HANOVER STAR MILLING COMPANY v. METCALF; ALLEN & WHEELER COMPANY v. HANOVER STAR MILLING COMPANY
No. 23, No. 30
Supreme Court of the United States
March 6, 1916
240 U.S. 403
Argued May 7, 10, 1915 (No. 23); Argued May 10, 1915 (No. 30)
287; Hoffeld v. United States, 186 U.S. 273; United States v. Commonwealth Trust Co., 193 U.S. 651; United States v. Colorado Anthracite Co., 225 U.S. 219.
Decree affirmed.
HANOVER STAR MILLING COMPANY v. METCALF.
CERTIORARI TO THE CIRCUIT COURT OF APPEALS FOR THE FIFTH CIRCUIT.
ALLEN & WHEELER COMPANY v. HANOVER STAR MILLING COMPANY.
APPEAL FROM AND CERTIORARI TO THE CIRCUIT COURT OF APPEALS FOR THE SEVENTH CIRCUIT.
No. 23. Argued May 7, 10, 1915; No. 30. Argued May 10, 1915. Decided March 6, 1916.
Two District Courts in different circuits having granted temporary injunctions, and both Circuit Courts of Appeals having reversed upon grounds that went to the merits and differed upon fundamental questions affecting the same trade-mark, writs of certiorari were allowed by this court before final decrees, notwithstanding the general rule to the contrary.
Where neither of the parties, citizens of different States, has registered the trade-mark in dispute under any act of Congress or under the law of any State, and no local rule arising from statute or decision is shown, cases involving the use of such trade-mark must be determined according to applicable common-law principles.
Redress accorded in trade-mark cases is based upon the party‘s right
The common law of trade-marks is but a part of the broader law of unfair competition.
While common-law trade-marks and the right to their exclusive use may be classed among property rights, the right grows out of use and not mere adoption.
Where two parties independently employ the same trade-mark or name, not in general use and susceptible of adoption, upon goods of the same class but in separate and remote markets, the question of prior appropriation is legally insignificant in the absence of intent on the part of the later adopter to take the benefit of the reputation, or to forestall extension of the trade, of the earlier adopter.
While property in a trade-mark is not limited, so far as its use has extended, by territorial bounds, the earlier adopter may not monopolize markets that his trade has never reached and where the mark signifies not his goods but those of another.
So far as controversy over a trade-mark concerns intrastate distribution as distinguished from interstate trade the subject is not within the sovereign power of the United States.
Trade-mark rights, like others that rest in user, may be lost by abandonment, non-user, laches or acquiescence.
Where a later adopter, in good faith and without notice of its use in other territory by an earlier adopter, expends money and effort in building up a trade in a territory, which the earlier adopter has left unoccupied for a long period—in this case more than forty years—and into which his trade would not naturally expand, the earlier adopter is estopped to assert trade-mark infringement in that territory.
A third party who enters the territory of such second adopter and attempts to use the trade-name in a manner calculated to, and which does, deceive by similarity of package, even though the name of the actual manufacturer is placed thereon, is guilty of unfair competition from which the user of the trade-mark is entitled to protection.
There being diverse citizenship and the jurisdiction of the District Court resting thereon the decision of the Circuit Court of Appeals in a trade-mark case is final and an appeal from the decree is dismissed and the decree is reviewed here on certiorari.
204 Fed. Rep. 211, reversed.
208 Fed. Rep. 513, affirmed on certiorari and appeal therefrom dismissed.
The facts, which involve the rights of manufacturers of and dealers in flour to the use of “Tea Rose” as a trade-mark, for flour sold in certain territory, and the effect of non-user on right to use a trade-mark, are stated in the opinion.
Mr. Edgar L. Clarkson and Mr. Henry Fitts, with whom Mr. James E. Morrisette and Mr. John London were on the brief, for Hanover Star Milling Company.
Mr. J. Fred Gilster and Mr. Edward Everett Longan for Metcalf.
Mr. J. Fred Gilster and Mr. Edward Everett Longan, with whom Mr. L. O. Whitney was on the brief, for Allen & Wheeler Company.
MR. JUSTICE PITNEY delivered the opinion of the court.
These cases were argued together, and may be disposed of in a single opinion.
In No. 23, the Hanover Star Milling Company, an Illinois corporation engaged in the manufacture of flour in that State, filed a bill in equity on March 4, 1912, in the United States District Court for the Middle District of Alabama, against Metcalf, a citizen of the State of Alabama and a merchant engaged in the business of selling flour at Greenville, Butler County, in that State, to restrain alleged trade-mark infringement and unfair competition. The bill averred that for twenty-seven years last past complainant had been engaged in the manufacture of a superior and popular grade of flour, sold by it at
Defendant‘s answer denied all attempts to deceive purchasers, and further denied complainant‘s right to the exclusive use of the words “Tea Rose” or the picture of a rose as a trade-mark; averred that long prior to complainant‘s first use of it, and as early as the year 1872, the name had been adopted, appropriated, and used as
Upon consideration of the bill and answer and affidavits submitted by the respective parties, the District Court granted a temporary injunction restraining Metcalf from selling flour labeled “Tea Rose,” manufactured by the Steeleville Company or any person, firm, or corporation other than the Hanover Company, at Greenville, or at any other place in the Middle District of Alabama. Upon appeal, the Circuit Court of Appeals for the Fifth Circuit reversed this decree and remanded the cause with directions to dismiss the bill. 204 Fed. Rep. 211. A writ of certiorari was then allowed by this court.
In No. 30, The Allen & Wheeler Company, a corporation of the State of Ohio, manufacturing flour at the City of Troy in that State, filed a bill against the Hanover Star Milling Company on May 23, 1912, in the United States District Court for the Eastern District of Illinois, averring that in or before the year 1872 the firm of Allen & Wheeler, then engaged in the manufacture of flour at Troy, adopted as a trade-mark for designating one of its brands the words “Tea Rose,” and from thence until the year 1904 continuously used that trade-mark by placing it upon sacks, barrels, and packages containing the brand and quality of flour designated by that term and sold throughout the United States; that in 1904 the Allen & Wheeler Company was incorporated and took over the mills, machinery, stock, trade-mark, and good-will of the firm, since which time the corporation had continued to use the trade-mark upon flour of its manufacture, and had distributed and sold such flour in the mar-
No question is raised respecting the propriety of passing upon the questions at issue on a review of decisions rendered upon applications for temporary injunction. Both District Courts granted such injunctions, and both Circuit Courts of Appeals reversed upon grounds that went to the merits. These courts differed upon fundamental questions, and it was because of this that the writs of certiorari were allowed, the situation being such that it was deemed proper to allow them before final decrees
In both cases it was shown without dispute that the firm of Allen & Wheeler adopted and used the words “Tea Rose” as a trade-mark for one kind or quality of flour manufactured by it as early as the year 1872, and continued that use until the year 1904, when the Allen & Wheeler Company was incorporated and took over the mills, machinery, stock, trade-mark, and good-will of the firm and succeeded to its business. But there is nothing to show the extent of such use or the markets reached by it, except that in the year 1872 Allen & Wheeler sold three lots of 25 barrels each to a firm in Cincinnati, Ohio, and one lot of 100 barrels to a firm in Pittsburgh, Pennsylvania; that in the early 70‘s another firm in Pittsburgh was a customer for this brand; and that in the later 70‘s a firm in Boston, Massachusetts, was a customer for the same brand. As to the Allen & Wheeler Co., there are affidavits stating in general terms that since its incorporation in 1904, and “continuously down to the present time,” the company has used the brand “Tea Rose” for flour; but there is a remarkable absence of particular statements as to time, place, or circumstances; in short, no showing whatever as to the extent of the use or the markets reached. There is nothing to show that the Allen & Wheeler “Tea Rose” flour has been even advertised in Alabama or the adjoining States, and there is clear and undisputed proof that it has not been sold or offered for sale or known or heard of by the trade in Alabama, Mississippi, or Georgia. In No. 30, there is uncontradicted proof that the Allen & Wheeler Co. is selling flour in Alabama and Georgia, but under the brands “Eldean Patent” and “Trojan Special.”
In both suits, the Hanover Star Milling Company introduced affidavits fairly showing that shortly after its incorporation in the year 1885 it adopted for one of its brands of flour the name “Tea Rose,” and adopted for the package or container, whether sack or barrel, a label bearing the name “Tea Rose” and the design already referred to; and that this trade-mark was adopted and used in good faith without knowledge or notice that the name “Tea Rose” had been adopted or used by the Allen & Wheeler firm, or by anybody else. In 1904 the Hanover Company began and has since prosecuted a vigorous and expensive campaign of advertising its Tea Rose flour, covering the whole of the State of Alabama, and parts of Mississippi, Georgia, and Florida, employing many ingenious and interesting devices that are detailed in the proofs, with the result that at the commencement of the litigation its sales of Tea Rose flour in these markets amounted to more than $150,000 a year, the Hanover Star Milling Company has come to be known as the Tea Rose mill, the reputation of the mill is bound up with the reputation of Tea Rose flour, and “Tea Rose” in the flour trade in the territory referred to means flour of the Hanover Company‘s manufacture. There is nothing to show any present or former competition in Tea Rose flour between the latter company and the Allen & Wheeler firm or corporation, or that either party has ever advertised that brand of flour in territory covered by the activities of the other.
Metcalf‘s purchases of competing Tea Rose flour, which gave rise to the suit brought by the Hanover Company against him, were made from the Steeleville Milling Company, an Illinois corporation, which appears to have adopted the name and design of a tea rose for flour in the year 1895.
It should be added that, so far as appears, none of the parties here concerned has registered the trade-mark
Interesting and important questions are raised concerning the territorial extent of trade-mark rights. In behalf of the Hanover Company it is, in effect, insisted: (a) that the failure of the Allen & Wheeler Company and its predecessors to enter the south-eastern territory with their Tea Rose flour, and the fact that such flour has been and is wholly unknown there under that name, disentitle it to interfere with the Hanover Company‘s trade established in good faith in that territory under the same mark; (b) that the same considerations entitle Hanover to affirmative trade-mark rights of its own, enforceable against the Steeleville Company and everybody else over whom it has priority in that territory; and (c) that Hanover is entitled to relief against Steeleville and against Metcalf as its agent, upon the ground of unfair competition in trade regardless of the trade-mark right. An affirmative answer to the first proposition will decide the Allen & Wheeler case (No. 30) in favor of Hanover, and an affirmative answer to the third proposition will decide the Metcalf case (No. 23) in favor of Hanover, irrespective of the disposition that might be made of the second proposition. In view of possible consequences to the rights of parties not before the court, it is desirable to limit the range of our decision as much as practicable, especially as the proofs now before us are incomplete and in some respects unsatisfactory.
It will be convenient to dispose first of No. 30. Here the bill is rested upon alleged trade-mark infringement, pure and simple, and no question of unfair competition is involved. The decision of the Court of Appeals for the Seventh Circuit in favor of the Hanover Company and
The redress that is accorded in trade-mark cases is based upon the party‘s right to be protected in the good-will of a trade or business. The primary and proper function of a trade-mark is to identify the origin or ownership of the article to which it is affixed. Where a party has been in the habit of labeling his goods with a distinctive mark, so that purchasers recognize goods thus marked as being of his production, others are debarred from applying the same mark to goods of the same description, because to do so, would in effect represent their goods to be of his production and would tend to deprive him of the profit he might make through the sale of the goods which the purchaser intended to buy. Courts afford redress or relief upon the ground that a party has a valuable interest in the good-will of his trade or business, and in the trade-marks adopted to maintain and extend it. The essence of the
This essential element is the same in trade-mark cases as in cases of unfair competition unaccompanied with trade-mark infringement. In fact, the common law of trade-marks is but a part of the broader law of unfair competition. Elgin Watch Co. v. Illinois Watch Co., 179 U.S. 665, 674; G. & C. Merriam Co. v. Saalfield, 198 Fed. Rep. 369, 372; Cohen v. Nagle, 190 Massachusetts, 4, 8, 15.
Common-law trade-marks, and the right to their exclusive use, are of course to be classed among property rights, Trade-mark Cases, 100 U.S. 82, 92, 93; but only in the sense that a man‘s right to the continued enjoyment of his trade reputation and the good-will that flows from it, free from unwarranted interference by others, is a property right, for the protection of which a trade-mark is an instrumentality. As was said in the same case (p. 94), the right grows out of use, not mere adoption. In the English courts it often has been said that there is no property whatever in a trade-mark, as such. Per Ld. Langdale, M. R., in Perry v. Truefitt, 6 Beav. 73; per Vice Chancellor Sir Wm. Page Wood (afterwards Ld. Hatherley), in Collins Co. v. Brown, 3 Kay & J. 423, 426; per Ld. Herschell in Reddaway v. Banham, [1896] A. C. 199, 209. But since in the same cases the courts recognized the right of the party to the exclusive use of marks adopted to indicate goods of his manufacture, upon the ground that “A man is not to sell his own goods under the pretense that they are the goods of another man; he cannot be permitted to practise such a deception, nor to use the means which contribute to that end. He cannot therefore be
In short, the trade-mark is treated as merely a protection for the good-will, and not the subject of property except in connection with an existing business. The same rule prevails generally in this country, and is recognized in the decisions of this court already cited. See also Apollinaris Co. v. Scherer, 27 Fed. Rep. 18, 20; Levy v. Waitt, 61 Fed. Rep. 1008, 1011; Macmahan Co. v. Denver Mfg. Co., 113 Fed. Rep. 468, 471, 475; Congress Spring Co. v. High Rock Congress Spring Co., 57 Barb. 526, 551; Weston v. Ketcham, 51 How. Pr. 455, 456; Candee v. Deere, 54 Illinois, 439, 457; Avery & Sons v. Meikle, 81 Kentucky, 73, 86.
Expressions are found in many of the cases to the effect that the exclusive right to the use of a trade-mark is founded on priority of appropriation. Thus, in Canal Co. v. Clark, 13 Wall. 311, 323, reference is made to “the first appropriator“; in McLean v. Fleming, 96 U.S. 245, 251, to “the person who first adopted the stamp“; in Manufacturing Co. v. Trainer, 101 U.S. 51, 53, the expression is “any symbol or device, not previously appropriated, which will distinguish,” etc. But these expressions are to be understood in their application to the facts of the cases decided. In the ordinary case of parties competing under the same mark in the same market, it is correct to say that prior appropriation settles the question. But where two parties independently are employing the same mark upon goods of the same class, but in separate markets wholly remote the one from the other, the question of prior appropriation is legally insignificant, unless at least it appear that the second adopter has selected the mark with some design inimical to the interests of the first user, such as to take the benefit of the reputation of his goods, to forestall the extension of his trade, or the like.
Of course, if the symbol or device is already in general use, employed in such a manner that its adoption as an index of source or origin would only produce confusion and mislead the public, it is not susceptible of adoption as a trade-mark. Such a case was Columbia Mill Co. v. Alcorn, 150 U.S. 460, 464, affirming 40 Fed. Rep. 676, where it appeared that before complainant‘s adoption of the disputed word as a brand for its flour the same word was used for the like purpose by numerous mills in different parts of the country.
That property in a trade-mark is not limited in its enjoyment by territorial bounds, but may be asserted and protected wherever the law affords a remedy for wrongs, is true in a limited sense. Into whatever markets the use of a trade-mark has extended, or its meaning has become
To say that a trade-mark right is not limited in its enjoyment by territorial bounds, is inconsistent with saying that it extends as far as the sovereignty in which it has been enjoyed. If the territorial bounds of sovereignty do not limit, how can they enlarge such a right? And if the mere adoption and use of a trade-mark in a limited market shall (without statute) create an exclusive ownership of the mark throughout the bounds of the sovereignty, the question at once arises, “What sovereignty?” So far as the proofs disclose, the Allen & Wheeler mark has not been used at all, is not known at all in a market sense, within the sovereignty of Alabama, or the adjacent States, where the controversy with the Hanover Star Milling Company arose. And so far as the controversy concerns intrastate distribution as distinguished from interstate trade, the subject is not within the sovereign powers of the United States. Trade-Mark Cases, 100 U.S. 82, 93.
We are referred to an expression contained in the opinion of this court in Kidd v. Johnson, 100 U.S. 617, 619: “The right to use the trade-mark is not limited to any place, city, or State, and, therefore, must be deemed
We are also referred to Derringer v. Plate, 29 California, 292, 295, in which it was said by the court: “The manufacturer at Philadelphia who has adopted and uses a trade-mark, has the same right of property in it at New York or San Francisco that he has at his place of manufacture.” In that case plaintiff averred that he was a resident of Philadelphia, and upwards of thirty years before the action invented a pistol and adopted as a trade-mark for it the words “Derringer, Philadel.,” which was and ever since had been his trade-mark, and which he had caused to be stamped on the breech of all pistols manufactured and sold by him; and that the defendant since 1858 had been engaged in the manufacture of pistols at San Francisco similar to plaintiff‘s, on the breech of which he had stamped plaintiff‘s trade-mark, etc. The report of the case shows (p. 294) that the only question presented was whether the California statute of 1863 concerning trade-marks had repealed or abrogated the remedies afforded by the common law in trade-mark cases. This was answered in the negative, and in the course of the reasoning the court said, p. 295: “The right is not limited in its enjoyment by territorial bounds, but, subject only to such statutory regulations as may be properly made concerning the use and enjoyment of other property, or the evidences of title to the same, the proprietor may assert and maintain his property right wherever the common law affords remedies for wrongs;” continuing with what we have first quoted. Although not expressly stated, it is implicit in the report that plaintiff‘s pistols were on the market in San Francisco, and his trade-mark known there and imitated by defendant for that very reason. It was such a mark as could not be accidentally hit upon.
It results from the general principles thus far discussed that trade-mark rights, like others that rest in user, may
The case is peculiar in its facts; and we have found none precisely like it. The recent case of Rectanus Co. v. United Drug Co., 227 Fed. Rep. 545, 549, 553, is closely analogous.
We come now to No. 23. The Court of Appeals (204 Fed. Rep. 211) denied relief to the Hanover Company against Metcalf under the head of trade-mark infringement partly upon the ground that Allen & Wheeler were the first appropriators of the mark, and that it had been continuously used by that firm and its successor down to the time of the suit, but principally upon the ground that, irrespective of whether this use was so general or continuous as to exclude other appropriation, the evidence
Upon the question of trade-mark rights as between the Hanover and the Steeleville companies (leaving Allen & Wheeler out of the question), the proofs are somewhat conflicting. There is evidence that Hanover‘s use of the Tea Rose brand antedated the year 1893, and probably began as early as 1886. The extent and particulars of such use, prior to the year 1903, are not made to appear. On the other hand, Steeleville appears to have adopted the brand in the year 1895, and used it in trade in Illinois, Tennessee, Mississippi, Louisiana, and Arkansas; the extent and particulars of the use not being shown. Sharp competition appears to have been carried on between the two companies in selling flour under the Tea Rose brand at Meridian, Mississippi, in the years 1903 to 1905, with the result that the Hanover Company, claiming that its use of the mark for flour had antedated that of the Steeleville Company, succeeded in obtaining a favorable decision in an informal arbitration by officials of the Millers
As we regard the proofs, they do not sustain the view of the Circuit Court of Appeals for the Fifth Circuit either as to first use or as to extensive, continuous, or exclusive use of the Tea Rose brand by the Steeleville Company, and there is nothing in the history of the use of the brand in the disputed territory to deprive the Hanover Company of its right to be protected at least against unfair competition at the hands of the Steeleville Company or of Metcalf as its representative.
That there was such unfair competition, commenced by Metcalf shortly before the bringing of the suit, the proofs clearly show. Repeating that since the year 1904 the Hanover Company had extensively advertised its Tea Rose flour throughout the State of Alabama and parts of Mississippi, Georgia, and Florida, with the result that its sales of that flour in those markets amounted to more than $150,000 a year, while the Hanover Star Milling Company had come to be known as the Tea Rose mill, and the words “Tea Rose” in the flour trade in that territory meant flour of the Hanover Company‘s manufacture and nothing else, and that, except for isolated sales in Mississippi in 1910 and 1912, already mentioned, no Tea Rose flour other than that of the Hanover Company had been sold in that territory for a number of
It results that the decree under review in No. 23 should be reversed, and the cause remanded for further proceedings in accordance with this opinion, and that the decree in No. 30 should be affirmed.
Decree in No. 23 reversed.
Appeal in No. 30 dismissed.
Decree in No. 30 affirmed.
MR. JUSTICE HOLMES concurring.
I am disposed to agree that the decree dismissing the bill of the Hanover Star Milling Company should be reversed and that the decree denying a preliminary injunction to the Allen and Wheeler Company should be affirmed, and I agree in the main with the reasoning of the court, so far as it goes. But I think it necessary to go farther even on the assumption that we are dealing with
As the common law of the several States has the same origin for the most part and as their law concerning trade-marks and unfair competition is the same in its general features, it is natural and very generally correct to say that trade-marks acknowledge no territorial limits. But it never should be forgotten, and in this case it is important to remember, that when a trade-mark started in one State is recognized in another it is by the authority of a new sovereignty that gives its sanction to the right. The new sovereignty is not a passive figurehead. It creates the right within its jurisdiction, and what it creates it may condition, as by requiring the mark to be recorded, or it may deny. The question then is what is the common law of Alabama in cases like these. It appears to me that if a mark previously unknown in that State has been used and given a reputation there, the State well may say that those who have spent their money innocently in giving it its local value are not to be defeated by proof that others have used the mark earlier in another jurisdiction more or less remote. Until I am compelled to adopt a different view I shall assume that that is the common law of the State. It appears to me that the foundation of the right as stated by the court requires that conclusion. See
I think state lines, speaking always of matters outside the authority of Congress, are important in another way. I do not believe that a trade-mark established in Chicago could be used by a competitor in some other part of Illinois on the ground that it was not known there. I think that if it is good in one part of the State it is good in all. But when it seeks to pass state lines it may find itself limited by what has been done under the sanction of a power coördinate with that of Illinois and paramount over the territory concerned. If this view be adopted we get rid of all questions of penumbra, of shadowy marches where it is difficult to decide whether the business extends to them. We have sharp lines drawn upon the fundamental consideration of the jurisdiction originating the right. In most cases the change of jurisdiction will not be important because the new law will take up and apply the same principles as the old, but when, as here, justice to its own people requires a State to set a limit, it may do so, and this court cannot pronounce its action wrong.