WAL-MART VS. SAMARA BROS.CASE:

Samara Brothers, Inc. designs and manufactures children's clothing. Its primaryproduct is a line of spring/summer one-piece seersucker outfits decorated withappliques of hearts, flowers, fruits, and the like. A number of chain stores,including JCPenney, sell this line of clothing under contract with Samara.In 1995, Wal-Mart contracted with one of its suppliers, Judy-Philippine, Inc., tomanufacture a line of children's outfits for sale in the 1996 spring/summerseason. Wal-Mart sent Judy-Philippine photographs of a number of garmentsfrom Samara's line, on which Judy-Philippine's garments were to be based; Judy-Philippine duly copied, with only minor modifications, sixteen of Samara'sgarments, many of which contained copyrighted elements. In 1996, Wal-Martbriskly sold the so-called knockoffs, generating more than $1.15 million in grossprofits.

Samara officials launched an investigation, which disclosed that Wal-Mart andseveral other major retailersKmart, Caldor, Hills, and Goody'swere sellingthe knockoffs of Samara's outfits produced by Judy-Philippine.Samara brought an action against Wal-Mart, Judy-Philippine, Kmart, Caldor, Hills,and Goody's for copyright infringement under federal law and infringement ofunregistered trade dress under Section 43(a) of the Lanham Act.All of the defendants except Wal-Mart settled before trial.

Questions:

1.Did either of the parties act unethically?

2. Should the court issue an injunction?

3. If not, why? If so, what should the penalty be?