Pepsico, Inc. v. The Grapette Company, Inc., and Grapette-Aristocrat, Inc.
416 F.2d 285
8th Cir.
1969
Check Treatment

*1 INC., Appellant, PEPSICO, COMPANY,

The GRAPETTE Inc., Appellees. Grapette-Aristocrat,

No. Appeals Court States

United Eighth Circuit.

Sept. Handler, Kaye, Scholer, Milton Fier-

man, Hays Handler, City, & New York appellant; Freund, Sidney Fred A. Head, A. Diamond and Elizabeth New City Mahony, York and Emon of Ma- A. hony Yocum, Dorado, Ark., & El on the briefs. Stevens, Davis, Gipple,

J. W. Miller Mosher, C., Washington, ap- & D. pellees; Washington, Klages, Robert D. C., Camden, Laney, Jr., D. and Walter H. Ark., on the brief. *2 Jersey York, New and Connecticut.2 LAY and BLACKMUN, Before exclusively as was sold Judges. cola distribution syrup.

HEANEY, Circuit syrup been Fox’s has Since jobbers in ounce consumer to sold Judge. LAY, Circuit years ten size to twelve bottles. Some holding company of Inc., PepsiCo, a prior to this time it was sold also to including Pepsi Cola subsidiaries several gallon syrup a in the fountain trade as sought bottler, soft drink national containers. against Grapette-Aristo- injunction 1965, Grapette into an In entered Co. Grap- holding company crat, its Inc. and agreement Corp. in which with Fox collective- (hereinafter referred ette Co. assigned “Peppy” to de- trademark was infringe- alleged ly Grapette) on $7,500. fendant for consideration “Pepsi.” In 1965 trademark ment of its Chapter Corp. At time was in a this Fox “Peppy” Grapette purchased the mark Although proceeding.3 bankruptcy “pepper” a soft to bottle intended assignment Corp. made a formal Fox district name. The drink that “good-will”, by it is conceded defendant “Peppy” con- was found that the fusingly Corp.’s physical assets that none of Fox “Pepsi” and such to similar plant the trade- or mark; transferred with infringement under 15 constitute would lists, inventory, for- no customer However, not- U.S.C. § mulas, acquisition Upon etc. infringe- finding withstanding this arrange- began “Peppy” mark, Grapette plaintiff in- ment, denied the court upon placed its this mark ments have ground it was junctive on the that relief Fox pepper soft drink. new flavored F.Supp. guilty at of laches. 288 syrup Corp. un- cola continued to sell its PepsiCo, appeals. Inc. We reverse. “Fox Brand” as well der the mark agreeing Pepsi Cola The evidence shows of de- to act distributor beverages duly registered bottled Co. has 1965, plaintiff “Peppy.” fendant’s In Cola,” “Pepsi” “Pepsi trademarks under litiga- possible warned the defendant of many years. “Pep-Kola” See stop the of its tion if it Grapette is national U.S.C. § April 21, mark. begun. this action was On drinks, distributor of soft bottler and syrups. In it de- concentrates (1) Plaintiff contends that the trans- syrup veloped a formula for a new by “Peppy” fer the trade-mark Fox pepper type in a bottled used Corp. it was an as- was invalid because beverage. opposed to a cola In search- as ing “gross” therefore, signment in and that prod- for a name to market new Grapette cannot the shoes stand reg- uct, defendant the 1926 discovered predecessor in order to assert the de- “Peppy” FoxH. istration of the mark laches; (2) defense fense that the Co., partnership. The mark had supported of laches is not sufficient 1966.1 been Fox in 1946 and renewed evidence. Fox 1932 and Sometime between began “Peppy” disputed Grapette to use the mark con- It is not must junction syrup place Corp. which stand in the Fox with a cola flavored With- rights basis, assignment, Grapette’s confined out a on a local valid was distributed mostly of New the use of as of to the Eastern accrue states validity partnership the mark to 3. Plaintiff also attacks 1. The transferred Grapette corporation, Corp. Co., Inc., Fox from Fox Corp.). (hereinafter the transfer done called Fox on the was bankruptcy approval validity attacked this transfer is also without holding by plaintiff in- in view of our we find the court. Since any event, necessary pass valid in it is this contention. we do pass upon this contention. originally name on a used the 2. Fox syrup “ginger-bitter” later and then grape punch. recently not assert 25 L.Ed. 769. This court could November Sunline, PepsiCo, Inc. as- observed in Sweetarts v. of laches. defense 1967): “A the 1965 serts generally any name, sign, Corp. Fox adopts nullity trade-mark mark which one to denominate in that goods originating totally from commercial from him.” disconnected was transferred assignor. goodwill *3 any the or business pointed As out in the Restatement agree. must We (Second) Torts, 756, comment a at § (Tent. 1963): 136 pro- Draft No. Act 1060 of the Lanham Section vides : “A trademark or tradename is independent object prop- itself registered “A mark or a mark erty, right nor register is the application use such mark

which has been designation or name. The assignable good is filed the shall be with identifying particular goods, means of in mark will of the business which the services, used, or a business good associated part with is or with of the particular source, commercial wheth- will of the business connected with the * * * anonymous. er or mark, known symbolized by use of and the property, Goodwill is assignment it since is in such it shall symbol prop- transferable the necessary good the not be the include erty along is transferable with it.” will of the business connected with the symbolized by any use of and Strict adherence to this rule has been in the mark used the business or vigorously impractical criticized as style legalistic. or under which the busi Schecter, The Rational Bases ” * * * ness is conducted. 15 U. Protection, of Trademark 40 Harv.L.Rev. S.C. (1926); Grismore, Assignment § The Tradenames, Trademarks and 30 Mich. early rule common law The (1932); Callman, L.Rev. 489 Unfair assigned “in could not be trademark Competition, Monopo- Trademarks recognized circuit gross” in this was lies, (3d 1969); Note, ed. § Trade- Denver Co. v. Pharmacal Macmahan mark Following Protection Ineffective 1901) (8 Co., Mfg. F. 468 Cir. Chem. Assignment, (1940). 88 Pa.L.Rev. 863 Milling Superior Duluth Carroll v. According commentators, to these the 1916). Co., This F. 675 Cir. continuum of the compre- rule fails observed in Carroll image hend the modern of the trade- “in connection transferred could be consuming mark to the Strict particular of the with the application undoubtedly of the rule fails used, in which has been business recognize the function of the trade- good will, and for continued use its representing mark as (1) guar- as well articles.” or class of the same articles anty (2) of the the inher- explained “that later Id. at We advertising ent value of the mark itself. property ex- there is no a trade-mark Id. cept appurtenant estab- to an given Some recent recogni- cases have trade, it becomes lished or when business tion that in certain good situations a naked Atlas Bever- an element of will.” assignment might approved. age Minneapolis Brewing emphasizes Hy-Cross 1940). The Hatch- F.2d 674-675 ery, Osborne, John- rule found derivation in Kidd v. (1962), CCPA being controlling. son, 25 L.Ed. 769 U.S. necessity assign more than plaintiff sought There cancellation premised upon pri- mark naked “Hy-Cross” the trademark solely on mary object of the trademark “to indi- assignee the basis that orig- of the meaning registrant cate its or association the inal nothing took origin of the to which it af- article naked mark. The evidence showed that (Emphasis ours.) fixed.” at assignee U.S. all the received was apply approach, assignor, or rule must Osborne, whether itself. pre suggested Hy-Cross, rais- should same business in the continue discussing involving Inherent in the rules vail. court in ing chickens. recog assignment stated of a trademark is naked the issue against protection consumer nition of de following: ception. concept is the Basic to this on, cases relied “Unlike proposition using shows, was record so far (with goodwill he executed the time mark at tangibles intangibles as without reg- He had valid assignment of it. signed) requires the mark itself be used assigned. also he which istration assignee product having on a sub he also properties these two With stantially characteristics. See the same very assigned, words in the g., Independent Baking e. Powder Co. v. goodwill of part statute, ‘that Boorman, (C.C.D.N.J.1910) 175 F. 448 *4 use connected with business (alum baking powder is distinctive from by the mark symbolized of * * baking phosphate powder); Atlas Bev selling chicks which He was erage Minneapolis Brewing Co., advertising shows of record his designated (whiskey 1940) is a HY-CROSS Ill as ‘No. product beer); different H. than Mark) (Trade WHITES.’ AMERICAN Scott, Annapolis Electroacoustic assign- assignment, part his As ing Corp., (D.Md.1961) F.Supp. right gave up goodwill, he (audio reproduction equipment is distinc had This chicks. to sell ‘HY-CROSS’ hi-fidelity consoles). from tive Cf. W. By the part of ‘business.’ his been Wagner’s Orange Snap Co., T. Sons Co.v. assignee, ac- Welp, (No infringe 1927) 18 F.2d 554 Cir. right. shows The record quired that gingerale ment: inis a different class selling began ‘HY-CROSS that he drinks). than fruit flavored soft designated Hatching Eggs’ and chicks 610,’ 501,’ ‘HY-CROSS ‘HY-CROSS as Historically, requirement this Thus, what ‘HY-CROSS 656.’ early founded in the of Filkins business once been Osborne’s had Blackman, (No. 4786) 9 Fed.Cas. 50 Welp’s became chicks ‘HY-CROSS’ (C.C.D.Conn.1876), wherein the ob- see what We do not business. : served if have made it would difference assignee “If the should make a dif- eggs in the included had been crate of assignment, article, derive, by ferent he would chickens flock of purchase Blackman, from Jonas to be eaten. destined right equity which court of would argument trans- that the for the “As enforce, to use which the illegal be- held fer should have been given inventor had article, to his own kind of chick Osborne sold cause one because such a use of the name would Welp [sic] another sold another right deceive the to the The whereby public mark, under the use of a trade-mark cannot so be en- record think deceived, we joyed by would be assignee that he shall type support this. does not have the to affix the mark to appears otherwise to have been goods chick differing species in character or trademark, than indicated from the orig- article which it was quoted as well numbers above inally attached.” Id. at 52. moreover, name. philosophy the rule is sound any obligation public to the under though utility pragmatic of it even change he of chicks not to the breed confusing. is sometimes difficult and time to from under the mark sold urges it intends to use time.” general Fox, need In the instant case we same assignor. “classification” product may law “Class” common mean the strict decide whether registration purposes, purposes thing have included within Class 45 one registration, connotation court observed: completely different yet infringement cases, and ap- “The evidence did not show meaning when consid- have a distinctive beverages pellee’s above-mentioned assignments. ering upon The mean- use possessed substantially the same de- infringement ing cases of “class” scriptive qualities possessed by as are There tends to be inclusive. more appellant’s ginger ale, may broadly defined as: “class” ginger beverage ale or of the same general Orange Appellee’s Snap class. * * * means word class ‘“[T]he beverages. Snap and Lemon are fruit including genus species broadly a Ginger beverage, ale is not fruit goods which the substantially is not a mark, goods ex are same when descriptive properties same as those by side, posed mis tend to side would beverages. of fruit ” For bever- two purchasing public.’ E-Z lead ages general class, to be of the same Mfg. App. Waist Co. v. Reliance enough it is not that each of them is D.C. 286 F. principal nonalcoholic and contains a ingredient plant, contention, derived from a how- Contrary appellee’s plants may ever different the be.” Id. up set stat- the classes under the federal at 555. registration, simplify not con- utes to trolling. are *5 Distilling Spring v. Rock Co. Spring See Distilling also Rock Co., W. A. & 246 Gaines U.S. Co., supra; W. Independent A. Gaines & See S.Ct. L.Ed. Baking Boorman, Powder v.Co. 175 F. Nims, Competition & also Unfair (C.C.D.N.J. 1910). (4 1947). Trademarks, 694-695 ed. Where a transferred trademark Thus, “Peppy,” the fact that defendant’s is to prod be used on a new and different “Peppy” registered and Fox’s are any goodwill uct, which the mark itself (soft wa- Class drinks and carbonated might represent legally cannot be as beverage ters, and nonalcoholic maltless signed. “The trademark owner not does syrup respectively) that and cannot mean particular have the to a word products these are the same within to symbol the use of the word as the determining validity “class” in the the particular goods.” Callman, 78.1(a) at § Grapette. to defendant 426. To hold otherwise would be to con public might concern in done ultimate all cases deceit. The consumer by buy product thinking the welfare of is the A case it to be of one problem quality specific having case treatment of or the as certain characteristics present facts and themselves is desirable. could find it too late to be an Although dealing broad, general say other. To with the that this would be rem public edied infringement, losing soon “class” to test faith in product give fails Wagner’s consumer Orange Snap W. T. v. Sons Co. protection initially it deserves. 1927), 18 F.2d 554 Cir. serves analogue presented a useful to the facts It Grapette’s is that here use of There, plaintiff here. de both the “Peppy” the mark meets terminal diffi “Snap” on used the fendant culty. Grapette’s intended use ginger their ale and fruit flavored bev simply mark is one to describe its new erages respectively. Although pepper beverage.4 both were The evidence is clear Fooks, 4. Mr. Chairman of the thought Board of the market with no name and I Grapette, very testified: name, his was a suitable “We went into [Mr. Fox’s] his just office if it wasn’t too valuable I would like to frankly my purchase I told him situa- it.” Record at 176a-177a. tion, product ready I had this Hy-Cross transfer absence adopt to the or not intend Grapette did tangible assets. the name “goodwill” from any exploit long Hy- association urges, Grapette if, Fox’s But syrup. one When greater import holding cola than it with has use Cross acquire not suggest me, did then peculiar facts considers acquire Fox, did not regard to set- assets it aberrational I would Fox stay process which authority. prefer I formula tled Kropff, thought, made, Mulhens & rule, long cf. I syrup established usual Muelhens, validly 38 F.2d may as- Ferd that a trademark (2 Cir. 1929), (D.C. 43 F.2d signed gross. rev’d difference And rule. 1930), aspect clarified mandate this traditional is type changed 1931), and then is all that Fox A naked assignment on altogether, Grapette attempted effected. It It void. enough. considered must be its face de- either the fundamental seems any “goodwill” acquire fendant did, assuming required if law pos- argues itself as defendant mark on “goodwill,” sesses Grapette in- totally product, different public. Either deceive tended validity of is untenable Ethel C. DEAKYNE assignment. hold that We LEWES, Dela COMMISSIONERS OF “Peppy” is Grapette of the trademark corporation, ware Public Board of Grapette possesses no void and that Works, quasi corporate body, Gilbert standing equitable defense of to raise Littleton, Wiltbank, M. Daniel H. C. *6 laches. Manning, Clayton Ellis, T. William H. Morris, Burton, Perry Sr., B. Thomas T. Judgment and remanded reversed Bayard Coulter. by the determined relief further district court. Lewes, Commissioners of cor a Delaware poration, Works, a Board of Public quasi corporate body, Wilt Gilbert M. Judge (concur- BLACKMUN, Circuit bank, Littleton, H. C. Daniel William ring). Manning, Clayton Ellis, T. Hy- concur, on I Morris, Sr., Appellants. B. Thomas Hatchery, 303 F. Inc. Cross No. 17437. (1962), 947, case 2d CCPA 1163 Appeals States United Court of here, court district relied Third Circuit. authority helpful not, or should not be Argued 25, March peculiar Grapette. Hy-Cross is a among factually that, as Sept. Decided spects, baby live chicks assignor assignee. The court of both place some what it seemed reliance good genuine regard transfer and, accordingly, will, 303 F.2d at significance the ab saw little tangible of an chicks sence Hall Co. v. Hall themselves. See J. C. Cards, (1965), where same CCPA 981 significance

apparently relates