to i"t""' ";iiti' 
wouid have been an error of

proht from illegal acti"iii'-w" n"a no EupPort il';; ;; of Appeals' rather than make

in the record for such J far-.eactting conclu- ii;'";; fact,rul d"i..-lDzllor: should have

rion. Moreover. the assumptron is inc-onsistent i"-r"J"a for further proceedrngs to allo$ the

;ct ;i; Oistrla Court's hnding that onlv. ? ;;*l;;;-io "or'.iae' 
the evidence St" !91-

;HifSHft#l,H'JI'11*" '","$Hli' -Jit'na"a v s*int' ante' at 2sr-,,.2'72L

at 897. 
! occurrw 'ou r vevr' 

Ed 2d 66' 102 s ct 1781 (1982)'

617



U.S. SUPREME COURT BEPORTS 72LEd2d
producing an imitative product.
Ibid.r

[o] Each of those conclusions iscontrary to the findings of the Dis-trict Court. An appellite court c-an_not substitute its interpretation ofthe evidence for that of tfr" i.i"i
court simply because the reviewins
court "might give the facts anott,"i
construction, resolve the ambiguities
diferently, and find a

[456 US 858]

cast to actions which H:" i'r:'rtt;l
!9y., apparently deemed in"o.Lni.,;
unrtect Utates v Real Estate Boards,
13e_gs 485, 4e5, e4 L Ed 1o0r, r0 Ea 7n (1950).

v
Tlr" Court of Appeals erred insetting aside findings of fact that

yele n9t clearl.v erroneous. Accord-
mgly, the. judgment of the Court ofAppears that the oetitioners violated
g 32 of the Lanham e.t i. ."r"rlJi*

, [7] ,Although_ the District Court
also clrsmissed Ives' claims alleeins
that. the petitioners ,iof.t"a d tTiuiof -the Lanham Act and th"".;;
unfair-competition law, the C;#;;Appeals did not address tir;;claims. Because $ 43ra) p."friUir."l
Droacler range-of practices than does
S.o.z, T ma)' the state unfair comDe_
trtron law, the District Court's decl_sion dismissing Ives' claims 

-b;;;
upon those statutes must be indelpendently

[456 US 859]
reviewed. Therefore, weremand to the Court of Appeals'foifurther proceedings corrriri"nt *iihthis opinion

Reversed and remanded.
SEPARATE OPTNIONS

_ _Justice White, with whom Justice
Marshall joins, concurring in th;
result.

lVe granted certiorari in these
cases in order to review the legal
standard employed by the Seco-nJUlrcuit in finding that a generic

drug manufacturer is vicariously lia-
ble for trademark i"f.i.rg"-"riio.I_
mitted by pharmacists rnlho airp""sl
the generic drug. The Cor.t ir";il-
itly, endorses the legal stand.rJ ;;;-portedly employed b1. the Cou.i ofappeals, anre, at g5g_g54, ?2 L Ed2d, at 61ffi16, but nnas that

.20. The Coun of Appeals reached that con_clusion despite the b'istrict C"r.-,r-'.-*r.I..
finding. thar. for purposes ;i a;i;,, t,i"""#'sule_colors were funcrional. See supra.-;i g5I.
72 L. ry 2d, ar 615 As the- ;il;;i-beffi:noted, the Courr of Appeals. -"i*ii, "-ii'x1'"orcregarded the Districr Court,i nrti""".ifunctionality. see 638 rza, 

"t sjs, ,'j-ii,i""ri1l
fli: _J_. 

dissent.ing ;. or impt ici t i5: r"j;"r.d', #;*,gj,nq a6 nor ',persuasive." See-id., at S4J. -'
. wh'le the precise basis for the Coun of
11ry"]:' Ali"e l" this issue i. "".r."i'u i.clear..that the Courr of Appeals 

".r"a. in.
lnneliarc ooun *.as nor entitled simptf- todisrsgr.6 

_t}le Districr Couri.s n"aing oiiunitionalit.v. .While the doctrine of furlrionJlr.
rs, most dlrectl_\. related to the question oiwhether.a defendant has vrolatrjJ;i;;:, ;fthe Lanham Act. see generall.u :f"t". tfr"
6r8

Pr-oblem of Functional Features: Trade DressInfringement Under Section 43(a)of th";;
h-am Act, 82 Colum L Rev ZZ tfgezl, ,"fi1;;cof functonality ma). also be ..l"r"r,r io'"i
lq11ol rnvolving $ 32 By establishing ro thelrlstrrct Oourt's satisfaction that unifJrm capsule colors served a functional p".po";.;ii"
petitioners offered a legitimate .;;; i;;producing an imitative product

-Nor wa-s the Court of Appeals entitled sinr.
pl.r' to dismiss the Districi 'C.r.,,.-fi"Ji.s';f
functionalit.v as not .'persuasrve '. If the Dr:.trrct Uourt erred a-. a matter of iau.. the Court
1f Appeals should have identified tf," Oi.iJ.iCourt's legal error If the Courl ;i;;;;t.
disagreed n'ith the Distrrct Court,s factual
findings, it should not have dismissed therrrwithout finding them cleari.v 

"..on"ou.- 
------



OBTS 72 LEd ?A

:learly erroneous. Accord,
judgment of the Court ofat the petitioners viohd
Lanham Act is reversed -

ough the District Court
sed. Ives' claims aUegi;;
etitioners violated $ 4?J
tham Act and the etate
petition law, the Court ofIid not address thqg;
)ause^ g 43(a) prohibits i
rge-of practices than does
y- the state unfair compe
the District Court's d&i_
sing Ives' claims based
statutes must be inds

[456 US 85e]

- 
reviewed. Therefore, we

lhe Court of Appeals-for
ceedings consistent with

and remanded.

rcturer is vicariously lia-
rmark infringement com-
harmacists who dispense
drug. The Court implic.
; the legal standard pur-
ployed by the Court of
;e, at 853-€54, 72 L Dd
;{i16, but finds that

15c court erred in setting aside fac-

6d nnai"gt that were not.,clearlY

[gnn#:rf;i",l#H1H:l:

On appeal after trial, a majority of
the Second Circuit found defendants
liable for contributory infringement
by revising and expanding the doc-
trine of contributory trademark in-
fringement. 638 Fzd 538 (1981) (Ives
IV):

"By using capsules of identical
color, Bize, and shape, together
with a catalog describing their ap
pearance and listing comparable
prices of CYCLOSPASMOL and
generic cyclandelate, appellees
could reasonably anticipate thal
their generic drug product would
by a substantial number of drug-
gists be substituted illegally . . . .

This amounted to a suggestion, at
least by implication, that the drug-
gists take advantage of the oppor-
tunity to engage in such miscon-
duct." Id., at 543 (emphasis added).

Ives II required a shou,ing that peti-
tioners intended illegal substitution
or knowingly continued to supply
pharmacists palming off generic cyc-
landelate as CYCLOSPASMOL; Ives
IV was satisfied merely b,v the fail-
ure to "reasonably anticipat,e" that
illegal substitution b1' some pharma-
cists u'as likely. In my vieu'. this is
an erroneous cdnstiiiEfici-n' 6f_the
iatutory law governing trademark'
protection. 

_

William R. Warner & Co. v Eli
Lilly & .Co. 265 US 526, 68 L Ed
1161, 44 S Ct 615 i924i, made clear
that a finding of contributory in-
fringement requires proof of either
an intent to induce illegal substitu-
tion or continued sales to particular
customers whom the manufacturer
knows or should know are engaged

INWOOD LABORATORIES v IVES LABORATORIES
456 US 844.72 L Ed 2d 606, 102 S Ct 2182

clcarly*ttone.ou.s rule, however' was

]4 pr"r"trted in the petitions for
trtiorari. This was conceded at oral
rmrment.t Tr of Oral Arg 69. Our
BrIe 21.1(a) states that "[o]nly the
onestions set forth in the petition or
irirly included therein will be con-

ridered by the Court." The majority
rrggests no reason for ignoring our
orn rule. Furthermore, if the issue
resented in the petitions for certio
i"ri frta been whether the clearlY-

,ctional Features: Tlade Drs
nder Section 43tat of the L,ar
Ium L Rev 77 i.l98}, a 6ndia3
may also be relevant to ea

I 5 32. By establishing to thc
satisfaction that uniform cap
ed a functional purpee, tbc
:ed a legitimate reason for
itative product.
)ourt of Appeals entitled dm-
he District Court's finding of
not "persuasive." If the Dir
as a mat[er of las.. the C,ourt
d have identifieC the Disrrict
ror If the Court of Appeab
the Disrnci Court's factual
ld not have dismissed than
hem clearl.r- erroneous.

Gtroneous standard, although ProP
crly invoked, was erroneouslY aP'
plied, it is doubtful in my mind that
ibi" fact-bound issue would have
rarranted certiorari. I nevertheless
Goncur in reversal because I believe
that the Court of Appeals has wa-
tered down to an impermissible ex-
tent the standard for frnding a viola-
tion of $ 32 of the Lanham Act, 15
usc $ 1114 [15 USCS $ 1114].

In its first opinion in this litiga-
tion, the Court of Appeals indicated
that a "manufacturer or wholesaler
would be liable

[456 US E60]

under $ 32 if he sug-

Sest€d, even if only by implication,
that a retailer fill a bottle with the
generic capsules and apply Ives'-
mark to the label, or continued to
ell capsules containing the generic
drug which facilitated this to a drug-
gist whom he knew or had reason to
know was engaging in the practices
just described." 601 F2d 631, 636
(1979t (Ives II). The District Court
applied this test but concluded that
no vic,iatron of S 32 had been shou'n.

l. Th: ii':i:'C question in petitioner Darb-v
Drug C-. s petrtron embraced the claim that
the Cour'. oi Appeals had failed to observe
Rule 52ra, in overturning the District Judge's

finding of functionaiity. As discussed belou. I
agree r+'ith the Court's invocation of Rule 52
with respect to this aspect of the decisron
below'.

619



U.S. SUPREME COURT REPORTS

inclined to believe
silently acquiesces
change in the test
infringement.

72LEdzn

.that the esun
tn a significant
tor contributo,rS,

in improper palming off. In that
case, it was shown that the manufac-
turer'E salesmen actively induced,
either in direct terms or by insinua-
tion, the filling of requests for Coco-
Quinine with. 

[456 US E6l]

coco. "The wrong was in o".r*S$il,
enabling the dealers to palm off thL
preparation as that of the respon-
dent."z Id., at 530, 68 L Ed 1161, 44
S Ct 615. Coca-Cola Co. v Snow Crest
Beverages, Inc., 64 F Supp 980, g8g
(Mass 1946), affd, 162 F2d ZBO (CAl),
cert denied, 332 US 809, 92 L Ed
386, 68 S Ct 110 (L947), the case
upon which the Court of Appeals
relied in Ives II, stands for this very
proposition. There was no contribu-
tory infringement in Snow Crest's
manufacture of a product identical
in appearance to that of Coca{ola.
Judge Wyzanski observed that

"any man of common sense knows
that in any line of business
there are some unscrupulous per-
sons, who, when it is to their
financial advantage to do so, nill
palm off on customers a different
product from that ordered by the
customer." 64 F Supp, at 98&gg9.

These cases reflect the general con-
sensus. 2 J. McCarthy, Trademarks
and Unfair Competition g2S:2 (1929)
('[TJhe supplier's duty does not go so
far as to require him to refuse tJ sell
to dealers who merely might pass off
its goods"). The mere fact that a
generic drug company can anticipate
that some illegal substitution will
occur to some unspecified extent.
and by' some unknown pharmacists.
should not b1- itself be a predicate
for contributory liabilirl.. I rntr: am

Piluting the requirement for e*tablishing a prima facie case of ooitributory trademark infringemeniT.
particularly unjustified in the ,I
neric drugs field. preventing the rL
of generic drugs of the same colorli
which customers had becom" ...ui
tomed in their prior use of the b"""a
name product interferes with the
important state policy, expressed 

-ij
New York and 47 other States, ii
promoting the substitution of

[456 US 862]

neric formulations. See Wr..r?i
Consumer Protection and prescriu
tion Drugs: The Generic Drug SuL
stitution Laws, 62 Ky lJ 3g4 ifgZg
1979).

The Court of Appeals concluded
that there was no "persuasive evi_
dence of a legitimate reason" for
petitioners to use imitative colors.
The District Court, however, had
expressly found that for purposes of
$ 43(a), the capsule colors weie func-
!i9n1l With respect to functionality,
I fully agree with the Court that the
Coyt -of Appeals erred in setting
aside factual findings without find-
lng that they were clearly erroneous.
The District Court found that cap
sule color was functional in s"u"""l
respects: patient anxiety and confu-
sion were likely if accustomed medi-
cine were dispensed in a different
color; capsule colors assist patients
in identifying rhe correct pill tD
take; standard colors help ph-vsicians
identify the drug involved in case of

2. Although Warner and other (.as:: were
decided before $ 32 wa-s enacrei. thr r,u-uose
of the Lanham Act was to codifr. and unifv
the common la*, sf unhir competrtron anb

620

trademark protection. S Rep No lg33, 7fth
Cong, ?i Sess (1946r. There is no suggestion
thai Congress intended to depart from War-
ner and other contemporarl' precedents.



tls 72 L Ed Ad

:lieve that the Ceun
)sces in a significaut
test for contributoy

) requirement for ga.

rima facie case of oou.
emark infringement i1
rnjustified in the gs
rld. Preventing the ".c
gs of the same color to
ers had become accur'
prior use of the braad
I interferes with thc
te policy, expressed in
rd 47 other States, of
substitution of

{66 US E621

ge
ations. See Warner,
otection and Prescrip
'he Generic Drug Sub
;, 67 Ky lJ 3&1 (197&

rtion. S ReP No 1333' 79th

t946t. There is no suggeattoo
rtended to dePart from War'
ntemporarY Precedents'

of Appeals concluded
as no "persuasive evi'
iegitimate reason" for
r use imitative colors.
Court, however, had

nd that for purposes of
rpsule colors were func!
'espect to functionalitY,
nrith the Court that the
peals erred in setting
findings without find'

were clearly erroneous.
Court found that caP
s functional in several
ent anxiety and confu'
ely if accustomed medi'
spensed in a different
r colors assist Patients
g the correct Pill to
d colors helP PhYsicians
Irug involved in case of

I N w ooD lJI39*tT9}*?.',.#'# ! I3,?#AToRIES

$*jIffiffi
Finally, although the.Court states. ;*ft;;]'-Si*f"n1"5 v Wagner' 216

ihat a .'finding ot tunctionality mav il['gi!,'e80l S+ I pa 525' 30 S Ct

ri"" ue relevant to an action involv- iig iigiol (riolmes'' J')' Reproduction

* fi2.;'lt does rii explicatq the li"u-i"""tio"uf attribute is legiti-

*tru*r,**,*i*r*l}l[r*fu
"rui- 

pi"aicated sorelv tm:* |", i,?frtt:f::ri3f: ili
on the ,"p'od"tion of a functional ir"tl, ;i';;;;;t or oackage design

;iltfi;-'"f the. nr{uc.!' a. f:i: that is so similar.to ihat of another

iiorJ-.frrracteristic is "an impor- ,rJ".* ,fr", it i.s likely to. confuse

L".'i'i.,gt"aient in the commercial ro1ffi;; it to tt'tproduct's source.

ffi ;. li tle product"' 60 1 F2d' at u"lir ".1*,"tir,"-' Jf.i"i desigaation .of
aA;';;;, aftei expiration of I p?; 

o'#in'; within the meaning of the

i"ni, it is no more the property ot 
X.i.l"et'iir"-Court of Appeals l"^*1

f"""rig,""tor than the product it- ;"i";ii:'S aau, "!L".'u.yond S-3.2

;'*ilnul4'Hii"r,r#::q: [-HIl*im jrnfi u!l:
ni ;Uli:l;":rt"':*"fi:i'?"'L 61''Filr' at 641 Section 43(a) offers

eame formutatron of the arug, o. Iii iilJit protection of I'es' interest

S. "The reality is that for every link.in the Unfair C'ompetition'{rademarks and Monop

distributive chain. (from .P'S:'-"'L:y'"T.: "'i"' S slli';l lt-::]i'i'lll', ,*',f#io#l]";:'::il';'Hi:t#-;ftil; g^,: 4. see. e g. rnternationar order or Job's

ffiil;; i."...tptio,, ao"p.-,i".- a runclion^ ,.';rffi* ^;;itif:g'f ,L.?;;tl3 il11;J?
yki:l"i:**t;#'h:'d'ir'.il?'T"'"i",fr:,*ql6fqg;+fffffi
f,rr'tr,"-atrg .nd its milligram.dosage to-t-n1: a
lliilil'ca1l be avoided in the inrcresl'-tt 1

iirlil.""",t.ul precaution and patient satety r

lti"ti'"'JT"E";il"*'x;!i:,:,tri5a{xrl*;l:i#T'i"-"11'}i$l
,.r""u.ing and therefore"L*.ldi.rltr- 

-t".,"0- 
;;#'il;; 11" t.,.,t* :1,1:ftui:.t:::;l:t ;i,;,

i,;fr;;i dtug ir"tf in addition ther"also cooied feature bars relt

B€n'e to identiiv tn" o''le"ili';l-''ing"i'lon :;i';' i;; i;";e dress -infrinsemenl 
or prod'

"l'itlii'ii"" 
has l'<'come the pluralitl vieu"'t

,.rlli'i:"5:l"ili !:lo'::',ii"'l;l*:Ti*!-tiii 5' se'l eg Tr-r*r Lqurl' Sen co r'Frue-

competitron to adop" " 'iot'^r,ti"rn 
differenl i'''"'r?"''att '- -''":tt !f': ;":i 3: 

'fi^n
:?fffi+:i1*:,,,,T1i.$,!f*'":1ff l,'&Jl"fl;;.i';. -"',i; ."G,, rovs 1n'-

sion at the pharmacr'; i;';i could- be com- b#tzi io 'ci--'t!!I-' See also Note' 82

pounded beyond '"a"*p'iln:: 
Ji -c'lirnt'"''' ilr'* r' Rer" supra at ?t+-8(i

62r



U.S. SUPREME COURT REPORTS 72LEidzt

in this case, and it is not surprising
that the alleged

[456 US 664]
g 4B(a) violation was

the. primary claim in this litigation,
as it has been in other cases of tnis
genre. It would be anomalous for the
imitation of a functional feature to
constitute contributory infringement
for purposes of $ 32, while th-e same
activity is not a "false designation of
origin" under g 43(a).s

I would reverse the decision of the
Court of Appeals and remand for
review of the District Court,s find-
ings consistent with the principles
stated above.

. Justice Rehnquisl, concurring in
the result.

_ I agree that the judgment of the
Court of Appeals should be reversed.
That court set aside factual findings
of the District Court without haviis
found them to be clearly 

".ro.r"oulas required by Rule 52(a) of the
Federal Rules of Civil procedure. I
disagree, however, with the Court,s
determining for itself that the find-
ings of the District Court were not

cleady erroneous. I think in theusual case this is a question beei
decided by the court of app"ut., *t'oh?y" 3 good deal more experierrce
with the application of this i.inciptJ
tha-n we do, and I see no reason to
make an exception in this case.

I also assume, correctly I hono
that the Court's discussion of apfili
late review of trial court findings'in
bench trials, ante, at 8Sb, 22 i Ed'24, ?t 616, is limited to cases liwhich the appellate court fr.s ,oi
lound the trial court findings to be'clearly erroneous." United -St.tes-,

^UliEa lhtes Gypsum Co. 33g US
364, 92 L Ed 746,68 S Ct 525 (194-8;
upon which the Court relies, estab_
lishes the authority of a reriewine
court to make its own findings, conl
tr-ary to those of the trial court.
where it has determined the lattei
to be "clearly erroneous."

I agree with the Court that these
cases should be remanded to the
Court of Appeals to review the Dis-trict Court's dismissal of respon-
dent's claims under $ 43ta) of the
Lanham Act and its state-law
claims.

6: This is not- to suggest that the copying ofa functiona) feature protects a defenainr
from g 32 liability predicated on active in_

ducement of trademark infringement or prc
tects a defendant who ha-s also reproduced
nonfunctional features.

622