Carson v. Ury

| U.S. Circuit Court for the District of Eastern Missouri | Sep 2, 1889

Thayer, J.,

(after stating the facts as above.) On the facts stated I think that complainant is entitled to equitable relief. It is no doubt true that the union label does not answer to the definition ordinarily given of a technical trade-niark, because it does not indicate with any degree of certainty by what particular person or firm the cigars to which it may be affixed were manufactured, or serve to distinguish the goods of one cigar manufacturer from the goods of another manufacturer, and because the complainant appears to have no vendible interest in the label, but merely a right to use it on cigars of his own make, so long, and only so long, as he remains a member of the union. In each of these respects the label lacks the characteristics of a valid trade-mark. The court cannot interfere in this instance, as in ordinary trade-mark cases, on the ground that one person is intentionally or unintentionally appropriating a mark, symbol, design, or word which has become the exclusive property of another when used by him to distinguish goods of a certain class. In short, this is not a trade-mark case. As I view it, it is a bill filed to restrain the defendants from perpetrating a fraud which injures the complainant’s business, and occasions him a pecuniary loss. Even where no trade-mark was infringed or involved, courts of equity have granted injunctions on more than one occasion against the use upon goods of certain marks, labels, wrappers, etc., when the evident design of such use was to deceive the public by concealing the true origin of the goods, and making it appear that they wore the product of some other manufacturer of established reputation, thereby depriving the latter of a portion of the patronage that would otherwise come to him, or injuring the reputation of his goods. Croft v. Day, 7 Beav. 84; McLean v. Fleming, 96 U.S. 245" court="SCOTUS" date_filed="1878-04-29" href="https://app.midpage.ai/document/mclean-v-fleming-89701?utm_source=webapp" opinion_id="89701">96 U. S. 245; Wotherspoon v. Currie, L. R. 5 H. L. 508; Seixo v. Provezende, L. R. 1 Ch. 195; Thomson v. Winchester, 19 Pick. 214; Perry v. Truefitt, 6 Beav. 66; Newman v. Alvord, 51 N.Y. 189" court="NY" date_filed="1872-09-05" href="https://app.midpage.ai/document/newman-v--alvord-3590368?utm_source=webapp" opinion_id="3590368">51 N. Y. 189; Avery v. Meikle, 31 Ky. 73; Burton v. Stratton, 12 Fed. Rep. 696; Chemical Co. v. Myer, 31 Fed. Rep. 453; Browne, Trade-Marks, §§ 43, 44. No valid reason can be assigned why the principle which underlies these decisions does not entitle the complainant to relief. The right of the court to grant relief in the cases cited was predicated on the ground that the conduct of the parties proceeded against, in intentionally marking, labeling, wrapping, or advertising their wares so that they would be mistaken for the goods of some other manufacturer, was fraudulent. That, and the fact that the fraud complained of had a natural tendency to injure the business of the person whose marks, labels, etc., had been simulated, by lessening his sales or injuring the reputation of his goods, was held sufficient to give the person who had thus sustained or was liable to sustain special damage a right to equitable relief. In the case at bar complainant shows that he has a clear right to use the union label, and that the right to use it is a valuable privilege, inasmuch as it enhances the value of the cigars which he manufactures and sells, and increases the demand therefor.

It does not appear from the averments of the bill that the action of the Cigar-Makers’ Union, in adopting a label to distinguish cigars made by its members, was or is in any respect unlawful, or opposed to public policy. On the other hand, the action of the defendants is confessedly fraudulent. The demurrer admits that they are engaged in making and selling counterfeit labels purporting to have been issued by the “Cigar-Makers’ International Union of America.” The bill avers that the sale of such counterfeit labels injures the complainant’s trade and business, and such would seem to be the necessary and immediate result of such fraudulent acts. In other words, complainant shows that he has sustained such special pecuniary damage as gives him the right to complain of the fraud. It is true that the bill does- not show that the defendants have affixed any of the spurious labels to cigars of their own manufacture, or that they have sold any cigars bearing the counterfeit certificates or labels. But this is not important. From the fact that they have made and sold spurious labels and advertised them for sale the court must presume that defendants intend that they shall be used on cigar boxes by the persons who buy them, and that they manufacture and sell them for that purpose. The conduct of the defendants is equally as culpable as that of the manufacturers of cigars who buy and use the spurious labels, and the loss which complainant sustains by the use of the same on cigar boxes is as directly attributable to the persons who make and sell the counterfeit labels, as to the dealers in cigars who buy and use them.

In conclusion I will add that my attention was called, on the hearing of the demurrer, to a recent decision of the supreme court of Minnesota affecting the union label in the case of Protective Union v. Conhaim, 41 N. W. Rep. 943; also to a decision of the court of chancery of New Jersey in the case of Schneider v. Williams, 14 Atl. Rep. 812. In both of those cases the bill seems to have been framed upon the theory that the union label was a technical trade-mark, and that as such it was the property of the members of the union in the aggregate, and that any one or more members of the union, whether they were or were not engaged on their own account in the manufacture and sale of cigars and in the use of the label, might maintain a suit to restrain an unauthorized party from using the label. The decision in each case was adverse to such • contention. The bills appear to have been filed by persons and by. an association- who were not engaged in the manufacture and sale of cigars on their own account.- Hence they were not injuriously affected by the fraudulent acts complained of, or, if they were liable to suffer a pecuniary loss to any extent or at any time in consequence of such acts, the loss to be apprehended was indirect and speculative. It may well bo conceded that the plaintiffs in those cases had no such property rights involved as would enable them to maintain an action, even on the theory on which this decision proceeds. The case at bar differs from those cases, however, in the respect before mentioned, that complainant is himself a manufacturer of cigars, and, according to the averments of the bill, has built up a profitable trade by the use of the union label, which trade has been damaged, and is liable to be further damaged, by the fraudulent acts of the defendants. I think that he is entitled to relief on the facts stated in the amended bill, and accordingly overrule the demurrer.