115 Me. 472 | Me. | 1916
This bill in equity is brought by the Lapointe Machine Tool Company of Hudson, Massachusetts, against the J. N. Lapointe Company of New London, Connecticut, both corporations having been organized under the laws of this State, to enjoin
Both the plaintiff and defendant companies are manufacturers of what is known in the mechanic arts as broaching tools and broaching machines. A broaching tool, or a broach, as it is sometimes called, is made from a solid bar of steel in which teeth are cut, each succeeding tooth being a little longer than the preceding. A broaching machine is operated by either pushing or pulling a broach through an internal section of metal changing its contour or outline. The cutting of a key way is a simple illustration. Broaching tools and machines of various designs have been known to the trade for many years.
In 1896 Joseph N. Lapointe, then an employe of the Pratt and Whitney Company of Hartford, Connecticut, after many experiments originated a system of broaching which was a marked improvement on the methods then in use. This improvement in the broaching tool consisted in making the cutter teeth an integral part of the bar instead of having separate teeth attached to the bar. He also designed and built a broaching machine of a new model adapted to do the work by this new system. Some of the older machines then in use were upright. The Crompton and Knowles type which he had been using in the Pratt and Whitney shop was of the horizontal type but with a rack and pinion drive. The machine originated by Lapointe was also of the horizontal type but with a nut and screw drive. This increased the power, and the new system combining both the machine and the improved tools enhanced the production and enlarged the scope of the work.
On March 3, 1902, J. N. Lapointe caused the plaintiff company to be incorporated for the purpose of manufacturing among other products these new broaching machines and broaches. He gave to it the name of the Lapointe Machine Tool Company. On March 15, 1902, he conveyed to the corporation all his patent rights, whether issued or pending, and all his right, title and interest in his patterns, drawings and designs in return for stock in the company. He himself became a director and the president and general
This corporation began business in a small way on Heretord street, Boston, Mass., with only three or four employes. As it had meagre capital, it, at first, did a general jobbing business and, later, manufactured portable reamers and taps. At the end of eighteen months larger quarters were secured on Atlantic avenue. In 1903 it manufactured and sold its first broaching machine. In 1906- the company moved to Hudson, Mass., where it erected a plant and has ever since remained. Its trade increased after the removal to Hudson and with the advent and development of the automobile business, beginning about 1900, the use of these machines was multiplied. Frank J. Lapointe, the plaintiff’s son, early entered into the service of the company. He was made a foreman and later had practically one-half of the manufacturing at the Hudson plant under his charge. He was a skilled machinist.
In the summer of 1911, one Hall, who had been a stockholder and the treasurer for several years, but who was himself actively engaged in the insurance business in Boston, acquired the stock control of the corporation. Friction ensued and both J. N. and Frank J. Lapointe were, as they claimed, practically forced out of the company.
On July 17, 1911, immediately after severing his connection, J. N. Lapointe organized the defendant corporation, gave it his full name and began the manufacture of broaching machines and tools at Marlboro, Mass. The company remained there about eighteen months and in the early part of 1913 moved to New London, Connecticut, where a new plant had been constructed and where it has ever since been carrying on a growing business. Frank J. Lapointe entered the new concern with his father. Another son, Ralph R. Lapointe, was engaged by the plaintiff as a mechanical engineer after the withdrawal of his father and brother and is still in its employ.
This brief statement of facts makes an adequate outline for the discussion of the issues in this case. The plaintiff and defendant have been engaged in lively competition since 1912 when the new company started in active business. The plaintiff contends that this competition has been unfair on the part of the defendant, and
It should be stated at the outset that the nature of this form of action is such that the courts require clear and convincing proof of the plaintiff’s claim. In a sense the remedy that is sought invades the realm of private enterprise and private rights, and it is only when the necessity and the justice of such invasion are made clear that the court in equity will interfere. As was said by the Federal Court, in denying an injunction in a very recent case:
“When a plaintiff provisionally stands upon grounds independent of the scope of his patent and goes to the proposition of unfair competition in trade, he prevails, if he prevails at all, under the general doctrines of equity; and when an injunction is sought, which operates as restraint in the mercantile field, it is a principle of equity based upon considerations of caution, that to justify an injunction the case must be unmistakably clear and beyond question.” Marshall Field & Co. v. Kelley Co., 233 Fed., 265 (1916).
Stated broadly, monopoly in trade is frowned upon, while free competition is. favored by the law. There is, of course, one exception to this rule, namely patent and copyright legislation which is designed to promote invention and literary achievement. But unless a commodity is governed by these exceptional rights competition is to be desired and encouraged.
Competition, however, is of two kinds, fair and unfair, and unfair competition may be subdivided into the ethically unfair and the legally unfair. Courts have to do only with the last named. Many acts among keen business rivals which might offend the golden rule do not violate the legal rule.
Hence it is that unfair competition, as a legal term, has acquired a well defined meaning. Its definition is found in varied forms
The methods adopted to practice this deception are as varied as human ingenuity can devise. It may be by closely simulating a particular device, mark or symbol, by assuming the same or practically the same name, by the use of crafty and misleading advertisements or by false oral representations. Such conduct, calculated to steal away the custom, good will and business established and maintained by another, works both a fraud upon the purchasing public and actionable injury upon the defenceless rival. The rights of both are to be protected. Nims, sec. 16-20; C. A. Briggs Co. V. National Wafer Co., 215 Mass., 100; W. R. Lynn Shoe Co. v. The Auburn-Lynn Shoe Co., supra.
The converse is also true. If the defendant, although a sharp and vigorous competitor, so conducts his business as not to palm off his products as those of the plaintiff, the action fails. He has kept within his legal rights. Howe Scale Co. v. Wyckoff, Seamans & Benedict, 198 U. S., 118; Motor Mfg. Co. v. Marshalltown Mfg. Co., 167 Iowa, 202, 149 N. W., 184; Kaufman v. Kaufman, 223 Mass., 104.
On which side of the line stands the defendant here? Is it a fair or an unfair competitor? This is a question of fact, and the answer must be found in the record. Its determination brings us to a consideration of the evidence and to the facts and circumstances relied upon by the plaintiff as proving unfair competition.
The plaintiff in the first place contends that J. N. Lapointe and his son Frank were not forced from the old company, but voluntarily withdrew because they were incited by its large and growing business to establish a rival concern of their own. The facts do not bear out this contention. It is proven to the satisfaction of the court, that after Hall had acquired the stock control and friction had developed, in an interview between J. N. Lapointe and Hall, the former offered to purchase Hall’s stock at par, amounting to $11,000, although its cost was much less, and continue the business, or to sell his own stock at seventy-five cents on the dollar and agree not to engage in the same kind of business again. Hall declined both offers. He would neither sell nor buy, and Lapointe then added: “Well, then it is a question of competition.” We can see in this situation neither ground of complaint on Hall’s part nor evidence of bad faith on the part of Lapointe. Whether the ill feeling that had been engendered between the business head and the controlling owner was adequate cause for Lapointe’s withdrawal is immaterial. It seemed adequate to Lapointe, and his statement as to competition was frank and plain. Deception does not show its hand so openly.
The plaintiff further claims that in order to injure the plaintiff’s business by causing it to make errors in filling duplicate orders, Frank J. Lapointe, just before leaving the employ of the old company, fraudulently altered the company’s shop sketches. This is a serious charge. It involves rank turpitude on the part of the offender and needs convincing proof. Frank J. Lapointe indignantly refutes the charge. Without discussing the evidence on this point in detail it is sufficient to say that the imputation is without substantial basis. The claim outstrips the facts.
Another complaint made by the plaintiff is that the defendant took away many of its skilled workmen in order to handicap the plaintiff’s business and enable the defendant by plausible adver
The fourth minor complaint is that Lapointe after conferences with the representatives of the telegraph company took for the new company the cable address “Lapointe-Marlboro,” leaving for the old company, “Lapointe-Hudson.” This does not smack of fraud. Lapointe naturally wished to incorporate his own name in the new cable address. The difference in the residence obviated any confusion, especially as the foreign business was done through sales agents who were not likely to be misled.
It is unnecessary to devote more space to minor and rather insignificant contentions. We come now to the more serious elements of the plaintiff’s cause, those growing out of the name taken by the new company and the alleged fraudulent methods adopted by it, by way of advertisements and otherwise, to deceive the public and injure the plaintiff.
The name of the original corporation is the “Lapointe Machine Tool Co.,” the name of the new is the “J. N. Lapointe Co.” Has the adoption of that name by the defendant subjected it to the charge of unfair competition? The decisive test is whether by the use of the word “Lapointe” in its corporate name the defendant is sailing under false colors and is succeeding in palming off its machines as the machines of the plaintiff. The use of the name itself is not controlling. The manner in which it is used and the actual or probable effect are the vital questions. The gist of the action is not the employment of similar words, but the appropriation of the plaintiff’s business. Thus it has been very recently decided by the Massachusetts court that the mere use of a trade name which one person has found effective in bringing his
A distinction should here be noted between the use of a family name as a trade name and certain trade marks, designs or devices. The latter are arbitrary symbols adopted to designate particular goods. They are associated with those goods and no others, and rivals are not permitted to imitate them. The device in W. R. Lynn Shoe Co. v. Auburn-Lynn Shoe Co., 100 Maine, 461, is a fair illustration. But the use of a family name is quite different, and to prohibit its use throws upon the complaining party the burden of showing the deceitful practices which are the gist ol unfair competition. Nims, sec. 81.
Moreover a trade name, if it be not fanciful, gives more information than a trade device. It often gives not merely the name, individual or corporate, of the manufacturer, but the place of manufacture as well; while a trade device or a fanciful name is silent on these points and can give this information only by association.
These observations are pertinent here. It is conceded that J. N. Lapointe was the originator of this particular process and was a widely known and acknowledged expert in the art of broaching. Hence he naturally wished to avail himself of the general reputation in the trade which attached to that business, and he had a perfect right to do this provided he exercised care to prevent the public from believing that his product, or the product of the new company employing his name, was that of the old company, or that the second company was the successor of the first. Int. Silver Co. v. Rogers, 66 N. J. Eq., 119; Stix Baer & Fuller Co. v. American Piano Co., 211 Fed., 274; Knabe Bros. v. American Piano Co., 229 Fed., 23; Hotel Claredge Co. v. Rector, 169 App. Div., 185, 149 N. Y. Supp., 748; Wm. Rogers Mfg. Co. v. Simpson, et als., 54 Conn., 527.
“Every person has a right to the honest use of his own name in his own business, but he will not be permitted by imitation and unfair devices to mislead the public in regard to the identity of the firm or corporation or the goods manufactured by it.” W. R. Lynn Shoe Co. v. Auburn-Lynn Shoe Co., 100 Maine, 461-473.
Nor is there proof of conduct on the part of Lapointe such as to create an equitable estoppel. This claim is urged by the learned counsel for the plaintiff, but the record fails to disclose acts which will warrant the application of that doctrine. The cases cited to support the contention are based upon facts vitally dissimilar from those that confront us here. They are readily to be distinguished.
This eliminates all but the third restriction upon the use of one’s name as held in Howe Scale Co. v. Wyckoff etc., supra, and that
What then is the character of the use which the defendant has made of the word “Lapointe” ? Was it chosen as a cover for unfair competition? Has it been used craftily, with the purpose of misleading the purchasing public, and has the wrongful design been accomplished? In the judgment of the court these questions must all be answered in the negative and for the following reasons:
In the first place the name selected, while it contained the surname of the originator of the process, did not copy it closely. There is a marked difference between the “Lapointe Machine Tool Co.” and the “J. N. Lapointe Co.” The new name did not so much imitate the old as it emphasized the personal association of its owner with the new.
In the second place the broaching machines themselves are marked with no special device, simply the maker’s name and the residence. On the machines of the plaintiff are the words “The Lapointe Machine Tool Co., Hudson, Mass., U. S. A.,” on the machines of the defendant, “The J. N. Lapointe Co., Marlboro, Mass., U. S. A.,” and after the removal “The J. N. Lapointe Co., New London, Conn., U. S. A.” The partial dissimilarity in name and the entire dissimilarity in residence should tend to prevent confusion in the minds of the trade. The place of business of rival concerns, whether in the same or different towns, is always a point to be considered. Holmes, Booth & Hayden v. Holmes, Booth & Atwood, 37 Conn., 278; Viano v. Baccigalupo, 183 Mass., 160; W. R. Lynn Shoe Co. v. Auburn-Lynn Shoe Co., 100 Maine, 461.
Moreover the machines themselves though somewhat similar in outlines and appearance, especially to the ordinary and inexperienced layman, possess points of marked difference to the expert mechanic, and these differences became more conspicuous as the defendant added one improvement after another. It must not be overlooked that in the manufacture of a machine the maker is limited as to general form and design by the very nature of the article itself. It must be adapted to a particular kind of work,
The plaintiff urges however that “Lapointe,” although primarily a family name, has acquired a secondary meaning and has become identified with the products of the plaintiff company. That it denotes not merely origin but quality, and it cannot be used by the defendant as a corporate or trade name since that would necessarily create the impression that the defendant’s products are those of the plaintiff. It is true that family names do sometimes acquire such a secondary meaning, as “Rogers Silver,” International Silver Co. v. Rogers Co., 110 Fed., 955, or “Baker’s Chocolate,” Walter Baker & Co. v. Slack, 130 Fed., 514. But the acquisition of such a secondary meaning is in every case a matter of proof, and the evidence here does not sustain the claim. There is no evidence that the broaches were marked at all, and the machines were not marked as “Lapointe” products, but like all heavy machines of like character with simply the name and business location of the maker. The plaintiff’s advertising by catalogue or through the trade journals followed for the most part the same course. The machines came to be known in the trade simply as the type of broaches, propelled by nut and screw in a horizontal plane, made by the Lapointe Machine Tool Co., of Hudson, Mass. As one of the plaintiff’s witnesses put it, the machine was known as a Lapointe broaching machine and “Lapointe” was used, not as a descriptive trade name like “Perfection Cigarettes,” because, to quote his own language: “I take it that ‘Perfection’ is a brand or trade name, while ‘Lapointe’ is descriptive of a type,, as between a hoist bridge arid a swing bridge.”
We come now to the circulars and advertisements issued by the defendant. They are of great value in ascertaining the good or bad faith and the honest or fraudulent- purpose of the new com
In addition to these precautions the defendant advertised in the trade paper, “American Machinist,” for six months, emphasizing in different forms the fact that J. N. and Frank J. Lapointe had left the old company and formed the new, and after the removal to New London, Conn., the trade was informed of that removal. We can hardly conceive what additional steps could have been taken by the defendant to explain to the purchasing public the
In this connection another important fact should be kept in mind. We are not dealing here with merchandise or articles in common use, which are advertised and sold to the general and indiscriminating public, like shoes, breakfast food, chocolate, soap, candy, &c., &c., articles which may easily be the subject of mistake, but we are ■dealing with a valuable machine, involving a Substantial expenditure of money, designed for a particular work and purchased only by men who are mechanical experts and know precisely what they want and what they are buying. It is a limited and specialized trade. The customers are men with trained mechanical eye and brain who .do not purchase a machine of this character and value without careful examination and consideration. These machines are not sold to middlemen, like ordinary articles of trade, but by the manufacturer to the user, either directly by the company or indirectly by its sales agents. The likelihood of palming off the defendant’s machines for the plaintiff’s, even if the defendant desired to do so, is very remote.
The test applied by the courts on the question of similarity is the likelihood of deceiving an ordinary purchaser who Is using ordinary care, and in applying that test regard must be had to the nature
Perhaps the best test of whether certain acts are likely to deceive is whether after being continued for a series of years they have in fact deceived. The evidence here is lacking to prove that the public have been misled or that substantial confusion has been created. Through carelessness or mistake a few letters or orders or telegrams are shown to have been sent to the one concern when they were intended for the other, but the witnesses themselves admitted the error and that very fact admits also their knowledge of the existence of the two concerns. Motor Mfg. Co. v. Marshalltown Mfg. Co., 167 Iowa, 102. Considering the volume of business transacted the confusion would seem to be negligible. One of the leading sales agents for the plaintiff, and its own witness, intelligently sums up the situation on the question of confusion. He states that competition began early in 1912, and this competition increased the difficulty of selling his own make. Customers then wished to know which was the original Lapointe broaching machine, and he explained that his was the original. But he says that “today the purchaser of this type of machine is familiar with both companies and in conversation a customer merely asks which Lapointe broaching machine I am handling.”
This is undoubtedly a correct statement of the present situation. Any slight misapprehension that may have at first existed on the part of the public has ceased. It is five years since the competition started. It has been persistent and vigorous. But its very intensity on both sides has served to dispel all possible misunderstanding. The defendant apparently is proud of its product and has endeavored to impress upon the trade its superiority over the product of the rival plaintiff. It wishes to be known and is known not as the old company, nor as its successor, but as a distinct and pushing competitor.
With equal truth it can be said in the case now before us that the entire history of the conduct of the machine business by the defendant corporation after the retirement of the Lapointes from the plaintiff company discloses no such fraudulent intention and no such inequitable effort as was there discovered and decried. We find in the appallingly voluminous record an entire lack of proof that the trade has been imposed upon and beguiled, or that the conduct of the defendant has been calculated to produce that result. Legitimate competition relies on the intrinsic merits of its own goods and offers to purchasers a choice of selection between the articles exposed for sale. Unfair competition seeks to appropriate the reputation of another and to dispose of its product as the product of that other. The former acts openly, though it may be with energy. The latter acts cunningly and ifi disguise.
It is the opinion of the court that the defendant belongs in the class of the legitimate and not the unfair competitors. The temporary injunction is therefore to be dissolved, and the bill dismissed with costs.
Decree in accordance with the opinion.