Westcott Chuck Co. v. Oneida National Chuck Co.

122 A.D. 260, 106 N.Y.S. 1016, 1907 N.Y. App. Div. LEXIS 2411

• Court: Appellate Division of the Supreme Court of the State of New York
• Decided: November 13, 1907
• Status: Published

Opinions

Cochrane, J.:

Plaintiff has recovered an interlocutory judgment which restrains the defendant as follows, viz.: “ From the manufacture and sale of the two types of drill chucks known as Exhibits 3-A to 8-A inclusive and Exhibits 15—B, 16—B, 17—B, 19—B and 20—B in the manner and form and as stamped by the defendant according to the evidence in the case and from advertising the said two types of drill chucks in the manner and form herein stated in this case. .The injunction is not to be construed as preventing the defendant from manufacturing and selling the said two types of drill chucks according to the mechanical device and in the form and shape in which they were manufactured prior to the expiration of the patents nor in the use of its name, but they are to so manufacture, stamp and-advertise-said products to thfe public so that the public and inténding purchasers will not be deceived into believing that the defendant company, located at Oneida, N. Y., is the plaintiff company, and so that they will not be deceived into bélieving that the products offered for sale by the defendant company are the products of the plaintiff company.” ■

Such interlocutory judgment also provides as follows: “It is adjudged and decreed that each and every of the acts committed by the defendant as herein specified as well as those disclosed in the evidence * * * were carried on and conducted for the purpose and with the intent on the part of the defendant of carrying on and conducting an unfair and unlawful competition with the plaintiff, the effect of which has been and if continued will injure the plaintiff’s trade and business and is a fraud upon the pub-lid and the plaintiff,” and also “that the Westcott Chuck Company recover from the defendant, the Oneida National Chuck Company, the damages occasioned by the various wrongful acts herein decreed, and that a referee be appointed by the Supreme Court on notice to the defendant to take and state and assess the damages sustained by the plaintiff on account of the various wrongful acts herein referred to.”

An inspection of the interlocutory judgment discloses that some of the “ acts committed by the defendant,” as therein specified, are harmless and lawful, and it is scarcely necessary to observe that many of such acts “ disclosed in the evidence ” are clearly beyond criticism, and are not within the prohibition of the injunctive portion of said judgment; nevertheless, they indiscriminately fall within the condemnation of said judgment as being “ unfair,” “ unlawful,” “ a fraud upon the public and the plaintiff,” and they are all by the express mandate of the said judgment made to constitute the basis of the damages which the plaintiff has sustained, and on the strength of such interlocutory judgment the referee appointed as thereby provided has awarded to the plaintiff for such damages the sum of $11,923.52, and plaintiff has recovered against the defendant a final judgment for that amount.

As may be inferred from the portions of the interlocutory judgment above quoted the purpose of the action is to prevent alleged unfair and fraudulent competition on the part of the defendant in the manufacture and sale of drill chucks. In approaching the consideration of the facts herein it is well to keep in mind as pertinent thereto certain distinguishing principles as declared by the courts.

In Tabor v. Hoffman (118 N. Y. 30) Judge Vann said: “It is conceded by the appellant that, independent of copyright or letters patent, an inventor or author has, by the common law, an exclusive property in his invention or composition until by publication it becomes the property of the general public. This concession seems to be well founded and to be sustained by authority. (Palmer v. De Witt, 47 N. Y. 532; Potter v. McPherson, 21 Hun, 559 ; Hammer v. Barnes, 26 How. Pr. 174; Kiernan v. M. Q. Tel. Co., 50 id. 194 ; Woolsey v. Judd, 4 Duer, 379 ; Peabody v. Norfolk, 98 Mass. 452; Salomon v. Hertz, 40 N. J. Eq. Rep. 400 ; Phillips on Patents, 333-341; Drone on Copyright, 97-139.) . As the plaintiff had placed the perfected pump upon the market without obtaining the protection of the patent laws, he thereby published that invention to the world and no longer had any' exclusive property therein. (Rees v. Peltzer, 75 Ill. 475; Clemens v. Belford, 14 Fed. Rep. 728; Shortt’s Law of Literature, 48.) ”

• There is, however, another principle equally well established by modern decisions that, irrespective of any question of .a right protected by patent, a party may not always appropriate to his own use in his business a label or word or device in prior use, and especially or particularly appropriated by another. The distinction is indicated in Cooke & Cobb Company v. Miller(169 N. Y. 475), as follows: “ In the absence of some restriction upon the defendants arising out of the patent law, as to which the record is silent and as to which the State courts have no jurisdiction, the defendants had the. right to manufacture and sell the article in question, although it was similar in general appearance and made from the same material and upon the same plan as the article made' and sold by the plaintiff. This proposition is not questioned, but. what the plaintiff claims is that the defendants have wrongfully-appropriated for use in their business a label or device which belonged' to the plaintiff as its trade mark, and so have invaded its property rights;”

The same distinction is recognized in Fischer v. Blank (138 N. Y. 244, 252), where it is said: “ The true test we think, is whether the resemblance is such that it is calculated to deceive, and does in fact deceive, the ordinary buyer making his purchases under the ordinary conditions which prevail in the conduct of the particular traffic to which the controversy relates. (Franks v. Weaver, 10 Beav. 297; Amoskeag Men. Co. v. Spear, 2 Sand. 599 ; Colman v. Crump, 70 N. Y. 573; McLean v. Fleming, 96 U. S. 245 ; Lawrence Mfg. Co. v. Tenn. Mfg. Co., 138 id. 537.) No inflexible rule can be laid down. Each case must in a measure be a law. unto itself.” (See, also, to the same effect, Day v. Webster, 23 App. Div. 604 ; Dunn Co. v. Trix Manufacturing Co., 50 id. 78.)

Let .us now consider the facts constituting the grounds of plaintiff’s alleged grievance'. For about thirty years . plaintiff and its predecessor in business have been manufacturing drill chucks in the city of Oneida. These chucks included two genera,! types known as “ Little Giant Improved ” and “ Little Giant Double Grip ” and each type in different sizes. To designate the various sizes letters 'and numerals were used. Chucks as thus constructed were stamped thereon with these numerals indicating their sizes, with the w’ords “ Little Giant Improved ” or “ Little Giant Double Grip ” as the ease might be, with plaintiff’s corporate name and place of business, with the date of the year of manufacture and with the words “ keep well oiled.” Certain methods and- devices connected with these chucks were protected by patents which expired in the years 1902 and 1903. The defendant on the other hand and its predecessor in business have been constructing drill chucks for about ten years in the city of Oneida. It has, therefore, been during that period a natural competitor of- the plaintiff. After the expiration of plaintiff’s said. patents defendant procured some of plaintiff’s chucks in the market, took them apart, and proceeded to duplicate them in the chucks which it manufactured and sold. It did not, however, stamp thereon the plaintiff’s name or the names of plaintiff’s types “ Little Giant Improved ” and “ Little Giant Double Grip,” but it placed thereon the date of the year of manufacture, the words “ keep well oiled,” the same numerals as used by plaintiff to indicate the different sizes and its own corporate name.

Referring now in the light of these facts to the injunctive provisions of the interlocutory judgment above quoted it is difficult to determine just what defendant is permitted to do and what it is commanded ' to refrain from doing. It may be urged with much plausibility that the injunction is too vague and indefinite and should not for that reason be sustained. By the very terms of the injunction resort .must be had “ to the evidence in the case ” and not necessarily to anything found or determined therein in order to ascertain just what the defendant may or may not do. It is very clear, however, that the defendant is permitted to manufacture and sell “ the said two types of drill chucks according to the mechanical device and in the form and shape in which they were manufactured prior to the expiration of the patents.” In other words, the defendant is at liberty by the injunction to imitate and use the products of the plaintiff precisely as they have been manufactured by the plaintiff in all or their details save only as to the stamping and advertising of the same. And that the defendant lias such right by law I think is very clear from the authorities above cited and many others. No secret method or formula has been purloined or patterns or forms surreptitiously or by underhanded methods acquired by the defendant as was» the case in Tabor v. Hoffman (118 N. Y. 30). But the defendant copied and imitated the perfected articles of the plaintiff which were already upon the. market and in. which the patents thereon having expired the plaintiff no longer had any exclusive property. -As was said by the court in that, case: “If a valuable medicine, not protected by patent, is put upon the market, anyone may, if he can by chemical analysis'and a series of experiments, or .by any other use of the medicine itself aided by his own resources only, discover the ingredients and their proportions. If he thus finds out the secret of the proprietor, he may use it to any extent that he desires without danger of interference by the courts.” That is all the defendant has done in this case save only as the question of stamping its products is concerned. It is true it employed some of plaintiff’s prior employees who had acquired a knowledge of its business, but it does not appear that defendant derived any benefit or advantage from such knowledge on their part save such as might have been derived from any competent mechanic, nor does the referee so find.

As to the method of stamping, it is somewhat, difficult to see how with the plaintiff’s name stamped upon its product and' the defendant’s name stamped upon the product sold by it any confusion as to the' source or origin of the respective products could arise in the mind of any purchaser who cared to inform himself as to that question. These chucks are . used almost exclusively by machinists, who have technical knowledge, and who look tó the construction of the chuck rather than to its form - or any particular marks thereupon. Such customers are much less likely to be misled by form than in ordinary cases where articles are purchased by thpse who buy for no mechanical purpose or who have no special knowledge to enable them to discriminate- between articles made by different makers. Much stress is laid on the fact that the defendant adopted some of the advertising material of plaintiff. As a matter of business ethics such methods should be condemned. But all of this literature in order to be effective must necessarily have been sent out over the defendant’s signature or in such a manner as to riiake it clearly appear to any one who took the trouble to peruse it that it was the defendant and not the plaintiff who was thus advertising its wares. If the defendant misrepresented the quality of its wares its liability is'to the purchaser who was thereby defrauded. But no redress on that ground exists in favor of this plaintiff. As to the latter the utmost inquiry is merely whether or not defendant by any improper method has deceived or rendered it possible to deceive a purchaser into believing that the article sold by the defendant was the article of the plaintiff. It may be that if this injunction merely specifically and definitely restrained the defendant from, using the size numbers previously adopted by the plaintiff, and possibly some other features in the method of its stamping, and advertising, we should not interfere therewith. But there is nothing specifically commanded or en joined and the defendant and every one else is left to conjecture in respect to the matters within the spirit and scope of the prohibition. And while as stated the defendant might perhaps be enjoined as to some of its methods used in stamping and advertising its products, this 'mole hill has been magnified into a mountain and made the pretext for a considerable judgment for damages against the defendant.

On the question as to whether plaintiff is entitled to an injunction it may be that. it makes out a ease when it shows that the defendant by some unfair method has constructed its goods so that they are calculated or liable to deceive or beguile some purchaser thereof, be he wholesale or retail dealer or ultimate purchaser, into the belief that he is purchasing plaintiff’s goods, and without showing that such deception has actually occurred. But I cannot think that plaintiff, may recover a judgment for damages without proof that some such deception has in fact occurred. There should be little difficulty in finding some purchaser of these thousands of chucks which are claimed to have béen improperly sold by defendant, who believed when he made his purchase that he was buying plaintiff’s article. This voluminous record fails to disclose any evidence, however slight, to the effect that any' purchaser ivas ever deceived or misled into buying the defendant’s product as and for that of the plaintiff. In fact the evidence expressly negatives any such idea. Mr. Goodwin, the plaintiff’s president and' manager, visited many of its customers in various cities and found among such customers the defendant’s chucks. But he in no instance furnishes us with the slightest intimation that any one was deceived. He testified as follows“ The objection that one or some of these buyers made to giving me an additional order.at that- time was the price. They could buy others cheaper, the chucks made by the Oneida National Chuck Company, • The buyer said that defendant was making that line, of chucks and selling them for lower prices than ours. I don’t recall any other objection as haying been made, except that of price. In other words, the objection that was made by these persons that I have stated this. morning that were customers of ours in 1902, the objection that each made when they declined to give me further orders for ■ drill chucks, was in substance that the Oneida National Chuck Company was- furnishing that line of chucks at lower prices than we were quoting. That was the general objection.”

It clearly appears from the foregoing testimony of Mr. Goodwin that plaintiff’s customers were under no delusion or misapprehension as to the manufacturer of the chucks. ' Plaintiff’s real grievance'is not that purchasers have been deceived as to the origin or manufacture of the chucks but that defendant has undersold the plaintiff in the market. Very naturally and properly when the patents expired.plaintiff had to,compete with other manufacturers in respect to its privileges and rights formerly protected by such patents. The natural effect was to reduce the price. If the defendant accomplished such'a result without unfair means it did not thereby defraud the public but became a public benefactor. Reference has already been made to the effect that the interlocutory judgment decrees that every act committed, by the defendant as therein specified as well as those disclosed in the evidence Was unfair, unlawful or fraudulent and that the plaintiff recover of the defendant the damages occasioned by all of such'acts. Among such acts thus adjudged to have been “ unfair,” “ unlawful ” and “ fraudulent ” were that defendant “ sold to the plaintiffs customers on more favorable terms of discount than those which the-plaintiff, company had previously given to its customers; ” also the manufacture and sale by defendant of ordinary farm implements, drill and lathe chucks and tools of all kinds. The wonder is that under such provisions in the interlocutory judgment the damages are so small. There are a dozen other manufacturers of chucks, some in opep competition with plaintiff. All of this competition, including that of the defendant, naturally reduced the market price after the expiration of the patents and all of the depreciation in plaintiffs business which could be traced to any of defendant’s competition, lawful or unlawful, has been indiscriminately charged up to it on proof questionable in its most favor.able aspect that some possible person at some possible time and at some possible place might have bought defendant’s goods under the mistaken belief created by some possible deception or fraud not clearly pointed out or designated that he was buying the goods of plaintiff, but without the slightest evidence that such an instance ever in fact occurred.

The effect of these judgments in my opinion is- largely to stifle legitimate and healthy competition, and for the reasons heretofore stated I favor a reversal of both judgments on the law and facts.

All concurred, except Chestee, J., dissenting in an opinion in which Sewell, J., concurred.