c33:No. 80-7314

MULLIGAN, Circuit Judge
(dissenting):
I would affirm on the opinion of Judge Nickerson on all of the issues presented on this appeal. The majority here reverses solely on the ground that “undisputed evidence establishes a violation of § 32 of the Lanham Act.” I respectfully disagree.
I have no dispute with the interpretation of § 32 of the Lanham Act which the majority purports to apply. Indeed it was set forth by Judge Friendly for a panel of this court of which I was a member, in Ives I, 601 F.2d 631 (1979). There is and can be no claim that Judge Nickerson misunderstood the law announced in our prior opinion.
With respect to the claimed § 32 Lanham Act violation, we found in Ives I, supra, that Ives had failed to adduce sufficient evidence of contributory infringement. “[T]he evidence of improper substitution was limited to 15 prescriptions. Discovery and trial might show that the practice was much more widespread or, on the other hand, as defendants suggest, that the pharmacies in question were known bad actors and few others engaged in such practices.” Id. at 644. (The parties stipulated on trial that there were only 13 instances of such practices.)
Our inquiry then must focus upon, whatever additional evidence was adduced by Ives on the trial. Ives submitted the results of some 83 test shoppings. Forty-two of these shoppings were conducted at pharmacies selected from a list prepared by Ives. One of Ives’ own witnesses conceded that the selection of druggists by Ives’ detail men for this list might have been tainted by knowledge of this litigation. While Ives would object to the characterization of these pharmacies as “bad actors,” it would seem apparent that this list might be suspect and within the class of pharmacies to which we referred in our prior opinion. There is admittedly not a scintilla of evidence to suggest that the defendants sold to those pharmacies knowing or having reason to believe that illegal substitution or mislabeling had occurred. I therefore would conclude that under our prior opinion, the further evidence gleaned from such shop-pings would hardly be probative of any violation by the defendants of Section 32. In any event the statement by the majority that Ives carried out in an “impartial manner” two series of drug shoppings is not entirely accurate.
Forty-one shoppings were impartially selected from a list contained in Hayes Druggist Directory, 1979 ed. Even taking the results of both series of shoppings, however, the results confirm Judge Nickerson’s finding that there was no reasonable inference of an invitation by the defendants to mislabel. The testing hardly supports a finding that the practices condemned were “much more widespread” than those disclosed when this case first came to us in Ives I.
Only 10 out of the entire sample of 83 mislabeled the generic drug as Cyclospasmol. This amounts to some 12% of the sample and not the 29% estimated by the majority. More significantly, five of these ten included the word generic or its abbreviation before or after the word Cyelospasmol. Nine of the ten druggists advised the patient that they were dispensing the generic drug. Only one druggist out of 83 attempted an illegal substitution, charged a “higher” brand price and thus reaped any profit from a color confusion. These facts support rather than discredit the finding of the District Court that druggists were confused with respect to the labeling requirements of the new generic drug law and were not motivated by profit considerations. Any pharmacist who intended to mislabel would simply place the name Cyclospasmol on the label and charge a higher price. He would hardly put generic on the label and inform the customer that he was receiving a generic. In sum, the additional evidence adds nothing of substance to the record previously before this court.
It is also significant that the defendants did not employ “detail” men who contacted druggists and thus were in a position to encourage substitution or mislabeling. This fact completely distinguishes this case from Upjohn Co. v. Schwartz, 246 F.2d 254 (2d Cir. 1957) which is relied upon in the majority opinion. That case involved the use of look alike products but there was also proof that the defendant’s salesmen had contacted druggists for the very purpose of encouraging substitution. No such evidence exists here.
The sampling by Ives of druggists on the Sec. 32 issue was in any event inadequate. On the secondary meaning question (§ 43(a)) which involved a survey of doctors, a list of some 12,000 physicians was assembled and a random selection of names was made in twenty randomly selected geographical areas throughout the country. On the Section 32 contributory infringement issue, however, only 83 druggists located in the State of New York and only half randomly selected, were questioned. There are some 3,000 pharmacists in the State of New York alone. The record indicates that Cyclospasmol is prescribed to some 100,000 patients nationwide. A testing of some 83 druggists in one state does not present a sufficient basis after our remand for the injunctive relief sought here particularly in light of the results obtained.
In an effort to bolster what I believe is a weak record, the majority takes judicial notice of the fact that subsequent to the trial in this case six indictments have been handed down in the New York City area alleging illegal substitution and mislabeling of generic cyclandelate in prescriptions requiring Cyclospasmol. This we are told constitutes “additional undisputed evidence suggesting that illegal substitution and mislabeling in New York are neither de minim-is nor inadvertent.” Of course it is not disputed that the indictments have been filed but the record does not show any convictions. Six indictments are certainly not proof of any illegality and cannot reasonably be described as undisputed evidence of widespread or deliberate substitution and mislabeling even by the druggists much less by the defendant manufacturers here. If pharmacists are violating state laws which provide criminal sanctions, they should be punished. The criminal actions commenced if anything should discourage unethical pharmacists, and if convictions ensue even the de minimis violations adduced on this trial would be further reduced.
Admittedly there has been an imitation of color and capsule and the use of catalogues displaying both the generic and brand name drugs. There was, however, evidence that the catalogue juxtaposition of the drugs was a trade practice.
The majority also contends that the appellees have not offered any “persuasive” evidence of a legitimate reason unrelated to Cyclospasmol for using identically-colored, look-alike capsules instead of those of a different color, size or shape. However, the trial court which heard the evidence found that the colors were functional in several respects. The court found that many elderly patients associate the appearance of their medication with its therapeutic effects. The court credited testimony that some elderly patients refuse to take equivalent drugs of a different color despite explanations of equivalence by their physicians while others do eventually accept it but experience confusion and anxiety. 488 F.Supp. at 389, 399. The majority does not characterize this finding or other evidence of functionality discussed in the opinion below as “clearly erroneous.” This finding was based on the testimony of three physicians and the Chief Pharmacist of a hospital. There is no reason to require the direct evidence of such patients as the majority suggests. Judge Nickerson’s findings of fact based upon the testimony of witnesses who appeared before him cannot be disregarded by this court. See, e. g., Master Shipping Agency, Inc. v. M. S. Farida, 571 F.2d 131 (2d Cir. 1978).
In sum I am persuaded that Ives has failed on trial to adduce any evidence of substance which would support a finding of a Section 32 violation. I would affirm.
. The principal contention of Ives has been that the defendants violated section 43(a) of the Lanham Act. That issue has not been addressed by the majority. Suffice it to say that Ives’ position that the generic drug supplied by the defendants was falsely described as comparable to or equivalent to Cyclospasmol was not supported on trial by any evidence and was abandoned on appeal. The contention that the use of identically colored capsules was a false designation of origin since the Ives’ capsules had acquired a secondary meaning and that the color was not functional within Pagliero v. Wallace China Co., 198 F.2d 339, 343 (9th Cir. 1943) was also found by the trial court to be without merit. While not reaching the § 43(a) violation the majority does disregard the finding of functionality.
. An Ives witness, the President of the New York State Pharmaceutical Society, testified that he knew personally of no illegal substitution of generic for brand name drugs, and in answer to a question from the court stated that he did not believe the practice was widespread.
. Ives, on the other hand, employs detail men who personally visit pharmacists and admittedly know which of them have a proclivity for illegal substitution.
. Two defense witnesses, Sperber and Black-man testified that it was common in the industry to list the generic drug next to the brand name drug. In addition, Mr. Lowenkron, a witness for Ives, testified that druggists and doctors refer to drugs by the brand name. Thus, it would seem that juxtaposition of the generic and brand name drug would be imperative for generic manufacturers to compete effectively. See Pagliero v. Wallace China Co., supra, 198 F.2d at 343.
. Other evidence which supported Judge Nickerson’s finding of functionality of the color included: testimony by physicians that they often give their patients color coded charts to help the patients avoid confusion between several drugs; testimony that color is useful in identifying drug overdoses in emergencies; and evidence which showed that some hospitals and pharmacies refused to purchase green cyclandelate capsules because of a potential for confusion. Ives Laboratories, Inc. v. Darby Drug Co., Inc., supra, 488 F.Supp. at 399.

Passage view · GavelSight