Inwood Laboratories Inc v Ives Laboratories Inc

Inwood Laboratories Inc. v. Ives Laboratories, Inc., 456 U.S. 844 (1982), is a U.S. Supreme Court case that addressed contributory trademark liability under § 32 of the Lanham Act. The Court established a test for such liability, holding that a manufacturer or distributor may be liable if it "intentionally induces another to infringe a trademark, or if it continues to supply its product to one whom it knows or has reason to know is engaging in trademark infringement." This doctrine is based on the principle that parties contributing to harm can be held liable even if they did not directly cause the harm. The case arose after Ives Laboratories, owner of the trademark for Cyclospasmol, sued Inwood Laboratories and others for producing generic versions of a drug in identically colored capsules. Ives alleged that pharmacists were mislabeling these generics as Cyclospasmol due to their identical appearance. The District Court denied a preliminary injunction, finding no evidence of conspiracy or suggestion by manufacturers to infringe. The Second Circuit affirmed but broadened the standard for contributory liability. The Supreme Court agreed with the lower courts that liability could extend beyond direct infringers. It reversed the Second Circuit's finding of infringement under § 32 and remanded the case, emphasizing that appellate courts must defer to district court findings under the "clearly erroneous" standard. The Court also defined functionality in Footnote 10, stating a product feature is functional if essential to its use or affecting cost or quality. This definition has been referenced in ...