## Facts

- Ives Laboratories marketed prescription cyclandelate under the registered trademark CYCLOSPASMOL, originally protected by a patent that expired in 1972.
- Ives sold cyclandelate in distinctive colored gelatin capsules: a blue 200 mg capsule and a blue-red 400 mg capsule, each imprinted with identifying marks.
- After patent expiration, generic manufacturers (including Inwood and others) sold cyclandelate in capsules intentionally matching Ives’s capsule colors and general appearance.
- Because the drug was prescription-only, Ives marketed primarily to physicians and sought to prevent substitution by urging “no substitution” directions on prescriptions.
- Ives alleged that some pharmacists dispensed generic cyclandelate but mislabeled it as CYCLOSPASMOL and that look-alike capsules and certain sales materials contributed to this mislabeling.
- The district court found some pharmacist mislabeling occurred but ruled for defendants, finding Ives failed to prove defendants either (a) intentionally induced mislabeling or (b) continued supplying product to pharmacists they knew or had reason to know were mislabeling.
- The Second Circuit reversed, concluding the evidence was clearly sufficient to establish a Lanham Act § 32 violation and rejecting the district court’s findings.
- The Supreme Court granted review.

## Issues

1. When is a manufacturer or distributor contributorily liable under Lanham Act § 32 for trademark infringement committed by pharmacists who mislabel generic drugs as the branded drug?
2. Did the court of appeals violate Federal Rule of Civil Procedure 52(a) by overturning the district court’s factual findings absent clear error?

## Decision

- The Supreme Court reversed the Second Circuit and reinstated judgment for defendants.
- The Court held contributory trademark liability may attach only if the defendant (a) intentionally induces another to infringe, or (b) continues to supply a product to a party it knows or has reason to know is infringing.
- The Court held the district court’s findings that defendants did not intentionally induce infringement and did not knowingly continue supplying infringing pharmacists were not clearly erroneous.
- The Court held the Second Circuit improperly reweighed evidence and substituted its assessment for the trial court’s credibility and inference determinations, contrary to Rule 52(a).

## Legal Principles

- Contributory trademark infringement exists when a manufacturer or distributor:
  - intentionally induces another to infringe a trademark, or
  - continues supplying its product to one it knows or has reason to know is engaging in trademark infringement.
- Lanham Act contributory liability is grounded in common-law tort principles of responsibility for materially contributing to another’s wrong.
- Under Rule 52(a), appellate courts must uphold trial-court findings of fact unless clearly erroneous; disagreement with how the trial court weighed evidence does not justify reversal.
- Assessments of credibility and the weight of evidence are primarily for the trial court, and appellate courts may not recast ambiguous facts to reach a different view of intent absent clear error.

## Conclusion

The Court defined the modern standard for contributory trademark infringement—intentional inducement or continued supply with knowledge (or reason to know) of infringement—and reaffirmed that appellate courts must defer to trial-court factfinding under Rule 52(a) unless those findings are clearly erroneous.


Inwood Lab’ys, Inc. v. Ives Lab’ys, Inc., 456 U.S. 844 (1982)