Dennison Mfg. Co. v. Scharf Tag, Label & Box Co., No. 1,139

No. 1,139 | 6th Cir. | Mar 13, 1903

LURTON, Circuit Judge,

having made the foregoing statement of the case, delivered the opinion of the court.

1. The merits are not involved. The only question is upon the decree sustaining the plea of res adjudicata.

2. The plea goes to the whole bill. It is consequently too broad if there is any relief possible under the present bill, notwithstanding the thing adjudged which is pleaded in bar.

3. For the purposes of this case we may assume the broadest claims made for the former adjudication, to wit, that it was adjudged that the complainant could not acquire any valid or exclusive right to the numbers used by it or to any such system or method of designating or describing the different kinds of labels to which different numbers were applied. Both the suits were decided by Judge Swan, and opinions were filed in each case.. In the opinion filed in the case at bar that learned judge, referring to what he regarded as adjudged in the former case, said:

“It was held in the first case, rightly or wrongly, that the numbers used by complainant as ‘short trade phrases’ to designate its various labels to its customers, and for the latter’s convenience in ordering different sizes of labels by numbers instead of by measurement or lengthy description, do not constitute trade-marks, and that the adoption by any other manufacturer of the same system of designation of his labels was not in itself unfair competition in trade. Whether those conclusions are sound or unsound is not the inquiry. If unsound, it is too late to review them; if sound, they equally defeat this suit. The complainant took and perfected its appeal in that case, but upon its motion the appeal was dismissed. In the first suit the bill sets forth a series of numerals forming part of ithe same system of ‘short trade phrases,’ claiming the numerical designation of its various labels as trademarks, and the use of any of them by defendant upon its labels as an order or trade phrase was an invasion of complainant’s property right, and, as in the present bill, that claim failing, alternatively that such use per se • evidenced unfair competition in trade.”

But the infringement charged in the former case was not the same as the infringement charged in this case. In the former case the infringement consisted in a simulation of the plan, system, or method, and not an identical use of the same specific numbers upon labels of the same size, shape, and color. The complaint was that the defendant violated the complainant’s rights in the numbers 1001 to 1007 by the use of the numbers 3001 to 3007 upon labels having blue borders, but of size and shape corresponding to those of the complainant designated by the series of numbers. But the former bill also sought relief upon the theory that if the complainant was not entitled to appropriate the series of numbers, claimed as an exclusive or technical trade-mark, these numbers had acquired a secondary signification indicating origin or ownership, and that equity would protect the use of such numbers in such a way by a rival in trade as was calculated to enable a competitor to sell its own product as and for the goods of the complainant. Upon this question of unfair trade the case made by the former bill and the one at bar present a totally different state of facts. Thus that bill charged “that the defendant has fraudulently and unlawfully violated and infringed your orator’s rights in the premises by making use of palpable imitations and infringements of your orator’s numbers, trade-marks, and designations”; “that defendant has knowingly made use in connection with bottle and jar labels by it manufactured in the exact way in which your orator has used the numbers aforesaid, which imitations, as applied and used by the defendant, have been calculated to mislead and promote and enable unfair competition and the sale of defendant’s bottle and jar labels as and for those of your orator’s catalogue,.”

Referring to this matter, Judge Swan in his opinion sustaining the demurrer said:

“It is not alleged that defendant imitates complainant’s labels in any other particular than by denominating by numerals — other than those used by the complainant — the different sizes and colors of labels which it makes and sells, or that it offers its goods as of Dennison’s manufacture. The arrangement of the illustrations of labels in the catalogues of both parties is the same, but that feature of a sales catalogue is not the subject of exclusive use. Adams v. Heisel (C. C.) 31 F. 279" court="U.S. Cir. Ct." date_filed="1887-04-15" href="https://app.midpage.ai/document/adams-v-heisel-8126015?utm_source=webapp" opinion_id="8126015">31 Fed. 279. Neither illustrations nor arrangement suggest the identity of Scharf’s labels with Dennison’s. The differences in color of border design and numerals are so obvious as to disprove at a glance anything more than a generic resemblance. Liggett and Meyrs Co. v. Finzer, 128 U. S. 184, 9 Sup. Ct. 60, 32 L. Ed. 395" court="SCOTUS" date_filed="1888-11-12" href="https://app.midpage.ai/document/liggett--myers-tobacco-co-v-finzer-92321?utm_source=webapp" opinion_id="92321">32 L. Ed. 395. Both catalogues are by reference made part of the bill, and the differences noted are further accentuated by the name of the manufacturer displayed in bold type at the top of those pages of the respective catalogues which depict the labels in controversy. If by possibility the public or the trade has been misled into the belief that Scharf’s labels of a given numerical designation, advertised and catalogued as his manufacture and of a given color and design, are Dennison’s, which are ordered by another numerical designation, differ in color, appearance, and pattern, and are advertised, catalogued, and known to the trade as Dennison’s, the fault is that of the public and the trade, who, in addition to the differences noted, are apprised of the origin of the labels by the catalogue, the boxes, and the cartons, on each of which the manufacturer’s name appears. For this consequence of the use of numerals as cipher orders the defendant is not responsible. Coats v. Merrick Thread Co., 149 U. S. 563 [13 Sup. Ct. 966, 37 L. Ed. 847" court="SCOTUS" date_filed="1893-05-10" href="https://app.midpage.ai/document/coats-v-merrick-thread-co-93651?utm_source=webapp" opinion_id="93651">37 L. Ed. 847].”

In the former suit the trade numbers claimed were from 1001 to 1007, inclusive. The defendant was not using those identical marks or numbers, but the numbers 3001 to 3007. There seems also to have been a difference in the color of the border of the labels upon which these different series of numbers were used. This Judge Swan notices very pointedly in his opinion quoted above. The charge here is that plaintiff’s identical numbers are used in connection -with labels like those of the complainant in color, size, and shape.

The equitable principles applicable to cases involving unfair trade are well settled. The difficulty is in their application, for it is quite as impossible to define unfair trade as to define fraud. It follows, therefore, that very slight difference in the facts of two such cases may result in very different decisions.

The question as to whether the former decree is a bar to the relief sought under the present bill in its aspect as a bill to restrain unfair trade must depend upon the identity of the facts of the two cases. The res judicata relied upon arises from a decree sustaining a demurrer for want of general equity. There was no hearing upon any issue of facts. In such cases the rule is that the estoppel extends only to the precise point presented by the pleadings and decided by the ruling upon the demurrer. In Wiggins Ferry Co. v. O. & M. Ry., 142 U.S. 396" court="SCOTUS" date_filed="1892-01-04" href="https://app.midpage.ai/document/wiggins-ferry-co-v-ohio--mississippi-railway-co-93225?utm_source=webapp" opinion_id="93225">142 U. S. 396, 410, 12 Sup. Ct. 188, 192, 35 L. Ed. 1055" court="SCOTUS" date_filed="1892-01-04" href="https://app.midpage.ai/document/wiggins-ferry-co-v-ohio--mississippi-railway-co-93225?utm_source=webapp" opinion_id="93225">35 L. Ed. 1055, it is said:

“Where the judgment in the former action is upon a demurrer to the declaration, the estoppel extends only to the exact point raised by the pleadings as decided, and does not operate as a bar to a second suit for other breaches of the same covenants, although if the judgment be upon pleadings and proofs the estoppel extends not only to what was decided, but to all that was necessarily involved in the issue.”

To the same effect are the cases of Gould v. Evansville Ry., 91 U.S. 526" court="SCOTUS" date_filed="1876-02-21" href="https://app.midpage.ai/document/gould-v-evansville--crawfordsville-r-co-89210?utm_source=webapp" opinion_id="89210">91 U. S. 526, 23 L. Ed. 416; Russell v. Place, 94 U. S. 606, 608, 24 L. Ed. 214.

The estoppel of the former suit so far as that bill sought relief upon the ground of unfair competition extends no farther than the precise point raised by the facts there stated in reference to the wrong there charged. The plea in the present case goes to the whole bill, and all relief under it. It is therefore too broad, and the court erred in sustaining it.

Decree reversed and remanded for further pleading.

Judge DAY participated in the decision o.f this case.