When the use of his own name upon his goods by a later
competitor will and does lead the public to understand that such
goods are the product of a concern already established and well
known under that name, and when the profit of the confusion is
known to, and, if that be material, is intended by the later man,
the law will require him to take reasonable precautions to prevent
the mistake.
Herring-Hall Marvin Co. v. Hall's Safe Co.,
208 U. S. 554.
There is no distinction between corporations and natural persons
in the above principle, which is one to prevent a fraud.
All the protection which a manufacturer is entitled to get
against a later person of the same name manufacturing similar goods
is to require the later person to so use his name in marking his
goods that they cannot be confused with the earlier manufacturer,
and this
Page 235 U. S. 89
though one of the motive of the later person was to obtain an
advantage by the use of his own name.
While the transfer of a person's name without any business may
not be enough to entitle the transferee to prevent others from
using the name, it still is a license that may be sufficient to put
the licensee on the footing of the licensor against another party
of the same name.
Two courts below having upheld arrangements as effective in
giving a licensee of the right to use a name the same protection
which the licensor would have had as against another party of the
same name, this Court will not go into any consideration of the
facts on which such arrangement was based.
197 F. 534, 536, affirmed on cross-appeals with cost equally
divided between both parties.
The facts, which involve the use of the name Waterman in
connection with the manufacture and sale of fountain pens, are
stated in the opinion.
Page 235 U. S. 93
MR. JUSTICE HOLMES delivered the opinion of the Court.
This suit was brought by the L. E. Waterman Company to enjoin
the Modern Pen Company from using in connection with the
manufacture and sale of fountain pens, other than those of the
plaintiff's make, the name "A. A. Waterman" or any name containing
the word "Waterman" in any form, and for an account. The decision
of the circuit court of appeals upon an order for a preliminary
injunction is reported, 183 F. 118; that of the district court upon
the merits, 193 F. 242, and that of the circuit court of appeals,
197 F. 534, 536. The final decree, in the parts material here,
restricted the defendant to using the name "Arthur A. Waterman
& Co." instead of "A. A. Waterman & Co.," and required the
words "not connected with the L. E. Waterman Co." to be juxtaposed
in equally large and conspicuous letters when the permitted name
was marked upon any part of the fountain pen sold by the defendant,
or upon boxes containing such pens, and whenever the name was used
by way of advertisement or otherwise to denote any fountain pens
made or sold by the defendant, or to denote that it was the maker
or seller of such pens. 183 F. 118, 193 F. 248; 197 F. 535, 536.
See further, L. E. Waterman Co. v. Standard Drug Co., 202
F. 167, 171. The bill, besides alleging diversity of citizenship
and unfair competition, seemingly relied upon the registration of
"Waterman's" and "Waterman's Ideal Fountain Pen, N.Y." as
trademarks under the Act of Congress of March 3, 1881, c. 138, 21
Stat. 502, as a ground of jurisdiction.
Page 235 U. S. 94
Jacobs v. Beecham, 221 U. S. 263,
221 U. S. 274.
Both parties appeal.
The defendant's appeal is from the requirements that it use the
name "Arthur A. Waterman & Co." instead of "A. A. Waterman
& Co.," and that it juxtapose the words "not connected with the
L. E. Waterman Co." After the finding of two courts and upon the
evidence, it must be assumed that the defendant had used the name
Waterman in such a way as to mislead the public and to interfere
with the plaintiff's rights unless the defendant had the right to
use the name as matter of law, because it was the selling agent of
a firm calling itself "A. A. Waterman & Co.," and deriving its
name from a man who started in business long after the plaintiff
had acquired whatever rights it has. In support of this
proposition, the defendant lays hold of language in
Howe Scale
Co. v. Wyckoff, Seamans & Benedict, 198 U.
S. 118,
198 U. S. 140,
and in other books, to the effect that courts will not interfere
with the use of a party's own name "where the only confusion, if
any, results from a similarity of the names, and not from the
manner of the use." But, whatever generality of expression there
may have been in the earlier cases, it now is established that,
when the use of his own name upon his goods by a later competitor
will and does lead the public to understand that those goods are
the product of a concern already established and well known under
that name, and when the profit of the confusion is known to, and,
if that be material, is intended by, the later man, the law will
require him to take reasonable precautions to prevent the mistake.
Herring-Hall-Marvin Safe Co. v. Hall's Safe Co.,
208 U. S. 554,
208 U. S. 559.
There is no distinction between corporations and natural persons in
the principle, which is to prevent a fraud.
Ibid. Howe
Scale Co. v. Wyckoff, Seamans & Benedict, 198 U.
S. 118,
198 U. S. 136;
Donnell v. Herring-Hall-Marvin Safe Co., 208 U.
S. 267,
208 U. S. 273.
In the
Howe Scale Co. case, it was stated upon the same
page
Page 235 U. S. 95
with the passage quoted that "defendant's name and trademark
were not intended or likely to deceive."
The only other ground for the defendant's appeal that needs a
word after the findings below is a decree of the supreme court of
New York in a suit by the plaintiff against Arthur A. Waterman and
Edward L. Gibson, partners doing business as the A. A. Waterman Pen
Company of New York and Boston. The defendant alleges that it has
succeeded to A. A. Waterman's rights. The decision found in the
strongest terms that the name was used with fraudulent intent, and
the decree in some detail enjoined the defendant from using that or
any corporate name containing the word "Waterman," and from using
in connection with the business of making or selling fountain pens
the word "Waterman" alone or with others in such collocation with
the word "pen" as to indicate that such pens were a variety of
Waterman's fountain pens. This rather damaging decree is thought to
give some help because of a following sentence to the effect that
the defendants were not prohibited from indicating that their pens
were made or sold for or by Arthur A. Waterman & Co. or A. A.
Waterman & Co. But that sentence was subject to the previous
prohibition, and consistent with it. The present defendant still
not only may indicate the source of its pens in undeceptive ways,
but may mark them "Arthur A. Waterman & Co." if only it add
words that prevent the fraud that it insists upon the right to
effect. It is unnecessary to go into other considerations presented
by the record to show that the defendant's appeal cannot be
maintained.
The plaintiff's appeal is from the failure of the decree to
prohibit the use of the name "Arthur A. Waterman & Co." even
with the suffix required by the court. The ground upon which it
claims this broader relief is that the agreement with A. A.
Waterman by which he purported to become a partner in the firm of
A. A. Waterman & Co.
Page 235 U. S. 96
was a sham, that the firm does not make the pens sold by the
defendant, and that all the arrangements between Waterman, the
firm, and the defendant were merely colorable devices to enable the
defendant to get the name upon its pens. If we were to adopt this
view of the facts, the nature of the parties' rights and powers
perhaps might need a more careful discussion than, so far as we are
aware, it has received as yet. Under the decree in its present
form, the plaintiff gets all the protection to which it is entitled
as against another Waterman who has established himself in the
business, even though one of his motives for going into it was the
hope of some residual advantages from the use of his own name. If,
with the warning that the law decrees sufficient to prevent a
fraud, a second Waterman could go into the business and give it his
name, the question occurs whether a man might not change his name
to Waterman and do the same thing, and, if so, whether the nature
of the defendant's title to the name is any concern of the
plaintiff -- whether, in short, the protection now granted is
limited by reason of a personal privilege, or is the measure of the
plaintiff's rights as against the world. We express no opinion upon
the point beyond saying that it would have to be considered before
the plaintiff could obtain a broader decree. For the purposes of
decision, we give the plaintiff the benefit of the doubt.
Whatever view may be taken of the agreements, there is no
question that they were intended, with A. A. Waterman's assent, to
authorize the use of his name in a business that he had pecuniary
reasons for wishing to see succeed. He purported to transfer to the
partnership the goodwill attaching to his name. While it very well
may be true that the transfer of a name without a business is not
enough to entitle the transferee to prevent others from using it,
it still is a license that may be sufficient to put the licensee on
the footing of the licensor as against the plaintiff. Moreover, two
courts have upheld the arrangements
Page 235 U. S. 97
as effective to give the defendant the protection of such rights
as A. A. Waterman would have had in establishing business after the
plaintiff, and therefore we shall not go into any consideration of
the facts.
It cannot be said the partnership agreement was ineffectual for
the present purpose as matter of law. The object is pretty plain,
but it is none the worse for that. The leading features are as
follows: a partnership is formed under the name "A. A. Waterman
& Co." Contributions of capital are to be deemed loans and bear
interest. The two partners other than Waterman have the management
of the business, and alone can sign negotiable paper and contracts.
The business is to make, buy, and sell fountain pens, and the
defendant corporation is to be formed (the parties to be interested
in it), and is to be the sole selling agent of the firm. Waterman
grants to the firm the exclusive use of his own and the firm names
in connection with the business, and all the goodwill attaching to
either. The continent is divided into two defined districts, and
Waterman has the exclusive right to do business under the name "A.
A. Waterman & Co." in the western district if he begins it
before July 1, 1906, and the remaining members the exclusive right
to the eastern district. In any event, Waterman leaves the present
firm at that date. Each party has the free use of all patents,
trademarks, and tradenames within their territories that either
party has or may acquire. Eastern territory goods are to be marked
"A. A. Waterman & Co., New York," and those made in the
western, "A. A. Waterman & Co. (or some similar name) Chicago."
Waterman covenants not to compete for thirty-six years, or to use
or allow the use of his name except as provided. Finally, if
Waterman does not go into independent business, he is to have the
exclusive agency for the western territory for the thirty-six
years, and his commissions are fixed in detail and with care.
Page 235 U. S. 98
As we have said, we do not reopen the matters of fact that must
be taken to have been found by the two courts. So we assume that
there was nothing to hinder Waterman from making this agreement,
and that the defendant was organized and acted under it. Whether he
had more or less goodwill to convey perhaps is not very material.
We are not prepared to say as matter of law that a man who for
years has been trying to do business may not join a partnership for
a time long enough to start it with his name and whatever goodwill
he has, and provide that thereafter he will divide territory as
above stated, or become a selling agent, at his choice. The obvious
motive is met by the protection given in the decree, but does not
deprive him of all rights in his name. A sufficient interest is
disclosed to sustain the transfer as against the plaintiff and to
free the defendant from a greater liability than would have fallen
on A. A. Waterman had he gone on alone.
Decree affirmed.
MR. JUSTICE PITNEY:
In No. 72, the appeal of the Modern Pen Company, I concur in the
result.
In No. 54, the appeal of the L. E. Waterman Company, I dissent
from the conclusion reached by the Court. It seems to me that the
alleged partnership agreement of June 12, 1905, made between Arthur
A. Waterman and others, pursuant to which the Modern Pen Company
was organized, and under which it claims the right to use the name
of "A. A. Waterman" and "A. A. Waterman & Co.," appears upon
its face to be a mere sham and a fraudulent device, and is
demonstrated to be such by the other evidence. The case presents no
question respecting the right of an individual to the
bona
fide use of his name, but rather the question whether a
partnership or a corporation can,
Page 235 U. S. 99
by purchase or otherwise, obtain the right to use the name of a
third party for the very purpose of employing it in unfair
competition with the established business of still another party.
The case in its circumstances closely resembles
International
Silver Company v. Rogers Corporation, 67 N.J.Eq. 646, and, for
reasons sufficiently indicated by a reference to that case, I think
the Modern Pen Company should be unqualifiedly enjoined from using
the name "Waterman."