456 U.S. 844 (1982)
In 1955 respondent Ives Laboratories, Inc. received a patent on the drug cyclandelate.1 Ives marketed it under the registered trademark CYCLOSPASMOL in blue 200 mg capsules imprinted Ives 4124 and blue-red 400 mg capsules imprinted Ives 4148.2 Ives promoted the drug primarily to physicians through personal visits distributing product literature and starter samples.3 After the patent expired, Ives focused its efforts on convincing physicians to indicate on prescriptions that generic substitution was not permissible.4
After the patent expired in 1972 petitioners Inwood Laboratories, Inc., Premo Pharmaceutical Laboratories, Inc., and MD Pharmaceutical Co., Inc. began selling generic cyclandelate in capsules of identical colors and form.5 They promoted the products through catalogs sent to wholesalers, hospitals, and pharmacies that described them as equivalent or comparable to CYCLOSPASMOL and sometimes listed prices and capsule colors.6 The generic products reached the market in bulk containers correctly indicating the manufacturer.7
Ives filed suit in the United States District Court for the Eastern District of New York under sections 32 and 43(a) of the Lanham Act and New York unfair competition law.8 Ives alleged that the petitioners' look-alike capsules and catalog references induced pharmacists to mislabel generic cyclandelate as CYCLOSPASMOL.9 Ives sought an injunction against marketing in the same colors and damages.10
The District Court denied a preliminary injunction in 1978 and after a bench trial entered judgment for the petitioners in 1980.11 The court found that the petitioners had not suggested improper substitutions.12 Instances of mislabeling were infrequent and stemmed from pharmacists' misunderstanding of state substitution law rather than deliberate passing off.13 The court also found the capsule colors functional for patients, doctors, and hospitals.14 The colors lacked secondary meaning.15
The Court of Appeals for the Second Circuit affirmed the denial of preliminary relief in 1979 but after trial reversed the judgment for the petitioners in 1981 on the section 32 claim.16 The Supreme Court granted certiorari in 1981.17
Whether the Court of Appeals for the Second Circuit properly applied the clearly erroneous standard of Federal Rule of Civil Procedure 52(a) when it reversed the District Court's factual findings?18
Federal Rule of Civil Procedure 52(a) provides that findings of fact shall not be set aside unless clearly erroneous.19 Due regard shall be given to the opportunity of the trial court to judge the credibility of witnesses.20 An appellate court must accept the trial court's findings unless left with the definite and firm conviction that a mistake has been committed.21
No. The Court of Appeals reversed the District Court's findings on the frequency and cause of mislabeling by pharmacists and the absence of any suggestion by the petitioners without determining that those findings were clearly erroneous.22 Instead the appellate court substituted its own assessment of the evidence and concluded that the petitioners could reasonably anticipate misconduct by pharmacists supplied with imitative lower-priced products.23
The Court of Appeals failed to properly apply the clearly erroneous standard of Rule 52(a) and its reversal of the District Court's judgment on the section 32 claim cannot stand.24
Related opinions on this issue
Justice Rehnquist agreed that the Court of Appeals set aside factual findings without finding them clearly erroneous as required by Rule 52(a).25 He disagreed with the majority determining for itself that the findings were not clearly erroneous.26 Rehnquist stated that this question is best decided by the courts of appeals in the usual case because they have more experience with the application of the principle.27
He also assumed that the Court's discussion of appellate review is limited to cases in which the appellate court has not found the trial court findings to be clearly erroneous.28
Whether the evidence established that the generic manufacturers suggested or continued to supply products to pharmacists they knew or had reason to know were mislabeling generic cyclandelate as CYCLOSPASMOL?29
Liability for contributory trademark infringement under section 32 of the Lanham Act extends to a manufacturer that intentionally induces another to infringe a trademark.30 It also reaches a manufacturer that continues to supply its product to one whom it knows or has reason to know is engaging in trademark infringement.31
No. The District Court found no direct evidence that the petitioners suggested infringement through their catalogs and promotional materials and determined that mislabeling incidents occurred too infrequently to support an inference of implied invitation.32 The court further found that the mislabeling resulted from pharmacists' misunderstanding of the New York Drug Substitution Law rather than deliberate passing off.33 The Court of Appeals improperly overturned these findings without applying the clearly erroneous standard.34
The evidence did not establish that the generic manufacturers were contributorially liable for trademark infringement under section 32 of the Lanham Act.35
Related opinions on this issue
Joined by Justice Marshall
Justice White concurred in the result but expressed concern that the Court of Appeals had watered down the standard for contributory infringement.36 The court required only that petitioners could reasonably anticipate misconduct rather than proving intent to induce infringement or continued sales to known infringers.37 He noted that the mere ability to anticipate some illegal substitution by unspecified pharmacists should not predicate contributory liability.38 White also observed that a finding of functionality provides a complete defense to a claim based solely on reproduction of a functional product feature.39
He would reverse and remand for review of the District Court's findings consistent with these principles.40