Case(s): Inwood Laboratories v. Ives Laboratories, 456 U.S. 844 (1982)

Ives Laboratories, Inc. manufactured and marketed the patented prescription drug cyclandelate to wholesalers, retail pharmacists, and hospitals in colored capsules under the registered trademark CYCLOSPASMOL. After Ives Laboratories’s patent expired, several generic drug manufacturers, including Inwood Laboratories, Inc., began marketing the drug, intentionally copying the appearance of the blue and blue-red CYCLOSPASMOL capsules. Ives Laboratories then brought an action against Inwood Laboratories and wholesalers in Federal District Court under, inter alia, section 32 of the Trademark Act of 1946, alleging that some pharmacists had dispensed generic drugs mislabeled as CYCLOSPASMOL and that petitioners’ use of look-alike capsules and catalog entries comparing prices and revealing the colors of generic capsules contributed to the pharmacists’ mislabeling. Respondent sought injunctive relief and damages.  

The District Court Decision

The District Court entered judgment for Inwood Laboratories (and thus, refused to grant a preliminary injunction for Ives Labs), finding that, although the pharmacists had violated section 32, Ives Laboratories had not made the necessary factual showing that Inwood Laboratories had intentionally induced the pharmacists to mislabel generic drugs or continued to supply cyclandelate to pharmacists who it knew or should have known were mislabeling generic drugs. Specifically, the District Court determined that Ives Labs failed to produce evidence of the requisite “knowing and deliberate instigation” of infringement and determined that its section 43(a) claim was not supported by evidence of the color combination’s “nonfunctionality” and “secondary meaning.

The Second Circuit Appeal and Remand

The U.S. Court of Appeals for the Second Circuit affirmed the district court’s decision, finding that the record lacked necessary facts. However, the Second Circuit advised the district court that the proper test for “contributory infringement” was broader than the one utilized by the lower court, and instead, stated … “[A] manufacturer would be liable under section 32 if he suggested, even if only by implication, that a retailer fill a bottle with the generic capsules and apply [plaintiffs] mark to the label, or continued to sell capsules containing the generic drug which facilitated this to a druggist whom he knew or had.”

After a bench trial on remand, the District Court entered judgment for the petitioners. Applying the test approved by the Court of Appeals to the claim based upon section 32, the District Court found that the Inwood had not suggested, even by implication, that pharmacists should dispense generic drugs incorrectly identified as CYCLOSPASMOL.

The District Court also found that Ives failed to establish its claim based upon section 43(a). In reaching its conclusion, the court found that the blue and blue-red colors were functional to patients as well as to doctors and hospitals. In addition, because Ives had failed to show that the colors indicated the drug’s origin, the court found that the colors had not acquired a secondary meaning.

The Court of Appeals concluded that the petitioners violated section 32, and did not reach Ives’ other claims.

Supreme Court Decision

The Supreme Court granted certiorari, and found that the Court of Appeals erred in setting aside the District Court’s findings of fact. 

(a) In reviewing such findings, the Court of Appeals was bound by the “clearly erroneous” standard of Federal Rule of Civil Procedure 52(a).

(b) By rejecting the findings simply because it would have given more weight to evidence of mislabeling than did the trial court, the Court of Appeals clearly erred. Determining the weight and credibility of the evidence is the special province of the trier of fact. Because the District Court’s findings concerning the significance of the instances of mislabeling were not clearly erroneous, they should not have been disturbed.

(c) Moreover, each of the conclusions that the Court of Appeals made in holding that the evidence established a section 32 violation was contrary to the District Court’s findings. An appellate court cannot substitute its interpretation of the evidence for that of the trial court simply because the reviewing court “might give the facts another construction, resolve the ambiguities differently, and find a more sinister cast to actions which the District Court apparently deemed innocent.”