In the case of Inwood Laboratories, Inc., et al. v. Ives Laboratories, Inc., 1981, the Supreme Court examined whether a manufacturer or distributor could be held liable for intentionally inducing retailers to pass off its product as that of another's. The dispute arose when generic drug manufacturers produced and sold capsules identical in color and size to those patented by Ives Laboratories. These were then sold by pharmacists as the more expensive brand-name drug Cyclosporine manufactured by Ives Labs under false pretenses. The court ruled in favor of Inwood Labs stating that a company can only be held responsible if it intentionally induces another to infringe on a trademark or if it continues supplying its product knowing that the recipient is mislabeling with an intent to deceive consumers.

In the dissenting opinion for Inwood Laboratories, Inc. v. Ives Laboratories, Inc., Justice White disagreed with the majority's view that a manufacturer or distributor could only be held liable for secondary trademark infringement if they intentionally induced a retailer to pass off its product as that of another. He argued that liability should also extend to situations where the manufacturer or distributor continues to supply its product to retailers knowing that it is being passed off as another's product. This broader interpretation would better serve the purpose of trademark law by discouraging manufacturers and distributors from turning a blind eye towards such deceptive practices by their retail customers.