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>> Warren E. Burger: We will hear arguments next in Inwood Laboratories against Ives Laboratories
and the consolidated case. Mr. Bass, I think you may proceed whenever
you're ready. >> Milton A. Bass: Mr. Chief Justice, and
may it please the Court: In this dispute between generic manufacturing
companies and brand name companies, the generic manufacturers are seeking to get a larger
share of the drug industry, of the drug market. The brand name companies are seeking to retain
or increase their dominant position in the prescription drug market.
It has been variously reported that they have approximately 90 percent of the prescription
drug market at this time. What the brand name companies are asking,
what they're asking for the Court to give them is a monopoly on color.
They're asking this for a competitive advantage, and that's why we are here.
Both sides in this dispute claim they speak in the public interest.
We believe that our position weighs more heavily in the public interest than that of the brand
name companies. If the brand name companies are given a monopoly
on color, I respectfully submit they will be able to use that advantage for unfair competition
whether or not it is found by this Court that there is functionality present.
The question of whether there is functionality will depend upon the definition that this
Court lays down. But irrespective of whether there is a fact
of functionality, even then I believe it will be used to the great advantage of the brand
name companies and to the disadvantage of the generic companies for this reason.
The Respondent and the PMA, the association that represents the brand name companies,
have submitted briefs to this Court, and they have said to this Court color serves no function
other than to deceive the consumer. They have said that to this Court in order
to get the color monopoly they seek. But when they speak outside of this Court,
they do not say color has no purpose or no function.
On the contrary, we have found that one company, for example, issued a document to its salesmen
for discussion with physicians to convince them that they should prescribe the brand
name product and not the generic product. And they said... they didn't say what they
told the courts, color has no function; they said color has advantages.
If you change, some patients may become concerned that it's been changed.
They said particularly in the hospitals, if you change the color, if you don't keep prescribing
the brand name product, you'll have problems with all personnel handling the medications.
Explanations alone will be time consuming. They'll require additional checks.
Possible confusion and additional effort will result.
Now, that's-- >> Unidentified Justice: Isn't there a statute
involved in this case? >> Milton A. Bass: --A statute?
>> Unidentified Justice: The Lanham Act? >> Milton A. Bass: Yes, Your Honor.
>> Unidentified Justice: On that point, Mr. Bass, aren't we really concerned with whether
there is a Section 32 of the Lanham Act violation? >> Milton A. Bass: Correct.
>> Unidentified Justice: We're not concerned properly, are we, with the 43a question, would
you agree? >> Milton A. Bass: That is correct, Your Honor.
The case comes up on an alleged violation of Section 32, and more precisely, whether
the defendant manufacturers are guilty of contributory liability or contributory violative
conduct. But I would respectfully submit, Your Honor,
the question of functionality is essential, in my view, to a consideration of this problem
because when these cases have been presented in the district courts, in the lower courts,
that is the argument that has been presented to the court time and time again: color has
no purpose except to deceive. And I believe that is the reason we're here
today; that the lower courts have accepted that proposition.
And therefore, with due respect, I merely wish to point out that no matter what Your
Honor decides is the definition of functionality, well, I believe this itself is functionality,
that our ability to effectively compete... I'm not saying we cannot compete... to effectively
compete will be damaged if they can say to the doctor do not prescribe the generic because
you'll cause confusion, mistake, error, patient resistance, whether that's true or not, even
though we will submit, as I will discuss now, it is true.
So that the strict legal question, Your Honor, you are correct, is are we guilty of contributory
violative conduct. But I--
>> Unidentified Justice: Shouldn't we focus on what standard of review the Court of Appeals
invoked in reviewing the District Court findings? >> Milton A. Bass: --Yes, Your Honor.
I believe that must be done, and I can do it now, or I intended to address it.
The reason I wanted to-- >> Unidentified Justice: It just seemed to
me that maybe a lot of time was spent in the briefs arguing something that we wouldn't
end up resolving if we stuck to the question that we were supposed to resolve.
>> Milton A. Bass: --Well, that is true, Your Honor, but there is one other factor that
is relevant. Inherent in applying the standard that the
Second Circuit discussed both in Ives II and Ives IV, both the first decision written by
Judge Friendly and the second by Judge Mansfield, one of the rules laid down is that you will
find contributory liability if you suggest even by implication that you should commit
illegal substation or mislabeling. The second part that Judge Friendly mentioned
was if you continue to sell to someone you know is illegally committing these acts.
In discussing the question of whether you come within the first prong of that rule,
if that is the rule this Court should adopt, that if you suggest even by implication, whether
or not there is functionality becomes relevant, separate and apart even from the question
of relief. But even liability itself will hinge on whether
there is a complete absence of functionality. And the reason why the Respondent and the
other briefers make great moment of that question is precisely because I believe they cannot
sustain any position unless they can convince this Court that color serves no purpose.
If color serves a purpose, they have then lost their basic position to get a color monopoly,
because that is what they are saying to the Court constituted the suggestion.
Now, I will, Your Honor, be happy to address it right now.
When Judge Friendly in Ives II said the standards we're using are twofold... either you suggest
even by implication that you should commit the wrongful act, or you continue selling...
he said also he was adopting Judge Wyzanski's discussion and rule in the Coca-Cola-Snow
Crest case. When it came to the Ives IV decision in which
the majority opinion was written by Judge Mansfield, he said he was applying that rule,
and to come within that rule he said there were a number of factors.
He said the color, which was the same. He said there were catalogs and price lists
which compared prices and mentioned the color of both products.
Significantly, when the Respondent submitted its brief in this case, it did not adopt what
Judge Mansfield said, even though he ruled in their favor.
They are trying to contend and argue that color alone, color alone comes within the
rule to constitute the suggestion. And I would respectfully submit, Your Honor,
twofold: first, that is not a proper rule to be adopted; and secondly, that this Court
of Appeals did not properly apply the rule in terms of showing that there was compliance
with the requirement laid down in Ives II, if that is the rule this Court agrees with.
Because when Ives II came before the Court of Appeals, the court effectively said color
is not enough to constitute a suggestion by implication or otherwise that you should commit
an illegal act, violate the criminal code because we sell it in the same color, because
if that were adequate, the Court would not have sent it back and said a trial will have
further evidence to see what each side can introduce to try to come within or negate
compliance with that rule of liability. And in that regard I would like to point out
what is relevant and significant. When Judge Friendly sent the case back for
trial, he said you've give us 15 instances of illegal substitution.
I don't think this is of any moment. This is not extensive.
Though I might point out we later found out there were really only four; they found four
cases of illegal substitution in the United States... one in Philadelphia, Pennsylvania,
one in Tylertown, Mississippi, and two in New York City.
And what did they do when they came back with the additional evidence?
They did not conduct a study, which Judge Friendly asked them to do, to try to show
more extensive illegal substitution. They showed... there was an indictment against
six pharmacists for illegal substitution. That was all they showed.
But the study they conducted, allegedly to follow the direction of the Court of Appeals,
was on legal substitution. And, Your Honors, I respectfully ask how can
legal substitution be connected with or related to contributory violative conduct?
In other words, if the substitution isn't legal under the law, how can we say the manufacturer
is suggesting to the pharmacist that he comply with the law, sell my product, the generic
product but put his trademark on it? Why?
What motive is there for the manufacturer to tell the pharmacist you have the legal
right, the law says you can legally substitute? Ives isn't losing a sale.
It's not its sale. Under the substitution law it's mine, the
generic companies. So what they did to try to prove what the
Ives II court asked them to do was come in with a survey on legal substitution.
And I would respectfully submit there was a complete failure of proof.
But what we are trying to ask this Court today is not--
>> Unidentified Justice: But, Mr. Bass, may I interrupt a minute?
>> Milton A. Bass: --Yes, sir. >> Unidentified Justice: The concept of legal
substitution means legal as a matter of state law, don't you?
>> Milton A. Bass: That's correct. And, Your Honor--
>> Unidentified Justice: Well, but the fact that it's legal as a matter of state law doesn't
necessarily mean there was no infringement or unfair competition, does it?
>> Milton A. Bass: --Absolutely, Your Honor. But what I am suggesting is this: they are
trying to put in evidence to prove that the manufacturer is guilty of contributory trademark
infringement, and they are trying to do it by saying the manufacturer sells his product
to the pharmacist in the same color. And they say he's telling him you commit the
wrongful act of writing their name on your label to the consumer.
And what I am saying, Your Honor, is how do we get that causal connection?
What nexus can there be, what motivation? >> Unidentified Justice: The only thing I'm
suggesting is I don't think your argument turns on whether... the mere fact that there
was legal substitution isn't what's critical. The fact is that there was no wrongful intent
or not sufficient knowledge of the likelihood of deception or something of that character.
>> Milton A. Bass: Yes. There has to be a showing or proof of culpability
on the part of the manufacturer. >> Unidentified Justice: But I mean that could
exist even though the substitution was lawful. It just seemed to me you're emphasizing a
point that is not critical to your argument. >> Milton A. Bass: It is conceivable or theoretically
possible, Your Honor, but I think it would be rather difficult to conceive of a generic
company acting with guilty intent or wrongful intent or have any thought of wanting to tell
the pharmacist by any means... by telegram, letter, or using the same color here as they're
claiming... to go and commit a trademark infringement when I'm selling a product for a legal sale,
and it's being sold legally. Their theory, Your Honor, was originally that
an illegal substitution... the pharmacist is palming off my product... so they're saying
the manufacturer is trying to get more sales to have his product substituted illegally.
That was their theory, reading into his mind that state of mind.
And I'm suggesting for whatever reason they had, they didn't go out and try to prove more
extensive illegal substitution, which Ives II court found no showing of any moment.
But I appear, Your Honors, not primarily to say to you it was applied incorrectly, which
I believe the case was decided incorrectly-- >> Unidentified Justice: Mr. Bass.
>> Milton A. Bass: --Yes, sir. >> Unidentified Justice: May I ask you a factual
question? Are the four drug manufacturers that are here
in this case the only ones who marked this particular drug?
>> Milton A. Bass: No, Your Honor. >> Unidentified Justice: How many others are
there? >> Milton A. Bass: We don't have the exact
figure of pharmacists. There's been an estimate of approximately
100,000 users, maybe 25,000 pharmacists. >> Unidentified Justice: I'm asking--
>> Milton A. Bass: I mean doctors. We don't--
>> Unidentified Justice: --I'm asking only about drug manufacturing companies that manufacture
this particular drug. >> Milton A. Bass: --How many today?
>> Unidentified Justice: There are four before us in this case.
Are there others in the United States that market... manufacture and market this drug?
>> Milton A. Bass: Yes, Your Honor. >> Unidentified Justice: How many?
>> Milton A. Bass: The only one I know of, there's a Hauck, there's a regional manufacturer
in Georgia. I don't... there would be some others, Your
Honor. I'm not certain of which others.
Incidentally, I must amend, though, the answer, sir.
In this case two of... the two manufacturers, Premo and Inwood, are not presently manufacturing
it pending the decision of this case. >> Unidentified Justice: So there are only
two parties before the Court that are presently manufacturing this drug?
>> Milton A. Bass: Ives, yes, that I know of.
Actually it's Ives basically would be the one manufacturer.
>> Unidentified Justice: Do you know whether the company in Georgia that you mentioned
markets the drug with the same color and shape distinctions that you are discussing?
>> Milton A. Bass: No, they do not. They use a red capsule for their product.
>> Unidentified Justice: Are there any others who use different colors?
>> Milton A. Bass: Not that I'm aware of. I mean right now, yes.
After the decision when they were compelled to change--
>> Unidentified Justice: Yes. >> Milton A. Bass: --Yes.
The company would have to change. >> Unidentified Justice: What is the purpose
of using identical colors? >> Milton A. Bass: The purpose of identical
colors, Your Honor, is to maximize the ability to compete.
One example-- >> Unidentified Justice: Does that mean the
purpose is to cause the public to think that they're produced by the same manufacturer?
>> Milton A. Bass: --No, sir. >> Unidentified Justice: Why not?
>> Milton A. Bass: The purpose is to make them think it's the same drug, not the same
manufacturer. The purpose... I'll have to use plural, Your
Honor, if I may, with due respect... the first purpose I tried to refer to is that if we
do not make it in the same color, they go to the doctors, who is the purchaser here,
who prescribes the product, as I mentioned earlier, and they say color is important;
you'd better prescribe my product or otherwise there will be problems and confusion.
Second, doctors say that. There was an amicus brief by an organization
of doctors who also said to this Court color isn't important.
But when they issue their own papers here, they say in a poll in Florida there were 99
percent of the people who said if they had a different color they'd call their doctor,
and they would have those calls. Color is important, Your Honor, for doctor-patient
communication. When the doctor... if a person is taking a
number of medications and the doctor tells the patient you'll take the red one at 2:00,
the green one at 4:00, it's an aid for identification. In that respect it's an aid with respect to
co-mingling. When an individual is taking a number of medications,
Your Honor, they carry them in a vial. They identify the product by color... not
the manufacturer, by the color. To the same extent, Your Honor, there is an
aid in an emergency situation... not a final determination but an aid to have the color.
Color prevents confusions at all levels... pharmacy, in the hospitals who handle drugs.
Color is an important factor. It is an important competitive factor because
they make it so and because there is resistance. >> Unidentified Justice: But from your point
of view it aids confusion. Otherwise you wouldn't have copied theirs.
>> Milton A. Bass: No. The reverse, Your Honor.
For example, the premise determines the answer to Your Honor's question.
If it distinguishes the medicine, if we say it's either the same medicine or a different
medicine, then it's aiding identification preventing confusion.
If it identifies source, then there would be confusion, Your Honor.
But that's the key to the issue. Now, take Ives.
When Ires sells its products, it really doesn't use color as a source.
It puts out one product in blue, one in orange, one in yellow, and one in green; and it says
each color says I am Ives. Lily has a green product, blue product, yellow
product that says each color is... I am Lily. Is that a rational way to try to identify
me as the source? If they really wanted to identify source,
Your Honor, they would take a symbol, a star. If they want to put on that capsule a blue
star which then they advertise says I am an Ives product on all their products, I think
they're right and should do it to identify the source.
But the color doesn't do it. Look at the products in this case.
In the 200 milligram they make it in blue. In the 400 milligram they make it in red and
blue. Each one... does that each one say I'm Ives?
It will confuse the patient if it was talking about source; but it does tell the patient
the truth: I am a different medicine. I, the blue, am 200 milligrams.
I, the red and blue, are 400 milligrams. And, Your Honor, you've touched one of the
very problems we have. What they're saying to the Court is give me
the color monopoly; force him to change the color so I will be saying to the patient you've
got a different medicine, because I speak, color is speaking, saying I am the same medicine
or I am different. And if I have to put a different color--
>> Unidentified Justice: Mr. Bass-- >> Milton A. Bass: --That patient--
>> Unidentified Justice: --Maybe the patients aren't confused, but I am.
>> Milton A. Bass: --Yes, sir. >> Unidentified Justice: You say if they put
a star on it it's all right. >> Milton A. Bass: If they want to--
>> Unidentified Justice: But if they put color on it it's wrong.
>> Milton A. Bass: --Here's the distinction. >> Unidentified Justice: Is that your position?
>> Milton A. Bass: That was an example. Let me explain, Your Honor.
My position is the color of the capsule or the pill identifies the product and either
says to the patient I-- >> Unidentified Justice: Well, does somebody
go in the drugstore and say I want some red pills?
>> Milton A. Bass: --No, sir. They don't even say I want anything, Your
Honor. That's the point about this industry.
In this industry the patient doesn't choose; the doctor is the purchaser.
He prescribes and the patient doesn't even see it until he goes home, Your Honor.
But let me explain the star because I'm going to change the star to the name, when I was
answering Justice Rehnquist. When the patient picks up the 200 milligram
blue from Ives, it has the name Ives on it, the source.
When he picks up the red and blue, it has the name Ives, too.
So if he wants to use Ives to identify the source, or a star, Your Honor, that's fine.
But the appearance, the basic appearance, the basic color speaks to the patient I am
the same medicine or a different medicine. >> Unidentified Justice: What happens to the
color-blind patient? >> Milton A. Bass: The color-blind patient,
Your Honor, will need another method for identification, communication and other purposes.
Unfortunately, we cannot solve the whole problem. In fact, one of the unfortunate things, Your
Honor, is in my view we should have a requirement that all medications in their overall appearance
as to color, shade and size should be the same to prevent confusion and to help in terms
of the patient, doctor, pharmacist and nurse in their use of the products, and if there's
a sincere need or desire. >> Unidentified Justice: But that's not before
us. >> Milton A. Bass: It is not before us, but
we are trying to accomplish part of the result. The answer is, Your Honor, when I started,
why are we here? It's why is because they want to counter the
drug substitution laws. Forty-nine states in this country the state
legislatures have passed substitution laws stating the public interest be to encourage
substitution. >> Unidentified Justice: Yes, but, Mr. Bass,
those laws don't say anything about color. Which is the other state?
>> Milton A. Bass: Indiana, Your Honor. Now--
>> Unidentified Justice: May I ask you a question, Mr. Bass, about your star example?
>> Milton A. Bass: --Yes. >> Unidentified Justice: You said well, they
could use a star, but unless they got a trademark on it, that wouldn't be a different case,
would it? >> Milton A. Bass: Yes.
>> Unidentified Justice: If they do not trademark the star, couldn't you copy the star as well
as the color? >> Milton A. Bass: If they don't trademark
it, they could get secondary meaning and use it, Your Honor, for identification of source.
We would have no problem with that. Our only dispute is that they are trying to
get a monopoly upon and appropriate the whole appearance.
>> Unidentified Justice: Well, do you deny that color can give rise to a secondary meaning?
>> Milton A. Bass: No, I don't deny it can. >> Unidentified Justice: Well, what's the
difference between color and a star then? >> Milton A. Bass: All right.
First, I would like to equate the star with the name.
The name Ives to identify source or some distinctive little star I would put in the same category.
The color is the overall appearance that the patient sees to identify his medicine, as
I see it, Your Honor, and I separate what functions they're playing.
You see, in this industry there's something very unique.
We are not looking at products that are sitting on a shelf, and a consumer comes in and chooses
a product, and there's a question of deception or palming off when he chooses one product
against another. In the prescription drug industry he doesn't
even seen it until he goes home after he picked it up at the pharmacy.
The doctor prescribes the product and decides what he'll get.
So that the overall appearance and color plays no function in the purchase.
The whole classic or historical purpose is not present here, so there is a basic distinction,
Your Honor, in what we are contending here today.
In answer to Justice Powell's question of functionality, though, if I might state, although
we submit that all of these elements that constitute functionality... questions of patient-doctor
communication, the co-mingling problem, the confusion problem, or even what Parke-Davis
calls the psychological problem in which they actually issued a paper that color itself
answers a positive or negative action. You wouldn't have a certain kind of black
pill or a certain kind of other negative pill, Your Honor.
We think the emergency aid. We think these are functional, but our submission,
as stated earlier, even if the rule or definition of functionality does not encompass all of
those, the reality of the commercial dispute that competition exists here will still exist,
and we know that that is not speculation but actually the fact of what is occurring.
Thank you. >> Warren E. Burger: Mr. Ganzfried.
>> Jerrold J. Ganzfried: Thank you, Mr. Chief Justice, and may it please the Court:
The United States contends that the Court of Appeals incorrectly found contributory
infringement in the trade name Cyclospasmol. I'd like to explain why.
>> Unidentified Justice: What's the Government's interest in this case?
>> Jerrold J. Ganzfried: This case presents important questions as to federal competition
policy, on the one hand between the policy favoring product imitation, which will ultimately
hopefully allow for reduced prices to consumers; and on the other hand, the federal policy
favoring competition by product differentiation. >> Unidentified Justice: Do you think the
Lanham Act is the federal policy favoring competition by differentiation?
>> Jerrold J. Ganzfried: It states so in the legislative history, in the Senate report
that we cited in our brief. It is certainly one aspect of the federal
policy favoring competition by product differentiation, so long as there is a distinctive trademark
or so long as the company that is seeking the protection has established that the symbol
it seeks to protect has acquired in the minds of consumers an identification with the producer.
Now, in this case the only trademark that's involved is the name Cyclospasmol, and any
claim of infringement under Section 32 must be rooted in the misuse of that particular
word. Keeping this as a central fact in the case
in mind, we approach the issues presented under the legal standard described by Judge
Friendly in the first appeal in this case and nominally applied by the majority in the
second appeal. Now, that standard that Judge Friendly announced
has been referred to by counsel. We contend that the problem with the majority's
opinion on the second appeal is that in effect it read the intent element out of the standard
and found liability on a lesser showing that Petitioners merely facilitated infringement.
In addition, there was error in the Court of Appeals' conclusion... Justice O'Connor's
question earlier as to the standard of appellate review.
They did not find that any of the findings of the District Court were clearly erroneous.
Rather, the words they used were "unconvincing" and "unpersuasive".
That, we submit, is not an appropriate standard for reversing findings of fact.
Now, as to the question of what the Court of Appeals did find on the second appeal,
there was indeed evidence of trademark infringement by a small number of retail druggists.
However, the record is absent any proof that the Petitioners in fact suggested or implied
this course of conduct to the druggists. To the contrary, the record does support,
and the District Court found, that the generic manufacturers label their bottles only with
the generic name cyclandelate, never with the trade name Cyclospasmol.
And each bottle manufactured by the manufacturing Petitioners clearly states the name of the
appropriate manufacturer; thus, there was no direct infringement by the manufacturers.
There was, however, direct infringement when those few retailers mislabeled the generic
name as the brand name and failed to inform customers.
But the Petitioners could be vicariously liable for these isolated acts of druggists as contributory
infringers only if they have the knowledge or intent required by Judge Friendly and the
cases recited in our brief. And as I previously indicated, Ives has no
evidence on that particular issue. It merely showed facilitation and relied on
the assumption that when presented with identical capsules, pharmacists as a group will be so
tempted that they will disregard their professional obligations and statutory responsibilities
simply in order to make a fast buck. Now, this is a pessimistic assumption that's
similar to one that the Court was asked to make in Virginia Board of Pharmacy, and the
Court properly refused to do so, because in any event this temptation to deceive, which
is presented when any product is imitated, whether it be a Singer sewing machine, or
Shredded Wheat, or cocoa quinine, or Hungarian bitter water... whenever a product is copied,
there is some temptation presented to those further down the line in distribution to pass
it off. But this has never been held to be a sufficient
nexus between the manufacturer, who makes no suggestion, merely facilitates, and the
ultimate infringement by the retail person. In fact, the language of the Court of Appeals
in the Coca-Cola-Snow Crest case... I realize that Judge Wyzanski's opinion tends to get
a lot of comment, but there is some language in the Court of Appeals decision in that case
which bears on this very issue. And that is that the court said that all that
Snow Crest did to make substitution possible was to make their product identical, which
it had a right to do. >> Unidentified Justice: Counsel, does the
Government take a position on the question of functionality of color?
>> Jerrold J. Ganzfried: The Government takes the position that on this record... the record
is rather sparse as to functionality. I think on this record we'd have to say that
the District Court made findings of fact which are in fact not clearly erroneous.
As to whether another finder of fact would have found differently is hard to say.
The record indeed is sparse. We don't argue--
>> Unidentified Justice: And the Government takes no broader position than that?
>> Jerrold J. Ganzfried: --We argue that-- >> Unidentified Justice: On the color question.
>> Jerrold J. Ganzfried: --Color can have functionality.
We submit that the record here is insufficient to state that in fact functionality has been
prove, or for that matter that nonfunctionality has been proved.
>> Unidentified Justice: And what were the findings of the District Court on functionality
here? >> Jerrold J. Ganzfried: That the color was
functional and therefore could be copied. In particular, the functionality that the
District Court found was the possibility of avoiding patient anxiety, identifying the
capsules in cases of consumers who co-mingled them with other capsules they--
>> Unidentified Justice: Do I understand the Government either supports that finding or
says in any event it was not clearly erroneous? >> Jerrold J. Ganzfried: --The Government
says it was not clearly erroneous. We don't argue, however, that color is always
functional or that it is always nonfunctional. >> Unidentified Justice: Well, are you...
let me try this out on you. >> Jerrold J. Ganzfried: Okay.
>> Unidentified Justice: Suppose someone came out with a new aspirin, which could readily
be done, I assume, and they had the same shape and size but it's tinted pale green.
Are you suggesting that that would... that people are so accustomed to aspirin and bufferin
and the related things-- >> Jerrold J. Ganzfried: We don't know.
>> Unidentified Justice: --Being white that the green would--
>> Jerrold J. Ganzfried: We don't know. That is what the Petitioners argue.
As to the evidence on aspirin, or frankly for any other particular drug, we don't know.
But the question is simply, as to functionality, is it a value apart from an identification
of the source. >> Unidentified Justice: --Well, what--
>> Jerrold J. Ganzfried: For example, if I may take one that appears before me, a question
of judicial robes. If there were one company that made judicial
robes and made them black, would the second company that made them have to make them green?
The question is do you identify the color with the product or do you identify it with
the producer; and that is the issue in this case.
>> Unidentified Justice: --Well, in common human experience what would be, in your view,
the reaction to people being handed green aspirin?
>> Jerrold J. Ganzfried: My personal view? >> Unidentified Justice: Yes.
>> Jerrold J. Ganzfried: They would think it was something other than aspirin.
>> Unidentified Justice: Well, common human experience which you share.
>> Jerrold J. Ganzfried: I frankly couldn't base it on anything other than that.
I think that's right. >> Unidentified Justice: Well, that's not
what Judge Friendly said in the original opinion. He gave certain tests, didn't he?
>> Jerrold J. Ganzfried: As to functionality. >> Unidentified Justice: Yes.
>> Jerrold J. Ganzfried: And as to secondary meaning.
>> Unidentified Justice: And they were not followed.
>> Jerrold J. Ganzfried: Well, the Respondents did not satisfy the tests that Judge Friendly
set down, and the panel on the second appeal in effect read the intent element out of the
test. >> Unidentified Justice: I understand.
>> Jerrold J. Ganzfried: Now, let me separate this question of Section 32 and the question
of Section 43. Section 32 is the only issue that is presented
to this Court. We submit that 43 should be remanded.
But 32 is the one that is rooted in the trademark, the name, and the misuse of that name.
Are the Petitioners contributorily liable? Section 43 would be an issue relating to the
non-trademark features, namely the colors. So the discussion of functionality, the discussion
of secondary meaning is largely an analysis that would come within Section 43 rather than
Section 32 which is the issue presented to this Court.
>> Unidentified Justice: Counsel, the Court of Appeals relied also on the distribution
of the comparative prices? >> Jerrold J. Ganzfried: That's correct.
>> Unidentified Justice: Isn't that right? >> Jerrold J. Ganzfried: The Court of Appeals
did refer to that. We submit two points on that.
One is that in the previous cases that has not amounted to sufficient conduct to constitute
suggestion or active inducement and thereby to bring someone contributorily liable.
>> Unidentified Justice: Well, in fact, how are you going to get competition if you don't--
>> Jerrold J. Ganzfried: You have to do it. >> Unidentified Justice: --Comparing prices.
>> Jerrold J. Ganzfried: You have to do it. It is protected speech.
It is precisely the speech that was at issue in Virginia Board of Pharmacy.
Can you provide price information: I will sell X to you for Y.
There is an interesting issue about that and that is an apparent factual mistake in Judge
Mansfield's opinion. The only price list that listed both the brand
name and the generic prices side by side was one price list.
It was not of a manufacturer; it was of a distributor who in fact sold both the brand
name and the generic. Now, I submit on the cases that that is not
sufficient to constitute the inducement to make out a case of contributory infringement.
>> Unidentified Justice: Is there any controversy about that here?
>> Jerrold J. Ganzfried: Excuse me? >> Unidentified Justice: At this point?
>> Jerrold J. Ganzfried: Very little has been said about the advertisements.
They don't seem to be relied on as a basis for upholding the Court of Appeals decision,
and I submit that in fact they cannot properly be used as a basis for that because it is
simply adding information that gets ultimately to the druggist and allows him to buy what
he would like. >> Unidentified Justice: Before you sit down,
I just want to be sure I understand your argument on functionality or nonfunctionality.
Your submission is that even if color has no function to play, there still is not sufficient
evidence of intent to cause the retailer to infringe.
>> Jerrold J. Ganzfried: The function of the color is something that has to be removed
entirely from Section 32, because the color was not the trademark feature that was the
basis of the finding of contributory-- >> Unidentified Justice: Really, the Government's
position just boils down to a suggestion that there was a failure of proof of--
>> Jerrold J. Ganzfried: --There was a failure of proof.
>> Unidentified Justice: --There's no really big issue in the case.
>> Jerrold J. Ganzfried: Under the standards that Judge Friendly set down we submit that
the standard that Judge Mansfield ultimately used as to Section 32 read the intent element
out and was incorrect in that respect. There was also the question of--
>> Unidentified Justice: Let me ask you this. Under Judge Mansfield's standard suppose they
used a different color, but they had everything else the same.
Do you think there would be contributory infringement? >> Jerrold J. Ganzfried: --Under Judge...
and there were no suggestion? >> Unidentified Justice: Just the... everything's
the same except they have different colored products.
Under Judge Mansfield's standard would the generic druggist... generic manufacturer be
guilty of contributory infringement? >> Jerrold J. Ganzfried: Presumably not, because
Judge Mansfield apparently assumed the fact of suggestion from the identity of the color.
>> Unidentified Justice: Suggestion to whom? >> Jerrold J. Ganzfried: Excuse me.
>> Unidentified Justice: Suggestion to the retailer?
>> Jerrold J. Ganzfried: Yes. Judge Mansfield assumed that by using the
identical colors, the manufacturers were thereby suggesting to the retailers that they pass
off. And in our view that is insufficient proof,
and that is an inappropriate standard for judging liability under Section 32.
>> Unidentified Justice: I understand your brief to say that the case should have been
decided under Section 43b rather than 32. >> Jerrold J. Ganzfried: 43a.
>> Unidentified Justice: 43a. >> Jerrold J. Ganzfried: That's correct.
That was the chief issue of trial. That was the chief issue on the appeal.
>> Unidentified Justice: Is it your suggestion the case should be remanded to be decided
on that statute? >> Jerrold J. Ganzfried: We believe that that
is really what is at issue here, and clearly there should be a remand for a finding under
Section 43a. It's not been briefed in this Court by the
parties. There is a complete record in the Court of
Appeals, however. Our suggestion was that it would be most suitable
in the circumstances for a remand on that issue and for a reversal of Section 32.
Thank you. >> Warren E. Burger: Ms. Driscoll.
>> Ms. Marie V. Driscoll: Mr. Chief Justice, and may it please the Court:
I think I, too, should begin with informing the Court just why we are here today and why
the finding of contributory trademark infringement was in fact clearly supportable on the record.
I have lodged with the Clerk of Court, and you may wish to look at what actually is involved
in this case. We have vivid blue capsules made by Ives.
The defendants... and this an exhibit in the record... had tens of thousands of color combinations
from which to select, and they selected exactly the same colors when they decided to sell
generic cyclandelate. >> Unidentified Justice: For the same content?
>> Ms. Marie V. Driscoll: The same active ingredient, Your Honor.
>> Unidentified Justice: The same... well, active ingredient.
The same total content? >> Ms. Marie V. Driscoll: There is not at
issue in this case, because we did not raise an issue, as to what in addition to the active
ingredient they may have in their product. That has been involved in some other cases
as to whether the binders and excipients are the same.
But we have not claimed in this case that for purposes of, for example, the substitution
law in New York which is involved, that these products are not in fact equivalent.
>> Unidentified Justice: The capsule is the same size?
>> Ms. Marie V. Driscoll: The capsules are exactly the same size, and the defendants'
capsules, to make things even worse, are completely, or were at the beginning of this suit, completely
anonymous. Their own executives at depositions looked
at their capsules, and they couldn't tell where there product came from.
>> Unidentified Justice: Did you say, Ms. Driscoll, copies of that are around here?
>> Ms. Marie V. Driscoll: Yes. Your Honor.
I believe they're lodged with the Clerk. I had ten facsimiles made.
>> Unidentified Justice: I thought that was corrected, though, wasn't it?
I mean your case doesn't depend on that. They could have their own name on it.
>> Ms. Marie V. Driscoll: They have... well, you will see, Your Honor, also that I have
included in the upper righthand samples of their capsules which have markings on it,
the names or MDC number; and in each case... and there have been many cases brought recently
involving the duplication of color of prescription drug capsules... it's been held that the imprint
is so small... and I think the Court will agree... it is so small--
>> Unidentified Justice: Well, but isn't it your legal position that even if the imprint
were large, you would still make the same claim about their using the color?
>> Ms. Marie V. Driscoll: --Yes, I would. >> Unidentified Justice: So now why are you
arguing that it's significant that it's not legible.
>> Ms. Marie V. Driscoll: That it is not... I'm not saying it's significant.
I'm saying it's so small-- >> Unidentified Justice: It's just a matter
of interest. >> Ms. Marie V. Driscoll: --It's so... yes.
And also in this exhibit you will see at the lower right the capsules of W.H. Hauck Company.
That is the company to which reference was made in Mr. Bass' argument.
That company sells generic cyclandelate, but it is not a copycat.
>> Unidentified Justice: Let me give you a hypothetical practical question.
Suppose you have a patient with diabetes, for example, or something of that kind where
they lifelong or for a long period of time take a particular prescribed medicine.
And at some point either the pharmacist acting on his own under this dual prescription of
the New York law or the physician himself in order to save the patient money says give
them the generic drug; it's the same thing. Now, if it comes in a different color, do
you say that creates no problem, psychological or whatever, for the patient?
>> Ms. Marie V. Driscoll: No. There has been extensive evidence on this,
Your Honor. Physicians testified.
We have physicians totaling, if you count up the plaintiffs' and the defendants' physicians,
with 125 years of experience total in treating patients where they have had color change.
Color change comes about fairly frequently in this industry because there are many companies
that sell generics that do not duplicate the appearance of the pioneer or market leader.
And while the patients may inquire and may say I notice why is this green this month,
it's always been red, hasn't it, the testimony is when the pharmacist or the physician explains
you're getting a generic because it's the same product, we believe it's cheaper, patients
accept that. There was one patient who refused to accept
a change... we do not know whether it was because of color or because he simply didn't
want a generic... from one of the doctors that the defendants produced.
On the other hand, we have significant evidence that color changes all the time, for example,
in institutional settings. Hospitals and government institutions for
years have bought generics, and they buy on the basis of the best price, also quality,
and their colors change frequently. Patients in the hospitals are used to this,
and these would be the same patients who at home may be getting a different color.
When they go to the hospital they get a different color generic.
The testimony was there really is no problem. The government does not require that color
be part of the bidding process, for example. >> Unidentified Justice: Well, would you agree
that there's a difference between the patient in the hospital and the patient taking a medication
long-term at home without constant medical guidance; that is, there's a nurse or an intern
or a doctor or a resident in the hospital to explain the change.
>> Ms. Marie V. Driscoll: That's true. >> Unidentified Justice: At home the patient
is-- >> Ms. Marie V. Driscoll: You can make a phone
call, that's correct, which does happen. That's right.
>> Unidentified Justice: --Do you acknowledge that there is a difference, that it's more
readily explained to the patient in the hospital than it is to the other patient?
>> Ms. Marie V. Driscoll: Well, there are more people to explain it.
Once the explanation is made I'm not sure it's more readily accepted one place or another.
There seem to be a distinction on that doesn't. And I might add that the particular product
involved in this case is a long-term medication for poor circulation.
>> Unidentified Justice: Ms. Driscoll, you're arguing the facts, which I think you're really
entitled to do, but you started out by saying you thought there was... or early in your
argument you said you thought there was support in the record for the finding that there was
a Section 32 violation. >> Ms. Marie V. Driscoll: That's right.
>> Unidentified Justice: Whose finding were you talking about, the Court of Appeals?
>> Ms. Marie V. Driscoll: The Court of Appeals application of the law, yes.
>> Unidentified Justice: Well, the District Court had found no Section 32 violation and
had a series of factual findings. Did the Court of Appeals set aside any of
the District Court's findings? >> Ms. Marie V. Driscoll: Yes.
>> Unidentified Justice: And did it do so on a clearly erroneous standard or not?
>> Ms. Marie V. Driscoll: While the Court of Appeals did not specifically use the words
"clearly erroneous", it would be a matter of semantics to say that it was not applying
such a standard, because the Court of-- >> Unidentified Justice: Well, you agree that
it should have, and that it did furthermore. >> Ms. Marie V. Driscoll: --And that it did,
yes, because it said, for example, on the question of the mislabeling that occurred,
there was no support-- >> Unidentified Justice: Well, you're not
suggesting that the Court of Appeals was free to arrive at its own independent finding?
>> Ms. Marie V. Driscoll: --No, I'm not suggesting that, nor do I believe it did.
The language is very strong, and I'll quote. There's no support in the record for the defendants'
claim that the mislabeling that occurred was because of confusion.
There's no persuasive evidence on this point. Arguments that the defendants made and testimony
on another point are unconvincing. There's no evidence of patient confusion.
There's no evidence that doctors or druggists refused to explain--
>> Unidentified Justice: Well, do you suggest that the Court of Appeals... or I'll just
ask you directly. Do you think the Court of Appeals applied
a different standard of law with respect to a Section 32 violation than did the District
Court? >> Ms. Marie V. Driscoll: --It's hard to tell
what standard of law the District Court applied because--
>> Unidentified Justice: Well did it require an intent, or did it not?
>> Ms. Marie V. Driscoll: --It appeared on both the motion for preliminary injunction
and after trial to require not only intent but almost active participation.
The language is not that clear. >> Unidentified Justice: You mean the District
Court. >> Ms. Marie V. Driscoll: The District Court,
yes. >> Unidentified Justice: But how about the
Court of Appeals? >> Ms. Marie V. Driscoll: Well, the Court
of Appeals did not specifically use the word 32 has been violated and whether there's been
a trademark infringement, specific intent to infringe is never an element of tradement
infringement. >> Unidentified Justice: So if you say the
District Court had an intent requirement in its appraisal of the facts--
>> Ms. Marie V. Driscoll: That would be incorrect. >> Unidentified Justice: --You... that would
be incorrect, and you suggest the Court of Appeals did not adopt a... did adopt a different
standard than the District Court. >> Ms. Marie V. Driscoll: Yes, unless you
can interpret the-- >> Unidentified Justice: Well, then, if that's
so, if there was an error of law in the District Court, why wouldn't it have been the proper
proceeding, proper procedure to remand for a new trial under the right standard rather
than the Court of Appeals arriving at its own independent view of the facts?
>> Ms. Marie V. Driscoll: --Well, as I say, it is not possible to tell whether the court
in fact was reversing on a clearly erroneous basis or whether it was applying the law differently.
It had the complete record in front of it. >> Unidentified Justice: Well, you just...
I thought you just conceded or just said that the Court of Appeals standard was different
from that adopted by the District Court, legal standard.
The District Court had an intent standard. You say that was wrong, and the Court of Appeals
said it was wrong. >> Ms. Marie V. Driscoll: No.
No. It is possible that when the Court of Appeals
held that the defendants were liable for the clear acts of trademark infringement by the
pharmacists that the Court of Appeals was also applying an intent standard, the intent
being the intentional copying of the color, the intentional hiding of the source of the
product, the intentional distribution of pamphlets in which the defendants indicated to whoever
purchased their product, look, this is the same color.
>> Unidentified Justice: Well, you say the standard the District Court applied was wrong.
You just said so a moment ago. >> Ms. Marie V. Driscoll: The result was wrong.
The result was wrong. >> Unidentified Justice: Well, you said the
standard was wrong. You said they applied an intent standard that
was wrong. >> Ms. Marie V. Driscoll: The District Court
standard went beyond intent because it implied there had to be almost an actual participation.
>> Unidentified Justice: Well, however... whatever standard it was, you say it was wrong.
>> Ms. Marie V. Driscoll: That's right. >> Unidentified Justice: And you say the Court
of Appeals corrected it. >> Ms. Marie V. Driscoll: Corrected the result,
yes. Whether it--
>> Unidentified Justice: Corrected the standard. Can you suggest any reason why there is no
reference to Rule 52 in the Court of Appeals opinion?
>> Ms. Marie V. Driscoll: --Well, all I can suggest is the Court was applying the standard
in United States against Gypsum which indicated that a finding can be reversed when the reviewing
court on the entire evidence, and this Court has said, is left with the definite and firm
conviction that a mistake has been made. And this standard has been repeated in U.S.
against Singer. There were many undisputed facts in this case.
There were many elements of proof in this case that the defendants never produced at
all. So in other words, it wasn't even a finding.
There was nothing put in. There was no testimony as to patients.
No patients appeared. No survey was put in by the defendants indicating
patient concern about color change. And the applicable standards as applied to
the facts were considered incorrect by the majority of the Court of Appeals.
I don't think it had to specifically refer to Rule 52 or specifically use the words "clearly
erroneous". >> Unidentified Justice: With respect to this
whole subject, could I focus your attention specifically to the District Court's finding
that color is functional and that it has no secondary meaning in these circumstances.
What is there in the record to suggest that the District Court clearly erred in making
that finding? >> Ms. Marie V. Driscoll: If the record is
reviewed, and I'll take first the function record, the record on whether this is functional
or not, we have a situation where it's undisputed that the drug in question is a white powder.
Color has nothing to do with it, if we go back to the normal standards of what function
means. Initially, Ives could have made this drug
in any color. It, for a purely arbitrary reason, chose the
blue and the blue-red. So there is no inherent functionality, and
that is undisputed, and I believe even the District Court admitted that there's no inherent
functionality. Judge Friendly on the first appeal agreed
that this was arbitrary, had no relationship to the underlying drug, and indicated that
whether or not the colors had become functional, had somehow acquired functionality, would
depend on proof offered by the defendants. Now, if you look at the proof offered by the
defendants, you find that there are three physicians who testified before the defendants;
and I'm assuming now that although there was no finding as to credibility, we'll eliminate
completely all the plaintiffs' evidence on this, but let's just look at what the defendant
put in on functionality through its physicians. They all agreed that there are many non-look
alike generics on the marketplace, and that they had had experience with them; that if
their patients inquire why is there a color change, the patient accepts the explanation
for the color change. One physician who sees approximately a thousand
patients a year and has practiced for 16 years... that's the defendant's Dr. Bloom... said that
once, once in his entire practice a patient did not accept his explanation and asked to
go back to the original drug. A second doctor, Dr. Schinback, couldn't recall
of a single instance in his practice where the explanation wasn't accepted.
In other words, if you say it's a different color because I'm giving you a generic, I
want you to get a less expensive drug, patients accept that.
The third doctor, who hadn't practiced for several years and is now with the New York
Health and Hospital Corporations, testified that several years ago some of her patients
who had Parkinson's disease did not want to change the source of their medication; and
it was not clear that color had anything to do with that, but whether they might have
been concerned about the true source of the medication.
And at the Health and Hospitals Corporation where that witness of the defendant was then
employed, it was clear that all purchasing decisions as to whether generics are to be
accepted are made not on the basis of color but price.
Color simply is really not a determining factor in whether institutional sales can be made.
The FDA, which has primary jurisdiction over the safety and efficacy of drug products,
has specifically said in response to pressures by the generic drug industry to have a color
requirement that they do not believe that safety and efficacy require that the drug
color be the same. >> Unidentified Justice: Ms. Driscoll, may
I ask a question about the examples of infringement on page 10 of your brief?
As I understand it, the thing you objected to primarily was that the retail druggist
would use the name Cyclospasmol and then put something additional that was a little bit
ambiguous, like they might put the word "generic" or "gen" or something like that, and those
are examples of the infringement of which you primarily complain.
>> Ms. Marie V. Driscoll: Yes. There are several types, Your Honor.
We had collected and put in evidence at trial approximately 34 instances.
>> Unidentified Justice: Right. >> Ms. Marie V. Driscoll: --Where a bottle
containing a generic look-alike had the Ives trademark on the label put on there by the
pharmacist. >> Unidentified Justice: The word "Cyclospasmol".
I take it you object to any use of the word "Cyclospasmol" by the druggist?
>> Ms. Marie V. Driscoll: I object to the uses in this case.
>> Unidentified Justice: Well, but in any event, could not the generic manufacturer
and the druggist continue to do exactly what they've done here even with different colored
capsules? >> Ms. Marie V. Driscoll: Yes, but they'd
be less likely... they'd be more likely to-- >> Unidentified Justice: So it's a question
of probabilities. >> Ms. Marie V. Driscoll: --Yes.
>> Unidentified Justice: Well, how... of course, your case is one where the patient used the
same drug over and over again. But with the first subscription why would
the patient have any knowledge about it? >> Ms. Marie V. Driscoll: The very first time
someone gets a drug is simply not at issue in this case, because there would be no recognition
by the patient, no understanding by the patient that he should--
>> Unidentified Justice: So the color wouldn't make any difference in that situation.
>> Ms. Marie V. Driscoll: --However, it could make a difference if the pharmacist--
>> Unidentified Justice: Does the record show these were all refills?
>> Ms. Marie V. Driscoll: --No. Most... many of these, Your Honor, would have
been situations where we sent a shopper out. >> Unidentified Justice: As though he were
getting his first prescription filled. >> Ms. Marie V. Driscoll: Yes.
>> Unidentified Justice: And he would have been equally misled if the color were not
the same. >> Ms. Marie V. Driscoll: Yes, but the pharmacist
wouldn't know that it was the first prescription. They could have had a prescription from another
doctor. >> Unidentified Justice: Well, the pharmacist
can usually tell by the date whether it's a refill or not, can't he?
>> Ms. Marie V. Driscoll: I'm not sure of that, Your Honor.
It could have been a different pharmacy from the one before and a different community.
>> Unidentified Justice: But I mean the doctor's prescription is usually dated, isn't it?
>> Ms. Marie V. Driscoll: Dated? Yes.
>> Unidentified Justice: Does your argument draw any distinction between the kind of drug
you have where it's largely refills and the same situation in which it was kind of just
one prescription drugs? >> Ms. Marie V. Driscoll: No.
The likelihood of abuse I believe is worse in the case of maintenance drugs because of
the recognition. >> Unidentified Justice: I should think that
it would be the other way around, that the one who only gets the drug once wouldn't know
what it looked like or anything right then. He'd have no way of protecting himself against
a complicated name followed by "Gen" or something like that.
>> Ms. Marie V. Driscoll: That's true, but he may not... he certainly would be... he
would be unlikely to detect a problem, but so would my person be unlikely to detect a
problem if it's in the same exact color. A patient... and this goes--
>> Unidentified Justice: What I'm trying to suggest to you is the problem, as long as
you're selling the same drug and advertising it as performing the same function biotically
and so forth and so on, the problem's always going to be there, isn't there?
>> Ms. Marie V. Driscoll: --That's true. >> Unidentified Justice: That there's a risk
that the druggist who is unscrupulous will say look, I can give you something cheap...
well, may not even say that... that will sell it more cheaply but just put that kind of
ambiguous legend on that a lot of people really don't understand very well anyway.
>> Ms. Marie V. Driscoll: That's true. And the problem is--
>> Unidentified Justice: So I'm just wondering if color really is the critical problem, or
is it selling generic drugs? >> Ms. Marie V. Driscoll: --Color is critical
because it makes it... and it's been admitted in this case and stipulated that it makes
it more likely for the pharmacist to do this because he doesn't think he's going to be
detected, whether by, for example-- >> Unidentified Justice: Do we know that any
of these pharmacists had that particular decisionmaking process?
>> Ms. Marie V. Driscoll: --No, we don't. We just know that they dispensed--
>> Unidentified Justice: It just seemed reasonable to the judge--
>> Ms. Marie V. Driscoll: --Dispensed a look-alike drug and called it Cyclospasmol.
>> Unidentified Justice: --May we return just a moment to the standard?
The Solicitor General suggested, as I recall, that a guilty state of mind... excuse me...
was necessary, was a necessary element to prove a case under Section 32.
>> Ms. Marie V. Driscoll: Well, I believe we do have a guilty state of mind, and we
look back again to Judge Wyzanski's decision, which has been cited so frequently, and that
Judge Friendly characterized on the first appeal as providing the proper criteria.
And that is, is the person furnishing this look-alike, does he know he's dealing with
customers who are peculiarly likely to use the product wrongfully?
And we have a very unfortunate history, both in cases, in FTC reports, and really in knowledge
generally available to the drug industry, that pharmacists have an unfortunate history...
not all of them, but enough of them to be a serious problem... of in fact dispensing
cheaper products in filling prescriptions for another product and pocketing the monetary
difference. And on this point of--
>> Unidentified Justice: You mean by that charging for the brand name but actually delivering
the generic drug? Is that what you're saying?
>> Ms. Marie V. Driscoll: --Either that, Your Honor, yes, and that does happen, or charging
more for the generic than they might otherwise do because the patient is not going to know
when he sees something that looks just like the Ives capsule that he should be getting
a price break. And you'll see in the Attorney General...
State of New York Attorney General report, which is in evidence in this case, that very
often in New York pharmacists are in fact filling generic prescriptions and charging
more than other pharmacies charge for the brand name.
The pricing patterns are erratic, but certainly there is no pass-along of the full generic
saving or even much of the generic saving to patients who are getting prescriptions
filled in that state and I believe in others, but certainly not in New York.
And a change in color in this instance, if it would alert the patient to inquire of the
pharmacist why is the capsule green this time instead of blue, the patient would also be
able to detect the economic problem and ask the pharmacist why am I paying the same amount
as I always paid for the name brand. >> Unidentified Justice: Does the record tell
us what percentage of retail druggists engage in this kind of practice?
>> Ms. Marie V. Driscoll: As to the straight mislabeling--
>> Unidentified Justice: Just say infringement, the whole category of infringement.
>> Ms. Marie V. Driscoll: --Okay. Of the mislabeling as opposed to the illegal
substitution, our survey, which was projectable to pharmacies in New York State, indicated
there was a 29 percent of the pharmacists put our trademark on their look-alike.
>> Warren E. Burger: We'll resume there at 1:00, counsel.
Ms. Driscoll, you may continue. >> Ms. Marie V. Driscoll: I believe I was
in the middle of an answer to a question from Justice Stevens about the frequency of the
infringements, and we have to look at those infringements in a few ways.
When we're talking about the legal substitution but followed by mislabeling or passing off,
our survey showed that this occurred 29 percent of the time in the pharmacies in New York
where the shopping was done. In this particular case, while we have many
instances of illegal substitution and mislabeling, that is not projectable.
There was not a projectable survey done on that.
So I cannot say what the percentage is, but it's clear from the history of the pharmaceutical
industry, from the FTC report that is referred to many times in the briefs, and from other
look-alike cases, of which there have been many recently, that there is a substantial
amount of illegal substitution and therefore infringement involved.
In the FTC report I believe it was said to be as high as 25 percent of the time.
>> Unidentified Justice: I meant to ask you also, if I could, is it your view that any
time the word "Cyclospasmol" is used on the label there's an infringement?
Supposing, for example, a druggist said this product is a generic equivalent to Cyclospasmol;
he spelled it all out. Would that--
>> Ms. Marie V. Driscoll: No. I would have to take the position that if
there were a clear and unequivocal statement like that, there would not be an infringement
because there would not be a chance of misunderstanding. >> Unidentified Justice: --Well, supposing
in each of these cases where you just have the "Gen", say the druggist had explained;
he said you understand, don't you, the doctor said we can substitute, and that's what we've
done? >> Ms. Marie V. Driscoll: Well, that would
put us once again at the mercy of the pharmacists. In the particular shoppings we did the only
reason the pharmacist disclosed anything to the shoppers that went in was that our shoppers
were instructed as part of the survey instructions to ask whether or not a generic had been dispensed.
But because of the peculiar way in which prescription drugs reach the public and because of the
fact that the pharmacists are passing off these look-alikes, we do not want to be in
a position where we are relying on the good faith of the pharmacists, because we see this
problem already. >> Unidentified Justice: Well, I understand
that, but I'm not clear what your answer to my question was.
Supposing that the pharmacist says this is a generic equivalent to Cyclospasmol, and
he just has the writing, you say. Would that be infringement then?
>> Ms. Marie V. Driscoll: Well, the person receiving the bottle presumably would not
be confused, and to that extent there would be no infringement; but anyone else who saw
the bottle, for example, such as the physician should something have gone wrong with the
product and the patient said this doesn't seem to be working the same way, here's my
bottle, to that extent anyone else who saw labeling like that would in fact--
>> Unidentified Justice: Well, the doctor wouldn't be confused.
He would know what the "Gen" meant, wouldn't he?
>> Ms. Marie V. Driscoll: --Not necessarily. He may.
>> Unidentified Justice: You mean the doctor doesn't understand--
>> Ms. Marie V. Driscoll: Some of these designations, "Gen" may mean something.
A EQ> ["] may not. There are all sorts of gradations.
>> Unidentified Justice: --But if... if a doctor... if a doctor participates in this
process of permitting a druggist to substitute, is he... can he be liable, too, under the...
under 32 or under... I guess he couldn't be under... couldn't be under... but he could...
how about 32? >> Ms. Marie V. Driscoll: No.
See, the physician is in an unusual circumstance in most states, Your Honor.
In most states substitution is not mandatory so that when a physician, for example, writes
a prescription and indicates that a generic can be dispensed, that does not mean that
the pharmacist must dispense a generic. >> Unidentified Justice: Well, I know, but
isn't he like the manufacturer putting the druggist in a position to pass off?
>> Ms. Marie V. Driscoll: No, he's not, because he is not providing the druggist with the
means by which the patient is fooled. >> Unidentified Justice: Well, he's... he
could have prescribed a trade name product, though, I suppose.
>> Ms. Marie V. Driscoll: Yes, he could have, but he has no control over what's finally
given to the patient or what the labels given to the patient say.
>> Unidentified Justice: Well, he has more control--
>> Ms. Marie V. Driscoll: Except in a mandatory-- >> Unidentified Justice: --He has more control
than the manufacturer. I would think so.
Without the prescription the druggist can't even do it.
>> Ms. Marie V. Driscoll: --No, but he has no control over... let's talk about these
look-alikes. >> Unidentified Justice: Yes, but if the druggist
follows his instructions, the doctor has quite a bit of control.
>> Ms. Marie V. Driscoll: If his instructions are followed, and he, of course, has no way
of knowing whether his instructions are followed because he is unlikely ever to see, unless
there is a problem, what has been dispensed. >> Unidentified Justice: Well, neither does
the manufacturer, but the manufacturer gets... is being held liable on the grounds that he
impliedly... that he facilitates the passing off.
>> Ms. Marie V. Driscoll: That's right, because there is no independent reason for that manufacturer
to make these products in the look-alike form. They could just as easily make those products
in the colors that, for example, Hauck uses where the opportunity for wrongdoing or the
likelihood of wrongdoing would be far less, whereas the physician has presumably independent
and good reasons for prescribing either the branded product or the generic.
These people have furnished, as the Court of Appeals indicated, no good reason whatsoever
for copying the appearance. Many other manufacturers are on the market
with non-look alikes, and with non-look alikes you give the patient an opportunity to know
that something has been changed. The change isn't concealed.
As a matter of fact, if-- >> Unidentified Justice: The question is whether
the statute imposes a duty on them to have a reason.
I mean there's no sort of general law that you've got to have a reason for making something
blue instead of red. >> Ms. Marie V. Driscoll: --No, but you do
have an obligation not to be the person who facilitates, makes more likely, or allows
these pharmacists in many more instances to-- >> Unidentified Justice: But if that's the
test of secondary infringement, the doctor is clearly guilty, if he just makes it more
likely or makes it possible. >> Ms. Marie V. Driscoll: --But he hasn't
furnished the look-alike that prevents the patient from finding out.
>> Unidentified Justice: He's given the authorization to purchase it.
>> Ms. Marie V. Driscoll: Well, Your Honor, I can't see that the analogy flows, because
the doctor is not providing-- >> Unidentified Justice: In fact, his authorization
would apply even if the thing is a different color.
>> Ms. Marie V. Driscoll: --Yes. >> Unidentified Justice: He would make it
possible for... in any generic drug to make it possible for the unscrupulous druggist
to substitute. >> Ms. Marie V. Driscoll: That's right.
>> Unidentified Justice: And write the word, whatever the word is plus "Gen".
>> Ms. Marie V. Driscoll: That's right. And if it is in fact a different color, the
patient will do exactly what-- >> Unidentified Justice: And the patient has
never even seen the drug before in most cases, so how would he know what the color is?
>> Ms. Marie V. Driscoll: --Well, in this... in this case because it is a maintenance drug,
the patient is very likely-- >> Unidentified Justice: Well, your case really
rests on the fact that it's a maintenance drug then.
>> Ms. Marie V. Driscoll: --Well, it is more likely that a patient will be alerted to the
fact that he should inquire about a color change if it is a maintenance drug, yes.
>> Unidentified Justice: But all that seems to me is that it's more likely that there
will be confusion or misunderstanding if it's not a maintenance drug, because they don't
know what color to expect. All they get is a prescription, and they go
in, and the druggist gives them a generic substitute.
>> Ms. Marie V. Driscoll: Well, to that extent those patients have less of a way to protect
themselves. However, the pharmacist--
>> Unidentified Justice: He'd have to rely on the druggist and the doctor.
>> Ms. Marie V. Driscoll: --But the pharmacist doesn't necessarily know this.
And if a pharmacist has a look-alike, the pharmacist admittedly in this case is more
likely to take the chance of passing off and take the chance of illegal substitution because
it is so much less likely that he will... that his subterfuge will be detected.
>> Unidentified Justice: Particularly if nothing happens to him when he does the substitute,
and I guess nobody ever goes after the pharmacists. >> Ms. Marie V. Driscoll: The Attorney General's
report in the State of New York indicated that violation of the New York substitution
law, for example, is given a very low priority. >> Unidentified Justice: Ms. Driscoll--
--To what extent-- --Go ahead.
To what extent does your case turn on proof of intent to deceive?
>> Ms. Marie V. Driscoll: Specific intent to deceive by the manufacturers, it does not
turn on the specific intent to deceive. What it does turn on is the manufacturer's
knowledge that in the prescription drug industry there is a very special circumstance, namely
there is an individual intermediary, the pharmacist, who unfortunately as widely known in the industry
and all the cases, has a proclivity toward trying to get away with something to make
himself more money, either through illegally substituting or just through... even through
in this case legally substituting but misbranding and charging more money.
in the circumstances, given the fact that these were identically copied... they didn't
have to be; they could have done what Hauck did... given the fact that they all admit
that the identical copying of the color in fact made illegal substitution and misbranding
more likely to occur and far less likely to detect, and given the fact they knew they
were dealing with a very particular industry... and I also suggest that it would not be offensive
to hold these prescription drug manufacturers to a very high standard to make sure there
isn't deception. Public policy certainly is to hold prescription
drug manufacturers to very high standards. They're the only industry I can think of who
can't even sell their products without prior approval.
These people-- >> Unidentified Justice: Ms. Driscoll, why
doesn't the clear marking on the capsule go a long way toward solving the problem of druggist
misconduct. Mislabeling is very easy to detect when it's
printed right on it Ives. >> Ms. Marie V. Driscoll: --Well, these drugs
are taken principally by elderly people, and there is no evidence that--
>> Unidentified Justice: Well, now we're talking about pharmacist misconduct on which you have
been relying. Certainly the pharmacists can read, and they
understand that if it says Ives, it's not something else.
>> Ms. Marie V. Driscoll: --Yes. And the pharmacists can also read the original
manufacturers' bottles and know what they're dispensing.
It's not that the pharmacists are making mistakes, but the pharmacist, even when there is an
imprint on this capsule, knows that people don't pay that much attention to the imprint.
These are very small imprints because of the nature of the product.
Obviously it's a small capsule. >> Unidentified Justice: Well, if Ives is
so concerned, I suppose they could print a bigger name on the capsule.
>> Ms. Marie V. Driscoll: It's almost... it's very difficult to do much more than what is
done and still have it visible. And there's no evidence that the public would
derive... would really look at this. They look at the colors.
We did a survey of patients in this case, Justice O'Connor, in which we showed the patients
a... containers, three containers, one of which had... two of which had completely anonymous
capsules which the District Court opinion in this case would sanction, and the third
of which had capsules clearly imprinted with the name Premo.
And when asked what those capsules were, even the imprinted ones, patients still thought
they were the Ives Cyclospasmol. The imprint does not, and has been held in
all these cases not to have an effect. Even the District Court in this case said
that because of the size of the product we're dealing with and the fact that we do have
elderly patients who might not see as well that the imprint simply does not make an effect.
>> Warren E. Burger: Your time has expired now, counsel.
Do you have anything further, Mr. Bass? >> Milton A. Bass: Thank you, Mr. Chief Justice.
I do. I would like to first note, Justice Stevens,
that in the question that's been answered as to the survey and the projectability of
this 29 percent, that survey of mislabeling where the generic was dispensed as permitted
in the prescription, they had 10 pharmacists who used the name Cyclospasmol in some form
on the label. Nine of those 10 told the patient you're getting
a generic. And when they charged the patient, the average
price charged was $6.50; when they gave the brand name it was $13 in that study.
That is the study counsel was referring to, Your Honor, in the projection--
>> Unidentified Justice: But isn't it true that when they told them it was the generic,
it was in response to a specific question? >> Milton A. Bass: --Yes, but not the question
counsel said. She said they asked did you give me a generic.
That was not the question in the protocol. They asked do you carry a generic after he
gave them the prescription and charged them the lower price, and he answered I gave you
a generic. >> Unidentified Justice: I see.
>> Milton A. Bass: Also, Justice O'Connor, your question about the name Ives on the capsule
is most appropriate, because not only do my over-50 eyes read that Ives, but they refused
to include the Ives pill in those pills she showed the patients when the very company
doing the survey recommended they put the Ives there; but we can only surmise why they
didn't want to include for those test subjects the word Ives.
Now, Justice Powell, I'd like to correct an answer I gave you because I misunderstood
your question earlier. You asked me about manufacturers of Cyclospasmol
in the same color. I thought you were asking me today, and I
answered as I did. However, I am told you asked in more general
form. Prior to the decision in the Second Circuit
there were about 22 companies selling Cyclospasmol in the same color.
One company, this Hauck from Georgia, sold it in red.
This is a practice and this record that shows goes back 40 years, the generic companies
selling the products in the same color. Counsel has referred in answer to your question,
Justice Stevens, about Judge Wyzanski's decision in the Court of Appeals decision in Snow Crest
and Coca-Cola, and she referred again numerous times this afternoon about the pharmacists.
And I would only humbly suggest it is misplaced. Judge Wyzanski said bartenders are not so
unique that they would be deemed to be people who would commit a wrongful act in substituting
another cola for Coca-Cola. There's nothing in this record that shows
that pharmacists should be denominated worse than bartenders and should be considered unique
to commit criminal acts to have premised their argument made to this Court today.
>> Unidentified Justice: Mr. Bass, I notice we've talked about the standard this morning
that the Court of Appeals used and about whether the court followed the clearly erroneous rule.
I note that your petition for certiorari didn't raise either question.
>> Milton A. Bass: No, sir. >> Unidentified Justice: Do you agree, or
don't you, that the Court of Appeals properly applied the clearly erroneous rule?
>> Milton A. Bass: No. I think they tried to avoid it, as the dissenting
opinion of Judge Mulligan states. >> Unidentified Justice: Well, you didn't
raise it in a petition... in your... as a question.
>> Milton A. Bass: No. >> Unidentified Justice: And do you think
the Court of Appeals applied a different standard of law under Section 32 than the District
Court did? >> Milton A. Bass: Definitely not, Your Honor.
Ives II said to the District Court you didn't apply--
>> Unidentified Justice: So you... you... you... all... you say that the Court of Appeals
agreed with the standard of law that the District Court used and just disagreed with the factual
application. >> Milton A. Bass: --In Ives IV.
In Ives II they said you used the wrong standard. Then it went back to the District Court for
trial. In Ives IV the court said we disagree that
he didn't give weight to certain evidence like the catalogs.
But the standard, Your Honor, is precisely what you said this morning.
The standard was not the issue the Court took with the District Court in Ives decision IV
and in Judge Mansfield's decision, no, sir. >> Warren E. Burger: Thank you, counsel.
The case is submitted.