Hanover Star Milling Co. v. Metcalf - 240 U.S. 403 (1916)
U.S. Supreme Court
Hanover Star Milling Co. v. Metcalf, 240 U.S. 403 (1916)
Hanover Star Milling Company v. Metcalf
Argued May 10, 1915
Decided March 6, 1916
240 U.S. 403
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 trademark, 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 trademark 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 trademark must be determined according to applicable common law principles.
Redress accorded in trademark cases is based upon the party's right
to be protected in the goodwill of the trade or business, and the English rule that a trademark is not the subject of property, except in connection with an existing business, prevails generally in this country.
The common law of trademarks is but a part of the broader law of unfair competition.
While common law trademarks 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 trademark 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 trademark 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 trademark concerns intrastate distribution, as distinguished from interstate trade, the subject is not within the sovereign power of the United States.
Trademark rights, like others that rest in user, may be lost by abandonment, nonuser, 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 trademark infringement in that territory.
A third party who enters the territory of such second adopter and attempts to use the tradename 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 trademark 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 trademark case is final, and an appeal from the decree is dismissed and the decree is reviewed here on certiorari.
204 F. 211 reversed.
208 F. 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 trademark for flour sold in certain territory, and the effect of nonuser on right to use a trademark, are stated in the opinion.