Corkran, Hill & Co. v. A. H. Kuhlemann Co.

111 A. 471, 136 Md. 525, 1920 Md. LEXIS 89

• Court: Court of Appeals of Maryland
• Decided: June 17, 1920
• Status: Published

Opinion

Pattison, J.,

delivered the opinion of the Court.

An injunction was1 issued by the Court below upon the bill •of the appellant restraining the appellee from using a trademark known as the “Orange Brand,” claimed by the appellant to he its property, in connection with the manufacture and sale of oleomargarine. The injunction, however, on motion of the defendant, was dissolved upon-its filing an answer to the bill.

At the conclusion of the evidence, thereafter taken, the bill was dismissed by an order of the Court passed on the 9th day of February, 1920. It isi from that order this appeal is taken.

It appears from the evidence that the predecessors of the appellant, C'orkran, Hill & Ob., so early as 1855, adopted a trade-mark known as “Orangp Brand,” which was used by them in the sale and disposition of their goods', consisting of meat, etc.; and in 1908 Streett, Cbrkran & Co., one of the appellant’s predecessor's, registered it as a trado-mark for hams and bacon.

Prior to the year 1910', the predecessiors of the appellant had in no way dealt in oleomargarine, but in the spring of that year they determined to handle it with the other articles sold by them. After buying it for a short while from a party in New Jersey, they, in the fall of that year, began their dealings with the appellee, or rather with one of its predecessors, and continued to buy from it until 1913, but, for some reason, discontinued their purchases until the spring of 1914, when they resumed and continued with it until the fall of 1919.

The original dealings, as we have said, were started by the predecessors of the appellant and appellee, respectively, but as each has acquired the rights of its predecessor, w'e will hereafter1, in speaking of the parties, refer to them as the appellant and appellee, unless it bo found necessary to> do otherwise in order to be properly understood.

At the beginning of their dealings in 1910, the appellant bought oleomargarine from the appellee, a manufacturer, at such times and in such quantities as its trade required, and at its own expense furnished the appellee labels designed by it, to be used by the appellee upon the oleomargarine manufactured for the appellant. One of these, a round yellow label, approved by tbe U. Si Bureau of Industry, so early as August, 1910, bad upon it the words “Orange Brand’ Oleomargarine, prepared especially for Streett, Corkran & Co., 115-117 Pratt Street, Baltimore, Maryland, H. S. Inspected and passed. Establishment No. 787.” Establishment No. 787. was ".the. manufacturing' establishment- of the appellee. This was placed upon the label in obedience to- a requirement of the Government, that-the place ¡where" such "article is-manufactured shall appear upon the label Other labels-, slightly differing in their wording, but all bearing the words ‘-Orange Brand,”, were, from "time to time/ designed and furnished by the'- appellant to "be used, upon the goods- bought by it. These-•labels wer-'e used only, in-connection with tire oleomargarine manufactured for the appellant, and no- oleomargarine be-al•ing said trade-mark was sold by /the ¡appellee to any other person. This course of dealing continued down to September, 1914, with the .exception of a short interval of a,: few months between the fall of ,1913 and the spring of 1914.

In September, 1914, the-appellant, then the firm of Cork-ran, Hill &. Co., following an innovation of the trade, had cartons prepared-in which , the: oleomargarine manufactured for it was to be' packed by the appellee. These cartons, in addition to tire Words.--“Orange Brand,” bo-re the symbol of a branch of an orange tree, with oranges and leaves hanging therefrom, the symbol being that which was registered in the Patent Office in 1908, and which, was being generally used by Ofcxrkran, Hill & Go. upon; other products sold by it. The labels or cartons were ordered and paid for by appellant and were delivered to appellee from time to time as needed down to September, 1916. In the summer, of 1916, the, A. H. Kuhlemann Go.,, the appellee; was1 organized and became the successor of A. H. Kuhlemann., , In September of 1916, a new agreement, changing the. course of dealings that had hitherto existed1 between; the parties,.was made by A. H. Kuhlemann Oo. and the. appellant. This agreement is not in writing, nor are its -terms and' pro-visions., very clearly stated in- the evidence, offered. It may, however, be gathered from the record that at; such"time.it was the policy.of the newly formed company to enlarge and exp-and its business..

Herman Piel, manager of thé: appellant corporation, who-had been connected "with the appellant,: or its predecessors-, since 1909, and wlio bad conducted the negotiations; with Mr. Kuhlemann that led to the; dealings of the parties in 1910, when asked the terms and provisions; of the agreement of 1916, s.aid, “the new arrangement was that we were- to supply the Kuhlemann Co. with raw material on the basis, of a certain profit above cost, and they in turn were to distribute through us. the oleomargarine that they manufactured, or could be sold from their factory, carrying a one-quarter cent a pound Internal Revenue Tax, with the exception of one customer which was agreed among us would stay with the Kuhlemann Co. because of reasons known between us.”

The agreement, he said, included all brands of oleomaigarino manufactured by thei appellee that carried one quarter of a cent per pound Internal Revenue tax, and was. not confined to the “Orange Brand.” The witness explained that there were two; kinds of oleomargarine. One. of them carrying one quarter of a cent per pound Internal Revenue tax and. containing no artificial coloring], and the other contained artificial coloring and carried only one-tenth of a cent, per pound tax. The license held by the appellant did not permit it to handle the colored oleomargarine, but only the white, for which reason its contract or agreement with the appellee embraced only white oleomargarine.

The raw material furnished by tbe; appellant, was not manufactured by it, but bought in the open market. This., Mr. Piel said, they were not at all anxious; to do, as the profits in it were extremely small, but they did it to he assured that the appellee would have on hand at all times a, sufficient supply of finished product to meet the appellant’s, demands. The raw materials were bought by tbe appellant and charged to the appellee at a price above cost, and when the finished product was received by the appellant, it deducted the charge for the raw materials from the; amount of the purchase price of the, finished product.

The contract contained the further provision that Mr. O’Dea,, the vice-president of the appellee company, should go upon the road, in aid of tbe sale agents of tbe appellant, in an effort to increase tbe sales of tbe oleomargarine. Tbe efforts of tbe parties were successful and tbe sales were largely increased from year to year.

Hr. Kublemann, wben asked about the agreement of 1916, said: “I wanted to make it tbat tbey would take tbe whole output of tbe factory, just make tbe goods aud send it to them and have tbem as distributors. Tbey didn’t want it, because tbey didn’t want tbe yellow goods. They didn’t want to invest in another license, and tbey agreed it would be better to distribute yellow goods from the factory, because we had the privilege of distributing it in white or' color, a quarter of a cent to ten cents, so they took the distribution of the white goods and we were to make the sales for tbem, bring tbem tbe customers and they distribute, carry the bills, collect tbe money,'etc., for one cent a pound and there was an overage to be divided between us, fifty-fifty, each a half.”

Tbe appellant’s right to sell was exclusive “as far as tbej could sell tbe goods.” Kuhlemann stated tbat wben be approached Mr. Piel in 1916, be not only suggested tbat tbe appellant should take tbe whole output, thei colored as well as the white goods, but be also asked it to take stock in its new company, which was then about to be organized, but tbe appellant refused to purchase tbe stock. “It, however, took up the sale proposition, which was to sell our goods at one cent a pound profit to them/' It was about ten days thereafter that Piel offered to buy tbe raw material at a. broker’s profit, which was gladly accepted by tbe appellee.

Tbe cartons used prior to.tbe agreement of 1916 were continued in use thereafter so long as tbey lasted, but when these were exhausted aud until tbe new ones tbat bad been ordered were received, labels were used tbat bad upon tbem tbe words “Orange Brand” Oleomargarine, “Always tbe Same, Tbe A. H. Kublemann Ob., Mfrs., Oorkran, Hill & Ob'., Distributors, 221-23-25-21 S’. Howard !St., Baltimore, Md., H. S. Inspected and P’assed by Department of Agriculture. Estab lislnnent 787.” In addition to those labels, a large yellow sign was designed and used which bore the; words “Ask tor Kuhlemann’s 'Orange Brand’ Oleomargarine), Oorkran, Hill & Co., Distributors, Baltimore, Maryland.” These signs were distributed throughout the territory in which the “Orange Brand” oleomargarine was sold until the outbreak of the w7ar between this; country and Germany, when, because- of the name “Kuhlemann” appearing upon them, the signs, or at least some of them, were tom down and their use was- in a groat measure discontinued. In February, 1917, the cartons that had been ordered, months before were received, and were put in general use. They had upon them not, only the words “Orange Brand” but also the symbol o-f the branch of an orange tree with oranges and leaves hanging therefrom, that was registered in the Patent Office by the appellant for its hams and bacon. It also bore the words “Prepared for Oorkran, TIill & Co., Baltimore, Maryland,” but nowhere upon it appeared the name of the appellee. These cartons were continued in use to the time when the relations- between Ihe parties ceased, in December, 1919.

The cause that led to the breach in the dealings between the parties is not clearly defined, but it appears, from the record that in the spring or summer of 1919 the appelleecontemplated a still greater development or expansion, of its business operations;, and with this in view1 it purchased, or agreed to purchase, a site upon which a larger factory was. to be built. This required money which they did not have, and to obtain it they solicited the plaintiff to purchase from it certain preferred stock of the company, but they could not reach a satisfactory agreement in relation thereto), and the appellant declined to- purchase the; stock. Closely following this occurrence was the discovery by the appellant, that in 1917, while the parties; were operating under the agreement of 1916, the appellee, without the knowledge and consent of the appellant, had registered, in its name-, the “Orange Brand” trade-mark for the, manufacture and sale of oleomar garine. This fact was learned by the appellant in obtaining* a copyright of the “Orange Brand” carton, which "was issued to it on September 30, 1919. After learning of its registry by the appellee, Mr. Biel, with Mr. Armstrong, another official of the appellant company, called upon Mr. Nuhlemann, president of the appellee company, and demanded that he should surrender and abandon such trader-mark. Mr. Finch, vice-president of the company, was also seen and a like demand made of him, but they would not surrender or abandon the use of said trade-mark.

Because of the occurrences mentioned, as claimed by the appellant, it, in November*, 1916, took up. negotiations with O’Dtea, who' in the preceding summer had severed his relations with the appellee company, to organize a company for the manufacture of oleomargarine, and upon its organization the relations between the appellant and appellee were, on or about the 13th day of December, 1919, terminated. Ther©1after the appellants continued to sell and distribute oleomargarine under the trader-mark “Orange Brand” made by the newly organized corporation, The Baltimore Butterine Company, and the customers of the appellant were notified by it that the “Orange Brand” oleomargarine was no- longer manufactured by the appellee, but by the Baltimore Butterine Company. The appellee thereafter manufactured and sold to its customers oleomargarine under the “Orange Brand” trade-miark, and when asked to discontinue its use, refused to do so; whereupon the appellant instituted these proceedings asking for an injunction restraining the appellee in the use of the “Orange Brand” tradei-mark, and for the recovery of the profits realized "by the appellee from the alleged wrongful sale of oleomargarine under such trade-mark.

The record in this case is quite a large one, and contains facts that we have thought unnecessary to state, in as much as we have already prolonged this opinion much further than desired, hut though not mentioned, such facts, have, been carefully considered by us in reaching our1 decision.

The appellee contends that “it acquired the right of ownership to ‘Orange Brand’ trade-mark upon oleomargarine1 by user from May, 1914, by adoption in August, 1916, by its registration in February, 1917, in the H. S. Patent Office”; and that the appellant never acquired a right thereto, but if so, it lost it by abandonment, or if not by abandonment, by appellant’s acquiescence in its use by the appellee.

The appellant was not the manufacturer of the article. This was not necessary to entitle him to the us:e of the trademark, fetr its use “does not necessarily and asi a matter of law import that the articles upon which it is used are manufactured by its user. It may he enough that they are manufactured for him, that he controls their production, or even that they pass through his hands in the course of trade, aud that he gives to them the benefit of his reputation, or of his name and business style.” Nelson v. Winchell, 203 Mass. 75; Menendez v. Holt, 128 U. S. 514; 38 Cyc. 688; 26 R. C. L. 836. Nor was it necessary that thei trade-mark should have been registered by the appellant to entitle it to its use, or-to protect it against infringement.

From tin early day the common, law has recognized the right of the proprietor of a trade-mark to its exclusive use. The right has been, without intermptiou, recognized and protected by the courts of England and the United States,;, in the absence of statutes declaring the existence of such rights or providing regulations for its exercise and remedies for its deprivation. 26 R. C. L. 834, and cases, cited in note thereto.

It is conclusively established by the evidence in this case that the appellant, or its predecessor, designed, adopted and used the “Orange Brand” trade-mark in the sale by it of oleomargarine, and thereby acquired the exclusive light to its use for such purpose, and unless it has abandoned that right or has lost it by its acquiescence in the use of it by the appellee it still has it.

An abandonment, is the voluntary and, intentional disuse or non-user of the trade-mark. Such intention may be in ferred from circumstances necessarily pointing to an intention to abandon, but an actual intention to permanently give up the use of tire trade-mark is necessary to constitute an abandonment of it. Mere disuse, though for a considerable period, in the absence of intentional abandonment, will not amount to an abandonment, nor will it destroy trade-mark rights, unless the mark has ceased to be distinctive and the good will associated with it has passed away, or the mark has become identified with other goods. 38 Cyc. 880; Nims on Trade-marks (Edition Pub. in 1909), page 503; Julian v. Hoosier Drill Co., 78 Ind. 413.

In Julian v. Hoosier Drill Co., supra, it is said: “The suspension (of the use of a trade-mark) must be, presumptively at least, attributed to indisposition or inability, rather than to an intention to abandon valuable rights,” and “it is incumbent upon those alleging the defense of abandonment, to show that the right had been relinquished to the public by clear and unmistakable evidence.” It may be, as said by Browne on Law of Trade-marks, Sec. 681, that “a person may temporarily lay aside his mark, and resume it, without having in the meantime lost his property in the right of user1. Abandonment being in the nature of a forfeiture must be strictly proven.”

In Menendez v. Holt, supra, a case very similar to the one before us, it is said when the excuse of the party using another’s trade-mark “is that the owner permitted such use, that excuse is disposed of by affirmative action to put a stop to it. Persistence then in the use is not innocent, and the wrong is a continuing one, demanding5 restraint by judicial interposition when properly invoked. Mere delay or acquiescence cannot defeat the remedy by injunction in support of the legal right, unless it has been continued so long and under such circumstances as to defeat the right itself. * * * Acquiescence to avail must be such as to create a new right in the defendant. Rodgers v. Nowill, 3 De Gex, M. & G. 614. Where consent by'the owner to the use of his trade-mark by another is to be inferred from his knowledge and silence merely; it lasts no longer than the silence from which it springs; it is, in reality no more than a revocable license.’ Amoskeag Mfg. Co. v. Spear, 2 Sandf. (N. Y.).” Nelson v. Winchell, supra.

It is clear, upon an application of the principles of law above stated to the facts of tins case, that the exclusive right of the appellant to use the trade-mark “Orange Brand” in the sale of oleomargarine was not abandoned by it, nor was. such right lost by it, because of its alleged acquiescence in the use •of it by the appellee, consequently its use was never acquired by the appellee, as claimed by it.

The appellant’s acts of abandonment and acquiescence upon which the appellee relies in this case are: Eirst, the failure of the appellant, in its early dealings with the appellee, to use, at all times, labels upon its goods which indicated its ownership of the trade-mark “Orange Brand”; second, its use of cartons upon which the “O'range Brand” trade-mark appeared, but not the name of the appellant’s, nor anything indicating the appellant’s connection with it; third, the use, after the agreement of 1916 and after the labels and cartons then on hand had been used, and while awaiting the receipt of those that had been ordered, of other labels and a sign having the “Orange Brand” trade-mark upon them and upon which for the first time appeared the name of the appellee. On these the appellee was named as the manufacturer and the appellant as the distributor of the goods. In the prepar ration of these labels and signs, the appellee for the first time made certain suggestions to> the appellant as to the wording of them. Their suggestions, after modification, were accepted by the appellant and the labels used and the signs posted, but when the new cartons were received they were largely discontinued and the new cartons were put into general use. They, like the earlier ones, bore the “Orange Brand” trademark containing the name of the appellant, but nowhere upon them appeared the name of the appellee. These were used until the relations of the parties were .severed in the fall or winter of 1919. .

Much reliance is placed by the appellee upon the use of the large yellow sign that was. used only for a short while, or at least, in a short time thereafter, upon the outbreak of the war with Germany, its use was very materially reduced b&cause of the hostile feeling thereto caused by the use of the name “Kuhlemann” appearing upon it.

It is because of the expression “Kuhlemann’s Orange Brand Oleomargarine,” appearing upon the sign by the permission of the appellant, that the appellee relies so much in its claim to the ownership of said brand.

■ There is nothing in the agreement of 1916,-so far as the record discloses, indicating any intention of the appellant to surrender to tire appellee its rights to the use of its “Orange Brand” tradeKmark.' The appellant, after such agreement, continued to desigta, order and pay for the labels and cartons that were to be used under that contract, and their costs became a part of the cost of the finished product.

Theré is- nothing in the record showing, that the appellant by permitting the temporary use of such labels and signs intended, to - surrender his exclusive right to the use of the “Orange Brand” trade-mark in the sale of oleomargarine. It is. -inconceivable to ,us that such was its intention. The “Orange Brand” trade-mark meant much to the appellant. .For more than sixty years it had used this brand upon other products sold hy it with great results. It was this brand that it had selected and used to designate and identify its best and highest grade of goods and hy it the superior quality of said goods was commended to the public.

After the use of this brand for more than fifty years and fully appreciating its value, the appellant registered it in 1908 for hams and bacon. It not only used it thereafter on hams and bacon, but upon beef, cheese, sausage and other articles sold by it. In 1908 tbe appellant was not selling •oleomargarine, but when it commenced its sale in 1910, it very naturally selected this brand or trade-mark tu» one to use in commending their highest and best grade of oleomargarine offered for sale by it. It is true it never registered the trad&-mai*k for oleomargarine1 nor did it register it for it's other products, except ham, and bacon. This it said was duo to the fact, that it felt secure in its common law rights thereto.

That it was not its intention to abandon the “Orange Brand” trade-mark in the sale of oleomargarine, nor to surrender the same without consideration to the appellee, is shown by the fact that so late as. 1919, after the use of the label and sign mentioned, it obtained a copyright for the “Orange Brand” carton to be used in the sale of oleomargarine. Tliis it would never have done had it intended to abandon the use of the “Orange Brand” irade-mark in the sale of oleomargarine.

The appellant, was a. large dealer1 in the products sold by it. It had many salesmen upon the road, and with its prestige and business reputation, aided it is true by the efforts of the appellee, the sales of the “Orange Brand” oleomargarine largely increased from year to year. The increased sales inured to the benefit of the appellee, in that it increased the amount of its output. Before its association with, the appellant and before the latter’s zeal and energy was exerted in the sale of its products, the appellee was, comparatively speaking a small concern.

The efforts, of the appellee, as manufacturer of the, oleomargarine sold under this, brand, in keeping: up its, high standard of quality, may have largely aided in increasing; its sales, but because of such fact, it could acquire no, right to it against the consent: of the appellant, when in its, agreement with the appellant it had made no provision in respect thereto,.

The record discloses that, in 1919 the aggregate sales of all products sold by the appellant amounted to over eight million of dollars and. of this amount, 90% thereof came from the salo of goods bearing its “Orange Brand” trader-mark.

It is not shown from the evidence that the appellant ever abandoned said trade-mark or lost its exclusive right to use it by laches or acquiescence.

In our opinion the appellant has the exclusive right to the use of the “Orange Brand” trade-mark in the sale of oleomargarine, and the continued use of it by the appellee is an infringement upon that right. Consequently the Court below erred in not granting a permanent injunction restraining the appellee in the use of said trade-mark.

The decree appealed from will be reversed and the case ■ remanded in order that a permanent injunction may be granted and evidence taken, if desired, upon the prayer of the appellee asking for an accounting.

Decree reversed and cause remanded, costs to be paid by the appellee.