Samara Brothers, Inc. (Samara), is a designer and manufacturer of children's clothing. The core of Samara's business is its annual new line of spring and summer children's garments. Samara sold its clothing to retailers, which in turn sold the clothes to consumers. Wal-Mart Stores, Inc. (Wal-Mart), operates a large chain of budget warehouse stores that sell thousands of items at very low prices.

In 1995, Wal-Mart contacted one of its suppliers, Judy-Philippine, Inc. (JPI), about the possibility of making a line of children's clothes just like Samara's successful line. Wal-Mart sent photographs of Samara's children's clothes to JPI (the name "Samara" was readily discernible on the labels of the garments) and directed JPI to produce children's clothes exactly like those in the photographs. JPI produced a line of children's clothes for Wal-Mart that copied the designs, colors, and patterns of Samara's clothing. Wal-Mart then sold this line of children's clothing in its stores, making a gross profit of more than $1.15 million on these clothes during the 1996 sales season

Samara discovered that Wal-Mart was selling the knock-off clothes at a price that was lower than Samara's retailers were paying Samara for its clothes. After sending unsuccessful cease-and-desist letters to Wal-Mart, Samara sued Wal-Mart, alleging that WalMart had copied Samara's trade dress (i.e., look and feel) in violation of Section 43(a) of the Lanham Act.

Although it did not find that Samara's clothes had acquired a secondary meaning in the minds of the public, the district court held in favor of Samara and awarded damages. The court of appeals affirmed. Wal-Mart appealed to the U.S. Supreme Court. Was it ethical conduct for Wal-Mart to sell the alleged knockoff clothes at a lower price?