Shire US Inc v. Barr Laboratories ( 2003 )

Opinions of the United
2003 Decisions States Court of Appeals
for the Third Circuit
5-23-2003
Shire US Inc v. Barr Laboratories
Precedential or Non-Precedential: Precedential
Docket 02-3647
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PRECEDENTIAL
Filed May 23, 2003
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 02-3647
SHIRE US INC.,
Appellant
v.
BARR LABORATORIES INC.
On Appeal from the United States District Court
for the District of New Jersey
(D.C. Civ. No. 02-02023)
Honorable Joel A. Pisano, District Judge
Argued April 8, 2003
BEFORE: ALITO, FUENTES, and GREENBERG,
Circuit Judges
(Filed: May 23, 2003)
Donald A. Robinson
Robinson & Livelli
Two Penn Plaza East
11th Floor
Newark, NJ 07105
2
Marie V. Driscoll
Barbara A. Solomon (argued)
Fross, Zelnick, Lehrman & Zissu
First Avenue & 48th Street
866 United Nations Plaza
New York, NY 10017
Attorneys for Appellant
Kurt L. Shultz (argued)
Winston & Strawn
35 West Wacker Drive
Suite 4200
Chicago, IL 60601
Brian J. McCarthy
Virginia R. Richard
Gregory C. Vamos
Winston & Strawn
One Gateway Center
Newark, NJ 07102
Attorneys for Appellee
OPINION OF THE COURT
GREENBERG, Circuit Judge.
I. FACTUAL AND PROCEDURAL HISTORY
A. Factual History
This matter comes on before this court on appeal from an
order entered August 27, 2002, denying appellant Shire
U.S. Inc.’s (“Shire”) application for a preliminary injunction
in its case against Barr Laboratories, Inc. (“Barr”) charging
Barr with trade dress infringement and trade dress dilution
under sections 43(a) and (c) of the Lanham Act, 15 U.S.C.
§§ 1125(a) and (c), and state unfair competition laws with
respect to Shire’s rights in Adderall, an unpatented drug
Shire manufactures and sells. Adderall is a central nervous
system stimulant used in treating attention deficit
hyperactivity disorder (ADHD) available only by prescription
3
and dispensed to patients in pharmacy vials labeled
“prescription-only” as required by law. Adderall is
composed of the mixed salts of a single-entity amphetamine
and is a controlled substance. Shire first placed Adderall on
the market in 1996 and since that time it has enjoyed
substantial success so that by 2001 it had a 32% market
share in the United States ADHD prescription market.1
Adderall originally came in two dosage strengths and
colors, 10 mg. (blue, round) and 20 mg. (orange, round).
The tablets are currently either blue or pale orange/peach
and either round or oval. Color and size vary with the
tablet’s strength, seven of which currently are prescribed: 5
mg. (blue, round), 7.5 mg. (blue, oval), 10 mg. (blue, round),
12.5 mg. (orange/peach, round), 15 mg. (orange/peach,
oval), 20 mg. (orange/peach, round), and 30 mg.
(orange/peach, round). Adderall tablets are scored and
stamped with the mark “AD” on one side and the dosage
size, e.g., “10” on the other.
Recently, Shire sought a trademark for the Adderall trade
dress. Shire’s trademark applications sought protection for
the overall configuration of the round tablet shape and the
colors blue and orange used in conjunction with the “AD”
marking. The United States Patent and Trademark Office
(USPTO) initially has refused to register Shire’s
configuration.2
1. In addition to Adderall, Adderall XR, and Barr’s generic amphetamine
salts, other currently marketed products used in the treatment of ADHD
include: Ritalin, Ritalin SR, Methylin (generic branded methylphenidate),
generic methyphenidate, Dexedrine, Cylert, Provigil, and Concerta.
2. The USPTO refused to register Shire’s configuration “because the
proposed mark appears to be functional.” JA 1517. The examining
attorney reached that conclusion because “the proposed mark consists of
a design feature of the identified goods which serves a utilitarian
purpose, namely, to hold and/or contain pharmaceutical preparations
used for the treatment of attention deficit disorder and hyperactivity.” Id.The examining attorney’s letter goes on to explain that a mark may be
functional in two senses: de jure and de facto. If a mark is de jure
functional it is unregisterable. If a mark is merely de facto functional it
may be registerable if it is either inherently distinctive or has acquired
distinctiveness. The examining attorney found that Shire’s “proposed
mark is not inherently distinctive,” JA 1518, and thus determined that
even if the proposed mark was de facto and not de jure functional it only
would be registrable with a showing of acquired distinctiveness. It
appears that Shire did not submit evidence of acquired distinctiveness.
4
Shire’s product literature, promotional materials, and
mailings, which its sales staff distributed to physicians,
feature color pictures of the Adderall tablets and sometimes
direct patients to examine the tablets to ensure that they
have received exactly the drug prescribed. Shire does not
advertise its products in general consumer publications,
but pictures of Adderall tablets appear in the Physician’s
Desk Reference and in certain consumer books. While Shire
continues to sell Adderall, it altered its marketing strategy
for 2002 and discontinued promoting Adderall, promoting
instead a patented, sustained-release version of the drug,
Adderall XR.
Barr, a public company that develops and manufactures
generic and proprietary pharmaceuticals, was the first
manufacturer of a generic equivalent to Adderall. It began
developing a generic amphetamine salt alternative in 1998
and started marketing it in February 2002 after submitting
an Abbreviated New Drug Application (“ANDA”) to the
United States Food and Drug Administration (“FDA”) and
obtaining its approval. The FDA has approved Barr’s
generic amphetamine salts as safe and effective, and has
classified Barr’s product, which it manufactures in
accordance with FDA regulations, as therapeutically
equivalent to Adderall. Barr’s product is the bioequivalent3
of Adderall, for which it thus may be interchanged freely.
According to Shire, however, the products contain different
inactive ingredients, and, in particular, Barr’s tablets
contain saccharin, a once controversial ingredient the FDA
only recently removed from its list of banned substances.
Barr manufactures its generic amphetamine salts in 5
mg. (blue, oval), 10 mg. (blue, oval), 20 mg. (orange/peach,
oval), and 30 mg. (orange/peach, oval) tablets.4 Barr’s
3. The FDA rates a generic product “AB” equivalent to its branded
counterpart if a study is submitted demonstrating bioequivalence to the
branded product. Barr’s generic product has an AB equivalency rating
from the FDA.
4. For Barr’s product to be approved as a generic equivalent for Adderall,
it was required to produce the same dosage strengths available for
Adderall. Shire, however, launched its mid-range dosages (7.5 mg., 12.5
mg. and 15 mg. ) after Barr filed its ANDA with the FDA. In an internal
memorandum, Shire indicated that its motivation for introducing these
new strengths was to “buy time” to protect market share because generic
substitutes would not be available for all strengths, thereby minimizing
competition from substitutes.
5
generic amphetamine salts are oval5 and convex in shape.
Both the size and the color of Barr’s tablets are linked to
dosage. The face of the tablets has a “b” mark or the trade
name Barr, and contains a numerical product code. The
district court, on the basis of its physical examination of
the tablets and the record before it, determined that while
Barr’s tablets, like Shire’s, are blue and peach/light orange
and those colors are keyed to dosage amounts, their shape
and markings are different and “[j]uxtaposed against one
another, the products are similar though not identical.” JA
25.
B. Procedural History
On April 30, 2002, Shire filed this action against Barr,
alleging that Barr’s sale of generic amphetamine salts
copying Adderall’s appearance constituted unfair
competition and diluted Shire’s rights under federal and
state law.6 On May 3, 2002, Shire filed a motion seeking a
preliminary injunction precluding Barr’s use of a tablet
with an appearance similar to that associated with the
appearance of Shire’s Adderall tablets.
On June 3, 2002, after the parties had engaged in
limited, agreed-upon discovery, the district court heard oral
arguments on Shire’s motion. In a comprehensive opinion
dated August 26, 2002, the court denied Shire’s motion on
the grounds that Shire had not credibly carried its burden
of establishing that the color and shape of Adderall is non-
functional. Therefore the court concluded that Shire was
not likely to succeed on the merits of its case. The court
entered the order denying the motion for a preliminary
injunction on August 27, 2002,7 but subsequently altered
5. Barr chose the oval shape for its generic tablets without knowing that
Shire planned to use an oval configuration for two of its new “mid-range”
dosages. Shire does not assert any trade dress claims with respect to
these new dosages.
6. The district court had jurisdiction pursuant to 15 U.S.C. § 1121 and
28 U.S.C. §§ 1331, 1338(a), and (b). We have jurisdiction under 28
U.S.C. § 1292(a)(1).
7. The district court also found that inasmuch as a trade dress dilution
claim similarly requires a showing of non-functionality, Shire was
unlikely to prevail on that claim. In addition, the district court denied as
moot two motions by Barr to strike materials that Shire submitted in
support of its motion for injunctive relief inasmuch as the court
determined that Shire was not entitled to a preliminary injunction.
6
parts of its opinion by an amended opinion dated
September 16, 2002, which corrected inaccuracies in
certain terminology used in the original opinion.8 Shire filed
a timely appeal on September 16, 2002.
II. DISCUSSION
A. Standard of Review
We approach this case recognizing that when ruling on a
motion for preliminary injunctive relief, a district court
must be convinced that consideration of the four following
factors favors the granting of preliminary relief: (1) the
likelihood that the moving party will succeed on the merits;
(2) the extent to which the moving party will suffer
irreparable harm without injunctive relief; (3) the extent to
which the nonmoving party will suffer irreparable harm if
the injunction is issued; and (4) the public interest. See
Clean Ocean Action v. York, 57 F.3d 328, 331 (3d Cir.
1995); AT&T Co. v. Winback and Conserve Program, Inc., 42
F.3d 1421, 1427 (3d Cir. 1994). As we have indicated, the
district court determined that Shire had failed to satisfy the
first prong of the test for preliminary injunctive relief,
8. Shire suggests that the district court’s amended opinion was the
product of an improper communication between the court and Barr’s
attorney. See br. of appellant at 5 (“The opinion was subsequently
altered after a communication by Barr’s attorney to the Court (which
was not shared with Shire’s counsel), and a new written opinion was
issued dated September 16, 2002.”) We, however, have compared the
opinions and determined that the district court made only minor
terminological changes in the amended opinion. See JA 21 and JA 6-7
(“sought a trademark application for the Adderall trade dress” changed
from “applied for trademark protection regarding Adderall”), (“its
trademark application seeks protection only for the product’s colors and
shapes when used together with the ‘AD’ marking” changed from “its
patent application seeks protection only for the product’s colors and
shapes when used together with the ‘AD’ marking”) and JA 24, n.4 and
JA 10, n.3 (“its trademark applications” changed from “its patent
applications”). The court added a new footnote at the outset of its
amended opinion explaining why it issued the opinion. This addition had
the effect of changing the number of the subsequent footnotes so that
footnote 4 in the amended opinion corresponds to footnote 3 in the
original opinion.
7
finding that Shire was unlikely to succeed on the merits of
its trade dress claim because it failed to demonstrate that
the product configuration of Adderall is non-functional,
which is one of the factors Shire needed to prove in order
to prevail in an action for trade dress infringement.9
On this appeal we recognize that “[t]he decision whether
to enter a preliminary injunction is committed to the sound
discretion of the trial court, and will be reversed ‘only if the
court abused its discretion, committed an obvious error in
applying the law, or made a serious mistake in considering
the proof.’ ” Duraco Prods., Inc. v. Joy Plastic Enters., 40
F.3d 1431, 1438 (3d Cir. 1994) (quoting Loretangeli v.
Critelli, 853 F.2d 186, 193 (3d Cir. 1988)). However,
“[a]lthough terms of an injunction are normally reviewed for
abuse of discretion, any determination that is a prerequisite
to the issuance of an injunction . . . is reviewed according
to the standard applicable to that particular
determination.” John F. Harkins Co. v. Waldinger Corp., 796
F.2d 657, 658 (3d Cir. 1986); see AT&T v. Winback and
Conserve, 42 F.3d at 1427. Thus, we review the district
court’s factual determinations for clear error but exercise
plenary review with respect to its legal conclusions. See
A & H Sportswear, Inc. v. Victoria’s Secret Stores, Inc., 237
F.3d 198, 210 (3d Cir. 2000). Under the clearly erroneous
standard, “a finding of fact may be reversed on appeal only
if it is completely devoid of a credible evidentiary basis or
bears no rational relationship to the supporting data.”
American Home Prods. Corp. v. Barr Labs., Inc., 834 F.2d
368, 370-71 (3d Cir. 1987).10
9. The other factors relate to secondary meaning or acquired
distinctiveness and likelihood of product confusion. See TrafFix Devices,
Inc. v. Marketing Displays, Inc., 532 U.S. 23, 28-29, 121 S.Ct. 1255,
1259-60 (2001).
10. Shire suggests, citing our opinion in Scott Paper Co. v. Scott’s Liquid
Gold, Inc., 589 F.2d 1225, 1229 n.3 (3d Cir. 1978), that “[b]ecause there
was no live testimony and this case involved only documentary evidence,
this Court is in an equally good position as the District Court ‘to
evaluate the evidence and need not be constrained as in cases where the
credibility of a witness may be in issue.’ ” Br. of appellant at 19-20. Barr
correctly points out, however, that in 1985 Fed. R. Civ. P. 52(a) was
amended to provide that the clearly erroneous standard applies to the
district court’s factual findings “whether based on oral or documentary
evidence”, see American Home Prods., 834 F.2d at 370, and that we thus
have noted specifically that the position previously taken in Scott Paper
Co. “is no longer tenable.” Id. at 370 n.2
8
B. Likelihood of Success on the Merits
The Lanham Act, 15 U.S.C. § 1125(a),11 establishes a
cause of action for trade dress infringement. “Trade dress”
refers to the design or packaging of a product which serves
to identify the product’s source. See TrafFix Devices, Inc. v.
Marketing Displays, Inc., 532 U.S. 23, 28, 121 S.Ct. 1255,
1259 (2001). The purpose of trade dress protection, like
trademark protection, is to “secure the owner of the [trade
dress] the goodwill of his business and to protect the ability
of consumers to distinguish among competing producers.”
Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 774,
112 S.Ct. 2753, 2760 (1992) (citation omitted).
Trade dress protection, however, is not intended to create
patent-like rights in innovative aspects of product design.
Eppendorf-Netheler-Hinz GmbH v. Ritter GmbH, 289 F.3d
351, 355 (5th Cir. 2002). Thus, trade dress protection,
unlike patent law which is not implicated here, does not
foster innovation by preventing reverse engineering or
copying of innovative product design features. Id. “Trade
dress protection must subsist with the recognition that in
many instances there is no prohibition against copying
goods and products.” TrafFix, 523 U.S. at 29, 121 S.Ct. at
1260. Therefore, trade dress protection extends only to
incidental, arbitrary or ornamental product features which
identify the product’s source. Eppendorf, 289 F.3d at 355.
To establish infringement of its unregistered trade dress a
plaintiff must prove that (1) the allegedly infringing feature
is non-functional, (2) the feature is inherently distinctive or
11. Section 1125(a) provides in pertinent part:
Any person who, on or in connection with any goods or services, or
any container for goods, uses in commerce any word, term, name,
symbol, or device, or any combination thereof, or any false
designation of origin, false or misleading description of fact, or false
or misleading representation of fact, which is likely to cause
confusion, or to cause mistake, or to deceive as to the affiliation,
connection, or association of such person with another person, or as
to the origin, sponsorship, or approval of his or her goods, services,
or commercial activities by another person . . . shall be liable in a
civil action by any person who believes that he or she is or is likely
to be damaged by such act.
9
has acquired secondary meaning, and (3) consumers are
likely to confuse the source of the plaintiff ’s product with
that of the defendant’s product. See Wal-Mart Stores, Inc. v.
Samara Bros., Inc., 529 U.S. 205, 210-211, 120 S.Ct. 1339,
1343 (2000).
The functionality doctrine “accommodates the twin
purposes behind the Lanham Act. It protects the
manufacturer (and the consumer) from the copying of those
features that signify a product’s source (and quality) and
encourages competition by preventing one manufacturer
from acquiring a monopoly by attempting to trademark
those features of a design essential to a successful product
of that type.” Standard Terry Mills, Inc. v. Shen Mfg. Co.,
803 F.2d 778, 780-81 (3d Cir. 1986). However, the
definition of “functionality” has not enjoyed such clarity.
See 1 J. THOMAS MCCARTHY, MCCARTHY ON
TRADEMARKS AND UNFAIR COMPETITION, § 7:67 (4th ed.
2001) (discussing the “plethora of definitions” for
functionality). In TrafFix, the Supreme Court set forth two
tests for functionality. First, the Court recognized the
“traditional” definition of functionality: “a product feature is
functional, and cannot serve as a trademark, ‘if it is
essential to the use or purpose of the article or if it affects
the cost or quality of the article.’ ” TrafFix, 532 U.S. at 32,
121 S. Ct. at 1261 (quoting Qualitex Co. v. Jacobson Prods.
Co., 514 U.S. 159, 165, 115 S.Ct. 1300, 1304 (1995)
(quoting Inwood Labs., Inc. v. Ives Labs., Inc., 456 U.S. 844,
850, n.10, 102 S.Ct. 2182, 2187 n.10 (1982))). In addition
to the traditional definition, TrafFix recognized a second
test for functionality: “a functional feature is one the
‘exclusive use of [which] would put competitors at a
significant non-reputation-related disadvantage.’ ” Id.(quoting Qualitex, 514 U.S. at 165, 115 S.Ct. at 1304).
The district court, applying the “traditional” definition of
functionality12 found that “[i]n reviewing the proofs, the
12. The Court of Appeals for the Fifth Circuit recently noted that “[i]n
light of TrafFix, the primary test for determining whether a product
feature is functional is whether the feature is essential to the use or
purpose of the product or whether it affects the cost or quality of the
product.” Eppendorf, 289 F.3d at 356. This is the test that the district
court applied in this case. See JA 23 (“Generally, a feature is functional,
and thus unprotected as a trademark, if it is essential to the use or
purpose of the article or if it affects the cost or quality of the article.”)
(internal quotation marks omitted).
10
Court is not persuaded that the color and shape of Shire’s
product is non-functional.”13 JA 24. Preliminarily the court
noted that, contrary to Shire’s contention, Barr did not
adopt the “identical trade dress developed by Shire for its
Adderall product.” Id. After an examination of the actual
tablets the court found that the products have different
shapes and markings and therefore while the products are
similar, they are not identical.
In addition, the district court found that “the record
developed for purposes of this injunctive relief application
fails to support the conclusion that Shire’s alleged trade
dress is non-functional” inasmuch as Shire “falls short on
its burden to prove non-functionality because it has not
credibly rebutted Barr’s theory that the similar color-coding
and shape of the products are particularly meaningful for
ADHD patients and enhance efficacy.” JA 25-26. In
reaching its conclusion the district court quoted the
declaration of Lawson F. Bernstein, M.D., the affidavit of
Cheryl D. Blume, Ph.D., and the declaration of Gregory
Drew.
Dr. Bernstein’s declaration explains, inter alia, that
because ADHD patients overuse visual cues, (1) when
therapeutically equivalent ADHD products have similar
visual recognition properties, adult ADHD patients will
experience less confusion in correctly identifying the agent
and/or its dosage strength; (2) given that almost all
patients require some initial dosage titration and a
subsequent substantial majority require intermittent
dosage adjustment, the color coding of a particular
preparation of mixed amphetamine salts tablets confers a
substantial degree of clinical functionality for the patient in
the titration/adjustment process; (3) many adult patients
may take multiple daily dosages of different strength
amphetamine salts tablets, also inferring the usefulness of
similar color-coding.
13. Shire has the burden of proving non-functionality for Congress
amended the Lanham Act in 1999 to provide that “[i]n a civil action for
trade dress infringement under this chapter for trade dress not
registered on the principal register, the person who asserts trade dress
protection has the burden of proving that the matter sought to be
protected is not functional.” 15 U.S.C. § 1125(a)(3).
11
The district court quoted Dr. Blume’s affidavit explaining
that a generic drug’s similar appearance to the branded
product “enhance[s] patient safety and compliance with the
medically prescribed dosing regimen” and that safety and
compliance “would be particularly important for ADHD
drugs when non-medical intermediaries (such as school
secretaries) dispense mid-day doses to children [treated for
ADHD].” JA 27. Dr. Blume’s affidavit explains that “[d]osage
form similarities enhance patient acceptance” and points to
generic formulations of other central nervous system drugs
that are identical or mirror the brand drug in color. Id.The district court also noted that, concurring with both
Dr. Bernstein and Dr. Blume, the declaration of Gregory
Drew, a registered pharmacist and Vice President of
Pharmacy Health Services for Rite Aid Corporation, explains
that Rite Aid prefers that “the generic tablet look as similar
to the branded tablet as possible” so as to “increase[ ]
patient acceptance and comfort,” as well as compliance and
that “all other things being equal, Rite Aid will choose to
stock the generic product that most closely resembles the
branded product.” Id.The district court found that “Barr has not copied
features signifying the Adderall source” and that “the color
and shape of Barr’s product are directly linked to the drug’s
efficacy in ADHD patients.” JA 28. The court concluded
that “Shire has failed to prove the requisite non-
functionality as an initial step to gaining the desired relief
here.” Id. The court’s functionality conclusion is a factual
finding, see Ciba Geigy Corp. v. Bolar Pharm. Co., Inc., 747
F.2d 844, 850 (3d Cir. 1984), that “may be reversed on
appeal only if it is completely devoid of a credible
evidentiary basis or bears no rational relationship to the
supporting data.” American Home Prods., 834 F. 2d at 370-
71.
Shire’s primary argument is that the district court
“committed an obvious error by failing to apply Third
Circuit precedent which is contrary to the district court’s
ruling.” Br. of appellant at 21. But as Barr points out, most
of opinions on which Shire relies were district court
opinions from the early 1980s14 which the court here was
14. As Barr notes, those cases were decided prior to: (1) the enactment
in 1984 of the Hatch-Waxman amendments to the Food, Drug and
12
not bound to follow. Br. of appellee at 35. In addition, even
when Shire’s district court case law is considered for its
persuasive value, it does not support its contention that the
court committed reversible error as a court must decide
each trademark case on its own facts, Dresser Indus., Inc.
v. Heraeus Engelhard Vacuum, Inc., 395 F.2d 457, 461 (3d
Cir. 1968), and the cases on which Shire relies are
distinguishable on their facts. Most significantly, though
the cases involved prescription drugs, none involved
controlled substances15 and in all of the cases there was
evidence of the passing off of the defendant’s product by
pharmacists, see Boehringer Ingelheim G.m.b.H. v.
Pharmadyne Labs., 532 F. Supp. 1040 (D.N.J. 1980);
Hoffman La Roche, Inc. v. Premo Pharm. Labs., Inc., 210
U.S.P.Q. 374 (D.N.J. 1980); Biocraft Labs., Inc. v. Merck &
Co., 532 F. Supp. 1068 (D.N.J. 1980); American Home
Prods. Corp. v. Chelsea Labs., Inc., 572 F. Supp. 278(D.N.J. 1982), aff ’d, 722 F. 2d 730 (3d Cir. 1983) (table), or
of an intent to induce illegal substitution on the defendant’s
part. See Ciba-Geigy Corp. v. Bolar Pharm. Co., 547 F.
Supp. 1095 (D.N.J. 1982), aff ’d, 719 F.2d 56 (3d Cir. 1983).16
Shire also relies on our opinion in SK&F, Co. v. Premo
Pharmaceutical Laboratories, Inc., 625 F.2d 1055 (3d Cir.
1980), but SK&F also is distinguishable on its facts as in
SK&F we found evidence of actual passing off by
Cosmetic Act, Pub. L. No. 98-417, § 101, 98 Stat. 1585, 21 U.S.C.
§ 355(j), which established a federal policy favoring the marketing of
therapeutic equivalents of generic drugs, (2) the 1999 amendment to 15
U.S.C. § 1125(a)(3) which places the burden of proving non-functionality
of unregistered trade dress on the plaintiff, and (3) the Supreme Court’s
decisions in Wal-Mart and TrafFix. See br. of appellee at 35.
15. Dr. Salah Ahmen, senior vice president for research and development
at Barr, testified on a deposition that Barr wanted its “product to have
similar color to Adderall to avoid patient confusion, to improve patient
compliance. Especially for this control drug.” JA 496.
16. In the Ciba-Geigy litigation after we affirmed the order of the district
court granting a preliminary injunction, 719 F.2d 56, the parties by
stipulation converted the proceedings on the preliminary injunction to a
trial on the merits so that a permanent injunction was entered and on
further appeal we affirmed again. Ciba-Geigy, 747 F.2d 844.
13
pharmacists. Id. at 1063. Shire does not make a
comparable claim in this case.17
It is true that in SK&F and several of the other cases on
which Shire relies, the defendant offered affidavits and
declarations of pharmacists and physicians making claims
relating to functionality similar to those Dr. Bernstein, Dr.
Blume and Mr. Drew have made in this case and that the
courts in those cases did not credit the evidence. For
example, in SK&F Dr. Shafer, a physician, submitted an
affidavit in which he supported the sale of similarly
configured generic tablets as he believed this configuration
would enable the patient to feel confident that there was no
change in the chemistry of the medication and that patients
might become uneasy, confused or react adversely if the
generic medication looked different from the market
innovator. Id. at 1060-61. But we explained that the district
court nevertheless “apparently chose not to credit the
assertion of the Shafer affidavit, crediting instead the
affidavits of Drs. Meyerson and Tannenbaum that in their
experience the appearance of a drug bears no established
relationship to its therapeutic efficacy.” Id. at 1061. SK&F
does not dictate, however, that we overturn the district
court’s findings of fact in this case because, in contrast to
17. In addition, as Barr points out, there were other significant
differences between the facts in the cases Shire cites and those here.
First, the generic drugs in some of the cases Shire cites were identical in
shape, color, and size to the brand names drugs, whereas here the
district court found that while the products in this case are similar, they
are not identical. See, e.g. Ciba-Geigy Corp., 747 F.2d at 849
(“[Defendant’s] capsules are identical to [plaintiff ’s] APRESAZIDE
capsules except that each is imprinted with the name of its respective
manufacturer.”); American Home Prods. Corp., 572 F. Supp. at 280 (“[B]y
copying every physical feature distinguishable by the human senses,
such as size, shape and color, the defendants have made their product
‘look like’ plaintiff ’s though in fact they are different.”) Boehringer, 532
F. Supp. at 1045 (finding that defendant’s drug was identical to
plaintiff ’s tablet in “size, shape, and color”). Second, Shire relies on
cases involving inferior quality generic drugs that did not adhere to the
strict FDA standards with which generic drugs now must comply. See,
e.g., SK&F, 625 F.2d at 1061 n.4 (noting FDA recall of defendant’s
product); Boehringer, 532 F. Supp. at 1045 (noting “potential
bioequivalence problems” of defendant’s product).
14
the district court’s conclusions in SK&F, the district court
in this case did credit the assertions made by Drs.
Bernstein and Blume and Mr. Drew that were comparable
to those of Dr. Shafer. Just as in SK&F we deferred to the
district court’s findings of fact it is appropriate for us to do
so in this case as well.18 After all, it is inherent in the very
nature of the deferential appellate review of findings of fact
that a court of appeals can and, indeed, should, depending
on the records before it, uphold arguably inconsistent
outcomes.
We also point out that while Shire is correct that the
district court did not discuss most of the case law on which
it relies, it concedes that the court did not ignore all
precedents in its favor. Thus, after quoting at length from
Dr. Bernstein’s declaration explaining that there is clinical
functionality when a generic drug is physically similar to
the branded version, testimony which the district court
credited, the court cited our opinion in Ciba-Geigy, 747
F.3d at 850-51, contrasting it as a case “affirming finding
of non-functionality where district court found no ‘medical
or business considerations’ compelled the size and shape of
a drug.” JA 26.
While district courts in this circuit have rejected
functionality arguments similar to those the court credited
18. We have case law that is consistent with a determination that the
color and shape of drug tablets can be functional. In Smith, Kline &
French Laboratories v. Clark & Clark, 157 F.2d 725 (3d Cir. 1946), one
of the earliest cases involving generic drug substitution, Smith, Kline &
French (SK&F) sought an injunction against the manufacture and sale of
Clark & Clark’s patent-infringing amphetamine tablets under New Jersey
unfair competition laws. Id. at 726. We observed that the infringing
tablets closely resembled those produced by SK&F in shape, color and
scoring and that the two tablets were distinguishable only upon close
examination. Id. at 730. We, however, refused to uphold an injunction
beyond the life of SK&F ’s patent, stating that the patent aside, SK&F
“has no exclusive right to sell amphetamine sulphate and it may not
preempt the market in the drug” and finding that the various features of
the amphetamine tablets were functional. Id. at 730-31. Nevertheless we
upheld the district court’s findings of unfair trade practices as the
evidence showed that Clark & Clark’s salesmen encouraged palming off
of Clark & Clark’s product for that of SK&F. Id. at 731.
15
in this case, other district courts, such as that in Ives
Laboratories, Inc. v. Darby Drug Co., 488 F. Supp. 394(E.D.N.Y. 1980),19 have credited similar testimony bearing
on functionality. In Ives the manufacturer of the
prescription drug cyclandelate sought an injunction against
manufacturers of generic cyclandelate claiming that the
defendants’ use of the same capsule colors was “a false
designation of origin” or a “false description or
representation” of defendants’ product. Id. at 398. But the
district court in Ives found that capsule colors were
functional in several respects. “First, many elderly patients
associate the appearance of their medication with its
therapeutic effect . . . . Second, some patients co-mingle
their drugs in a single container and then rely on the
appearance of the drug to follow their doctors’ instructions.
. . . Third, to some limited extent color is also useful to
doctors and hospital emergency rooms in identifying
overdoses of drugs.” Id. at 398-99.20
The Supreme Court noted the district court’s finding of
functionality in Ives in Inwood Laboratories, Inc. v. Ives
Laboratories, Inc., 456 U.S. 844, 853, 102 S.Ct. 2182, 2188
(1982), after it granted certiorari and reversed the judgment
of the court of appeals which had reversed the district court.21
19. The court of appeals reversed in Ives, 638 F.2d 538 (2d Cir. 1981),
but the Supreme Court in turn reversed the court of appeals in Inwood
Laboratories, Inc. v. Ives Laboratories, Inc., 456 U.S. 844, 102 S.Ct. 2182(1982). Then, on remand from the Supreme Court, the court of appeals
affirmed the district court. Ives Labs., Inc. v. Darby Drug Co., Inc., 697
F.2d 291 (2d Cir. 1982) (table).
20. The court also stated that a “different situation would be presented
if wholesalers, pharmacies and hospitals insisted on purchasing generic
cyclandelate in colors identical to those of Ives so that they could
unlawfully pass off the generic product as that of Ives. But nothing in
the record suggests such a motive. The fact is that, not surprisingly, the
colors have come to represent to large numbers of those taking
cyclandelate not its source but its ingredients and their effects. The
colors are thus functional to the patients as well as to doctors and
hospitals.” Ives, 488 F. Supp. at 399. As in Ives, in this case, in contrast
to the cases on which Shire relies there has not been an allegation of
passing off.
21. Inwood v. Ives, 456 U.S. at 853, 102 S.Ct. at 2188 (“[T]he court
found that the blue and blue-red colors were functional to patients as
16
In addition, citing its opinion in Inwood v. Ives in Qualitex,
the Court commented on the functional nature of the color
of medical pills stating:
[T]his Court has written that competitors might be
free to copy the color of a medical pill where the color
serves to identify the kind of medicine (e.g., a type of
blood medicine) in addition to its source. See [Inwood
v. Ives] at 853, 858, n.20, 102 S.Ct. at 2188, 2190
n.20 (‘Some patients commingle medications in a
container and rely on color to differentiate one from
another’); see also J. Ginsberg, D. Goldberg and A.
Greenbaum, Trademark and Unfair Competition Law
194-195 (1991) (noting that drug color cases ‘have
more to do with public health policy’ regarding generic
drug substitution ‘than with trademark law’).
Qualitex, 514 U.S. at 169, 115 S.Ct. at 1306.
Here the district court credited Barr’s evidence that
similarity in tablet appearance enhances patient safety by
promoting psychological acceptance. We reiterate that we
recognize that district courts in this circuit have rejected
arguments of functionality similar to those credited by the
trial court in Ives and by the district court in this case, and
that we have affirmed several of those factual
determinations as not clearly erroneous. But, as we have
said, those cases are distinguishable on their facts.
Moreover, we have the benefit of the Supreme Court’s most
well as to doctors and hospitals: many elderly patients associate color
with therapeutic effect; some patients commingle medications in a
container and rely on color to differentiate one from another; colors are
of some, if limited, help in identifying 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. In addition, because Ives had failed to show that the
colors indicated the drug’s origin, the court found that the colors had
not acquired a secondary meaning.”); see also id. at 862 n.3, 102 S.Ct.
at 2192 n.3 (White, J., concurring) (“for the patient-user, of course, the
constancy of color and shape may be a psychologically reassuring and
therefore as medically beneficial as the drug itself ”) (quoting 3 R.
Callmann, Unfair Competition, Trademarks and Monopolies § 82.1(m),
pp. 217, 213 (Supp. 1981)).
17
recent trade dress decisions22 which caution against the
over-extension of trade dress protection. In this regard we
point out that there is language in several of the Court’s
opinions supporting a conclusion that the district courts in
Ives and in this case did not err in their functionality
conclusions. Overall we are satisfied that the district court,
after it determined that by being physically similar to
Adderall Barr’s generic amphetamine salts tablets
materially benefitted the patient population, did not clearly
err in finding that Shire had failed to show that its product
configuration was non-functional. Consequently, Shire did
not demonstrate its likelihood of success on the merits and
the court appropriately denied it a preliminary injunction.
III. CONCLUSION
For the foregoing reasons the order of August 27, 2002,
will be affirmed.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
22. With respect to the case law on which the district court relied, Shire
distinguishes the Supreme Court’s decision in TrafFix, 532 U.S. 23, 121
S.Ct. 1255, and our decision in Standard Terry Mills, 803 F.2d 778, and
suggests that Qualitex “effects no change in the law.” Br. of appellant at
28-29. While it is correct that TrafFix considered the evidentiary
significance of expired patents in establishing functionality, a process
not involved in this case, the facts remains that TrafFix did not confine
its discussion of trade dress to this circumstance. For example, in
TrafFix the Supreme Court reminded that “[t]rade dress protection must
subsist with the recognition that in many instances there is no
prohibition against copying goods and products” and cautioned against
“misuse or over extension of trade dress [protection].” TrafFix, 532 U.S.
at 29, 121 S. Ct. at 1260. With respect to our decision in Standard Terry
Mills, while that case did not involve prescription medication, the district
court correctly relied on it as precedent relevant to the definition of
functionality and the purpose of the functionality doctrine. See JA 23-
24, JA 28.