This is аn action for unfair competition. Plaintiff, a Massachusetts corporation organized in 1935, is and has been engaged in the selling of radio and electronic parts and equipment to amateur radio operators, referred to as “ham operators,” to servicemen who repair radio sets, to colleges, laboratories, and others. Plaintiff advertises, on a national scale, issues catalogues, and does a large mail order business in all parts of the United States. Plaintiff and its predecessors have operated under the business name of “Radio Shack” since 1924.
In July, 1946, the individual defendants named in the complaint organized the defendant corporation under the laws of the *202 State of Illinois. Defendant Ashbach had been engaged as a distributor of radio parts for some 15 years, and defendant Friedman had been a ham operator since 1935, and in the radio business for about 17 years. Defendant corporation proceeded to conduct its business in direct competition with plaintiff, selling similar articles of radio equipment, advertising in magazines-of national distribution, and issuing catalogues or fliers. Mail orders from various persons and concerns throughout the United States accounted for a part'of the business of defendant corporation. Defendant corporation claims, however, that a large proportion of its entire business was done in the State of Illinois.
Defendants filed an answer denying unfair competition, and several months later filed ah amended answer which presented affirmative defenses of estoppel, laches, abandonment, acquiescence, and that the trade name of “Radio Shack” was publici juris. Defendants also filed a counterclaim, based upon an alleged conspiracy between plaintiff and various manufacturers and jobbers to have the manufacturers and jobbers refuse to sell goods and equipment to defendants.
The term, “Radio Shack,” refers primarily to that part of a ship where the radio apparаtus is located and operated. The term is also applied by ham operators to the location in their homes or other buildings where their radio sending and receiving apparatus is located and operated.
The trial court found that as applied to a business operation, the name, “Radio Shack,” refers to the enterprise operated by plaintiff, that customers of radio and electronic equipment are familiar with the phrase as plaintiff’s trade name, and that thе adoption and use by the defendants of the phrase, “Radio Shack,” as a trade name has caused, and its continued use would cause, confusion in the minds of the customers in the field in which plaintiff and defendants have carried on their business operations, and in the mind of the public generally. In the decree defendants were “permanently enjoined from carrying on business in the name of the plaintiff, or in any approximation thereof likely to confuse purchasers of radio equipment, or in any wаy infringing plaintiff’s'trade name.” Defendants’ counterclaim was dismissed and the court reserved jurisdiction as to accounting and damages.
Some 22 years after plaintiff herein was organized, and long after the plaintiff had widely used its corporate name as its trade name, defendants deliberately went into direct competition, using for all practical purposes the identical, .corporate and trade name. .For some four years prior to incorporation of the defendant company at least one of its officers had knowledge of the plaintiff and of the operation of its business. Sufficient credible evidence sustains the findings of the trial court, and its conclusions of law are justified unless, as defendants claim, Illinois recognizes a most unusual principle of law, which we are bound to apply in the case at bar.
We must follow the rule stated by the Supreme Court in Pecheur Lozenge Co., Inc. v. National Candy Co., Inc., 1942,
Defendants rely almost entirely on Hazelton Boiler Co. v. Hazelton Tripod Boiler Co., et al.,
An examination of the opinion in the Hazelton case on file in the office of the Clerk of the Supreme Court of Illinois discloses those portions of the original opinion which were deleted. Before setting same forth, so far as they may be pertinent tо the decision in the case at bar, a review of the facts in the Hazelton case seems desirable.
In 1881 Hazelton invented certain improvements for steam boilers and formed a partnership in New York with one Kennedy to manufacture and sell boilers. The partnership was dissolved and Hazelton went to Illinois. Early in 1884 the partners reconciled their differences and a new partnership was organized under the name of The Hazelton Boiler Company. The manufacture of boilers was undertaken and the product was widely advertised as Hazel-ton boilers. However, on July 10, 1884, the second partnership was dissolved, and Hazelton sold and assigned all of his interests, including his letters patent, to a brother of his former partner. Kennedy and two brothers continued to operate the business as partners, under the name of The Hazelton Boiler Company. On June 23, 1888, The Hazelton Boiler Company was organized as a New York corporation, and it acquired the business of the Kennedy partnership on April 13, 1889. In the mеantime Hazelton had moved to Chicago, and on February 29, 1888, with several associates organized Hazelton Tripod Boiler Company, as an Illinois corporation, which manufactured boilers in the State of Illinois. Both plaintiff and defendant company sold directly to customers. The New York corporation, as plaintiff, sued in a State court of Illinois to restrain the Illinois corporation from using the name, “Hazelton Tripod Boiler Company,” and the words, "Hazelton Boiler,” and the word, “Hazel-ton,” in thеir business of manufacturing and selling steam boilers. The Supreme Court of Illinois decided plaintiff was not entitled to injunctive relief.
In its opinion the court pointed out that so far as the suit related to the right of the defendant to make use of its corporate name in the transaction of business, two obstacles confronted the plaintiff, saying: “ * * * The first grows out of the fact that the complainant is a junior corporation seeking to contest with a senior corporation the right of the latter to the use оf its corporate name; and the second arises from the position of the complainant as a foreign corporation seeking to contest with a domestic corporation the right of the latter to the corporate name given by the sovereignty which created it.” The court then strongly emphasized that the incorporation of the defendant corporation antedated that of plaintiff by four months, and that if there were any infringement, it was the plaintiff and not the defendant whо was the aggressor. Then follows the paragraph relied on by defendants (with the portion, deleted on the rehearing, italicised), to-wit: “But the complainant is in the attitude of a foreign corporation coming into this state, and seeking to contest the right to the use of a corporate name which this state, in furtherance of its own public policy and in the exercise of its own sovereignty, has seen fit to bestow upon one of its own corporations. For such a purpose a foreign corporation, ordinarily, at least, can have no standing in our courts. Such corporations do not come into this state as a matter of legal right, but only by comity; and they cannot be permitted to come for the purpose of asserting rights in contro *204 .vention of our laws or public policy. It is competent for this state, whenever it sees fit to do so, to debar any or all foreign corporations from doing business here ; and whatever it may do by way of chartering corporations of its own cannot be called in question by cоrporations which are here only by a ,species of legal sufferance.” In the original opinion, the paragraph just quoted contained the following additional language: “We would not be understood, however, as holding that cases may not arise where the name of a foreign corporation has so far become its trade-mark or trade name as to entitle it to protection in our courts against infringement caused by the chartering of a domestic corporation by the sаme name. ' We only wish to hold that the present cáse is not of that character.” 2
We do not know of any State court which has cited the Hazelton Boiler Co. case with approval. On its face, the opinion is legally unsound, and quite understandably other courts have refused approval of its doctrine. Judge Learned Hand, in United States Light & Heating Co. of Maine v. United States Light & Heating Co. of New York, et al., C.C.,
This court in Peck Brothers and Co. v. Peck Bros. Co.,
7
Cir., 1902,
But defendants repeat again and again that the Peck case was decided before Erie Railroad Co. v. Tompkins,
In the Hazelton case the Illinois Supreme Court gave emphasis to the fact that the plaintiff had not been licensed to do business in that State. Defendants in the case at bar likewise insist that the plaintiff herein is without remedy because of failure to have a license to do business in Illinois. However, there was no legal necessity for plaintiff herein to obtain such a license. It had no headquarters or offices in Illinois; it conducted its business in Illinois by mail. Under such circumstances it is well established that a State {
*205
license to do business in Illinois is not required. International Text-Book Co. v. Pigg,
In the recent case of Metropolitan Opera Ass’n, Inc., v. Metropolitan Opera Ass’n of Chicago, Inc., et al., D.C., N.D.E.D.Ill.,
The statement in the Hazelton opinion 4 hereinbefore quoted and relied upon by defendants has not been expressly overruled by the Illinois Supreme Court. When we consider the contents of the portions of the ■original opinion which were deleted upon rehearing, we have no doubt of the attitude of the court at that time on the principle of law there expressed. Although we are ■quite convinced that if this question were befоre the Illinois Supreme Court today it would overrule the unsound and archaic doctrine of the quoted portion 4 of the Hazelton opinion, we are compelled to hold that as applied to the facts of that case it states the Illinois rule. However, in spite of some broad generalizations in the Hazelton opinion, we are entirely justified in not extending the unsound doctrine there announced beyond a situation comparable to the facts in that case.
We believe that the case at bar can be fairly and adequately distinguished from the Hazelton case. In Hazelton, each corporation was selling boilers direct to customers at points nearly 1,000 miles apart, and they were not in fact in cempetition. Here there is no question as to the competition between the plaintiff and the corporate defendant. In Hazelton, defendant was incorporated in Illinois prior to the date of plaintiff’s incorporation. Here the corporate defendant was incorporated in 1946, with at least some of the incorporators knowing of
the
plaintiff and its business activities, whereas plaintiff had been incorporated in 1935. In Hazelton, the court placed considerable emphasis on the right of a person (Hazelton) to use his own name in his business. In considering the form of the assignment which Hazelton had made [
We hold that the rule of law recognized in the State of Illinois does not bar the plaintiff herein from seeking and securing an injunction against an Illinois corporation pirating its name and its business.
We pass now to a consideration of the defendants’ claim that the plaintiff’s trade name is not composed) of сoined or fanciful words so as to merit protection under the principles of the law of unfair competition. True it is that “Radio Shack” is a descriptive term, but when plaintiff’s predecessor started to use the term in 1924 and when plaintiff was organized in 1935 and continued to use it, these words had *206 not previously been used to indicate a merchant of radio equipment. Thus, as. applied to such a business the words were arbitrary and fanciful. A trade name will be protected even though the words are of a descriptive character if they have acquired a distinctive meaning in the market place. Plaintiff offered proof that customers and users of radio equipment recognized their trade name, “Radio Shack,” as identifying their business, and the district court so found. There is no sound basis for disturbing that finding, and we approve it.
Defendants argue that as plaintiff does not manufacture the goods it sells, it follows that there cannot be customer confusion. But as this court pointed out in Consumers Petroleum Co. v. Consumers Co. of Illinois, 7 Cir.,
In an amended answer defendants plead various affirmative defenses, such as estoppel, laches, abandonment, and acquiescence, and that the trade name of “Radio Shack” was publici juris. Defendants argue that as plaintiff did not answer or reply to these defenses, they stand admitted by the pleadings. This point is not well taken. Rule 7(a), Federal Rules of Civil Procedure, 28 U.S.C.A., provides that there shall be a complaint and an answer, and there shall be a reply to a counterclaim denominated as such. After referring to cross-claims and third-party complaints and answers thereto, the rule provides that no other pleadings shall be allowed, except that a court may order a reply to an answer or a third-party answer. Here there was a reply to the counterclaim, but the court did not order a reply to the affirmative defenses. As a matter of pleading they stand denied. Rule 8(d), F.R.C.P.
Defendants’ argument that plaintiff has abandoned its trade name and has acquiesced in its use by others, and that it is guilty of laches and is now estopped to assert its rights in its trade name, and that “Radio Shack” is
publici juris,
is based on the following showing. In the State of New York for some years past a business has been conducted under the name of “Uncle Dave’s Radio Shack”; that in Green Bay, Wisconsin, one Jarvis conducted a small shоp under the title, “Radio Shack,” which was devoted largely to local radio repair work, but did sell some broadcast radio parts on a local basis; and that Radio Shacks have been registered in Los Angeles, California, and Detroit, Michigan. There was also introduced in evidence a letter written by a clerk of the plaintiff (without the authority of its officers) stating that plaintiff had no objection to the use by Jarvis of the name, “Radio Shack,” in his business in Green Bay. The trial court found that Jarvis was not in compеtition with plaintiff. As to the registrations in Los Angeles and Detroit, registration without proof of user is not a sufficient defense. It is user, not registration, that confers rights in a trade name. Harvey v. American Coal Co. et al., 7 Cir.,
The testimony herein showed that other than the plaintiff and the defendant corporation none of the other Radio Shacks mentioned by defendants had ever advertised in magazines of national circulation except “Uncle Dave’s Radio Shack,”' whose proprietor used the name, “Uncle Dave’s Radio Shack,” in advertisements run in December, 1931, and in February and October, 1932. At the same time and since he also operated his business under the name, “Fort Orange Distributing Company.” Jarvis of Green Bay did not start in business until six months before the corporate defendant *207 herein was organized. The New York cor poration, “Radio Ham Shack,” was also organized about six months prior to the defendant corporation, but none of the individual defendants had ever heard of it. The president of the plaintiff corporation and several witnesses of prominence in the radio industry testified they did not know of the use of “Radio Shack” in connection with the business of selling radio parts and equipment by anyone except the plaintiff until the defendant corporation adopted the same trade name. The findings of the trial court overruling the various affirmative defenses are not clearly wrong, and we shall therefore not disturb such findings.
Defendants urge that the district court erred in dismissing the counterclaim and point out that they had demanded a jury trial on those issues. Defendants statе further that at a pre-trial conference it was agreed that only the question of an injunction would be first tried. Apparently the district judge and counsel for the plaintiff did not so understand, or agree to a piecemeal trial of the issues herein. It is unfortunate that at the conclusion of the pre-trial conference the district judge did not dictate or direct an order setting forth specifically any stipulations that may have been agreed upon.
Pre-trial conferences should he given every possible encouragement by the courts. Many crowded dockets have been brought up to date or at least greatly eased as a result of pre-trial conferences. Here the trial court very appropriately conducted such a conference. Twenty-seven pages of the printed record are devoted to what is designated as “Argument on Pre-Trial Conference.” It is apparent that this so-called argument is a report of a colloquy between the court and counsel. We cannot find any statеment of an understanding that the issues raised by the counterclaim would be separately tried. There was an agreement that the question of an accounting should be deferred until it was determined whether an accounting would be necessary. Furthermore, counsel for the defendants replied in the negative when the court asked at the pre-trial conference, “There won’t be a jury in this case?” It is also of some significance that at the trial certain questions were asked of witnesses by counsel fоr the defendants which could only have been material to the issues raised by the counterclaim. We find no error in the court’s dismissal of the counterclaim.
There remains for consideration the question of an accounting. It does not follow as a matter of course that in addition to an injunction a winning plaintiff in every case of unfair competition is entitled to a monetary award in the form of damages or an accounting of profits. Consumers Petroleum Co. v. Consumers Co. of Illinois, supra, 169 F.2d page 163. The character of the conduct giving rise to the unfair competition is relevant to the remedy which should be awarded. Champion Spark Plug Co. v. Sanders,
Except for the modification of eliminating Paragraph 4 pertaining to an accounting and damages, the judgment herein is affirmed, with costs allowed to the plaintiff.
Notes
. But see- interesting article by Professor Charles Bunn in Vol. 62, Harvard Law Review, p. 987 (1949), entitled, “The National Law of Unfair Competition.” Professor Bunn cites the provision of the Federal Trade Commission Act of 1914, as amended in 1938, 15 U.S.C.A. § 41 et seq., “Unfair methods of competition in commerce, and unfair or deceptive acts or practices in commerce, are hereby declared unlawful.” § 45(a). His conclusion is quite persuasive that as the act nowhere provides that the jurisdiction of the Federal Trade Commission is exclusive by authorizing enforcement when the public interest is involved, “а court hav *203 ing jurisdiction of a private unfair competition case involving interstate commerce should, therefore, apply the federal law established by the Act,” adding that if there were any doubt about this proposition before 1946, it has been dispelled, at least for the most important forms of unfair competition, by Sec. 43(a) of the Lanham Act, 15 U.S.C.A. § 1125(a).
. Two and one-half pages following this language were likewise deleted, but are not pertinent here.
. In the case of International Committee of Y.W.C.A. v. Y.W.C.A.,
. But with the deletions, as italicized.