## Facts

- Eli Lilly & Co. manufactured and sold a liquid quinine preparation flavored and colored with chocolate and other ingredients under the name “Coco‑Quinine” beginning in 1899.
- Related companies under common control with William R. Warner & Co. produced a similar quinine-and-chocolate liquid preparation sold under the name “Quin‑Coco,” later sold and distributed by Warner.
- The competing preparations were similar in taste, color, and appearance, with Warner’s product sold at a lower price.
- Lilly alleged Warner infringed the name “Coco‑Quinine” and engaged in unfair competition by encouraging retail druggists to substitute “Quin‑Coco” when customers ordered or prescriptions called for “Coco‑Quinine.”
- The district court dismissed Lilly’s complaint on both trademark and unfair competition theories.
- The court of appeals agreed there was no trademark infringement but found unfair competition and entered relief that, in part, restricted Warner’s use of chocolate.
- The Supreme Court reviewed both the trademark and unfair competition questions and the scope of injunctive relief.

## Issues

1. Whether “Coco‑Quinine” (and “Quin‑Coco”) was a protectable trademark or was merely descriptive of ingredients.
2. Whether Warner committed unfair competition by inducing or enabling retailers to pass off “Quin‑Coco” as “Coco‑Quinine.”
3. What injunctive relief was permissible without barring lawful competition, including the use of chocolate as an ingredient and truthful descriptive naming.

## Decision

- The Court held that “Coco‑Quinine” and “Quin‑Coco” were descriptive of ingredients and therefore not protectable trademarks; Warner’s use of “Quin‑Coco” was not infringement.
- The Court held Warner was liable for unfair competition based on conduct encouraging substitution and passing off through retailers.
- The Court approved injunctive relief aimed at stopping misrepresentation and substitution, including restrictions on Warner and its agents from suggesting passing off.
- The Court held relief could include labeling requirements distinguishing Warner’s product and affirmatively stating it was not to be sold or dispensed as Lilly’s or used to fill orders or prescriptions calling for Lilly’s.
- The Court reversed the decree to the extent it forbade Warner’s use of chocolate as an ingredient, holding that such a ban exceeded permissible relief.

## Legal Principles

- A term that merely describes ingredients, qualities, or characteristics of a product cannot be exclusively appropriated as a trademark.
- A competitor may use a similar descriptive name to truthfully describe its own goods even if some confusion about source may result, absent protectable trademark rights.
- Unfair competition may be established by conduct that induces intermediaries to deceive purchasers, including encouraging retailers to pass off a defendant’s goods as the plaintiff’s.
- One who induces another to commit fraud and supplies the means may be held responsible for the resulting deception.
- When repeated acts of unfair competition are shown, equity may infer likely continuation and grant injunctive relief.
- Injunctions must be limited to preventing deception and may not prohibit lawful competition, including use of functional ingredients and truthful descriptive terminology.

## Conclusion

The Court denied trademark protection to descriptive ingredient-based names but upheld liability for unfair competition where a manufacturer encouraged retailers to substitute a cheaper, similar-looking product for the plaintiff’s, authorizing targeted injunctive and labeling relief while rejecting an overbroad ban on the defendant’s use of chocolate.


William R. Warner & Co. v. Eli Lilly & Co., 265 U.S. 526 (1924)