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
Page 240 U. S. 404
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.
Page 240 U. S. 405
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.
MR. JUSTICE PITNEY delivered the opinion of the Court.
These cases were argued together, and may be disposed of in a
single opinion.
In No. 23, the Hanover Star Milling Company, an Illinois
corporation engaged in the manufacture of flour in that state,
filed a bill in equity on March 4, 1912, in the United States
District Court for the Middle District of Alabama, against Metcalf,
a citizen of the State of Alabama and a merchant engaged in the
business of selling flour at Greenville, Butler County, in that
state, to restrain alleged trademark infringement and unfair
competition. The bill averred that, for twenty-seven years last
past, complainant had been engaged in the manufacture of a superior
and popular grade of flour, sold by it at
Page 240 U. S. 406
all times under the name of "Tea Rose" flour, in a wrapping with
distinctive markings, including the words "Tea Rose" and a design
containing three roses imprinted upon labels attached to sacks and
barrels; that this flour had been marketed thus by complainant in
the State of Alabama for the preceding twelve years, during which
time, by maintaining a high and uniform quality, by expensive
advertising, and by diligent work of its representatives, it had
built up a large and lucrative market, with annual sales of more
than $175,000 of Tea Rose flour in that state, and had established
a valuable reputation for the name "Tea Rose" and the distinctive
wrappings in Alabama and other states, particularly Georgia, and
Florida; that, until shortly before the commencement of the suit
complainant's Tea Rose flour was the only flour made, sold, or
offered for sale under that name in Butler County or elsewhere in
the State of Alabama, and the name "Tea Rose" had represented and
stood for complainant's flour, and that recently the Steeleville
Milling Company, of Steeleville, Illinois, had, through Metcalf's
agency, been marketing in Alabama, and particularly in Butler
County, flour of its manufacture, in packages and wrappings
substantially identical with complainant's and bearing a design
containing three roses and the name "Tea Rose" upon the labels in a
manner calculated to deceive and in fact deceptive to purchasers,
thereby threatening pecuniary loss to complainant exceeding $3,000
in amount, and destroying the prestige of complainant's "Tea Rose"
flour, and damaging its trade therein.
Defendant's answer denied all attempts to deceive purchasers,
and further denied complainant's right to the exclusive use of the
words "Tea Rose" or the picture of a rose as a trademark, averred
that, long prior to complainant's first use of it, and as early as
the year 1872, the name had been adopted, appropriated, and used
as
Page 240 U. S. 407
a trademark for flour by the firm of Allen & Wheeler, of
Troy, Ohio, and used by it and its successor, the Allen &
Wheeler Company, continuously as such, and alleged that the
Steeleville Milling Company had used its "Tea Rose" brand for more
than sixteen years last past, and, as early as the year 1899, had
sold flour in Alabama under that label.
Upon consideration of the bill and answer and affidavits
submitted by the respective parties, the district court granted a
temporary injunction restraining Metcalf from selling flour labeled
"Tea Rose," manufactured by the Steeleville Company or any person,
firm, or corporation other than the Hanover Company at Greenville,
or at any other place in the Middle District of Alabama. Upon
appeal, the Circuit Court of Appeals for the Fifth Circuit reversed
this decree and remanded the cause, with directions to dismiss the
bill. 204 F. 211. A writ of certiorari was then allowed by this
Court.
In No. 30, the Allen & Wheeler Company, a corporation of the
State of Ohio, manufacturing flour at the City of Troy, in that
state, filed a bill against the Hanover Star Milling Company on May
23, 1912, in the United States District Court for the Eastern
District of Illinois, averring that, in or before the year 1872,
the firm of Allen & Wheeler, then engaged in the manufacture of
flour at Troy, adopted as a trademark for designating one of its
brands the words "Tea Rose," and from thence until the year 1904
continuously used that trademark by placing it upon sacks, barrels,
and packages containing the brand and quality of flour designated
by that term and sold throughout the United States; that, in 1904,
the Allen & Wheeler Company was incorporated and took over the
mills, machinery, stock, trademark, and goodwill of the firm, since
which time the corporation had continued to use the trademark upon
flour of its manufacture, and had distributed and sold such flour
in the markets
Page 240 U. S. 408
of the United States, whereby the words "Tea Rose" had become
the common law trademark of the Allen & Wheeler Company; that
recently it had learned that the Hanover Star Milling Company had
adopted the words "Tea Rose" as designating a brand of flour
manufactured by it, and, notwithstanding notice of complainant's
rights, was persisting in the sale of its flour under that name and
threatening to continue so to do, and that defendant had sold large
quantities of Tea Rose flour, particularly in the markets of the
States of Alabama, Florida, and Mississippi, with large gross
sales, and profits approximating $5,000 per year for the past five
years, causing damage and loss to complainant in excess of $3,000.
An injunction and an accounting of profits were prayed. Upon this
bill, a demurrer filed by the Hanover Company, and affidavits
presented by both parties, the district court granted a temporary
injunction restraining the use of the words "Tea Rose" as a
trademark for flour, without territorial restriction. The Circuit
Court of Appeals for the Seventh Circuit reversed this decree, and
remanded the cause to the district court for further proceedings
not inconsistent with its opinion.
Hanover Star Milling Co. v.
Allen & Wheeler Co., 208 F. 513. An appeal was taken to
this Court, and a writ of certiorari was subsequently granted. The
appeal must be dismissed for want of jurisdiction, and the case
will be disposed of under the writ of certiorari.
No question is raised respecting the propriety of passing upon
the questions at issue on a review of decisions rendered upon
applications for temporary injunction. Both district courts granted
such injunctions, and both circuit courts of appeals reversed upon
grounds that went to the merits. These courts differed upon
fundamental questions, and it was because of this that the writs of
certiorari were allowed, the situation being such that it was
deemed proper to allow them before final decrees
Page 240 U. S. 409
were made, notwithstanding the general rule to the contrary.
American Const. Co. v. Jacksonville Ry., 148 U.
S. 372,
148 U. S. 378,
148 U. S. 384;
The Three Friends, 166 U. S. 1,
166 U. S. 49;
The Conqueror, 166 U. S. 110,
166 U. S. 113;
Denver v. New York Trust Co., 229 U.
S. 123,
229 U. S.
133.
In both cases, it was shown without dispute that the firm of
Allen & Wheeler adopted and used the words "Tea Rose" as a
trademark for one kind or quality of flour manufactured by it as
early as the year 1872, and continued that use until the year 1904,
when the Allen & Wheeler Company was incorporated and took over
the mills, machinery, stock, trademark, and goodwill of the firm
and succeeded to its business. But there is nothing to show the
extent of such use or the markets reached by it, except that, in
the year 1872, Allen & Wheeler sold three lots of 25 barrels
each to a firm in Cincinnati, Ohio, and one lot of 100 barrels to a
firm in Pittsburgh, Pennsylvania; that, in the early 70's, another
firm in Pittsburgh was a customer for this brand, and that, in the
later 70's, a firm in Boston, Massachusetts, was a customer for the
same brand. As to the Allen & Wheeler Company, there are
affidavits stating in general terms that, since its incorporation
in 1904, and "continuously down to the present time," the company
has used the brand "Tea Rose" for flour; but there is a remarkable
absence of particular statements as to time, place, or
circumstances; in short, no showing whatever as to the extent of
the use or the markets reached. There is nothing to show that the
Allen & Wheeler "Tea Rose" flour has been even advertised in
Alabama or the adjoining states, and there is clear and undisputed
proof that it has not been sold or offered for sale or known or
heard of by the trade in Alabama, Mississippi, or Georgia. In No.
30, there is uncontradicted proof that the Allen & Wheeler
Company is selling flour in Alabama and Georgia, but under the
brands "Eldean Patent" and "Trojan Special."
Page 240 U. S. 410
In both suits, the Hanover Star Milling Company introduced
affidavits fairly showing that, shortly after its incorporation in
the year 1885, it adopted for one of its brands of flour the name
"Tea Rose," and adopted for the package or container, whether sack
or barrel, a label bearing the name "Tea Rose" and the design
already referred to, and that this trademark was adopted and used
in good faith, without knowledge or notice that the name "Tea Rose"
had been adopted or used by the Allen & Wheeler firm or by
anybody else. In 1904, the Hanover Company began and has since
prosecuted a vigorous and expensive campaign of advertising its Tea
Rose flour, covering the whole of the State of Alabama and parts of
Mississippi, Georgia, and Florida, employing many ingenious and
interesting devices that are detailed in the proofs, with the
result that, at the commencement of the litigation, its sales of
Tea Rose flour in these markets amounted to more than $150,000 a
year, the Hanover Star Milling Company has come to be known as the
Tea Rose mill, the reputation of the mill is bound up with the
reputation of Tea Rose flour, and "Tea Rose" in the flour trade in
the territory referred to means flour of the Hanover Company's
manufacture. There is nothing to show any present or former
competition in Tea Rose flour between the latter company and the
Allen & Wheeler firm or corporation, or that either party has
even advertised that brand of flour in territory covered by the
activities of the other.
Metcalf's purchases of competing Tea Rose flour, which gave rise
to the suit brought by the Hanover Company against him, were made
from the Steeleville Milling Company, an Illinois corporation,
which appears to have adopted the name and design of a tea rose for
flour in the year 1895.
It should be added that, so far as appears, none of the parties
here concerned has registered the trademark
Page 240 U. S. 411
under any act of Congress or under the law of any state. Nor
does it appear that, in any of the states in question, there exists
any peculiar local rule arising from statute or decision. Hence,
the cases must be decided according to common law principles of
general application.
Interesting and important questions are raised concerning the
territorial extent of trademark rights. In behalf of the Hanover
Company, it is, in effect, insisted: (a) that the failure of the
Allen & Wheeler Company and its predecessors to enter the
southeastern territory with their Tea Rose flour, and the fact that
such flour has been and is wholly unknown there under that name,
dissentitle it to interfere with the Hanover Company's trade
established in good faith in that territory under the same mark;
(b) that the same considerations entitle Hanover to affirmative
trademark rights of its own, enforceable against the Steeleville
Company and everybody else over whom it has priority in that
territory, and (c) that Hanover is entitled to relief against
Steeleville and against Metcalf as its agent upon the ground of
unfair competition in trade regardless of the trademark right. An
affirmative answer to the first proposition will decide the Allen
& Wheeler case (No. 30) in favor of Hanover, and an affirmative
answer to the third proposition will decide the Metcalf case (No.
23) in favor of Hanover, irrespective of the disposition that might
be made of the second proposition. In view of possible consequences
to the rights of parties not before the court, it is desirable to
limit the range of our decision as much as practicable, especially
as the proofs now before us are incomplete and, in some respects,
unsatisfactory.
In will be convenient to dispose first of No. 30. Here, the bill
is rested upon alleged trademark infringement, pure and simple, and
no question of unfair competition is involved. The decision of the
Court of Appeals for the Seventh Circuit in favor of the Hanover
Company and
Page 240 U. S. 412
against the Allen & Wheeler Company was rested upon the
ground that, although the adoption of the Tea Rose mark by the
latter antedated that of the Hanover Company, its only trade, so
far as shown, was in territory north of the Ohio River, while the
Hanover Company had adopted "Tea Rose" as its mark in perfect good
faith, with no knowledge that anybody else was using or had used
those words in such a connection, and during many years it had
built up and extended its trade in the southeastern territory,
comprising Georgia, Florida, Alabama, and Mississippi, so that, in
the flour trade in that territory, the mark "Tea Rose" had come to
mean the Hanover Company's flour and nothing else. The court held
in effect that the right to protection in the exclusive use of a
trademark extends only to those markets where the trader's goods
have become known and identified by his use of the mark, and,
because of the nonoccupancy by the Allen & Wheeler Company of
the southeastern markets, it had no ground for relief in equity.
Let us test this by reference to general principles.
The redress that is accorded in trademark cases is based upon
the party's right to be protected in the goodwill of a trade or
business. The primary and proper function of a trademark is to
identify the origin or ownership of the article to which it is
affixed. Where a party has been in the habit of labeling his goods
with a distinctive mark, so that purchasers recognize goods thus
marked as being of his production, others are debarred from
applying the same mark to goods of the same description, because to
do so would in effect represent their goods to be of his production
and would tend to deprive him of the profit he might make through
the sale of the goods which the purchaser intended to buy. Courts
afford redress or relief upon the ground that a party has a
valuable interest in the goodwill of his trade or business and in
the trademarks adopted to maintain and extend it. The essence of
the
Page 240 U. S. 413
wrong consists in the sale of the goods of one manufacturer or
vendor for those of another.
Canal Co. v.
Clark, 13 Wall. 311,
80 U. S. 322;
McLean v. Fleming, 96 U. S. 245,
96 U. S. 251;
Manufacturing Co. v. Trainer, 101 U. S.
51,
101 U. S. 53;
Menendez v. Holt, 128 U. S. 514,
128 U. S. 520;
Lawrence Mfg. Co. v. Tennessee Mfg. Co., 138 U.
S. 537,
138 U. S.
546.
This essential element is the same in trademark cases as in
cases of unfair competition unaccompanied with trademark
infringement. In fact, the common law of trademarks is but a part
of the broader law of unfair competition.
Elgin Nat. Watch Co.
v. Illinois Watch Co., 179 U. S. 665,
179 U. S. 674;
G. & C. Merriam Co. v. Saalfield,198 F. 369, 372;
Cohen v. Nagle, 190 Mass. 4, 8, 15.
Common law trademarks, and the right to their exclusive use,
are, of course, to be classed among property rights
Trademark
Cases, 100 U. S. 82,
100 U. S. 92-93,
but only in the sense that a man's right to the continued enjoyment
of his trade reputation and the goodwill that flows from it, free
from unwarranted interference by others, is a property right for
the protection of which a trademark is an instrumentality. As was
said in the same case (p.
100 U. S. 94),
the right grows out of use, not mere adoption. In the English
courts, it often has been said that there is no property whatever
in a trademark, as such.
Per Ld. Langdale, M.R., in
Perry v. Truefitt, 6 Beav. 73;
per Vice
Chancellor Sir Wm. Page Wood (afterwards Ld. Hatherly), in
Collins Co. v. Brown, 3 Kay & J. 423, 426, 3 Jur. N.S.
930;
per Ld. Herschell in
Reddaway v. Bankam,
A.C.1896, 199, 209. But since, in the same cases, the courts
recognize the right of the party to the exclusive use of marks
adopted to indicate goods of his manufacture upon the ground
that
"a man is not to sell his own goods under the pretense that they
are the goods of another man; he cannot be permitted to practise
such a deception, nor to use the means which contribute to that
end. He cannot therefore be
Page 240 U. S. 414
allowed to use names, marks, letters, or other indicia by which
he may induce purchasers to believe that the goods which he is
selling are the manufacture of another person,"
6 Beav. 73, it is plain that, in denying the right of property
in a trademark, it was intended only to deny such property right
except as appurtenant to an established business or trade in
connection with which the mark is used. This is evident from the
expressions used in these and other English cases. Thus, in
Ainsworth v. Walmsley, L.R. 1 Eq. 518, 524, Vice
Chancellor Sir Wm. Page Wood said:
"This court has taken upon itself to protect a man in the use of
a certain trademark as applied to a particular description of
article. He has no property in that mark
per se, any more
than in any other fanciful denomination he may assume for his own
private use, otherwise than with reference to his trade. If he does
not carry on a trade in iron, but carries on a trade in linen, and
stamps a lion on his linen, another person may stamp a lion on
iron; but when he has appropriated a mark to a particular species
of goods, and caused his goods to circulate with this mark upon
them, the court has said that no one shall be at liberty to defraud
that man by using that mark and passing off goods of his
manufacture as being the goods of the owner of that mark."
In short, the trademark is treated as merely a protection for
the goodwill, and not the subject of property except in connection
with an existing business. The same rule prevails generally in this
country, and is recognized in the decisions of this Court already
cited.
See also Apollinaris Co. v. Scherer, 27 F. 18, 20;
Levy v. Waitt, 61 F. 1008, 1011;
Macmahan Pharmacal
Co. v. Denver Chemical Mfg. Co., 113 F. 468, 471, 475;
Congress & E. Spring Co. v. High Rock Congress Spring
Co., 57 Barb. 526, 551;
Weston v. Ketcham, 51 How.
Pr. 455, 456;
Candee v. Deere, 54 Ill. 439, 457;
Avery
v. Meikle, 81 Ky. 73, 86.
Page 240 U. S. 415
Expressions are found in many of the cases to the effect that
the exclusive right to the use of a trademark is founded on
priority of appropriation. Thus, in
Canal Co.
v. Clark, 13 Wall. 311,
80 U. S. 323,
reference is made to "the first appropriator;" in
McLean v.
Fleming, 96 U. S. 245,
96 U. S. 251,
to "the person who first adopted the stamp;" in
Manufacturing
Co. v. Trainer, 101 U. S. 51,
101 U. S. 53,
the expression is "any symbol or device, not previously
appropriated, which will distinguish," etc. But these expressions
are to be understood in their application to the facts of the cases
decided. In the ordinary case of parties competing under the same
mark in the same market, it is correct to say that prior
appropriation settles the question. But where two parties
independently are employing the same mark upon goods of the same
class, but in separate markets wholly remote the one from the
other, the question of prior appropriation is legally insignificant
unless at least it appear that the second adopter has selected the
mark with some design inimical to the interests of the first user,
such as to take the benefit of the reputation of his goods, to
forestall the extension of his trade, or the like.
Of course, if the symbol or device is already in general use,
employed in such a manner that its adoption as an index of source
or origin would only produce confusion and mislead the public, it
is not susceptible of adoption as a trademark. Such a case was
Columbia Mill Co. v. Alcorn, 150 U.
S. 460,
150 U. S. 464,
aff'g 40 F. 676, where it appeared that, before
complainant's adoption of the disputed word as a brand for its
flour, the same word was used for the like purpose by numerous
mills in different parts of the country.
That property in a trademark is not limited in its enjoyment by
territorial bounds, but may be asserted and protected wherever the
law affords a remedy for wrongs, is true in a limited sense. Into
whatever markets the use of a trademark has extended or its meaning
has become
Page 240 U. S. 416
known, there will the manufacturer or trader whose trade is
pirated by an infringing use be entitled to protection and redress.
But this is not to say that the proprietor of a trademark, good in
the markets where it has been employed, can monopolize markets that
his trade has never reached, and where the mark signifies not his
goods, but those of another. We agree with the court below (208 F.
519) that
"since it is the trade, and not the mark, that is to be
protected, a trademark acknowledges no territorial boundaries of
municipalities or states or nations, but extends to every market
where the trader's goods have become known and identified by his
use of the mark. But the mark, of itself, cannot travel to markets
where there is no article to wear the badge and no trader to offer
the article."
To say that a trademark right is not limited in its enjoyment by
territorial bounds is inconsistent with saying that it extends as
far as the sovereignty in which it has been enjoyed. If the
territorial bounds of sovereignty do not limit, how can they
enlarge, such a right? And if the mere adoption and use of a
trademark in a limited market shall (without statute) create an
exclusive ownership of the mark throughout the bounds of the
sovereignty, the question at once arises, "what sovereignty?" So
far as the proofs disclose, the Allen & Wheeler mark has not
been used at all, is not known at all in a market sense, within the
sovereignty of Alabama or the adjacent states where the controversy
with the Hanover Star Milling Company arose. And so far as the
controversy concerns intrastate distribution, as distinguished from
interstate trade, the subject is not within the sovereign powers of
the United States.
Trademark Cases, 100 U. S.
82,
100 U. S.
93.
We are referred to an expression contained in the opinion of
this Court in
Kidd v. Johnson, 100 U.
S. 617,
100 U. S. 619:
"The right to use the trademark is not limited to any place, city,
or state, and therefore must be deemed
Page 240 U. S. 417
to extend everywhere." But a reference to the facts of the case
and the context shows that the language was not used in the sense
attributed to it in the argument. The question presented for
decision related to the ownership of a trademark used by
complainants (Johnson & Company) on packages and barrels
containing whisky, manufactured and sold by them in Cincinnati, and
this turned in part upon the force to be given to a written
transfer executed by one Pike, and delivered to complainant's
predecessors in business in connection with a sale of the
distillery and its appurtenances, which were Pike's individual
property. Kidd, the defendant, claimed the right to use the same
mark as surviving partner of a firm of which Pike had been a
member. The Court, speaking by Mr. Justice Field, said (p.
100 U. S.
619):
"That transfer was plainly designed to confer whatever right
Pike possessed. It, in terms, extends the use of the trademark to
Mills, Johnson, & Company and their successors. Such use, to be
of any value, must necessarily be exclusive. If others also could
use it, the trademark would be of no service in distinguishing the
whisky of the manufacturer in Cincinnati, and thus the company
would lose all the benefit arising from the reputation the whisky
there manufactured had acquired in the market. The right to use the
trademark is not limited to any place, city, or state, and
therefore must be deemed to extend everywhere."
This does not import that the trademark right assigned was
greater in extent than the trade in which it was used. The record
in the case showed that complainant's trade had been extended to
New Orleans, and the controversy arose out of sales made there by
defendants as licensees of Kidd. It was admitted in the answer that
they had sold whisky in competition with that of complainants at
New Orleans, and under the same trademark, and the case was by
stipulation treated as a test case to settle whether Johnson &
Company or Kidd had the
Page 240 U. S. 418
exclusive right, or whether they had a joint right, to the use
of the mark.
We are also referred to
Derringer v. Plate, 29 Cal.
292, 295, in which it was said by the court:
"The manufacturer at Philadelphia who has adopted and uses a
trademark, has the same right of property in it at New York or San
Francisco that he has at his place of manufacture."
In that case, plaintiff averred that he was a resident of
Philadelphia, and, upwards of thirty years before the action,
invented a pistol and adopted as a trademark for it the words
"Derringer, Philadel.," which was and ever since had been his
trademark, and which he had caused to be stamped on the breech of
all pistols manufactured and sold by him, and that the defendant,
since 1858, had been engaged in the manufacture of pistols at San
Francisco similar to plaintiff's, on the breech of which he had
stamped plaintiff's trademark, etc. The report of the case shows
(p. 294) that the only question presented was whether the
California statute of 1863 concerning trademarks had repealed or
abrogated the remedies afforded by the common law in trademark
cases. This was answered in the negative, and, in the course of the
reasoning, the court said, p. 295:
"The right is not limited in its enjoyment by territorial
bounds, but, subject only to such statutory regulations as may be
properly made concerning the use and enjoyment of other property,
or the evidences of title to the same, the proprietor may assert
and maintain his property right wherever the common law affords
remedies for wrongs,"
continuing with what we have first quoted. Although not
expressly stated, it is implicit in the report that plaintiff's
pistols were on the market in San Francisco, and his trademark
known there and imitated by defendant for that very reason. It was
such a mark as could not be accidentally hit upon.
It results from the general principles thus far discussed that
trademark rights, like others that rest in user, may
Page 240 U. S. 419
be lost by abandonment, nonuser, laches, or acquiescence.
Abandonment, in the strict sense, rests upon an intent to abandon,
and we have no purpose to qualify the authority of
Saxlehner v.
Eisner, 179 U. S. 19,
179 U. S. 31, to
that effect. As to laches and acquiescence, it has been repeatedly
held, in cases where defendants acted fraudulently or with
knowledge of plaintiffs' rights, that relief by injunction would be
accorded although an accounting of profits should be denied.
McLean v. Fleming, 96 U. S. 245,
96 U. S. 257;
Menendez v. Holt, 128 U. S. 514,
128 U. S. 523;
Saxlehner v. Eisner, 179 U. S. 19,
179 U. S. 39. So
much must be regarded as settled. But cases differ according to
their circumstances, and neither of those cited is in point with
the present. Allowing to the Allen & Wheeler firm and
corporation the utmost that the proofs disclose in their favor,
they have confined their use of the "Tea Rose" trademark to a
limited territory, leaving the southeastern states untouched. Even
if they did not know -- and it does not appear that they did know
-- that the Hanover Company was doing so, they must be held to have
taken the risk that some innocent party might, during their forty
years of inactivity, hit upon the same mark and expend money and
effort in building up a trade in flour under it. If, during the
long period that has elapsed since the last specified sale of Allen
& Wheeler "Tea Rose" -- this was "in the later 70's" -- that
flour has been sold in other parts of the United States, excluding
the southeastern states, no clearer evidence of abandonment by
nonuser of trademark rights in the latter field could reasonably be
asked for. And, when it appears, as it does, that the Hanover
Company in good faith and without notice of the Allen & Wheeler
mark, has expended much money and effort in building up its trade
in the southeastern market, so that "Tea Rose" there means Hanover
Company's flour, and nothing else, the Allen & Wheeler Company
is estopped to assert trademark infringement as to that
territory.
Page 240 U. S. 420
The extent and character of that territory, and its remoteness
from that in which the Allen & Wheeler mark is known, are
circumstances to be considered. Alabama alone -- to say nothing of
the other states in question -- has an area of over 50,000 square
miles, and, by the census of 1910, contained a population of more
than 2,000,000. Its most northerly point is more than 250 miles
south of Cincinnati, which is the nearest point at which sales of
Allen & Wheeler "Tea Rose" are shown to have been made, and
these at a time antedating by approximately forty years the
commencement of the present controversy. We are not dealing with a
case where the junior appropriation of a trademark in occupying
territory that would probably be reached by the prior user in the
natural expansion of his trade, and need pass no judgment upon such
a case. Under the circumstances that are here presented, to permit
the Allen & Wheeler Company to use the mark in Alabama, to the
exclusion of the Hanover Company, would take the trade and goodwill
of the latter company, built up at much expense and without notice
of the former's rights, and confer it upon the former, to the
complete perversion of the proper theory of trademark rights.
The case is peculiar in its facts, and we have found none
precisely like it. The recent case of
Rectanus Co. v. United
Drug Co., 226 F. 545, 549, 553, is closely analogous.
We come now to No. 23. The court of appeals (204 F. 211) denied
relief to the Hanover Company against Metcalf under the head of
trademark infringement partly upon the ground that Allen &
Wheeler were the first appropriators of the mark, and that it had
been continuously used by that firm and its successor down to the
time of the suit, but principally upon the ground that,
irrespective of whether this use was so general or continuous as to
exclude other appropriations, the evidence
Page 240 U. S. 421
showed a use of the same brand by the Steeleville Company
commencing in the year 1895, and carried on in the States of
Illinois, Tennessee, Indiana, Arkansas, and Mississippi, with
occasional shipments into Alabama -- a use so extensive and
continuous as to exclude the claim of the Hanover Company to either
first appropriation or exclusive use in any of the territory from
which it sought to expel Metcalf, and that
"the Steeleville Milling Company's first use and its extensive
and continuous use established by the evidence in the territory of
its selection gave it the unqualified right to extend unhampered
its trade in flour under the Tea Rose brand into any part of the
United States, and that, too, without incurring the legal odium of
unfair competition."
Relief under the head of unfair competition was denied upon the
ground that the Hanover Company had not clearly shown that it had
established by prior adoption the exclusive right to dress its
goods in the manner claimed.
Upon the question of trademark rights as between the Hanover and
the Steeleville companies (leaving Allen & Wheeler out of the
question), the proofs are somewhat conflicting. There is evidence
that Hanover's use of the Tea Rose brand antedated the year 1893,
and probably began as early as 1886. The extent and particulars of
such use, prior to the year 1903, are not made to appear. On the
other hand, Steeleville appears to have adopted the brand in the
year 1895, and used it in trade in Illinois, Tennessee,
Mississippi, Louisiana, and Arkansas, the extent and particulars of
the use not being shown. Sharp competition appears to have been
carried on between the two companies in selling flour under the Tea
Rose brand at Meridian, Mississippi, in the years 1903 to 1905,
with the result that the Hanover Company, claiming that its use of
the mark for flour had antedated that of the Steeleville Company,
succeeded in obtaining a favorable decision in an informal
arbitration by officials of the Millers
Page 240 U. S. 422
National Federation, and, for this or some other reason,
Steeleville appears to have retired and left the Hanover Company in
complete control of the Meridian market. Aside from the business
done by the Steeleville Company at Meridian, there is no proof of
business done by it in the southeastern states, except that it made
an isolated sale of Tea Rose flour to a merchant at Whistler,
Alabama, in the year 1899, the quantity not stated, and two
isolated sales, involving a small quantity in each case, one to a
retailer in Tupelo, Mississippi, in the year 1910, the other to a
retailer in West Point, Mississippi, in January, 1912.
As we regard the proofs, they do not sustain the view of the
Circuit Court of Appeals for the Fifth Circuit either as to first
use or as to extensive, continuous, or exclusive use of the Tea
Rose brand by the Steeleville Company, and there is nothing in the
history of the use of the brand in the disputed territory to
deprive the Hanover Company of its right to be protected at least
against unfair competition at the hands of the Steeleville Company
or of Metcalf as its representative.
That there was such unfair competition, commenced by Metcalf
shortly before the bringing of the suit, the proofs clearly show.
Repeating that, since the year 1904, the Hanover Company had
extensively advertised its Tea Rose flour throughout the State of
Alabama and parts of Mississippi, Georgia, and Florida, with the
result that its sales of that flour in those markets amounted to
more than $150,000 a year, while the Hanover Star Milling Company
had come to be known as the Tea Rose mill, and the words "Tea Rose"
in the flour trade in that territory meant flour of the Hanover
Company's manufacture, and nothing else, and that, except for
isolated sales in Mississippi in 1910 and 1912, already mentioned,
no Tea Rose flour other than that of the Hanover Company had been
sold in that territory for a number of
Page 240 U. S. 423
years, it further should be stated that Hanover Tea Rose was
distributed in Butler County and adjoining counties in Alabama by
the McMullan Grocery Company, whose place of business was at
Greenville. They had built up a large trade for this flour in
Butler County and the neighboring counties of Conecuh, Covington,
Lowndes, and Crenshaw. The McMullan Company had the exclusive sale
of the Hanover Company's Tea Rose flour, so that Metcalf, who
likewise did business at Greenville, was unable to procure it for
distribution to his customers. A short time before the suit was
commenced, however, he announced to the public and the trade in
Butler County that he had secured Tea Rose flour, and, on receiving
a consignment from the Steeleville Company which was labeled "Tea
Rose" and put up in packages closely resembling those used by the
Hanover Company -- so closely that, according to the undisputed
evidence, they are
"calculated to and do in fact deceive the ordinary and casual
purchaser of flour into the belief that he is purchasing the
article of that name manufactured by the said Hanover Star Milling
Company"
-- Metcalf put large banners on his mules and dray, advertising
to the public that he had received a shipment of Tea Rose flour,
and that it was "Steeleville Milling Company's Tea Rose flour, best
quality." Metcalf and his traveling salesman who marketed the
greater part of this consignment, and several parties who purchased
it in lots of from one to ten barrels, deposed that it was not sold
under a representation that it was manufactured by the Hanover
Company, but, on the contrary, that it was Tea Rose flour
manufactured by the Steeleville Milling Company. But Metcalf's
purpose to take advantage of the reputation of the Hanover
Company's Tea Rose flour is so manifest, and the tendency of the
similarity of the brand and accompanying design, and of the make-up
of the packages, to mislead ultimate consumers, is so evident that
it seems to
Page 240 U. S. 424
us a case of unfair competition is made out. The circumstances
strongly indicate a fraudulent intent to palm off the Steeleville
Tea Rose flour upon customers as being the same as the Tea Rose
flour made by complainant, the reputation of which is shown to be
so well established. The mere substitution of "Steeleville" in the
place of "Hanover" on the labels is not convincing either that the
intent is innocent or that the result will be innocuous, since it
is accompanied with the words "Tea Rose" (shown to have acquired a
secondary meaning), and with the distinctive wrapping, both
indicative in that market of complainant's flour. Complainant is
thus shown to be entitled to an injunction against Metcalf
irrespective of its claim to affirmative trademark rights in that
territory.
Coats v. Merrick Thread Co., 149 U.
S. 562,
149 U. S. 566;
Elgin Nat'l Watch Co. v. Illinois Watch Co., 179 U.
S. 665,
179 U. S. 674.
Adjudication of the latter claim may be made, if necessary, upon
final hearing, when the proofs will presumably be more complete
than they now are.
It results that the decree under review in No. 23 should be
reversed, and the cause remanded for further proceedings in
conformity with this opinion, and that the decree in No. 30 should
be affirmed.
Decree in No. 23 reversed.
Appeal in No. 30 dismissed.
Decree in No. 30 affirmed.
MR. JUSTICE HOLMES, concurring:
I am disposed to agree that the decree dismissing the bill of
the Hanover Star Milling Company should be reversed, and that the
decree denying a preliminary injunction to the Allen & Wheeler
Company should be affirmed, and I agree in the main with the
reasoning of the Court, so far as it goes. But I think it necessary
to go farther even on the assumption that we are dealing with
Page 240 U. S. 425
the question of trademarks in the several states only so far as
commerce among the states is not concerned. The question before us,
on that assumption, is a question of state law, since the rights
that we are considering are conferred by the sovereignty of the
state in which they are acquired. This seems to be too obvious to
need the citation of authority, but it is a necessary corollary of
the
Trademark Cases, 100 U. S. 82. Those
cases decided that Congress cannot deal with trademarks as used in
commerce wholly between citizens of the same state. It follows that
the states can deal with them, as in fact they sometimes do by
statute, Mass.Rev.Laws, c. 72, ยงยง 2, 3, and when not by statute by
their common law.
As the common law of the several states has the same origin for
the most part, and as their law concerning trademarks and unfair
competition is the same in its general features, it is natural and
very generally correct to say that trademarks acknowledge no
territorial limits. But it never should be forgotten, and in this
case it is important to remember, that, when a trademark started in
one state is recognized in another, it is by the authority of a new
sovereignty that gives its sanction to the right. The new
sovereignty is not a passive figurehead. It creates the right
within its jurisdiction, and what it creates, it may condition, as
by requiring the mark to be recorded, or it may deny. The question,
then, is what is the common law of Alabama in cases like these. It
appears to me that, if a mark previously unknown in that state has
been used and given a reputation there, the state well may say that
those who have spent their money innocently in giving it its local
value are not to be defeated by proof that others have used the
mark earlier in another jurisdiction more or less remote. Until I
am compelled to adopt a different view, I shall assume that that is
the common law of the state. It appears to me that the foundation
of the right as stated by the court requires that conclusion.
See
Page 240 U. S. 426
further Chadwick v. Covell, 151 Mass.190, 193, 194.
Those who have used the mark within the state are those who will be
defrauded if another can come in and reap the reward of their
efforts on the strength of a use elsewhere over which Alabama has
no control.
I think state lines, speaking always of matters outside the
authority of Congress, are important in another way. I do not
believe that a trademark established in Chicago could be used by a
competitor in some other part of Illinois on the ground that it was
not known there. I think that, if it is good in one part of the
state, it is good in all. But when it seeks to pass state lines, it
may find itself limited by what has been done under the sanction of
a power coordinate with that of Illinois and paramount over the
territory concerned. If this view be adopted, we get rid of all
questions of penumbra of shadowy marches where it is difficult to
decide whether the business extends to them. We have sharp lines
drawn upon the fundamental consideration of the jurisdiction
originating the right. In most cases, the change of jurisdiction
will not be important, because the new law will take up and apply
the same principles as the old; but when, as here, justice to its
own people requires a state to set a limit, it may do so, and this
Court cannot pronounce its action wrong.