Petition — Bolar Pharmaceutical Co. v. Ciba-Geigy Corp.

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Supreme Court of the United States

Octroser Term, 1983

BOLAR PHARMACEUTICAL CO., INC.,

Petitioner,

CIBA-GEIGY CORPORATION,

Respondent.

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

Rosert B. Jones *

James J. Myrick

Timotuy FE. Levstik

FITCH, EVEN, TABIN & FLANNERY

135 South LaSalle Street

Chicago, Dlinois 60603

(312) 372-7842

Counsel for Petitioner

* Attorney of Record

Midwest Law Printing Co., Chicago 60611, (312) 321-0220

i

QUESTIONS PRESENTED FOR REVIEW

1. Is the “reasonable anticipation” standard, rejected

by this Court in Inwood Laboratories, Inc. v. Ives Lab-

oratories, Inc., 456 U.S. 844 (1982) as a “watered down

and improper standard”’ under Section 32 of the Lanham

Act, 15 U.S.C. §1114 for restraining sale of a generic drug

in the accustomed appearance for the drug, the proper

standard for restraining the same conduct under Section

43(a) of the Lanham Act, 15 U.S.C. §1125(a)?

2. Does the decision below improperly evade the

Lanham Act legal standards for “functionality” and

“secondary meaning”’, affirmed by this Court in Jnwood,

supra, by applying New Jersey state law to prohibit inter-

state commerce throughout the United States in a generic

drug product lawfully manufactured in another state and

lawfully approved in its publicly accustomed appearance

by the United States Food and Drug Administration,

thereby interfering with the drug substitution laws of the

other states?

il

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED FOR REVIEW .. i

TABLE OF AUTHORITIES ................. iv

een ccc e cc ccecsccccses 1

Tee ee he cscs be cccccecccces 2

|) 2

STATEMENT OF THE CASE ............... 2

1. History Of The Drug Product In Suit 4

2. The Evidentiary Proceedings ......... 7

REASONS FOR GRANTING THE WRIT:

A. The Decision Below Conflicts With This

Court’s Decision In Inwood By Applying

The “Watered Down And Incorrect”’

“Reasonable Anticipation” Standard To

Prohibit Manufacture And Sale Of A

Generic Drug Product In The Accustomed

Appearance For The Drug ........... 10

B. The Decision Below Conflicts With The

Decisions Of This Court And The Second

Circuit In Inwood As To The Standards

For “Functionality” Of Drug Color ... 15

C. The Decision Below Conflicts With The

Decisions Of This Court And The Second

Circuit In Inwood As To The Standards

For Establishing “Secondary Meaning” Of

Tc eekeiseccecdcocceecs 20

iii

D. The Lower Courts Improperly Based A

Nationwide Injunction On New Jersey

State Law to Evade This Court’s /nwood

PID. cb: nrk Gaael caida CaN a een ae ie

E. The Decision Below Granting Exclusive

Trade Rights From Iliegal Drug Sales

And Promotion Is In Conflict With The

Decisions Of This Court And The Other

CREE Sta bs ck tu neewsbnessuunbuceees

CTE Shek CukuGeckoauns céawaneasadees

APPENDIX (Separate Volume)

Opinion of the Third Circuit in Ciba-Geigy Corpo-

ration v. Bolar Pharmaceutical Co., Inc. ..

Preliminary Injunction Order against Petitioner,

Bolar Pharmaceutical Co., Inc. entered October

GO, Qe sskiwadadusexsidsaiunduesGrensusees

Opinion of the District Court for the District of

New Jersey in Ciba-Geigy Corporation v. Bolar

Pharmaceutical Co., Inc., 215 U.S.P.Q. 769

(SEED. Koéés cd dasacvaw aren eseneeiet cans

Order of the District Court for the District of New

Jersey Dismissing Counterclaims and Convert-

ing Preliminary Injunction Hearing to Fina!

oF Ge rer errr rr re

Final Judgment and Order of the District Court

for the District of New Jersey, entering Final

Injunction against Petitioner, Bolar Pharmaceu-

ee Gig TN sinkcnnoukcsvcnacecescensesis

Section 43(a) of the Lanham Act, 15 U.S.C. Sec-

CF Rivne cccikvessucesnkbesskeensans

New Jersey Statutes Annotated Sections 56:4-1 and

GE. cnstbeusncdaunbueses netancwresseses

Decision of the Second Circuit, on remand, follow-

ing Inwood Laboratories, Inc., et al. v. Ives

Laboratories, Inc., 456 U.S. 844 (1982) .....

26

1-4

5-7

8-50

51-53

iv

TABLE OF AUTHORITIES

Cases

American Safety Table Company v. Schreiber, 269

Pe Bee Ce Gs BUD cc cecscccsisecseves 16

Anti-Monopoly, Inc. v. General Mills Fun Group,

Inc., 684 F.2d 1316 (9th Cir. 1982), cert. denied,

sans Si sen SUE coven ccepanstusavehns os 24

Bayer v. United Drug, 272 F. 505 (S.D. N.Y.

Sn cdacnn ce ieaaa eat mene seen see oeuas 22

Campbell v. Hussey, 368 U.S. 297, 301 (1961) . 27

Cameo, Inc. v. Plough, Inc., 185 U.S.P.Q. 228

Se eo ee es kas a wew't 29

Clairol Incorporated v. Holland Hall Products,

Inc., 165 U.S.P.Q. 214 (TTAB 1970) ....... 29

Cloverleaf Butter Co. v. Patterson, 315 U.S. 148

SE ca ten WeReiu el cene een eas ete nhaTs 27

Coca-Cola Co. v. Snow Crest Beverages, Inc., 64

F.Supp. 980 (D. Mass. 1946), affd, 162 F.2d 280

(Ist Cir.), cert. denied, 332 U.S. 809 (1947) . 16

Compco Corp. v. Day Brite Lighting, Inc., 376 U.S.

CER tlt cece. hit eeciae ences Keke eaes 27

DuPont Cellophane Co. v. Waxed Prods. Co., 85

¢ & & fe Se Ear 23, 24

Famolare, Inc. v. Melville Corp., 472 F.Supp. 738

(D. Hawaii 1979), affd, 652 F.2d 62 (9th Cir.

Pct eacatbss Oth bh tad ian cdc ereenaneds 17

Haughton Elevator Co. v. Seeberger, (Com. of Pat.

PE SO OE Ak becccderccwenedetes 24

In re Stellar International Inc., 159 U.S.P.Q. 48

ee rs vaidde balan wahen 29

In re Taylor, 133 U.S.P.Q. 490 (TTAB 1962) .. 29

Inwood Laboratories, Inc., et al. v. Ives Laborato-

ries, Inc., 456 U.S. 844 (1982) ............ passim

Vv

Ives Laboratories, Inc. v. Darby Drug Co., No.

eee GONee 2, DD Sac cdddwcseuaveusans 10

Kellogg Co. v. National Biscuit Co., 305 U.S. 111.

ET LW ase hwarie asatase dare read amenity passim

King Seeley Thermos Co. v. Aladdin Industries,

Inc., 321 F.2d 577 (2nd Cir. 1963) ......... 24

Local 174, Teamsters Union v. Lucas Flour Co.,

er Els Oy WO MOEED vccckdascascacweencs 27

Manhattan Medicine Co. v. Wood, 108 U.S. 218

ME tos awhckendee ech astound nunca kobe 29

McDermott v. Wisconsin, 228 U.S. 115 (1913) . 27

Morton Salt Co. v. Suppinger, 314 U.S. 488 (1942) . 29

Norwich Pharmacal Co. v. Sterling Drug, Inc., 271

F.2d 569 (2nd Cir. 1959), cert. denied, 362 U.S.

Mt ME che a Wine Gwe an pe aa a eek euten are 16

Pagliero v. Wallace China Co., 198 F.2d 339 (9th

SE EE kine Dwiwawe coakcuedecwtewbdaken cae 16

Pennsylvania R.R. v. The Public Service Commis-

sion, 250 U.S. 566, 568-569 (1919) ......... 27

Roberts v. Ross, 344 F.2d 747, 751-752 (3rd Cir.

MN ck edie cae sae eka meee meee eae 16

San Diego Bu.!ding Trades Council v. Garmon,

ae UL Se CD on vic cbc sc ccwnncaes 27

Scott v. Marcalus, 326 U.S. 249 (1945) ........ 13, 14

Sears Roebuck & Co. v. Stiffel Company, 376 U.S.

ED 435 kane ccuensd ti hauhcwkeee mance 15, 27

Singer Mfg. Co. v. June Mfg. Co., 163 U.S. 169,

PD +o nckancounnnonemeuawGreuaeran 14

SK&F, Co. v. Premo Pharmaceutical Laboratories,

Inc., 625 F.2d 1055, 1065 (1980) ........... 4

Strey v. Devine’s, Inc., 217 F.2d 187 (7th Cir.

BET i ad-nk 0 ches seubitns oso ese seneces 29

United States v. Urbuteit, 335 U.S. 355 (1948) 29

U.S. v. Ciba-Geigy Corporation, 1976-1 Trade

Cases 460,908 (D. N.J. 1980) .............. 4

vi

U.S. v. Generic Drug Corp., ..... U.S. ..... (March

carina bin® Wha kw nwa nenn wa ee sa bin 5

Vibrant Sales, Inc. v. New Body Boutique, Inc.,

652 F.2d 299 (2nd Cir. 1981) .............. 16

West Point Manufacturing Co. v. Detroit Stamp.

ing Co., 222 F.2d 581 (6th Cir. 1955) ...... 16

William R. Warner & Co. v. Eli Lilly & Co., 265

ee Cus anaka seuss peceksces ss 16, 20

Worden v. California Fig Syrup Co., 187 U.S. 516

SE krevincckwusccseeuesabane ciauaed Seuss 29

Statutes

15 U.S.C. §§1064(c) and 1065(4) ............... 15, 24

Se UE EE ccd cau cs visecesensdccackcnsed 4

15 U.S.C. §1114, Lanham Act Section 32 ... 2, 11, 12, 13

15 U.S.C. §112%a), Lanham Act Section 43(a) .. 2, 12, 13

i oe wa cach ua bone Meso ene’ 27

es EE GEE GE viwceddscdce orcdsvoe ce 5, 28

IE es ween cease vekeas 6, 28, 29

Oe ee Ie GD BS cic eccccvccccccccss 4

28 U.S.C. §§1254(1) and 2101(c) ............... 2

New Jersey Statutes §56:4-1 and §56:8-2 ...... 2

Treatises

Abraham S. Greenberg, ‘‘Patent’”’ Clauses of the

Lanham Act, 38 Trademark Reporter, pp. 3-47,

Se MEE hs ete canto ctdtae tae sedancneens 15

McCarthy, Trademarks and Unfair Competition,

Lawyers Cooperative Publishing Company,

idee Vickie waded pS Andee seen dentiunene 23

Nims, Unfair Competition and Trademarks, Fourth

ee, Wee A ERD evcckccccccevess 26

Iw Tue

Supreme Court of the United States

Ocroser Term, 1983

BOLAR PHARMACEUTICAL CO., INC,

Petitioner,

v.

OCIBA-GEIGY CORPORATION,

Respondent.

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

OPINIONS BELOW

The opinion of the District Court for the District of New

Jersey is reported at 215 U.S.P.Q. 769 (1982). It is reprinted

in the Appendix at App. 8-50. The unreported preliminary

injunction entered by the District Court on October 4, 1982

is reprinted in the Appendix at App. 5-7. The unreported

decision of the Third Circuit Court of Appeals is reprinted

in the Appendix at App. 1-4. The unreported orders of the

District Court converting the preliminary injunction hear-

ing to a final trial on the merits and entering a permanent

injunction are reprinted in the Appendix at App. 51-55.

= 'sS

JURISDICTION

A writ of certiorari is sought to review the judgment of

the United States Court of Appeals for the Third Circuit

dated and entered October 14, 1983. The jurisdiction of this

Court is invoked under 28 U.S.C. §§1254(1) and 2101(c).

STATUTES INVOLVED

The federal statutory provision involved is Section 43(a)

of the Lanham Act, 15 U.S.C. §1125(a). The state

statutory provisions involved are New Jersey Statutes An-

notated, Sections 56:4-1 and 56:8-2. These provisions are

set forth in full in the Appendix at App. 56-07.

STATEMENT OF THE CASE

This is an action brought by Ciba-Geigy Corporation

(“Ciba”) against Bolar Pharmaceutical Co., Inc. (“‘Bolar’’),

Petitioner herein, under Sections 32 and 43(a) of the Lan-

ham Act, and New Jersey state law, to restrain Bolar’s

manufacture in New York of a generic prescription drug

in the same color capsules used by Ciba for the same

drug. Full evidentiary hearings were held in April, May

and June, 1982. Also in June, 1982, this Court unani-

ois

mously decided Inwood Laboratories, Inc. et al. v. Ives

Laboratories, inc., 456 U.S. 844 in favor of generic drug

manufacture in publicly accustomed capsule colors.

Nevertheless, by opinion dated August 11, 1982, the

trial court applied the “reasonable anticipation” stand-

ard specifically rejected by this Court in Jnwood, to

find Bolar guilty of “passing off’ an “unprivileged imita-

tion” under the Lanham Act and New Jersey state law,

despite the fact that there was no illegal substitution or

“passing off ’’ of the Bolar product for the Ciba product.

(Anp. 46). The trial court also specifically declined to

follow the legal standards for “functionality” and ‘‘sec-

ondary meaning” of drug appearance affirmed by this

Court in Inwood.'

On appeal, the Third Circuit summarily affirmed the trial

court (App. 1-4). The Third Circuit recognized the con-

flict with this Court’s Inwood decision, but held it was

not required to address the issue of conflict with Inwood

under the Lanham Act because the lower court’s injunc-

tion could be based solely on New Jersey law:

' ee ne meena’ colore | “will

a number of i in New York City for

welfare fraud. The drugs involved were not the cts in suit

es included generic drugs —> ha rent colors,

380 indictments are not probative of the drug appearance

issue (DX 12A). Reliance on such indictments was criticized by

this Court in Jnwoed (Id. at 857).

per SS

However, we need not address this issue because the

district court’s conclusions regarding the New Jersey

state law claims of “passing off’ and ‘‘unprivileged im-

itation” are mandated by SK&F and provide a suffi-

cient independent basis for affirming the district court’s

grant of preliminary injunctive relief. (App. 4).

This was despite its earlier holding in SK&F, Co. v.

Premo Pharmaceutical Laboratories, Inc., 625 F.2d 1055,

1065 (1980) that the legal standards for New Jersey state

law were the same as those for the Lanham Act.

The Third Circuit reliance on New Jersey state law is

a transparent effort to evade Inwood. Bolar is a New

York corporation which manufactured its generic product

in New York and intentionally avoided selling its product

into New Jersey. New Jersey has no interest in or sub-

ject matter jurisdiction over Bolar’s interstate generic

drug business outside of New Jersey.?

1. History of the Drug Products in Suit

Respondent Ciba is the U.S. arm of a major Swiss drug

conglomerate, Ciba-Geigy A.G. Ciba has a prominent

market position in antihypertensive (blood-pressure reduc-

ing) drugs. As a result of antitrust action brought by the

Justice Department against Ciba, its patents covering the

product in suit were dedicated to the public in 1981. U.S.

v. Ciba-Geigy Corporation, 1976-1 Trade Cases $60,908 (D.

N.J., 1980).

In August of 1976, Ciba’s competitor Pfizer began to

market Minipress (Prasosin), a new antihypertensive drug.

2 Ciba asserted jurisdiction under 15 U.S.C. §1121; 28 U.S.C.

§§1331, 1338, and the doctrine of t jurisdiction. The lower

courts have declined to consider 8 objection to subject matter

jurisdiction under New leans acai tow.

ale

The two principal dosages of Minipress were in pink/white

and blue/white capsules [R. 60-61, 800-802, 1045, 1199; DX

57, 40, 13A, 13B, 1, 2]. Ciba was simultaneously attempt-

ing to launch a new antihypertensive named “Apresazide”’

containing two different chemical ingredients, in order to

maintain its market share.

At the time Pfizer introduced Minipress, Ciba discovered

that its first production batches of Apresazide were

decomposed and adulterated by an unknown brown chemi-

cal reaction product. Rather than tall further behind Pfizer

by developing a pure drug, Ciba deliberately shipped the

decomposed and adulterated Apresazide into commerce in

October, 1976 without first advising or seeking approval

from the Food and Drug Administration for the contami-

nant as required by law, 21 U.S.C. §§334, 351 [R.

1381-1386; DX 81, 83, 84],3 see United States v. Generix

Drug Corp., ..... USS. ..... (March 22, 1983).

Ciba’s introduction of its adulterated Apresazide was

two months after Minipress came on the market. The

pink/white and blue/white capsule colors of the two prin-

cipal dosage forms of Apresazide are identical to the cor-

responding colors of the Minipress capsules [PX 2, 3, DX

1, 2, 138A, 13B, 41; R. 800-802, 1047].

At the time Ciba introduced Apresazide, the prestigious

National High Blood Pressure Education Program Task

Force had divided proper hypertension therapy into a se-

quence of four drug treatment steps, steps 1-4. Accord-

* Record references are to the numbered pages of the Record

on Appeal, and include documentary exhibits. Physical exhibits are

referred to by trial exhibit number. Petitioner has requested the

rd be transmitted to this Court.

= =

ing to the Task Force recommendations, drugs for step

2 should not be used unless step 1 treatment would

not work. Because of its dangerous side effects, the

Task Force classified Apresazide as a “step 3” drug,

which should not be used unless “first step’’ and ‘“‘second

step” drugs were ineffective [R. 1289, 1294]. To over-

come the Task Force recommendations, Ciba decided to

falsely promote Apresazide as ‘second step” therapy

because Ciba did not want Apresazide “to end up as a

third step in the therapy sequence . . . because most pa-

tients just don’t get to a step 3 situation” [R. 1422; DX

102]. Ciba instructed its salesmen how to respond “‘in the

unlikely event” they were questioned about their “‘second

step” promotion [R. 166-167, 1289, 1419, 1442]. Ciba

also deliberately violated the generic name labelling re-

quirements of the Food, Drug and Cosmetic laws by not

selecting and prominently printing a useful generic name

on its promotional materials as required by the Food and

Drug laws.4

In 1976, Bolar decided to market a generic version of Apre-

sazide and chose to use standardized capsule appearance for

reasons of public safety [R. 610-615]. Bolar’s application to

the Food and Drug Administration for approval of its generic

product in the pink/white and blue/white capsules by

which the public recognized and identified the drug was

approved by the FDA on March 4, 1982. In contrast to

4 This illegal conduct is remarkable because it was Ciba’s own

deceptive advertising of Singoserp, another of its antihypertensive

drugs, and the failure of its advertising agency to display generic

drug names, which resulted in 1962 Amendments to the Food and

Drug laws, 21 U.S.C. §§ 352(e), (n) prohibiting such deceptive drug

advertising and oe’ selection and prominent display of a

generic name [R. 952, }.

=

the adulterated drug marketed by Ciba, Bolar’s generic

drug is of the highest quality [R. 432-33]. Before being

restrained by the trial court, Bolar marketed its gen-

eric product to government agencies, wholesalers and

distributors, in distinctive containers with a prominent

yellow label cautioning pharmacists to substitute only

where permitted by law and only after informing the pa-

tient of the substitution [PX 16-17]. Bolar’s generic cap-

sules themselves each had Bolar’s logo and its National

Drug Control Identification Number prominently im-

printed on them twice so that Bolar could be readily iden-

tified as the source of its product [PX 16-17].

2. The Evidentiary Proceedings

In support of its case, Ciba called Henry Kirsch, its sales

director for Apresazide, who admitted that all of Ciba’s pro-

motion was directed to physicians and pharmacists, and not

to patients [R. 14-19, 93]. Kirsch was unable to distinguish

Apresazide capsules from the earlier Minipress capsules

and from other earlier capsules also identical in appear-

ance [R. 347-348]. Kirsch admitted that patients associate

the capsule colors with the medication itself and do not

associate the capsule colors with Ciba [R. 81, 87]. Kirsch

also admitted that the names of the ingredients of Apresa-

zide were too cumbersome to use as a generic name, that

Apresazide is the common descriptive name for Ciba’s

product, and that physicians commonly refer to the product

in suit as Apresazide [R. 73-77].

Ciba’s other employee-witness was Dr. Audrey Krieg-

man, a recent medical school graduate who has never been

in private practice [R. 120, 129, 1795]. She admitted that

the name Apresazide served as the common name of the

willie

drug itself, and that patients do not associate the cap-

sule colors with Ciba [R. 136, 143, 147].

Bolar called two expert witnesses, Dr. James O’Don-

nell, a pharmacist, and Dr. Herbert Silberner, a physician.

Dr. O’Donnell is Assistant Director of Pharmacy at Rush

Medical Institute, a prominent Chicago hospital center,

and a member of the Generic Drug Technical Advisory

Council of the State of Illinois which is responsible for

approval of all generic drugs in the state [R. 312-316]. Dr.

Silberner is a New Jersey physician who has specialized

in internal medicine since 1948, and who writes a majority

of his prescriptions for generic drugs [R. 507].

Both Dr. O’Donnell and Dr. Silberner testified that cap-

sule color is functional in many ways. To the patient, cap-

sule color identifies the medication itself, and also serves

to distinguish one medication from another when two or

more dosage forms are intermingled [R. 351, 369, 372].

Capsule color is especially helpful to elderly patients in

identifying medication and identifying the purpose of the

medication and should be the same regardless of manufac-

turer [R. 510-513]. Capsule color enables a patient to

detect a dispensing error by a pharmacist; Dr. O’ Donnell

te .jed from personal experience of instances where a

prescription that he had erroneously filled with the wrong

medication was returned by a patient who noticed the dif-

ferent color of the medication [R. 376].

Dr. O’Donnell and Dr. Silberner also testified that it

is common for patients to resist taking a generic equiv-

alent if the generic drug is a different color because the

patient thinks it is an entirely different drug [R. 509-514,

581-585).

cilin

Dr. O’Donnell serves as a volunteer at the Chicago

Poison Control Center, which gives information to health

care specialists about the identity of drugs which have

been accidentally or intentionally ingested. Here, too, the

color of the drug functions as a means of identifying un-

known drugs [R. 373-374]. For this reason and others un-

related to the source of the drug, he testified that when

in charge of purchasing drugs for major Chicago hospitals

he would pay a significant premium for a generic drug

having the publicly accustomed color than for one having

a different color [R. 364].

Dr. O’Donnell also confirmed the testimony of Mr.

Kirsch and Dr. Kriegman that the term ‘“‘Apresazide’’ is

the common descriptive name of the drug itself, because

Ciba did not select and properly promote any other

generic name for Apresazide. A tongue twisting list of

its ingredients—‘‘Hydralazine Hydrochloride and Hydro-

chlorothiazide”—is simply too cumbersome for use, and

hence everyone must necessarily use Apresazide as the

name of the drug itself [R. 353-361].

Dr. Silberner testified that, to the patient, color func-

tions to identify the medicine itself. When Dr. Silberner

prescribes a medication, he offers the patient a generic

drug. Even though his patients know that he has pre-

scribed a generic drug (and thus are not confused as to

source), they will call both the pharmacist and physician

to check whether the correct medicine has been dispensed

if it has an unaccustomed appearance [R. 509-514]. None

of Dr. O’Donnell’s or Dr. Silberner’s testimony as to the

functionality and meaning of drug color was controverted

by Ciba in any way.

—l0)

REASONS FOR GRANTING THE WRIT

A. The Decision Below Conflicts With This Court's Deci-

sion In Inwood By Applying The Watered Down And In-

correct Reasonable Anticipation Standard To Prohibit

Manufacture And Sale Of A Generic Drug Product In

The Accustomed Appearance For The Drug

The decision below is in conflict with the principles

established in this Court’s decision in Inwood Laboratories,

Inc. v. Ives Laboratories, Inc., 456 U.S. 844 (1982) and

with the decision of the Second Circuit in that case follow-

ing remand, Jves Laboratories, Inc. v. Darby Drug Co.,

No. 80-7314 (July 7, 1982) (App. 58-60), rejecting the

“reasonable anticipation” standard for prohibiting generic

drug manufacture in the accustomed drug appearance.

Based on their anti-generic drug position, the New Jersey

federal courts have become a haven for drug companies

seeking protection from generic competition after their

patents expire. Bolar and other generic drug companies

are now repeatedly being sued in New Jersey for sale

of generic drugs in their accustomed color. By evading

the rationale of the Court’s Jnwood decision, the New

Jersey District Court has effectively established a national

policy against manufacture and sale of a generic drug in

the only appearance by which the public recognizes the

drug.

The undisputed facts here are more compelling than in

Inwood. Although over a million capsules of Bolar’s

generic product were sold before Bolar was restrained by

the lower courts, there was no evidence of any illegal

substitution or “passing off’ of Bolar’s product for Ciba’s

product. Nevertheless, the lower courts found that Bolar

“passed off’ its generic drug by applying the ‘“reason-

a

able anticipation” test rejected by this Court and the

Second Circuit in /nwood.

Justice White expressed his concerns in Jnwood that a

generic drug manufacturer should not be held vicarious-

ly liable merely because it could “reasonably anticipate”’

some infringement by its customers:

The mere fact that a generic drug company can an-

ticipate that some illegal substitution will occur to

some unspecified extent, and by some unknown phar-

macists, should not by itself be a predicate for con-

tributory liability... .

Diluting the requirement for establishing a prima

facie case of contnbutory infringement is particularly

unjustified in the generic drugs field. Preventing the

use of generic drugs in the same color to which cus-

tomers had become accustomed in their prior use of

the brand name product interferes with the impor-

tant state policy, expressed in New York and 47

other states, of promoting the substitution of generic

formulations. (456 U.S. 861, 862) (Justice Marshall

concurring)

The majority opinion in Jnwood addressed this issue

by specifically rejecting the “reasonable anticipation”

standard:

JUSTICE WHITE’S concern is based on a comment

by the Court of Appeals that the generic manufac-

turers ‘could reasonably anticipate’ illegal substitu-

tion of their drugs. 638 F.2d at 543. If the Court of

Appeals had relied on that statement to define the

controlling legal standard, the court indeed would

have applied a ‘watered down’ and incorrect stand-

ard. (456 U.S. 854, note 13)

Because the Second Circuit had based its decision only

on §32 of the Lanham Act, this Court could not specifi-

cally reject the “reasonable anticipation” standard under

a,

§43(a). On remand the Second Circuit affirmed the judg-

ment in favor of the right to manufacture the drug in its

accustomed capsule colors under §43(a) without applying

the “reasonable anticipation” standard (App. 58-60). There

is no suggestion in Jnwood that the “‘reasonable anticipa-

tion” standard rejected by this Court under §32 of the

Lanham Act is a proper standard under Section 43 of the

Act. There is no public policy reason to apply one stand-

ard for vicarious liability for “passing off’ under §32, and

a lesser standard for “passing off’ under §43(a).

Nor can Jnwood’s rejection of the “reasonable anticipa-

tion” standard be avoided by the lower courts’ presump-

tion that Bolar “intended” to “‘permit”’ or “facilitate” illegal

substitution by unknown retail pharmacists because it manu-

factured a product in the only appearance by which it is

recognized by the consuming public. That is merely another

way of stating that Bolar could “reasonably anticipate” pass-

ing off. As pointed out by Justice White in his concur-

ring Inwood opinion:

A functional characteristic is “an important ingredient

in the commercial success of the product,” 601 F.2d,

at 643, and, after expiration of a patent, it is no more

the property of the originator than the product itself.

It makes no more sense to base contributory infringe-

ment upon the copying of functional colors than on

the petitioners’ decision to use the same formulation

of the drug, or even to market the generic substitute

in the first p ce. To be sure, the very existence of

generic drugs “facilitates” illegal substitution. But

Ives no longer has a patent for cyclandelate, “and

the defendants have a right to reproduce it as nearly

as they can.” Saxlehner v. Wagner, 216 U.S. 375, 380

(1910) (Holmes, J.). Reproduction of a functional at-

tribute is legitimate competitive activity. (Jd. at 863)

There is no evidence in the record of any “intent” by

petitioner to condone or allow any such wrongdoing; as

=

the district court’s opinion makes clear, petitioner’s as-

serted “‘intent”’ in this regard is nothing more than the

court’s application of the “reasonable anticipation”’ stand-

ard rejected by this Court in Jnwood. This Court held

in Inwood that generic manufacturers are free to adopt

the accustomed drug appearance, despite the “reasonable

anticipation” of wrongdoing by others, so long as they do

not encourage or condone the wrongdoing. What the lower

courts have done here is to ignore the substantive under-

pinning of /nwood in an attempt to distinguish Inwood

as a “narrow” case involving only the scope of appellate

review.

We believe that Section 43(a) does not constrain the

freedom of a generic drug manufacturer to adopt the ac-

customed appearance for a drug any more than Section

32 does, and that this Court would not have upheld that

freedom under one section of the Lanham Act only to

watch it perish under another. But if the Jnwood holding

is to perish, surely it should do so only after plenary

review of the matter by this Court. The decisions below

do not address the issue, let alone subject it to the scru-

tiny that it deserves.

The lower court’s finding that Bolar has “passed off”

its generic product is based on the faulty premise that

Ciba is entitled to the market demand for the drug

product itself, and that because Ciba first encouraged doc-

tors to prescribe it, it is unfair competition for Bolar to

produce and sell a generic drug at “much lower cost”

(App. 9).

This Court has struck down every attempt to use the

trademark laws to prevent competition and extend a pat-

ent monopoly. Scott v. Marcalus, 326 U.S. 249 (19465);

Kellogg Co. v. National Biscuit Co., 305 U.S. 111, 120-122

co ile

(1938); Singer Mfg. Co. v. June Mfg. Co., 163 U.S. 169,

185 (1896). In Scott v. Marcalus, the Court held the good-

will co: a product (i.e., the demand for a product in its

accustomed form) was public property:

By the force of the patent laws not only is the in-

vention of a patent dedicated to the public upon its

expiration, but the public thereby becomes entitled

to share in the goodwill which the patentee has built

up in the patented article or product through the en-

joyment of his patent monopoly [p. 256].

This Court has never permitted monopolists to ap-

propriate the demand and goodwill associated with the

product itself as it was known to the public during the

term of the monopoly. As the Court stated in its land-

mark Kellogg Co. v. National Biscuit Co. decision:

Since during the life of the patents “Shredded

Wheat” was the general designation of the patented

product, there are passed to the public upon the ex-

piration of the patent, not only the right to make the

article as it was made during the patent period, but

also the right to apply thereto the name by which

it had become known.

* * *

Where an article may be manufactured by all, a

particular manufacturer can no more assert exclusive

rights in a form in which the public has become ac-

customed to see the article ars' which, in the minds

of the public, is primarily associated with the article

rather than a particular producer, than it can in the

ease of a name with similar connections in the public

mind. (emphasis supplied)

*-_ * *

Kellogg Company is undoubtedly sharing in the

goodwill of the article known as “Shredded Wheat”’;

and thus is sharing in a market which was created

by the skill and judgment of the plaintiff's prede-

cessor and has been widely extended by vast expend-

aan |) Fyn

itures in advertising persistently made. But that is

not unfair. Sharing in the goodwill of an article un-

protected by patent or trade-mark is the exercise of

a right possessed by all—and in the free exercise of

which the consuming public is deeply interested. [305

U.S. 111, 118-122]

The so-called ‘“‘patent clauses” of the Lanham Act, 15

U.S.C. §§1064(c), 1065(4), were passed by Congress spe-

cifically to codify the Scott, Kellogg, and Singer cases, to

subordinate the trademark law to patent law, and to pro-

tect small drug companies such as Bolar from assertions

of trademark law as a legal device to perpetuate a mo-

nopoly. See Abraham S. Greenberg, “‘Patent’’ Clauses of

the Lanham Act, 38 Trademark Reporter, pp. 3-47, 19

(1948).

This Court should strike down the use of the “‘reason-

able anticipation” standard to prevent competition and

perpetuate drug monopolies.

B. The Decision Below Conflicts With The Decisions Of

This Court And The Second Circuit In Jnwood As To

The Standards For ‘‘Functionality’’ Of Drug Color

In Inwood, this Court reaffirmed the general test for

functionality of a product feature.

In general terms, a product feature is functional

if it is essential to the use or purpose of the article

or it affects the cost or quality of the article. See

Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225,

238 (1964); Kellogg Co. v. National Biscuit Co., 305

U.S. 111, 122 (1938) [456 U.S. 844, 850]

The evidence is uncontradicted that purchasers such

as hospitals (where there is no possibility whatsoever

of illegal substitution) will pay a substantial premium to

have the generic drug in its accustomed appearance, ir-

respective of source, purely because of the desire to have

oan

the generic drug in the only form by which it has een

recognized and identified by patients and to minimize staff

training and. dispensing error® [R. 364-365]. This price

premium is substantial, approximating Ciba’s entire cost

of manufacture of its product [R. 1455; DX 111]. More-

over, the District Court specifically found that the accus-

tomed appearance of the drug makes it ‘‘more saleable,

because it makes it easier for both the doctor and the

pharmacist to substitute the generic drug’”’ (App. 9). The

District Court also found that patients will ‘‘accept the

generic drug more readily” if it has the accustomed ap-

pearance by which it is identified and ‘‘may resist such

substitution, if it does not’’® [App. 9]. It is also undisputed

that Bolar’s customers, which include Gover,.ment agen-

cies, wholesalers and distributors, prefer the product in

the accustomed form [R. 364, 218-219, 1589].

5 Other circuits in addition to the Second Circuit recognize as

“functional” any feature which has value, apart from source iden-

tification, which is important to the commercial success of the prod-

uct. West Point Manufacturing Co. v. Detroit Stamping Co., 222

F.2d 581 (6th Cir. 1955); Pagliero v. Wallace China Co., 198 F.2d

339 (9th Cir. 1952). See also Vibrant Sales, Inc. v. New Body

Boutique, Inc., 652 F.2d 299 (2nd Cir. 1981); Norwich Pharmacal

Co. v. Sterling Drug, Inc., 271 F.2d 569 (2nd Cir. 1959), cert.

denied, 362 U.S. 919 (1960); American Safety Table Company v.

Schreiber, 269 F.2d 255 (2d Cir. 1959); William R. Warner & Co.

v. Eli Lilly & Co., 265 U.S. 526 (1924); Coca-Cola Co. v. Snow

Crest Beverages, Inc., 64 F.Supp. 980 (D. Mass. 1946), aff'd 162

F.2d 280 (1st Cir.), cert. denied, 332 U.S. 809 (1947).

6 The District Court Opinion was largely copied verbatim from

Ciba’s post-trial submissions, and is thus “loaded down with

argumentative overdetailed partisan matter . . . of doubtful validity

or even wholly without support in the record” Roberts v. Ross,

344 F.2d 747, 751-752 (3rd Cir. 1965). However, these findings as

to increased “‘saleability” were written by the Court and, pre-

sumably, more accurately reveal the Court’s reasoning.

|

As pointed out in Famolare, Inc. v. Melville Corp., 472

F. Supp. 738 (D. Hawaii, 1979), affd 652 F.2d 62 (9th Cir.

1981):

A feature which gives the consumer a substantial

reason for purchasing the product, as opposed merely

to distinguishing it from other products, is functional.

* * *

Free competition would be impeded if a manufacturer

could gain a perpetual monopoly on the reproduction

of a feature which contributes directly to the sale of

the underlying product. [/d. at 743]

The record and the Court’s own findings confirm a com-

mercial cost premium, “saleability” and preference for the

accustomed drug appearance, irrespective of source,

because it is the accustomed and only known identifica-

tion ofthe drug itself. The accustomed appearance ‘“‘af-

fects the cost of the drug” and is accordingly functional

under the general /nwood test. To give a former patent

monopolist an undeserved price advantage approximating

the cost of manufacture is contrary to the purpose and

policies of the trademark, patent and antitrust laws.

In addition to the general test for functionality, this

Court affirmed in Jnwood specific tests of functionality

for drug product appearance established by the trial court:

. . . that the blue and blue-red colors were func-

tional to patients as well as to doctors and hospitals:

many elderly patients associate color with therapeutic

effect: some patients co-mingle medications in a con-

tainer and rely on color to differentiate one from an-

other: colors are of some, if limited, help in identify-

ing drugs in emergency situations: and use of the

same color for brand name drugs and their generic

equivalents helps avoid confusion on the part of those

responsible for dispensing drugs. [456 U.S. 844 at 823]

=

The record in this case clearly establishes without con-

tradiction each of these elements of functionality, and

more. Capsule colors of Apresazide are functional to pa-

tients as well as to doctors, pharmacists and hospitals [R. 81-

82, 351, 372, 374-376, 419-420, 424-425, 510-512, 830-839, 1829,

1832;—DX 25, DX 26]. Patients associate color with thera-

peutic effect and use color to identify the medication itself

and its purpose [R. 351-369, 372, 376, 510-511). Patients

co-mingle different medications in a container and rely on

color to distinguish one from another [R. 423-425, 510-512;

DX 28, DX 29]. Drug appearance functions to distinguish

different dosages of a medication, serves as a means for

drug identification in emergency situations, facilitates

doctor-patient communication and helps avoid confusion

in drug dispensing [R. 374-376]. Functionality of drug ap-

pearance prevents prescription error and patient harm or

death [R. 375-376].

The lower courts specifically rejected these tests and

refused to consider the record evidence which fully sup-

ports functionality under the tests |R. 697]. For the Jn-

wood tests that color may be associated with therapeutic

effect and used by patients to distinguish co-mingled medi-

cation, the District Court presumed that “constancy” of

accustomed drug appearance “will permit the patient to

identify it with a single source” [App. 38]. This, despite

the lack of any advertising to patients.

The District Court rejected the /nwood tests “that uni-

form color kelps to avoid confusion on the part of those re-

sponsible for dispensing drugs”, and that “colors are some,

if limited help in identifying drugs in emergency situa-

tions” [456 U.S. 844 at 853]. It substituted its own pre-

sumption of law that a drug is functional if a “physician

or a pharmacist would prescribe a drug based upon its

appearance only” and that it must be a dangerous drug

a

“likely to engender . . . emergency room visits’’ or “over-

dose”’ [App. 37]. This was despite the fact that Apresazide

is sufficiently more dangerous than the drug involved in

Inwood, that the FDA requires a “box warning”’ for Apre-

sazide [R. 1916-1917; DX 12A—1982 Physicians’ Desk Refer-

ence]. The lower courts also ignored Dr. O’Donnell’s testi-

mony about dangerous prescription errors which are and

have been detected by drug appearance alone [R. 375-376].

They also ignored the position of the 55,000 member Amer-

ican Pharmaceutical Association, which is that if standard-

ized drug appearance is prohibited, “the possibility of drug

overdose is increased . . . [and] the problem of drug iden-

tification in emergency situations, such as accidental poison-

ing is exacerbated” [R. 831-32].

The apparent basis for the District Court’s refusal to

adopt the standards for functionality approved by this

Court in Jnwood is its conclusion that color is not func-

tional because patients who identify a drug by its color

may be persuaded by doctors and pharmacists that the

same drug may have a different color.? The District Court

reasoned that Bolar therefore must use different colors

to avoid any possibility of confusion (App. 22). The District

Court’s reasoning is in conflict with the holding of this

Court in Kellogg Co. v. National Biscuit that a competitor

is not required to adopt a product appearance different

from the accustomed form:

7 The Court found that when “a patient already on a brand name

product is then dispensed a different-looking generic equivalent

. . . the patient will usually call his physician or pharmacist to

an @ whether the correct medication has been dispensed.” (R.

). Because the physician tells the patient a generic drug is being

dispensed (and indeed, the patient can see this on the prescrip-

tion itself), this finding is conclusive proof that accustomed drug

appearance identifies the drug product, not source, defeating the

(Footnote continued on following page)

-_

It is urged that all possibility of deception or con-

fusion would be removed if Kellogg Company should

refrain from using the name ‘“‘Shredded Wheat”’ and

adopt some form other than that pillow-shape. But

the name and form are integral parts of the good-

will of the article. To share fully in the goodwill, it

must use the name and the pillow-shape. And in the

goodwill Kellogg Company is as free to share as the

plaintiff. Compare William R. Warner & Co. v. Eli

Lilly & Co., 265 U.S. 526, 528, 530.

Id. at 121. To share fully in the goodwill of the drug

product itself, generic drug companies must be permit-

ted to use the publicly accustomed appearance of the drug.

C. The Decision Below Conflicts With The Decisions Of

This Court And The Second Circuit In Inwood As To

The Standards For Establishing ‘‘Secondary Meaning’”’

Of Drug Color

The lower courts failed to follow the long established

test for secondary meaning reaffirmed by this Court and

the Second Circuit on remand in Jnwood:

To establish secondary meaning, a manufacturer

must show that in the minds of the public, the pri-

mary significance of a product feature or term is to

7 continued

District Court’s finding of ‘secondary meaning’’. The appearance

identifies the drug product because it is the only visual indica-

tion by which the drug may be recognized and identified, and has

nothing to do with source. It is the accustomed appearance of the

product acquired during the patent monopoly which now identifies

the drug to the public, and another appearance does not serve

this function. Subjecting doctors and pharmacists to patient in-

yeas and complaints merely because they prescribe a generic

rug creates a barrier to competition, and grants Ciba an unde-

served price advantage based on factors unrelated to Ciba as a

source, including considerations of safety, patient anxiety and

ignorance.

—2]—

identify the source of the product rather than the

product itself. See ae Co. v. National Biscuit

Co., supra, at 118. (emphasis added) [456 U.S. 844

at p. 851)

There is no evidence of record that either capsule ap-

pearance or the name Apresazide signifies the source of

the drug product in suit, rather than the drug itself. On

the contrary, all of the witnesses testified that capsule

appearance signifies the drug. (see footnote 7, supra)

Dr. Silberner testified that patients associate size, shape

and color with a certain medicine used for a certain pur-

pose, and that many patients cannot remember the names

of their drugs [R. 510-513). The 55,000 member American

Pharmaceutical Association officially recognizes that “‘pa-

tients associate drug identity with drug product appear-

ance”’ [R. 838]. Dr. O’Donnell testified that “patients

associate color of medication with what they are taking

it for” [R. 372].

Ciba’s own marketing director Kirsch testified that pa-

tients associate color with the name and identity of the

drug itself rather than the source of the drug [R. 80-81].

Dr. Kriegman, Ciba’s other principal witness, confirmed

that patients don’t associate capsule color with plaintiff

as a source [R. 142-143].

Nor can any association of capsule color with the drug

name “Apresazide” evidence “secondary meaning’’. Kirsch

testified that “Apresazide” is the common descriptive

name of the drug, and that “generic Apresazide” or

“Bolar’s Apresazide” is the most natural way of referring

to Bolar’s product in suit [R. 73-74].

Dr. O’Donnell testified that ‘‘Apresazide”’ is necessarily

the common descriptive name for the drug because there

~22—

is no other useful generic name, and that it is the policy

of the Official U.S. Adpoted Names Commission that a

combination drug such as Apresazide having multiple in-

gredients should have a separate generic name [R. 355-361).

Ciba has encouraged physicians to write only the word

“Apresazide” on prescriptions, so that this is the only

name patients will ever see [R. 1513]. Accordingly, the

public necessarily uses ““Apresazide” as a common descrip-

tive name for the drug, because it is the only name pro-

vided by Ciba.

A landmark case on this point was Bayer v. United

Drug, 272 F. 505 (S.D. N.Y. 1921) in which the famous

trademark ‘“‘Aspirin’’ was at stake. After the patent ex-

pired, Bayer sought to enjoin a competitor from using the

term ‘Aspirin’. Judge Learned Hand analyzed the case

as follows:

[A]lthough physicians appear to have used the

terms, ‘“‘Aspirin’’ or “acetyl salicylic acid” indifferent-

ly, it cannot be that such patients as read their pre-

scriptions attributed to “Aspirin” any other mean-

ing than as an ingredient in a general compound, to

which faith and science might impart therapeutic vir-

tue. Nor is there any evidence that such as may have

seen both terms identified them as the same drug.

I cannot speculate as to how many in fact did so. No

packages could possibly have reached the consumer,

nor was any advertising addressed to them; their

only acquaintance with the word was as the name

for a drug in whose curative properties they had got

confidence. (272 F. 510).

There is no evidence in the record that the general con-

suming public has had any acquaintance with the term

‘“‘Apresazide”’ or the dosage-coding colors of Apresazide

—23—

other than as the name or color of a “drug in whose cura-

tive properties they had got confidence”’.

As discussed by Professor McCarthy in his treatise

Trademarks and Unfair Competition at page 405:

The name of a product or service itself—what it is—is

the very antithesis of a mark. In short, a generic

name of a product can never function as a trademark

to indicate origin. The terms “generic” and “trade-

mark”’ are mutually exclusive. As noted previously,

the function of a mark is to identify and distinguish

the goods or services of one seller from those sold

by all others. A mark answers the buyer’s question

‘Who are you? Where do you come from?’’ But the

name of the product answers the question “What are

you?” (footnotes omitted)

Ciba selected the name Apresazide to answer the ques-

tion ‘“‘What are you” (i.e., “what the product is’). Any

association of capsule color with “what the product is”

cannot signify Ciba as a source.®

8 The Court’s finding that ‘““Apresazide” is not a generic name

simply because Bolar has refrained from using the word to avoid

litigation is based on an improper legal standard [R. 704, 718]. In

the famous ‘Cellophane case’’, defendant’s non-use of the

trademark “cellophane” did not prevent the word from being

generic:

“In the case at bar the defendant has never used either the

words “cellophane” or “DuPont cellophane” with or without

the oval, on its goods. It has merely filled orders for cello-

phane with its own product” [DuPont Cellophane Company,

Inc. v. Waxed Products Co., Inc., 30 U.S.P.Q. 332-3329

(1948)).””

Moreover, the Court’s finding that Hydralazine Hydrochloride/

Hydrochlorothiazide is a generic name does not counter the

evidence that Apresazide is also generic and is used generically.

A product may have multiple generic names, each of which

describes the product in suit. As pointed out by Professor McCar-

thy in his treatise (supra) at page 408:

(Footnote continued on following page)

nih.

Where there is no other name for a product, or the only

synonym for identifying the specific product is a cumber-

some technical term not generally known to purchasers,

it is inadequate for use by competitors and will not pre-

vent the mark from being generic. Anti-Monopoly, Inc.

v. General Mills Fun Group, Inc., 684 F.2d 1316 (9th Cir.

1982), cert. den., ..... USS. ..... (1983) (““Monopoly’’); Du-

Pont Cellophane Co. v. Waxed Prods. Co., 85 F.2d 75 (2nd

Cir. 1936) (“‘Cellophane’’); Haughton Elevator Co. v. See-

berger, (Com. of Pat. 1950), 85 U.S.P.Q. 80 (‘Escalator’);

Kellogg Co. v. National Biscuit Co., 305 U.S. 111 (1938)

(“Shredded Wheat’’); King Seeley Thermos Co. v. Aladdin

Industries, Inc., 321 F.2d 577 (2nd Cir. 1963) (“Thermos’’).

“Apresazide’” is the common descriptive name of a

prescription drug, and any association of capsule appear-

ance with the narne Apresazide, which is the common

name of the drug and which is the only name available

to patients, cannot show “secondary meaning”’, 15 U.S.C.

§§1064(c), 1065(4).

Common pink/white and blue/white capsules cannot

uniquely signify Ciba as a source because they are

common in the channels of drug commerce. There is

8 continued

There is usually no one, single and exclusive generic name

for a product. Any product may have many generic designa-

tions. Any one of those is incapable of trademark significance.

- » =

Even if there exists another suitable word to call the prod-

uct, the public may pick as a generic name the word claimed

as a mark by the seller. However, most names become generic

because the public is not given any other word to apply to

an unfamiliar product. The term which the seller claims is the

generic designation other than his “mark”, may be so unwield-

ly and complicated that the public will not accept it. (citations

omitted)

a

nothing special or unique about the colored capsules in

suit. There are many drug products of different drug

companies having the same or similar appearance as Apre-

sazide [DX 13A, 13B, 14-22; R. 82, 322-323, 800, 802].

Physicians complain that Apresazide capsules look like

the earlier-marketed Indocin [R. 1278—DX 65], and Ciba

has received complaints that Apresazide looks like the

earlier Minipress® [R. 782, 786—DX 8, 9]. These complaints

confirm the use of capsule color as an identifier of medi-

cation and have nothing to do with identification of Ciba

as a source.

The identity or confusing similarity of Ciba’s capsule

colors with those of Minipress, Indocin and many other

drugs prevents acquisition of ‘secondary meaning’’.

By the time Ciba introduced Apresazide, Minipress had

been in the marketplace for several months. Both sales

and promotional expenditures for Pfizer’s Minipress greatly

exceed those of Apresazide [R. 93, 1030, 1056—DX 38, 44].

It is hornbook law that a valid trade dress cannot desig-

nate multiple sources, and it is accordingly impossible for

Ciba to develop any exclusive trade dress rights or sec-

ondary meaning in colors of prior products in the same

channel of commerce:

Ciba’s own Sales Director Kirsch, when presented with blue/

white and pink/white capsules of the earlier marketed Minipress

and Dynapen (an antibiotic) confused them with Apresazide and

testified that physicians and pharmacists would associate them

with Apresazide (DX 6; R. 83-84, 347-348]. Ciba assured the FDA

that using the same colors as Minipress was not a problem because

the capsule markings were sufficient to —o confusion as to

drug identity [R. 782, 786—DX 8, DX 9]. Here, however, it argues

rrecisely the opposite; that Bolar’s markings will not identify Bolar

as a source.

=" =

[I]t is vital to the existence of a trade-mark that

it should be used by only one concern. A trade-mark

cannot serve two masters; it cannot identify two

sources at the same time and remain a trademark.

{Nims, Unfair Competition and Trademarks, Fourth

Edition, Vol. Two, p. 1289].

The lower court’s grant of rights in standard capsule

colors which were already on the market in the earlier

Pfizer product and other drug products used by patients

is improper. Such capsule color cannot indicate a “single

product from a single source’ because it is used for

multiple products from multiple sources in the same

channel of commerce, any of which might be prescribed

for patients taking multiple medications, simultaneously

or at different points in time.

The decision below conflicts with the District Court de-

cision in Jnwood, affirmed by this Court, that mere

“copying” of the accustomed appearance of a drug by a

generic drug manufacturer, and prior sales of the drug

by the former patient holder, do not establish “secondary

meaning.”

D. The Lower Courts Improperly Based A Nationwide In-

junction On New Jersey State Law To Evade This

Court’s Inwood Decision

Bolar manufactured its generic product in New York,

having a physical appearance properly approved under

Federal law by the United States Food and Drug Ad-

ministration. Bolar is not located in New Jersey and inten-

tionally avoided all sales of its product into New Jersey.

The lower court decisions thus constitute a nationwide

enforcement of New Jersey state law in an area pre-

empted by Federal Statute. The decision below applies

New Jersey state law, without subject matter jurisdic-

. |

tite.

tion over a New York corporation lawfully manufactur-

ing in its own state, to interfere with the generic drug

substitution laws of the other states.

The approval of Bolar’s product by the U.S. Food and

Drug Administration constitutes a Federal Agency deter-

mination that Bolar’s product is not a drug “‘falsely pur-

porting . . . to be the product of . . . [any] other drug

manufacturer . . .” (21 U.S.C. §321(gX2)]. This determina-

tion was made pursuant to specific FDA policy “routinely

to approve new drug applications for drug products that

duplicate the color, size and shape’ of the original prod-

uct, but not to require such duplication [R. 1586]. Where

federal law comprehensively regulates an area of national

concern such as the manufacturing of food or drug prod-

ucts, additional regulation by the states of such manufac-

ture and sale, particularly outside their borders, is pre-

empted.!° Cloverleaf Butter Co. v. Patterson, 315 U.S. 148

(1942); see also, McDermott v. Wisconsin, 228 U.S 115

(1913); Campbell v. Hussey, 368 U.S. 297, 301 (1961);

Pennsylvania R.R. v. The Public Service Commission,

250 U.S. 566, 568-69 (1919); Local 174, Teamsters Union

v. Lucas Flour Co., 369 U.S. 95, 103 (1962); San Diego

Building Trades Council v. Garmon, 359 U.S. 236, 242

(1959).

It is the policy of the various state substitution laws

to promote generic substitution. The Attorney General for

the State of New York, where Bolar manufactures its

product, strongly favored generic drugs in the accustomed

10 In addition, New Jersey is precluded by the overriding policy

of the patent laws from preventing Bolar from copying and selling

the previously patented product in its accustomed form. Compco

Corp. v. Day Brite Lighting, Inc., 376 U.S. 238 (1964); Sears,

Roebuck & Co. v. Stiffel Company, 376 U.S. 225 (1964).

—22—

drug color in his Amicus brief in Inwood. That the various

state substitution laws are frustrated by preventing uni-

formly colored generic products is pointed out by Justice

White’s concurring opinion in the Inwood case:

Preventing the use of generic drugs of the same

color to which customers had become accustomed in

their prior use of the brand name product interferes

with the important state policy, expressed in New

York and 47 other states, of promoting the substitu-

tion of generic formulations. [456 U.S. 844 at 861]

The lower court’s injunction frustrates the various state

substitution laws, and is an improper regulation of inter-

state commerce prohibited by the Constitution.

E. The Decision Below Granting Exclusive Trade Rights

From Illegal Drug Sales And Promotion Is In Conflict

With The Decisions Of This Court And The Other

Circuits

The decisions below establish a dangerous precedent by

permitting the acquisition of exclusive trade rights sole-

ly from illegal drug marketing activities [R. 469-480].

As earlier discussed, sales of Apresazide relied on by the

lower courts to prove secondary meaning included sales of

an adulterated drug, and all of Ciba’s promotion evidence,

relied on by the lower courts as proof of ‘secondary mean-

ing’, was illegally designed to mislead physicians into

believing that Apresazide is recommended as “second

step’’ therapy by the prestigious National High Blood

Pressure Education Program Task Force. 21 U.S.C. §§351,

352(e),(n).

To prevent “profit when generic names cannot be

remembered”’ [R. 952; DX 31], and to insure that useful

generic names for drugs are in the public domain, Con-

gress required that all prescription drug advertisements

29...

have a generic name printed in type half as large as any cor-

responding brand name [21 U.S.C. §§ 352(e),(n); R. 870-72).

Ciba has also intentionally violated the generic name pro-

motion law in all of its advertisements. The penalty for false

advertising and for failure to comply with the generic name

labelling requirement is that Ciba’s Apresazide is ‘‘deemed

misbranded” and is not legally in commerce. 15 U.S.C. §§331,

352. United States v. Urbuteit, 335 U.S. 355 (1948).

This Court has never permitted acquisition and enforce-

ment of exclusive rights in a drug based on misrepresen-

tation to the public of the nature of the product. Morton

Salt Co. v. Suppinger, 314 U.S. 488 (1942); Worden v.

California Fig Syrup Co., 187 U.S. 516 (1902); Manhat-

tan Medicine Co. v. Wood, 108 U.S. 218 (1882). Misbranded

and adulterated drugs such as Ciba’s Apresazide are not

legally ‘in commerce’”’ for purposes of the trademark laws

because trademark rights, either at common law or under

the Lanham Act, are acquired and maintained only by

lawful use, and the grant of exclusive trade rights can-

not be based on such illegal use. Strey v. Devine’s, Inc.,

217 F.2d 187 (7th Cir., 1954); Cameo, Inc. v. Plough, Inc.,

185 U.S.P.Q. 228 (N.D. Ohio 1975); In re Stellar Inter-

national Inc., 59 U.S.P.Q. 48 (TTAB 1968); Clairol In-

corporated v. Holland Hall Products, Inc., 165 U.S.P.Q.

214 (TTAB 1970); In re Taylor, 133 U.S.P.Q. 490 (TTAB

1962).

The reliance by the courts below on illegal marketing

and drug sales establishes a dangerous precedent which

should be reviewed by this Court.

—30—

CONCLUSION

It is respectfully submitted that a Writ of Certiorari

should issue to review the decisions below against manu-

facture of generic drugs in publicly accustomed form. The

decisions adversely affect competition in the drug industry,

and transcend the interests of the litigants.

Respectfully submitted,

Ropert B. JoNES*

JAMES J. MYRICK

TIMOTHY E. LEVSTIK

FITCH, EVEN, TABIN & FLANNERY

135 South LaSalle Street

Chicago, Illinois 60603

(312) 372-7842

Counsel for Petitioner

*Attorney of Record