Coca-Cola Co. v. Stevenson

276 F. 1010

• Court: District Court, S.D. Illinois
• Decided: January 15, 1920
• Docket: No. 47
• Status: Published

Opinion

FITZHENRY, District Judge

(after stating the facts as above). [1] The very recent decision of the Supreme Court in Coca-Cola Co. v. Koke Co. of America et al., 254 U. S. 143, 41 S. Ct. 113, 65 L. Ed. — , has conclusively disposed of the defense of “unclean hands’’ interposed by the defendants in this case, upon the authority of Koke Co. of America v. Coca-Cola Co., 255 Fed. 894, 167 C. C. A. 214 (C. C. A. 9th Cir.). While the exact question in that case is not presented here, yet the same principle is involved. It is claimed that none of the chemical elements suggested by the name “Coca-Cola” were in fact to be found in plaintiff’s syrup, and therefore it was a fraud upon the public. The language of the Supreme Court in disposing of that case is especially apt here:

“TLe name [Coca-Cola'! now characterizes a beverage to be had at almost any soda fountain. It means a single thing coming from a single source, and well known to the community. It hardly would be too much to say that the drink characterizes the name as much as the name the drink. In other words, ‘Coca-Cola’ probably means to most persons the plaintiff’s familiar product to be had everywhere rather than a compound of particular substances. Although the fact did not appear in United States v. Coca-Cola Co., 241 U. S. 265, we see no reason to doubt that, as we have said, it has acquired a secondary meaning in which perhaps the product is more emphasized than the producer, but to which the producer is entitled.”

This very recent decision of the United States Supreme Court settled many of the questions involved in this case. The opinion of the. Circuit Court of Appeals of the Ninth Circuit which was reversed was submitted to this court for its consideration upon the issues raised here, by the personal and corporate defendants, upon the theory that the identical plaintiff in this case had been adjudicated in the Circuit Court of Appeals to be of such unclean hands that it should be denied all relief in equity. The opinion disposes of the question of ownership of the trade-mark and recognizes that it has acquired a secondary meaning in which perhaps the product is more emphasized than the producer, but to which the producer is entitled.

[2] It is well established that equity has jurisdiction to: (1) Cancel fraudulent instruments affecting titles; (2) to quiet title; (3) to remove a cloud on title; and (4) to enjoin clouding a title. If at the time of Fletcher’s adoption and use of the trade-marks which he registered in Illinois the plaintiff had title to and was as far as possible, with this kind of property, in possession of the trade-mark “Coca-Cola,” then any user or claim by another to that mark or a simulation thereof was such a wrong and trespass upon plaintiff’s trade field, as to bring the question within the perview o f equitable relief. 1 Storey’s Equity, § 700; Coel v. Glos, 232 Ill. 142, 83 N. E. 529, 15 L. R. A. (N. S.) 413; Hernstreet v. Burdick, 90 Ill. 444; Glos v. Goodrich, 175 Ill. 20, 51 N. E. 643; Langlois v. Stewart, 156 Ill. 609, 41 N. E. 177; Bradley v. Bell, 142 Ala. 382, 38 South. 759; Grove v. Jennings, 46 Kan. 366, 26 Pac. 738; Hamilton v. Batlin, 8 Minn. 403 (Gil. 359) 83 Am. Dec. 787.

. In a case of this character, where it is clear that the legal remedy in the premises, mandamus, is utterly inadequate to protect plaintiff’s rights, equity has full jurisdiction over the Secretary of State to decree the plaintiff the relief to which it is entitled and to compel the Secretary of State to carry out the court’s mandates by canceling any wrongful registrations of the defendants which constitute a cloud upon plaintiff’s title and to .permit the registration of plaintiff’s trade-mark. Greene v. G. & I. R. Co., 244 U. S. 499, 37 Sup. Ct. 673, 61 L. Ed. 1280, Ann. Cas. 1917E, 88; L. & N. R. Co. v. Bosworth (D. C.) 230 Fed. 191; Ill. Central R. Co. v. Bosworth (D. C.) 209 Fed. 465; Same v. Greene, 244 U. S. 555, 37 Sup. Ct. 697, 61 L. Ed. 1309; St. Louis & S. F. R. Co. v. Cross (C. C.) 171 Fed. 480; Harrison v. St. L. & S. F. Ry. Co., 232 U. S. 318, 34 Sup. Ct. 333, 58 L. Ed. 621, L. R. A. 1915F, 1187; Phil. Co. v. Stimson, 223 U. S. 605, 32 Sup. Ct. 340, 56 L. Ed. 570; Lane v. Watts, 234 U. S. 525, 34 Sup. Ct. 965, 58 L. Ed. 1440.

[3] In the trade-marks registered by defendant Fletcher and attached to his answer, Exhibit A contains the words “JOHN D. FRET-CHER’S COCA and COGA Carbonating Syrup Chicago, Illinois.” B contains the words “JOHN D. FGETCHER’S CARBONATING SYRUP A Genuine. Coca and Cola Flavor.” ,C contains the words “TRIPURE PUREST DRINK IN THE WORGD A Genuine Coca and Cola Flavor. 7 El. Oz.” D contains the words “TRICO1 PUREST DRINK IN THE WORGD Genuine Coca and Cola Flavor 6% FI. Oz.” In Exhibit A the words “Coca” and “Cola” are in type about twice the size of the largest type in the label. The letters are outline type, printed in two colors, blue and red. In Exhibits B and C the words “A Genuine Coca and Cola Flavor” form four horizontal lines, the words “Coca and Cola” being the longest line in the center of the trade-mark, while the center of Exhibit D is arranged almost exactly the same as C, with the exception of the word “A,” so that in all four of the registrations the catchy display line which would naturally be the first to attract the eye is “Coca and Cola.” In Exhibit A the word “and” in the display line “Coca and Cola” is printed in type probably one-fourth as large as the type used in “Coca” and “Cola,” so that the word “and” might readily be mistaken for the dash in plaintiff’s trade-mark “Coca-Cola.” All of the labels now claimed by defendant Fletcher as his trade-marks, and which were registered by him, display a manifest purpose on the part of the designer to attract the eye of and interest the public in the two words “Coca” and “Cola.”

In the light of these facts, it is quite natural that the Secretary of State should have held, when the plaintiff endeavored to register its trade-mark, that it was s'o similar to those already registered as to require him to deny registration. There could be no better or more convincing evidence of the infringement than the official action of the Secretary of State upon plaintiff’s application. The addition of the word “genuine” and the adding of the word “flavor” and the substitution of the word “and” for the dash in plaintiff’s trade-mark do not relieve defendant Fletcher from his culpability as an infringer, but rather by the arrangement of the labels, the registration of which he procured, makes the conclusion the more irresistible that he clearly intended to appropriate to his own use the benefits of plaintiff’s trademark in Illinois. Added words and their embellishment do not destroy property rights in a trade-mark. Coca Cola Co. v. Nashville Syrup Co. (D. C.) 200 Fed. 153-155, 200 Fed. 157-160, affirmed 215 Red. 327, 132 C. C. A. 39; Coca-Cola Co. v. Am. Druggists’ Syndicate (D. C.) 200 Fed. 107; Fuller v. Huff, 104 Fed. 141, 43 C. C. A. 453, 51 L. R. A. 332; De Long v. De Long Hook & Eye Co., 10 Misc. Rep. 577, 32 N. Y. Supp. 203; Clark Thread Co. v. Armitage, 74 Fed. 936, 21 C. C. A. 178; Beecham v. Jacobs, 221 U. S. 263, 31 Sup. Ct. 555, 55 L. Ed. 729; Menendez v. Holt, 128 U. S. 514, 9 Sup. Ct. 143, 32 L. Ed. 526.

Virtuous intentions cannot be attributed to defendant Fletcher in his infringement upon the plaintiff’s rights. He personally procured the registrations; he is the president of the corporation defendant, National Carbonating Syrup Company, and he was the president, general manager, and one of the largest stockholders of the Nashville Syrup Company, which was enjoined from infringing upon the plaintiff’s trade-mark by the decree of the United States Circuit Court for the Middle District of Tennessee (Coca Cola Co. v. Nashville Syrup Co [D. C.] 200 Fed. 153; 215 Fed. 327, 132 C. C. A. 39), and was one of the persons who come within the rule that an officer, director, or stockholder of a corporation is bound and estopped by judgment against the corporation, when he has full knowledge and participates in the defense (Hancock Natn’l Bank v. Farnum, 176 U. S. 640, 20 Sup. Ct. 506, 44 L. Ed. 619; Singer v. Hutchinson, 183 Ill. 606, 56 N. E. 388, 75 Am. St. Rep. 133; United States v. United States Shoe Machinery Co. [D. C.] 234 Fed. 127). So we conclude that in designing the trade-marks, the registration of which Fletcher procured, his purpose to use plaintiff’s trade-mark was not only clear and deliberate, but with full knowledge of plaintiff’s rights. The character of defense interposed strengthens this view, for it is contended, practically, that inasmuch as the trade-mark “Coca-Cola” was not registered, anybody could register it and that the first person to do so would be the legal owner thereof and entitled to its use. This, of course, is a mistaken view of the Illinois statute. Registration does not and cannot create or bestow the exclusive right to use a trade-mark, nor does the statute so provide.

[4] There is nothing in the Illinois statute requiring registration preliminary to a suit, or the making of the certificate anything more than evidence of adoption, nor does it provide that registration shall confer any exclusive right, nor is any means provided for the settling of contested priority claims in the office of the Secretary of State between two applicants. Where a similar statute of New York was under consideration, the Court of Appeals said:

“It may be observed, however, that the Legislature by this statute has not attempted to confer trade-mark rights, but merely to more effectively regulate existing common-law trade-marks and to afford an additional speedy remedy for the violation thereof, and to prevent fraud and imposition on the public, which are matters within ihe police power of the state.” Prest-O-Lite Co. v. Ray, 162 App. Div. 62, 147 N. Y. Supp. 138.

Only the owner of n trade-mark has the right to register it. Defendant Fletcher must now be held to have known that the plaintiff here and its predecessors owned the trade-mark “Coca-Cola” by adoption and use since 1886, and this ownership and the rights of the plaintiff to it have been adjudicated so frequently in the federal and state courts that it has become a matter of such common knowledge as to make the citation of authorities entirely unnecessary.

In the light of this situation, it is not difficult for the court to conclude as to which of the contending parties judicial protection should be granted. Carroll & Son v. McIlvaine & Baldwin (C. C.) 171 Fed. 125.

Where it was contended that registration created rights, the Supreme Court of the United States said:

“This exclusive right was not created by the act of Congress, and does not now depend upon it for its enforcement. The whole system of trade-marlr property and the civil remedies for its protection existed long anterior to that act, and have remained in full force since its passage.” Trade-Mark Cases, 100 U. S. 82, 25 L. Ed. 550.

Registration cannot confer a title to a trade-mark, if some other individual has acquired a prior right by adoption and use; nor can it vest a title in the registrant as against another’s common-law title. Carroll & Son v. McIlvaine & Baldwin (C. C.) 171 Red. 125.

[5] The general rule adopted by the courts on this subject is that the state statutes providing for registration of trade-marks are in affirmance of the common law; that the remedies given by such statutes are either declaratory or are'cumulative and additional to those recognized and applied by the common law. Trade-Mark Cases, 100 U. S. 82, 25 L. Ed. 550. The registering of defendant Rletcher’s trade-marks with the Secretary of State has no effect in giving them the quality of trade-marks if not already such. Oakes v. St. Louis Candy Co., 146 Mo. 391, 48 S. W. 467.

Business good will and trade-marks indicative thereof are property-rights and considered and treated as such. Hanover Star Milling Co. v. Metcalf, 240 U. S. 403, 36 Sup. Ct. 357, 60 L. Ed. 713. The plaintiff here and its predecessors had used the trade-mark “Coca-Cola” in interstate commerce since 1886 and had used it in connection with its business in intrastate commerce in Illinois for a great many years before the recording of defendant Rletcher’s trade-marks with the Secretary of State. The good will of the public and the trade-mark indicative thereof in Illinois were plaintiff’s property at the time of the filing of the trade-marks by Rletcher and were entitled to the protection which the law gives.

[6] Section 3 of the Trade-Marks Act of Illinois provides;

“Every suck person, association or union that has heretofore adopted or used, or shall hereafter adopt or use, a * * * trade-mark * * * as provided in section 1 of this act shall file the same for record in the office of the Secretary1 of State, by leaving two copies * * * with said Secretary, and by filing therewith a sworn statement specifying the name or names of the person * * * on whose behalf such * * * trade-mark * * * shall be filed, the class of merchandise and particular description of the goods to which it has been or is intended to be appropriated; that the party so filing, or on whose behalf such * * * trade-mark * * * shall be filed, has the right to the use of the same, and that no other person, firm, association, union or corporation has the right to such use either in the identical form or in any such near resemblance thereto as may be calculated to deceive, and that the faseimile copies or counterparts filed therewith are true and correct." Ill. R. S. c. 140, § 3, 6 J. & A. Ann. Stat. 6335.

Defendant Fletcher undoubtedly made the proof required by this statute, and in doing so he knew’, by reason of the prior adjudication of plaintiff’s trade-mark in Coca-Cola Co. v. Nashville Syrup Co. (D. C.) 200 Fed. 157, as well as by his experience and knowledge of plaintiff's business and trade-mark, evidenced by the manifest purpose of the design of the trade-marks, the registration of which he procured, the showing which he made to the Secretary of State in compliance with the statute was false and fraudulent.

There can be no question as to the right of the plaintiff even though a foreign corporation to enter a forum in the state of Illinois for the purpose of protecting its property rights (Peck Bros. & Co. v. Peck Bros. Co., 113 Fed. 291, 51 C. C. A. 251, 62 L. R. A. 81) ; nor that the Secretary of State is a proper party to plaintiff’s bill, and that mandamus would be an inadequate remedy (People v. Rose, 219 Ill. 46, 76 N. E. 42; People v. Van Cleave, 183 Ill. 330, 55 N. E. 698, 47 L. R. A. 795; Bender v. Bender, 178 Ill. App. 203; International Committee of Y. M. C. A. v. Y. W. C. A., 194 Ill. 194, 62 N. E. 551, 56 L. R. A. 888). The Attorney General of Illinois on behalf of the Secretary of States presses the point of multifariousness. The bill comes clearly within Equity Rule 26 (198 Fed. xxv, 115 C. C. A. xxv).

The record shows that the Secretary of State was misled into recording Fletcher’s trade-marks by reason of the false showing made in connection with the application. In other words, the joint effect of Fletcher’s misconduct which resulted in the Secretary’s official action based thereon constitute a cloud upon the title of plaintiff’s property which equity will remove. Rule 26 (198 Fed. xxv, 115 C. C. A. xxv) does not drive the plaintiff into a circuity of actions, first, to resort to equity to establish its property rights over defendant Fletcher’s claims and then to bring a separate action against the Secretary of State to cancel the illegal and unlawful registrations which constitute a cloud updn plaintiff’s title and to procure the registration of plaintiff’s trade-mark. Equity will avoid a multiplicity of suits.

The claim that “Genuine Coca and Cola Flavor” is truthfully descriptive of the flavor of defendant’s product is disposed of by Coca Cola Co. v. Koke Co. of America, 254 U. S. 143, 41 Sup. Ct. 113, 65 L. Ed.; Davids Co. v. Davids, 233 U. S. 461, 34 Sup. Ct. 648, 58 L. Ed. 1046; Coca-Cola Co. v. Nashville Syrup Co. (D. C.) 200 Fed. 157. And this would be true even in the absence of the stipulation in this case that “Coca-Cola” has a secondary or distinctive meaning.

[7] To adopt the contention of the defendants as to territorial limitations would be to recognize an unlawful burden upon or interference with or obstacle to interstate commerce, in contravention of the long line of authorities upon that subject which hold that such a burden is unlawful, regardless of whether it is an attempt by reason of a regulatory statute, a license tax, or the enforcement of a trade-mark registration act. The case upon which defendants rely, Hanover Star Milling Co. v. Metcalf, 240 U. S. 103, 36 Sup. Ct. 357, 60 L. Ed. 713, is inapplicable to sustain their position as no registration of a trademark was under discussion in that case by the Supreme Court. That decision disposed of the rights of the parties as to common-law trademarks.

Defendants make the point that because the plaintiff itself does not bottle the beverages made from its syrup, but permits others to do so under supervisory bottling contracts, takes this case out of the rule with reference to adoption and user, for the reason, it is charged, that plaintiff’s trade-mark is only used upon the syrup. The courts have held that the sufficiency of plaintiff’s supervisory contracts over its bottlers justify the employment of plaintiff’s trade-mark “Coca-Cola” on the bottled product. Coca-Cola Co. v. Deacon Brown Bottling Co. (D. C.) 200 Fed. 105; Coca-Cola Co. v. J. G. Butler (D. C.) 229 Fed. 224. In the latter case equity enjoined a bottler from using the syrup and beverage made therefrom without supervision, against the plaintiff’s wishes. The court held the same in Coca-Cola Co. v. Bennett, 238 Fed. 513, 151 C. C. A. 449.

The personal and corporate defendants earnestly contend that their trade-mark is “Trico” and not a “Genuine Coca and Cola Flavor,” but simply the word “Trico,” which describes its syrup and the beverage .made from it. This court can see no objection to a full enjoyment of the benefit of any trade-mark by the defendant if properly limited, but in equity and good conscience it should not be permitted to use a combination of the words or symbol which constitute plaintiff’s trade-mark in any combination of words which will mislead the public into believing that it is getting a beverage which contains the “Coca-Cola” flavor. To permit defendants to do so would be to permit them to apply to their own use, the benefit of the stupendous sums of money which have been appropriated and expended for advertising plaintiff’s goods throughout the length and breadth of the country; to cause confusion, and, in a way, to permit the public to deceive itself, to the detriment of the plaintiff, who, undoubtedly, owns the trademark and all rights concerning it, as well as the good will'of the business and who is entitled to the full enjoyment of it. As the Supreme Court so recently said:

“It hardly would be too much to say that the drink characterizes the name as much as the name the drink.”

The name, it must be conceded, is owned by the plaintiff.

A decree will be entered in line with these views and the facts heretofore found.