Indiana Law Review Trademarks and '"Look-Alike" Drugs I. Introduction "Look-alike" drugs are generic products^ which are identical in size, shape, and color to their brand-name counterparts. The problems created by look-alike drugs have arisen in several cases; however, the equities were such that the courts were never forced to decide specifically whether, absent any fundan>ental inequality in the products, generic drug manufacturers should be allowed to market products made identical in size, shape, and color to their brand-name counterparts. The recent case of Ives Laboratories, Inc. v. Darby Drug Co.,^ has crystallized this issue and was heard by the United States Supreme Court during its 1981-1982 term. The courts, aided by previously existing "anti-substitution" legislation,^ had been able to control the controversy between generic and brand-name drug manufacturers. However, with the majority of states repealing that legislation, coupled with the Food and Drug Administration's (FDA) strong support of generic drug use,* the issue of look-alike drugs has exploded into high-stakes economic warfare. The generic drug companies allege that brand- name manufacturers are trying to block generic products from entering the market by creating monopolies in color combinations which would effectively extend the term of their expired patent under the guise of trademark law.^ The brand-name companies 'A "drug product" is a capsule, tablet, or other dosage form which contains a specific "drug" as the active ingredient. Each drug has both a standard "chemical name" and a "non-proprietary name." The non-proprietary name is usually a shortened version of the chemical name and is often, as in this Note, referred to as the "generic name." Remington's Pharmaceutical Science 1308-09 (15th ed. 1975) [hereinafter cited as Remingtons]. A brand name, by contrast, is a name arbitrarily assigned to the drug by a particular manufacturer and is often protected under trademark laws as a trade-mark. As long as a generic and a brand-name product contain the same quantity of the active chemical entity, they are termed generically or chemically equivalent. Remington's, supra, at 1368. ==455 F. Supp. 939 (E.D.N.Y. 1978), aff'd and remanded, 601 F.2d 631 (2d Cir. 1979); 488 F. Supp. 394 (E.D.N.Y. 1980), rev'd and remanded, 638 F.2d 538 (2d Cir. 1981), rev'd and remanded sub nom. Inwood Laboratories, Inc. v. Ives Laboratories, Inc., 50 U.S.L.W. 4592 (1982). ^"Anti-substitution laws" prohibit pharmacists from dispensing any manufac- turer's drug product other than the one specifically named on the prescription. See notes 12-17 infra and accompanying text. *See Bureau of Consumer Protection. U.S. Federal Trade Comm'n, Drug Prod- uct Selection. Staff Report to FTC 1-44 (1979) [hereinafter cited as FTC Report]; Hecht, Generic Drugs: How Good Are They?, FDA Consumer, Feb. 1978, at 17. 'See note 30 infra. 733 734 INDIANA LA WREVIEW [Vol. 15:733 respond that they are only trying to prevent the generic companies from unfairly utilizing the innovator's advertising campaigns and to protect the good will they have earned through the promotion and use of their products. Consumers also have interests in the issues raised by look-alike drugs. Without a means to distinguish between specific drug products, consumers will be unable to determine whether unknown or inferior quality drugs are received. In addition, consumers may fall prey to unscrupulous pharmacists who may easily substitute lower-priced generic products for more expensive brand-name products without the consumer's knowledge. Finally, the use of look-alike products provides an opportunity for the imitation of drugs with high abuse potentials thereby creating the possibility for injury or even death. This Note will evaluate the methods used to control the look- alike drug problem and the effect of look-alikes upon various in- terested parties. A discussion of legislative and judicial avenues for controlling the problems will follow. Finally, a possible solution will be proposed which takes into consideration the efficiency of available systems and balances the legitimate interests of the parties. II. BACKGROUND For centuries merchants and consumers alike have recognized the importance of being able to differentiate among similar products.® Some goods, such as clothing and raw materials, are easily distinguishable simply by touching them; others, such as perfumes or foods, are recognizable by smelling or tasting. For other goods consumers must rely upon accompanying literature, advertising, or consumer reports. Prescription drug products, however, present a unique situation because consumers have no opportunity to receive first-hand information. They must rely not only upon a physician to prescribe the appropriate medications, but also upon a pharmacist to dispense the correct product. Unlike other goods, drugs are capable of being positively identified only by technical chemical assaying; therefore, strict rules and ethics regulating the prescription and distribution of drugs have been created.' Drugs are distributed from the manufacturers in distinctive packaging and with identifying literature; however, the various drugs reach the ultimate consumer in identical amber vials with •H. TouLMiN, The Trade-Mark Act of 1946 1-2 (1946). 'See, e.g., Ind. Code §§ 25-26-13-1 to -29 (Supp. 1981) (laws regulating licensure of pharmacists and pharmacies); id. §§ 16-1-28-1 to -5, -7 to -16, -19, -22 (pure food and drug legislation). 1982] TRADEMARKS 735 only a pharmacist's label affixed. Once a medication is removed from one of these vials, only the product's size, shape, and color can provide any hints to its identity. Although the physical appearance of a drug product can create a presumption of the product's identity, the presumption is valid only as long as the strict regulations governing the manufacture and distribution of drug products remain intact. A. Mechanisms Used to Further Drug Product Identification The continuing goal of pharmacy laws and ethics has been to assure the patient that he will receive the medications properly prescribed by his physician and that the drugs he receives are of good quality.* A physician has traditionally had the prerogative not only to prescribe an appropriate drug for his patient, but to identify a particular product and its manufacturer or source as well.^ Until recently the modern laws governing pharmacy, in an effort to aid in product identification, required the pharmacist to fill the prescrip- tion exactly as it was written by the physician. Forty-nine states, however, have repealed these "anti-substitution" laws^° and now permit pharmacists to substitute, within specified limits, equivalent products for the drug specified by the physician.^^ The role of both anti-substitution and pro-substitution laws in providing the ultimate consumer with a means of identifying drugs will be presented as a framework for analyzing the cases involving ^REMINGTON'S, supra note 1, at 24. Pharmaceutical Mfrs. Ass'n, The Medications Physicians Prescribe: Who Shall Determine the Source? 3-4 (1972) [hereinafter cited as PMA]. See Willig, The Prosubstitution Trend in Modem Fharmacy Law, 6 U. Mich. J.L. Ref. 1, 2 & nn.3 & 4, 20 (1972). '"Indiana is the only state which has retained its substitution prohibition. Indiana: The Only State Where RPh's Don't Play a Role in Rx Product Selection, Am. Drug- gist, Dec. 1981, at 34. "For a discussion of state laws permitting substitution, see McCarey, Generic Substitution Policy, 34 Food Drug Cosm. L.J. 103 (1979); Ruggieri, Manufacturers' View of Generic Substitution Legislation, 34 Food Drug Cosm. L.J. 108 (1979); Willig, supra note 9; Note, Consumer Protection and Prescription Drugs: The Generic Substitution Law, 67 Ky. L.J. 384 (1978-1979). See also Dickinson, Substitution After a Decade: Oh, What a Tangled Web!, Drug Topics, Mar. 15, 1982, at 45, 46-47. For a pharmaceutical discussion of these laws, see Goldberg & DeVito, The Im- pact of State Generic Drug Substitution Laws, Drug Therapy, Dee. 1981, at 75; Drug Substitution Laws: A State-by-State Overview, Drug Therapy, Dec. 1979, at 15 [hereinafter cited as Overview]. For a medical discussion, see Carr, Potential Liabilities of Generic Drug Prescribing, Drug Therapy, July 1979 at 99; Coyne, Fear and Loathing and Generic Drugs, Private Prac, Sept. 1978, at 18; Substitution: The Doctor's Dilemma, Private Prac, June 1980, at 47-60 (special section) [hereinafter cited as Doctor's Dilemma]. 736 INDIANA LAWREVIEW [Vol. 15:733 look-alike drugs. In addition, a familiarity with fundamental concepts concerning trademark law is necessary for an understanding of the judicial treatment of look-alike drugs. 1. Anti-Substitution Latf;s. — Although drug substitutions were occasionally necessary and tolerated during periods of commercial uncertainty and of war, the first national anti-substitution drug law can be traced back to a thirteenth century German edict. ^^ Modern anti-substitution laws promulgated during the early 1950's were the result of a growing concern regarding the increased marketing of drug products of unknown quality whose appearance resembled established products.^^ In an effort to protect consumers from unethical pharmacists who were "palming off," or substituting cheaper imitations without the knowledge or consent of either the physician or the patient, and to protect the property interests of the innovator or brand-name companies, states passed legislation prohibiting the unauthorized substitution of drug products." The underlying rationale appeared to be that the sanctions^^ imposed by these laws against pharmacists engaging in unauthorized substitu- tion would sufficiently curb the practice. The pharmacist, by virtue of his professional ethics,^^ was trusted to refrain from illegal substitution. These laws and the pharmacist's ethics were the only means by which the patient, or ultimate consumer, could be assured *^According to an edict issued in 1227 by Emperor Frederic II of Germany, a substitution without the physician's consent would result in a confiscation of all the pharmacist's wares. PMA, supra note 9, at 3. ''Green, Welfare Losses from Monopoly in the Drug Industry: The Oklahoma 'Anti-Substitution" Law, 6 Antitrust L. & Econ. Rev. 97, 108 (1972); Note, supra note 11, at 389. ^*See PMA, supra note 9, at 5-7. ''See, e.g., Ind. Code § 25-26-13-26.1(e) (Supp. 1981). One commentator has noted that: When the consumer reposes a high level of trust and confidence in the exper- tise of a provider of goods and services, the law commonly treats this vendor in a fashion different from the manner in which it treats other suppliers of goods and services. Accordingly, the law regulates the professions to a greater extent than other occupations. This. scrutiny stems largely from the inability of the public to protect itself adequately in a situation where its members engage the professional on the understanding that he will put their interests before his own. Because the professional is deemed to be a fiduciary, the rule of caveat emptor does not apply. This is clearly the case with the professional pharmacist. He stands as a fiduciary for most transac- tions, and particularly in the case of prescription drugs, the public must trust the ability of the pharmacist to dispense properly those commodities on which health and life may depend. Willig, supra note 9, at 1. "•Am. Pharmaceutical Ass'n, Code of Ethics (1969), reprinted in Remington's, supra note 1, at 23. 1982] TRADEMARKS 737 of the drug product's identity because of the inherent difficulty in identifying a drug. The consumer had to believe the drug was what the pharmacist labeled it to be, otherwide he would always have to have it assayed. If look-alike products were available, the faith in the pharmacist had to be well-founded. The sanctions imposed by the anti-substitution laws impressed upon pharmacists the magnitude of their ethical responsibilities to consumers. In addition, they imposed a standard of conduct which resulted in a high degree of predictability with respect to substitu- tion and similar products. As long as the anti-substitution laws were in effect, any substitution of drug products without the physician's knowledge or consent was illegal. The patient could, thereby, reasonably rely on the pharmacist to dispense the specific product ordered by his physician without fear of an unauthorized substitu- tion occurring. 2. Pro-Substitution Laws. — In the 1970's, however, a strong, and ultimately successful, movement to reverse the traditional anti- substitution attitude began to gain momentum." As patents held by research-oriented drug manufacturers expired, large numbers of cheaper, generic drug products became increasingly available.^® Because of the nature of the advertising strategies of the two types of drug companies, ^^ the brand-name companies appeared to have a substantial marketing advantage over the generic drug manufac- turers.^'' This resulted in an alleged inability of the lower priced generic products^^ to break competitively into the market unless substitution was allowed, thus depriving the consumer of the oppor- tunity to receive cheaper medications.^^ "See Generic Deceit: "Look-alike" Drugs and Your Patients, Private Prac, May 1978, at 61, 63. See generally note 11 supra. ^^See FTC Report, supra note 4, at 43-45. ^^See id. at 44-50. For a comparison of the differing approaches used by the com- panies, see notes 50-62 infra and accompanying text. ^"See, e.g., Pennwalt Corp. v. Zenith Laboratories, Inc., 472 F. Supp. 413, 421 (E.D. Mich. 1979); Green, supra note 16, at 102; Latiolais, Should the Anti-Substitution Laws Be Amended to Permit Substitution? Yes!, Pharm. Times, Sept. 1972, at 32; Stetler, Should the Anti-Substitution Laws Be Amended to Permit Substitution? No!, Pharm. Times, Sept. 1972, at 33; Look-Alike Drugs: Is This Pharmacy's Next Battle Ground?, Drug Topics, Sept. 4, 1979, at 6. "Generic products are generally less expensive than their brand-name counter- parts, primarily for three reasons: (1) generic drug manufacturers have no research and development costs to recoup; (2) they advertise products on a "product line" con- cept rather than individually promoting drugs; and, (3) they adhere primarily to minimum FDA quality control standards. See The Pharmaceutical Industry 87 (C. Lindsay ed. 1978); FTC Report, supra note 4, at 44-50. See also notes 46-62 infra and accompanying text. ^^But as with other commodities, a cheaper product is not always better than, or even equivalent to, similiar goods. The added expense often covers the cost of increased quality. See Brand vs. Generic Names, 59 J. Ind. St. Med. A. 914 (1966) (editorial). 738 INDIANA LAWREVIEW [Vol. 15:733 In asserting their position, proponents of substitution pointed to ongoing scientific developments as providing a rational basis for a reversal in policy. They asserted that the fear of unknown or inferior products was no longer valid in light of: (1) the increased regulation and control of drug production by the federal government and, (2) the increased training received by pharmacists which enables them to evaluate data concerning various drug products and to choose among safe and comparable products.^^ Based upon this rationale, the anti-substitution laws were repealed by all but one state,^* and new laws permitting drug substitution within specified limitations were passed.^^ With the restraints of anti-substitution laws removed, the presumption that the drug received is the specific drug product ordered becomes weaker. Although the pharmacist is still restricted to substituting only generic equivalents,^^ there are many other factors affecting the specific drug products which may or may not be equivalent.^^ For this reason it becomes important that the consumer actively monitors the particular drug product which he receives. Without the strong presumption that the drug product is indeed the one specified by the prescription, the consumer must rely more than ^Tyler, Are Generics a Drug on the Market?, 70 J. Ind. St. Med. A. 452, 454-55 (1980). The validity of these bases has been challenged and is the focus of the raging debate concerning substitution. See, e.g., Berger, Drug Product Selection: Are All Drugs Created Equal?, Med. Mktg. & Media, Sept. 1980, at 46; Coyne, Substitution or Switching? New Name For An Old Game, Private Prac, Oct. 1981, at 22-26; Davis, Brand vs. Generic Drugs, Med. Mktg. & Media, May 1979, at 4; Dickinson, supra note 11, at 45; Feldmann, Drug Product Selection—Freedom with Responsibility, 12 J. Am. Pharm. a. (n.s.) 368 (1972); Latiolais, supra note 20, at 36; Stetler, supra note 20, at 33; Doctor's Dilemma^ supra note 11, at 47-60; Look-Alikes Can Be Trouble For All, Lawyer Says, Drug Topics, June 19, 1981, at 16-17. See also Generic Deceit, supra note 17, at 61, 63. ^*See note 10 supra; see also Overview, supra note 11, at 15. ^^The New York substitution law is exemplary of common substitution limita- tions. The physician signs the prescription on a line indicating permission for the phar- macist to substitute or not. N.Y. Educ. Law § 6810(6)(a) (McKinney Supp. 1981-1982). If permission to substitute is indicated, the pharmacist must select a less expensive drug product equivalent in form and dosage to the one originally prescribed. Id. § 6816-a(l). Often the pharmacist is required to select the product from a list specially prepared by the state. See, e.g., N.Y. PuB. Health Law § 206(l)(o) (McKinney Supp. 1981-1982). Un- fortunately, cost is often the paramount criterion used to compose these lists. Tyler, supra note 23, at 455. ^^See note 1 supra. "Many factors are involved in the manufacture of drug products and each factor has the potential to alter the amount of actual drug which is made available to the body. For a complete discussion of these variables and their potential effects, see Rem- INGTON'S, supra note,l, at 1355-435. For a brief overview, see Generic Deceit, supra note 17, at 64. 1982] TRADEMARKS 739 ever on the physical appearance of the dispensed medication, the only information available to him. It appears that the opportunity to receive less expensive drug products has shifted more responsibility onto the consumer to recognize the drug products he receives. This, in turn, should require the drug manufacturers to sufficiently distinguish their similar products in order to enable the consumer to aid the pharmacist in dispensing the same product as previously received. A degree of predictability has been lost in primarily two aspects when look-alike products are also involved because questions remain whether the specific drug product dispensed is indeed what it is labeled to be, and whether the drug dispensed was the exact product specified by the physician. 3. Trademark Theories and Policies. — Although the specific laws regulating trademarks developed slowly, various marks have been used since antiquity to designate the source or ownership of particular goods.^® Today, trademarks serve primarily three func- tions: (1) as a means of assuring the consumer of a continuity of quality; (2) as a means of identifying a product's source or origin and thus distinguishing between competing products; and, (3) as a means of advertising.^^ Because of the fear of creating monopolies, however, these laws have always limited the scope of what can be trademarked.^" In ^^See McClure, Trademarks and Unfair Competition: A Critical History of Legal Thought, 69 Trademark Rep. 305, 310-16 (1979). For a full discussion of early trademark history, see Diamond, The Historical Development of Trade-marks, 65 Trademark Rep. 265 (1965); Paster, Trademarks — Their Early History (pt. 1), 59 Trademark Rep. 551 (1969); Ruston, On the Origin of Trademarks, 45 Trademark Rep. 127 (1955). For a discussion of early American trademark history, see Pattishall, Two Hundred Years of American Trademark Law, 68 Trademark Rep. 121 (1978). ^J. Calimafde, Trademarks and Unfair Competition 1 (1970); Diamond, supra note 28, at 289; Lunsford, The Function of Trademarks in the Market Place, 64 Trademark Rep. 75, 78 (1974). ^°See McClure, supra note 28, at 1. At first blush, the decisions of Sears, Roebuck & Co. v. Stiffel, Co., 376 U.S. 225 (1964), and Compco Corp. v. Day-Brite Lighting, Inc., 376 U.S. 334 (1964), appeared destined to grossly restrict state regulation of industrial property through unfair com- petition laws. See G. Alexander, Commercial Torts § 1.4 (1972); Handler, Product Simulation: A Right or a Wrong? (Symposium), 64 Colum. L. Rev. 1183, 1184 (1964). More importantly, these cases appeared to restrict the application of federal trademark law to products which were the subject of an invalid or expired patent. See Kestenbaum, The Sears and Compco Cases: A Federal Right to Compete by Copying, 51 A.B.A. J. 935, 939 (1965); Spratling, The Protectability of Package, Container and Product Configurations, 63 Trademark Rep. 117, 133-34 (1973); Comment, The Impact of Sears and Compco on Federal Trademark and Patent Law, 19 Buffalo L. Rev. 91, 95-96 (1970). The Supreme Court has, however, subsequently held that trademark principles 740 INDIANA LAWREVIEW [Vol. 15:733 order to be a trademark, the identifying mark must be in continual use and capable of identifying the product.^^ A mark which is neither distinctive nor arbitrary but is merely descriptive must also have acquired secondary meaning in the minds of the public; the public must associate the mark as representing goods from a particular, albeit anonymous, source.^^ Whether a mark has acquired a second- ary meaning in the public mind is always a question of fact.^^ Because of the difficulty in discerning the "public's mind," courts have generally considered three factors in determining the acquisi- tion of secondary meaning: (1) the length of'time the mark has been in use; (2) the expense and extent of promotional advertising; and, (3) the product's sale volume.^* If the mark is "primarily descriptive of the qualities, ingredients, or characteristics" of the product, however, it will not be protected as a trademark because it is a "functional" feature.^^ For example, in William R. Warner & Co. v. Eli Lilly & Co.,^^ the plaintiff was unable to prevent competitors from marketing imitative chocolate- flavored quinine syrups. The Court held that the chocolate flavoring and patent principles are directed at different purposes and thus one is not limited by the other. Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 491-93 (1974). See also Truck Equip. Serv. Co. v. Fruehauf Corp., 536 F.2d 1210, 1215 (8th Cir.), cert, denied, 429 U.S. 861 (1976) ("Full and fair competition requires that those who invest time, money and energy into the development of goodwill and a favorable reputation be allowed to reap the advantages of their investments."); In re Mogen David Wine Corp., 372 F.2d 539 (C.C.P.A. 1967) (Mogen David II); In re Mogen David Wine Corp.. 328 F.2d 925 (C.C.P.A. 1964) (Mogen David I); In re Deister Concentrator Co., 289 F.2d 496 (C.C.P.A. 1961). For a more thorough examination of the Sears-Compco doctrine, see Dannay, The Sears-Compco Doctrine Today: Trademarks and Unfair Competition, 67 Trademark Rep. 132 (1977); Zammitt, The Ghost of Sears-Compco is Finally Laid to Rest Or Is It?, 3 HoFSTRA L. Rev. 37 (1975); Note, Generic Drug Laws and Unfair Competition Claims Under the Lanham Act—An Uneasy Alliance: Ives Laboratories, Inc. v. Darby Drug Co., 33 Rutgers L. Rev. 227, 240-44 (1980). ^^J. Calimafde, supra note 29, at 1. ^^E. Vandenburgh, Trademark Law and Procedure 119-23 (1968 & Supp. 1978); Tas-T-Nut Co. v. Variety Nut & Date Co., 245 F.2d 3 (6th Cir. 1957). The term "second- ary meaning" is actually a misnomer because it "does not mean a subordinate or rare significance. It means rather a subsequent significance added to the previous meaning of the designation and becoming in the market its usual and primary significance." Restatement of Torts § 716, comment b (1938). ^^J. Calimafde, supra note 29, at 102. ^*Id. See, e.g., SK&F, Co. v. Premo Pharmaceutical Laboratories, Inc., 625 F.2d 1055 (3d Cir. 1980) (sales volume); Barton v. Rex-Oil Co., 2 F.2d 402 (3d Cir. 1924) (length of time); Le Blume Import Co. v. Coty, Inc., 293 F. 344 (2d Cir. 1923) (advertis- ing expenses). ^^R. Callmann, 3 The Law of Unfair Competition, Trademarks, and Monopolies § 70.1 (3d ed. 1969 & Supp. 1981). ^'265 U.S. 526 (1924). 1982] TRADEMARKS 741 was a functional feature of the syrup because it masked the bitter taste of the quinine, and therefore did not "merely serve the incidental use of identifying the . . . preparation."^^ In order to be protectable as a trademark, the identifying feature, therefore, must be both nonessential to the product and capable of being associated with the product in the public's mind. Justice Frankfurter summarized and explained the qualifications and relationships of trademarks as follows: A trade-mark is a merchandising short-cut which induces a purchaser to select what he wants, or what he has been led to believe he wants. The owner of a mark exploits this human propensity by making every effort to impregnate the atmosphere of the market with the drawing power of a congenial symbol. Whatever the means employed, the aim is the same — to convey through the mark, in the minds of potential customers, the desirability of the commodity upon which it appears. Once this is attained, the trade-mark owner has something of value. If another poaches upon the commercial magnetism of the symbol he has created, the owner can obtain legal redress.'38 These requirements have caused the development of two closely related causes of action which differ primarily in the number of steps necessary to prove the existence of a trademark.^^ Section 32 of the Lanham Act embodies the common law test for true trademark infringement — "likely to cause confusion, or to cause mistake, or to deceive'"'" — and is applicable in cases involving registered trademarks.''^ Section 43(a) of the Lanham Act*^ encom- passes the broader category of unfair competition which includes actions for palming off and "unprivileged imitation."*^ In addition to proving the "likelihood of confusion," section 43(a) requires a 'Yd. at 531. For an argument that the use of chocolate flavoring should have been classified as nonfunctional, see Cooper, Trademark Aspects of Pharmaceutical Product Design, 70 Trademark Rep. 1, 9-11 (1980). '*Mishawaka Rubber & Woolen Mfg. Co. v. S.S. Kresge Co., 316 U.S. 203, 205 (1942). '^McClure, supra note 28, at 314. n5 U.S.C. § 1114(l)(a) (1976). See Sears, Roebuck & Co. v. All States Life Ins. Co., 246 F.2d 161 (5th Cir.) cert, denied, 355 U.S. 894 (1957); Ciba Pharmaceutical Prods., Inc. v. Abbott Laboratories, 121 F.2d 551 (C.C.P.A. 1941). ^'15 U.S.C. § 1114(l)(a) (1976). *'Id. § 1125(a). "See, e.g., SK&F, Co. v. Premo Pharmaceutical Laboratories, Inc., 625 F.2d 1055 (3d Cir. 1980). 742 INDIANA LA WREVIEW [Vol. 15:733 preliminary step of proving secondary meaning."* This prerequisite step is not necessary under section 32 because the registration of the mark creates a mandatory presumption of its secondary meaning. Section 43(a) is not limited to actions alleging infringement of unregistered trademarks, but also includes false advertising and false descriptions of products.^ 45 B. The Parties' Interests The goal of both pharmacy laws concerning substitution and trademark laws is to protect the valid interests of as many concerned parties as possible. To understand the depth of the look-alike controversy, it is necessary to examine in more detail the various interests of the parties concerned. Because the more blatant economic effects are present at the manufacturers' level, the controversy is more sharply focused there. Nevertheless, the issue has significant effects on both distributing professionals and ultimate consumers. 1. Manufacturers. — The look-alike issue affects two types of drug manufacturers: brand-name, or innovator, companies which, through extensive research and development, introduce new patented drugs into the market;*® and generic companies, which of- fer their products only after the brand-name companies' patents have expired. Although both parties have economic interests to safeguard, the law protects those interests only to a limited extent through the use of patents,*^ trademarks,*® and general anti-trust principles.*^ Brand-name companies have an economic interest in protecting their investment of time and money in researching products. A 1979 FTC staff report^" stated that drug companies not only finance their **See Note, Generic Drug Laws and Unfair Competition Claims Under the Lanham Act—An Uneasy Alliance: Ives Laboratories, Inc. v. Darby Drug Co., 33 Rutgers L. Rev. 227, 235-38 (1980). If the mark is, however, purely arbitrary and has no descriptive property, secondary meaning is inherently present. See 3 R. Callmann, supra note 35, at § 71.4. *'15 U.S.C. § 1125(a) (1976). "These manufacturers continue to market the drug even after the patent has expired, of course. In addition, some brand-name manufacturers also market various generic products. See FTC Report, supra note 4, at 48-49. *'35 U.S.C. §§ 101-171 (1976). Patents, with the exception of design patents, are issued for periods of 17 years. Design patents are issued for the terms of 3V2, 7, or 14 years, depending upon the election of the applicant. Id. §§ 154, 173. "Lanham Act of 1946, 15 U.S.C. §§ 1051-1127 (1976). "Sherman Act, 15 U.S.C. §§ 1-7 (1976); Clayton Act, 15 U.S.C. §§ 12-27. See Mc- Clure, supra note 28. ^"FTC Report, supra note 4. 1982] TRADEMARKS 743 own research almost exclusively, but spend more money on research and development than any other industry .^^ The estimated cost of pharmaceutical research is fifty million dollars for each drug actually marketed after its approval by the FDA.^^ Because the research and development process of the drug industry is internally funded, these dollars must be recouped if new drugs are to continue to be discovered and marketed.^^ Once the new drug is actually marketed, the brand-name company generally has only eight or nine remaining years of its patent- created monopoly.^* In order to recover their costs within this period of time, the innovator companies spend large amounts of money in advertising and promoting their products.^^ Those companies typically employ large forces of "detail men" to deal directly with physicians, hospitals, and pharmacists, providing both promotional and informative literature regarding the products' physical and pharmacological attributes and properties.^^ Brand-name companies also advertise extensively in medical and pharmaceutical journals." Those promotional activities not only serve an economic function as advertising, but are relied upon by both pharmacists and ^7d. at 22-25. The drug industry spends approximately 12% of its research budget on basic research and development as compared to the aircraft industry which spends less than 1%, and all private industry which spends an average of 3%. Id at 24. Figures from the Pharmaceutical Manufacturers Association show that company- financed research and development was $50,000,000 in 1951 and increased to $937,500,000 in 1975. Id. at 22. ^^Unapproved Generics, Am. Pharm. (n.s.) Nov. 1980, at 12, 17. See also Gorrell, Substitution: Expectations and Realizations, Med. Mktg. & Media, May 1981, at 54, 57. ^^Large Drug Firms Fight Generic Substitution, 206 Sci. 1054 (1979). See Cocks, Economic Competition in the Ethical Pharmaceutical Industry, Tile & Till, Winter 1978-1979, at 19, 22; Tyler, supra note 23, at 455-57. ^*Although patent protection is conferred for 17 years, a slow down in the FDA's processing has created an average lag of eight years between the time a new drug is patented to the time it is marketed. This period should be compared to the time lag in patenting and marketing new electronics — eighteen months. Large Drug Firms Fight Generic Substitution, 206 Sci. 1054, 1056 (1979). For a discussion of prerequisites to FDA marketing approval for new drugs, see Remington's, supra note 1, at 1300-11. ^^See, e.g., Pennwalt Corp. v. Zenith Laboratories, Inc., 472 F. Supp. 413, 416 (E.D. Mich. 1979), appeal dismissed mem., 615 F.2d 1362 (6th Cir. 1980) (the plaintiff spent over $2,000,000 in promoting its product each year since 1971); Smith, Kline & French Laboratories v. Heart Pharmaceutical Corp., 90 F. Supp. 976, 977 (S.D.N.Y. 1950) (the plaintiff spent approximately $900,000 in promoting the new color and shape of its product). ^See The Pharmaceutical Sales Representative: A Professional Communicator, Tile & Till, Summer 1978, at 8. "See, e.g., Pennwalt Corp., 472 F. Supp. at 416; Smith, Kline & French Laboratories, 90 F. Supp. at 977; see generally Leffler, Persuasion or Information? The Economics of Prescription Drug Advertising, 24 J.L. EcON. 45 (1981). 744 INDIANA LA WREVIEW [Vol. 15:733 physicians as an important source of information about new drugs.^^ Through its advertising and detailing service, a brand-name drug company establishes a reputation for quality products. Because a picture of the product is often featured in the promotional and advertising literature, its physical appearance also becomes easily recognized as an attendant consequence of this process. The generic companies, on the other hand, offer only unpatented drugs, but can provide them at substantially lower prices.^^ The generic companies are generally able to offer the consumer lower prices for the following reasons: they do not engage in research and development; they do not engage in "detailing" or individual promo- tion, but rather promote drugs in "product lines"; and most generic companies adhere only to minimum FDA quality control standards.^" Because of the brand-name companies' monopolies during their patent periods, and their extensive advertising and promotional campaigns, the generic companies contend that unless they are allowed to copy the size, color, and shape of brand-name products, they will not be able to break competitively into the market.^^ They also assert that by producing a look-alike, they are promoting emergency identification, as well as making substitution easier for both pharmacists and consumers.^^ 2. Professionals. — Physicians and pharmacists have an interest in product safety, a concern that has two overlapping aspects: a con- cern for easy identification; and a concern for bioequivalency in substituted products.^^ ^^Because of the nature of research within the drug industry, the innovator manufacturer is often the only source of information regarding the uses and precau- tions, as well as the physical and pharmacological properties of a new drug. Therefore, physicians and pharmacists rely heavily upon the manufacturers, especially for initial information and clinical studies pertaining to the new drug. Drug Development and Marketing 124, 182-86 (R. Helms ed. 1975). '^See FTC Report, supra note 4, at 44-50. ^"Id. FDA control standards are only minimum standards. See Pharmaceutical Mfrs. Ass'n, Brands, Generics, Prices and Quality —The Prescribing Debate After A Decade (1971); Willig, supra note 9, at 19 21. For information concerning quality control within drug manufacturing, see generally Remington's, supra note 1, at 519-29. For information from which to derive differences in quality control standards among various manufacturers, see Goldfinger, Dissimilarities of Digoxin, 285 New Eng. J. Med. 1376 (1971); Lindenbaum, Mellow, Blackstone & Butler, Variations in Biologic Availability of Digoxin from Four Preparations, New Eng. J. Med. at 1344; Vitti, Banes & Byers, Bioavailability of Digoxin, New Eng. J. Med. at 1433. "See, e.g., Pennwalt Corp., 472 F. Supp. at 421; Look-Alike Drugs: Is This Pharmacy's Next Battle Ground?, Drug Topics, Sept. 4, 1979, at 6. "T-