Coats v. Holbrook, Nelson & Co.

2 Sand. Ch. 586, 1845 N.Y. LEXIS 544, 1845 N.Y. Misc. LEXIS 45

• Court: New York Court of Chancery
• Decided: July 24, 1845
• Status: Published

Opinion

The Assistant Vice-Chancellor.

principles applicable to this case are well settled.

A man is not to sell the goods or manufactures of B., under the show or pretence that they are the goods or manufactures of A., who by superior skill or industry has established the reputation of his articles in the market. The law will permit no person to practice a deception of that kind, or to use the means which contribute to effect it. He has no right, and he will not be allowed, to use the names, letters, marks, or other symbols by which he may palm off upon buyers as the manufactures of another, the article he is selling ; and thereby attract to himself the patronage that without such deceptive use of such names, &c., would have enured to the benefit of that other person who first got up, or was alone accustomed to use such names, marks, letters or symbols.

One of the earliest cases reported in full is Gout v. Aleplogu, (6 Beav. 69, note, and 1 Chitty’s Gen. Pr. 721.) Gout had been in the habit of manufacturing watches for the Turkish market, where they were known by the marks engraved on them, and had acquired great repute. The marks were on the inside of the watch, and consisted of his name in Turkish characters, and the Turkish word “ Pessendede,” which signifies warranted or approved. There was also “ R. G.” and a crescent put in relief, and a sprig and crescent.

The defendant procured Parkinson to make watches for him, and had engraved on the same part of the watch as Gout was accustomed to do, the words “ Ralph Gout” and “ Pessendede” in Turkish characters; which Avatches the defendant consigned to Constantinople and sold there to the prejudice of the complainant’s trade. Vice-Chancellor Shadwell granted an injunction restraining Aleplogu from sending or permitting to go to Constantinople or Turkey, or to any other place, and from selling and disposing of any Avatches with Gout’s name, or the Avord “ Pessendede,” thereon in Turkish characters, or any Avatches in imitation of Gout’s Avatches; and also restraining the defendant and Parkinson from manufacturing or vending such watches.

A similar decision was made in the plough case, Ransome v. Bentall, before the Vice-Chancellor, (3 Law Journal Rep. N, S. 161,) and the omnibus case, (2 Keen’s R. 213,) Knott v. Morgan, before Lord Langdale, Master of the Rolls; and Day & Martin’s blacking, Day v. Binning, (1 Coop. Ch. R. 489,) V. C. Shad well.

Another in an action at law for damages, will be found in Sykes v. Sykes, (3 B. & Cres. 541,) where the manufacture simulated was shot belts and powder flasks, stamped “ Sykes' Patent.”

And in Millington v. Fox, (3 Mylne & Cr. 348.) the principle was sustained by Lord Gottenham, in a suit relative to the “ Crowley" steel.

In Taylor v. Carpenter, before the Chancellor, decided on the merits, December 3,1844, (4 Barbour’s Abstract of Chancellor’s Decisions, 68,) I prepared the bill as counsel. The complainants, residing in England, had long been the manufacturers of cotton thread, known as “ Taylor's Persian Thread" which had acquired an extensive and valuable reputation in the United States, where they sold large quantities of it. Their thread was put up upon spools, with a printed paper label on each end of the spool, and a certain number of the spools were placed in a paper envelope which was stamped with the name of the thread. The defendant had commenced the manufacture in Massachusetts of a simulated Taylor’s Persian Thread, and had introduced it into the city ofNew York for sale. His imitation extended to the appearance and color of the spools and paper labels and envelopes, as well as the use of the name and title of the thread. la his defence, the defendant insisted that his manufacture was equal in quantity and value to the genuine article; and that the complainants were subjects of a foreign government, and that he as a citizen of the United States had a right to use the marks and names in question.

The Chancellor held that the quality of the imitation was immaterial, and that the alienage of the complainants did not alter their rights. And he decreed a perpetual injunction with costs, together with an account as to damages.

(a)

A suit between the same parties, soon after the filing of the bill here, was instituted in the Circuit Court of the United States, in Massachusetts, on the equity side of the court. Judge Story sustained an injunction, granted on filing the bill.

The defendant put in an answer and proofs were taken, upon which the cause came to a hearing before the same eminent judge, in November, 1844. The answer admitted the imitation of Taylor’s black spools and their stamped envelopes, but alleged that the defendant had never sold any of his manufacture as genuine Taylor’s thread, nor without informing purchasers that they were of his own manufacture ; and it set up that the Taylor’s were aliens, and that the defendants were not accountable to any foreign manufacturer, for using in this country the names, trade marks, &c., of such manufacturer. The answer also alleged that the defendant’s thread was equal in quantity and quality to Taylor’s. It was also set up that other persons were engaged in imitating the complainant’s names, spools and labels. The proofs disclosed that the defendant had imitated and sold both the red and black spools and labels.

Judge Story, in a pointed opinion, (with a copy of which I have been furnished,) scouted these various grounds of defence, and decreed a perpetual injunction, with the costs of the suit. (Taylor v. Carpenter, defectively reported in 7 Law Reporter, 437.)

The legislature of this state has recently declared its reprobation of this kind of piracy, in the “ Act to punish and prevent frauds in the use of false stamps and labels,” passed May 14, 1845. (Laws of 1845, chap. 279, page 304.) This act makes it an offence punishable by fine and imprisonment, either to counterfeit such stamps or labels with intent to defraud, or to vend goods, &c. thus stamped, without disclosing the fact to the purchaser.

In this case the attempted imposition upon the public by the manufacturer of the simulated article, is too barefaced to be questioned.

The defendants are merely venders of the spurious goods, and they suppose that they are, on various grounds, exempted from the consequences which would be visited upon the manufacturer. Thus it is said that they have not used the trade marks of the complainants, that they merely sold for McGregor on commission in the usual course of their business, and have acted in perfect good faith. Indeed, they go so far as to say in their answer, that they had no information of the complainants rights, or of their manufacturing Coats’s thread, until after the defendants had sold for McGregor. How this could be true of the defendant, who sold McGregor’s thread as an imitation article made in this country, (such is the statement in the answer,) I cannot understand.

Then as to the good faith and morality of the transaction; and in all that I have to say, I refer to the defendant who alone acted in the sales. The defendants received for sale from McGregor, an imitation thread, carefully put up, labelled and stamped, as thread made by J. & P. Coats. They probably knew that there was such a house as J. & P. Coats who made the genuine thread. If they did not, they knew perfectly well that some person other than McGregor, made such genuine thread, that it was called “ Coats’s,” and it was in high repute in this market. They therefore knew that the article they were selling was spurious ; that it was going out to the public under false and deceptive colors, and was designed and well calculated to take in purchasers who were in pursuit of the genuine thread. They admit that they knew it was only a three cord thread, although it was stamped and labelled “ J. & P. Coats Best Six Cord”

Knowing all these things, they sold it, and so far as they could, put it in the way of imposing upon and swindling the community.

But it is said that upon their sale to the jobber, by whom it was to be again sold to the retailer, the defendants told the jobber, truly, that it was an imitation of Coats’s thread ; in short that they sold it as a spurious article. But what then 1 Did they imagine that the jobber would be equally frank and communicative to the retail merchants and shopkeepers, and that every one of the latter would carefully inform every customer who bought a spool, that the thread was an imitation of Coats’s, made in New Jersey, and only three cord instead of six'?

The idea is preposterous. Trade marks, names, labels, &c. are not forged, counterfeited or imitated, with any such honest design or expectation. " McGregor’s thread was labelled and stamped with Coats’s name and marks, so that it might be palmed off upon the consumer as being made by Coats. And every man who sold it, whether he made five per cent, or fifty per cent, by the operation, lent himself to the perpetration of the fraud.

I have looked into the point of good faith in reference to costs, and not because I deemed it to be of any consequence in respect of the injunction. (See Millington v. Fox, above cited.)

The question of costs remains to be disposed of. , There was no occasion for the complainants to apply to the defendants before filing their bill. They found the latter participating in a gross violation of their rights, under circumstances where it was not supposable that the defendants were ignorant of the wrong. The same consideration shows that the litigation cannot be deemed to have been unnecessary.

The costs subsequent to the bill and injunction, stand upon a somewhat different fooling from the others.

The defendants had disclosed the manufacturer to the c'omplainants agerit, and offered to give up their profits on the sale, to pay the costs up to that time, and to stipulate in writing not to sell any more of the spurious thread.

If it had turned out that they were ignorant of the spuriousness of the thread which they sold, the case would have been within the opinion expressed by Lord Cottenham in Millington v. Fox, and I think they would have been relieved from the subsequent costs. But the offer was not made till about the time the answer was due ; in fact, it was on the day the answer was filed. It was not accompanied with a proffer of a perpetual injunction, to which the complainants were entitled, and for which the proposed stipulation was not a reasonable substitute; but it required the bill to be dismissed.

And finally, it turns out by the answer, that the defendants were not guiltless of abetting McGregor’s fraud. 1 cannot under these circumstances, relieve them from any part of the costs.

Decree for a perpetual injunction, and the costs of suit.

NOTE.

Before giving the report of Taylor v. Carpenter, and Partridge v. Menck, as promised at the head of this case, the note will contain the recent English decisions stated in brief, as also two or three of an earlier date.

In Lewis v. Langdon, (7 Simons, 421,) the question arose on the use of a partnership name, as a trade mark, after a dissolution by the death of one of the two partners. One of the executors of the deceased, com- ' menced the use of the firm name as such trade mark; the survivor with a new partner, continuing its use as formerly. On a bill filed by the survivor and his new partner against the executor, Vice-Chancellor Shadwell on motion, granted an injunction restraining the latter from using the name of the late firm in carrying on his business.

In Pidding v. How, (8 Simons, 477,) where the bill was filed to restrain the use of a trade mark on tea, called “ Howqua’s Mixture,” the court, on the ground that the complainant was shown to have used false representations to the public about the mode of procuring and making up his mixture, refused to allow an injunction until he should establish his title at law. At the same time, the Vice-Chancellor said the defendant was not at liberty to make and sell a mixture of his own, under the same designation as the plaintiff had appropriated.

A similar decision was made by Lord Langdale, Master of the Rolls, in Perry v. Truefitt, (6 Beavan, 66,) relative to the “Mexican Balm for the Hair because the complainant in his labels and cards, described his own article as having been prepared from an original receipt of the learned Von Blumenbach; when in truth, its inventor was a man of a much less sounding name, and of no note at all.

In Croft v. Day, (7 Beavan, 84,) the “ Day & Martin Blacking,” which figured in Cooper’s Rep. 489, again came before the court. The genuine blacking was put up in bottles with a label, &c., containing as the place of manufacture “ 97 High Holborn," and the article was made by the executors of the surviving partner of Day & Martin, who continued the business in their name. The defendant, Day, a nephew of the testator, associated with a person named Martin, and set up a blacking manufactory, using the old firm name, and labelling their bottles in a manner closely resembling those of the old establishment. In the cut on the label, they however substituted the royal arms for those of the original firm, and inserted “ 90i Holborn Hill,” in the place of “ 97 High Holborn.” Lord Langdale said the defendants contrivances were calculated to mislead the bulk of the unwary public, into the impression that the new concern was connected with the old manufactory ; and thus to benefit the defendant, to injure the plaintiff, and to deceive the public ; and he therefore directed an injunction to issue.

Much like the principal case in the text, is the very recent decision in Pierce v. Franks, before Sir Knight Bruce, V. C. January 18, 1846; (15 Law Journal, Chy. Rep. N. S. 122; S. C. 10 London Jur. Rep.

25.) There the complainant was in the habit of selling tooth brushes and nail brushes on which were stamped “ Smyth’s Bond Street,” that being the trade mark to which he was entitled ; and they also had stamped on them certain figures and letters which were his private marks, and were used to distinguish the different sizes and patterns. The bill alleged that the defendant made and sold brushes which were stamped with the same words and the same private trade marks. An injunction was granted, restraining the defendant from selling brushes on which “ Smyth’s Bond Street,” were stamped.

In his answer the defendant stated he had made such brushes to fill two orders only, both of which he then believed were given by the complainant’s agent; he had no wish or intention to use the complainant’s marks without his consent, or to his injury ; and that if the complainant had applied to him he would have desisted, and undertaken not to use the trade marks, and no bill was necessary. He denied that the private marks were the complainant’s and alleged they were generally used in the trade. And he insisted that the suit was vexatious, and that he ought to have his costs. The cause was heard on bill and answer. The court decreed a perpetual injunction, and charged the defendant with the costs of the suit, except such as were occasioned by the allegation as to the private marks.

Cotemporary with the last, is Hine v. Lart, decided by Vice-Chancellor Shad well, January 12, 1846, (10 London Jur. Rep. 106.) The complainants claimed a right to a trade mark in the word “ Ethiopian,” upon black cotton stockings, with certain black lines above it, as having been acquired by them and a former partner deceased. They alleged a violation of their rights by the defendants, in the use of the same marks in fraudulent imitation of the complainants, and they prayed for an injunction and an account of profits. The answer denied the complainants’ right to the trade mark, alleging that other parties used it before they or their former partner did; but the defendants admitted that they had manufactured stockings largely, with the same marks, which were in imitation of or a copy from those which the complainants claimed. The answer stated that the defendants so used it without any intention to defraud or injure the complainants, or of passing them off as the manufacture of the latter. Affidavits were filed on both sides, respecting the complainants right to the trade marks, which were very contradictory.

The Vice-Chancellor said that it might be that the personal representatives of the complainants deceased partner might have a right to use the same mark, but that the complainants had sufficient right to bring forward the case, whether the title was in them alone, or jointly with the representative. That it was evident from the defendants making so perfect an imitation of the complainants marks as they had done, the difference being merely nominal; (although they claimed to think the complainants had no beneficial right to the mark ;) that they knew they might gain an advantage by it, to which they were not entitled. He refused to dissolve the injunction, and directed the complainants to bring an action at law to try their right to the trade mark.

Some cases in the courts of law, will now be mentioned.

In Blofield v. Payne, (4 Barn. & Adolph. 410,) in an action on the case, the plaintiff was the manufacturer of a metallic hone for sharpening razors, which he was accustomed to wrap up in certain envelopes containing directions for its use and other matters ; the same being intended and serving to distinguish his hones from those of other persons. It appeared on the trial, that the defendants had obtained some of the plaintiff’s wrappers, and used them wrongfully upon hones of their own manufacture, and sold such hones as and for the plaintiff’s, for their own gain. No proof was given of any actual damage to the plaintiff. The jury found for the plaintiff with one farthing damages, and stated that they thought the defendants hones were not inferior to the plaintiff’s. The defendants then moved at bar for a nonsuit, but the court held that the plaintiff was entitled to recover some damages, by reason of the fraudulent use of his wrappers, and refused, to grant a rule to show cause. The case decides that it is no answer to such a suit, to show that the simulated article is as good as the gen,nine manufacture.

Morison v. Salmon, (Z Mann. & Grang. 385,) was an action on the case for damages by reason of the pirating of a medicine called “ Morison’s Universal Medicine,” which the plaintiffs claimed to have prepared and sold for profit for many years, put up in boxes with a .label thereon as above ; and which had acquired great fame and reputation with the public. The defendant, it was alleged, intending to injure the plaintiffs, had fraudulently prepared and sold medicines in imitation of theirs, put up and labelled in the same manner, in order to denote that his was the genuine medicine prepared and sold by the plaintiffs, and that the defendant fraudulently sold such imitation for his own lucre and gain. After a trial on a plea of not guilty, where the plaintiffs recovered a verdict; the defendant moved in arrest of judgment. The Court of Common Pleas denied the motion, on the ground that the declaration disclosed a false representation in this, that the defendant sold the medicines made by him as and for those made by the plaintiffs.

Crawshay v. Thompson, (4 ibid. 357,) was an action on the ease, in the same court, for using the plaintiff’s trade mark on bars of iron ; both of the parties being iron manufacturers and exporters. The defendants had a verdict, and on a motion for a new trial, it was held, that it was properly left to the jury under the pleadings in that cause, to say whether the defendants mark bore so close a resemblance to the plaintiff’s as was calculated to deceive the unwary, and to injure the sale of the plaintiff’s goods ; and secondly, whether the defendants used the mark with the intention of supplanting the plaintiff, or whether it was done in the ordinary course of business in execution of orders, without such intent. Also, that the notice of the resemblance of the mark, given by the plaintiff to the defendants, did not in the absence of proof of any intention to imitate it on the part of the defendants, give the plaintiff' any cause of action ; it being expressly alleged in the declaration thaT the defendants knowingly used it in imitation of the plaintiff’s mark.

This allegation was held to be material by two of the thre.e judges, who delivered their opinions at large.

Coliman, J. said “ if there was such a similarity as might impose on ordinary persons, and it was shown that it was calculated to mislead, the plaintiff would have been entitled to a verdict; for the intention to deceive would have been manifest.”

Maulé, J. said “ the gist of the action is the selling of the defendants manufacture, as and for iron of the plaintiff's manufacture ; and it would be sustained by proof that the defendants had sold their iron to their correspondents, for the purpose of being retailed as the plaintiff’s manufacture.” He then mentioned the express scienter alleged in the declaration, and remarked that, he thought the declaration would have been good without that allgation. He further said, .that the first question'submitted to the jury was in effect, whether the iron made by the defendants was made so as to imitate the iron of the plaintiff; and that it was a material question. As to the defendants purpose to supplant the plaintiff in the market, or whether their acts were done in the ordinary course of business and merely in execution of foreign orders sent to their house ; he said “ it was equivalent to putting the question whether they had sold their iron as and for the plaintiff’s ; because if they had done so, it would have a natural tendency to supplant the plaintiff in the market, and then the intention to defraud would follow as a matter of law, as well as of common sense.” The judge agreed that if the defendants sold their iron as and for the plaintiff’s, they were liable, whatever may have been their motive in so doing.

This case is reported more at large in a note at the end of the opinion.