EI Du Pont De Nemours & Co. v. Sylvania I. Corporation

• Decision Date: 16 August 1941
• Docket Number: No. 4813.,4813.
• Citation: 122 F.2d 400
• Parties: E. I. DU PONT DE NEMOURS & CO. v. SYLVANIA INDUSTRIAL CORPORATION.
• Court: U.S. Court of Appeals — Fourth Circuit

122 F.2d 400 (1941)

E. I. DU PONT DE NEMOURS & CO. v. SYLVANIA INDUSTRIAL CORPORATION.

No. 4813.

Circuit Court of Appeals, Fourth Circuit.

August 16, 1941.

Hugh M. Morris, of Wilmington, Del. (J. Gordon Bohannan, of Petersburg, Va., on the brief), for appellant.

C. O'Conor Goolrick, of Fredericksburg, Va., and Ellis W. Leavenworth, of New York City (Leslie D. Taggart, of New York City, on the brief), for appellee.

Before PARKER, SOPER, and DOBIE, Circuit Judges.

SOPER, Circuit Judge.

The validity of the word "cellophane" as a trade-mark indicating a kind of wrapping material manufactured by E. I. duPont de Nemours and Company, a Delaware corporation, is the subject matter of this suit in which Sylvania Industrial Corporation, a Virginia corporation, is charged with infringement and unfair competition. In answer to the bill of complaint Sylvania denied infringement and averred affirmatively that "cellophane" is not a trademark, but is a generic and descriptive name used by the public and the trade to indicate a kind of product manufactured both by plaintiff and by defendant. Going further, Sylvania averred that the character of "cellophane" as the descriptive name of a product was adjudicated in DuPont Cellophane Co., Inc. v. Waxed Products Co., Inc., 2 Cir., 85 F.2d 75, certiorari denied, 299 U.S. 601, 57 S.Ct. 194, 81 L.Ed. 443, 304 U.S. 575, 58 S.Ct. 1047, 82 L.Ed. 1539, 305 U.S. 672, 59 S.Ct. 227, 83 L.Ed. 436, in which case the plaintiff in the instant case, as successor to a wholly owned subsidiary, was plaintiff, and Waxed Products Company, Inc., a customer of Sylvania, was defendant; and that Sylvania, being interested in the suit, employed counsel and defended the suit on behalf of its customer openly and to the knowledge of the plaintiff and the court.

Upon these pleadings in the instant case, Sylvania moved in the District Court for summary judgment dismissing the complaint, in accordance with Rule 56 of the Federal Rules of Civil Procedure, 28 U.S. C.A. following section 723c. This motion came on for hearing upon the pleadings and certain affidavits and other documents filed by the parties. The District Judge, being of opinion that the plaintiff was estopped from maintaining the action by the final judgment adverse to DuPont in the prior case, granted the motion and dismissed the suit. The propriety of this ruling is the only question on this appeal. That question involves the determination of (1) the basis of the court's decision in the prior case, and (2) Sylvania's connection therewith.

In connection with the motion for summary judgment, the following facts with reference to the use of the term "cellophane" by Sylvania and its customers were established: DuPont and Sylvania are the only manufacturers of the product in this country. Prior to the end of 1936, Sylvania, in contracting with its customers, described the goods as "transparent cellulose wrapping paper". Sylvania first used the term "cellophane" in its advertisements in December, 1936, and first used it on its goods in November, 1937. These uses were subsequent to the decision of the trial court in the prior case on May 11, 1934, and the decision of the appellate court therein on July 17, 1936; but Sylvania filled customers' orders for cellophane with its own product from 1930 until 1933. Sylvania did not encourage the use of the word by the public, and uniformly advised its customers to avoid its use. The Waxed Products Company, defendant in the prior case, did not use the word on its goods or in its advertisements, but supplied customers who asked for cellophane with material made by Sylvania.

The following facts were shown with regard to Sylvania's connection with the Waxed Products Company's case. Sylvania petitioned the trial court therein for leave to intervene on the ground that the word "cellophane" was a descriptive name for its product, and that its customers could not sell it successfully without filling orders for cellophane, and hence Sylvania had a substantial interest in the outcome of the case. The District Judge held that this motion should be denied as a matter of discretion, unless Sylvania would stipulate to be bound in all respects by the final decree. Sylvania was unwilling to make this stipulation, and intervention was therefore denied. But counsel who appeared for Waxed Products Company said in his opening statement that although Sylvania was not willing to face the eventualities of the required stipulation, it did come into the case to take care of the defendant. Prior to the examination of the witnesses, counsel for the defendant, in reply to a question from counsel for DuPont, declined to say that Sylvania was guiding and controlling the defense, but admitted that counsel representing the defendant was employed by Sylvania; and in answer to questions from counsel for DuPont, the President of the Waxed Products Company testified that the attorneys employed by Sylvania were in charge of the defense. Under these circumstances the District Judge made the following statement in his opinion (DuPont Cellophane Co. v. Waxed Products Co., 6 F. Supp. 859, 862): "It is admitted by the defendant that attorneys selected and paid by Sylvania Industrial Corporation, and not by defendant, are defending and guiding this suit." Upon the same question, the District Judge in the pending case made the following finding in his memorandum opinion: "The defendant in the prior suit was the seller of cellophane made by the defendant in this suit, and the defendant in this suit selected and paid the attorneys who defended and guided that suit to the knowledge of the plaintiff."

It is not open to doubt that the DuPont Company in the prior case sought an adjudication that it possessed a valid trademark in the word "cellophane", or that the suit was defended on the ground, amongst others, that the word, if ever a valid trade mark, had become a generic name descriptive of the product. The District Court rejected this defense and held that "cellophane" was a valid trade-mark which DuPont owned and was alone entitled to use. The court said (6 F. Supp. 884): "The name `Cellophane' characterizes a single thing coming from a single source, and is a valid trade-mark, even if it should be shown that the product is more emphasized than the producer, or that the identity of the producer was unknown." Accordingly, the court issued a decree which provided:

"1. That the name cellophane is a valid trade-mark.

"2. That plaintiff is the owner of and alone entitled to use the trade-mark cellophane, and that its goods alone can lawfully be sold under that name.

"3. That defendant has infringed the exclusive rights of the plaintiff by supplying and passing off in response to requests for cellophane transparent film not manufactured by plaintiff."

The decree also provided that a writ of injunction should issue against Waxed Products Company from using the word "cellophane" in connection with any product not made by DuPont, and from filling orders for cellophane with any such product without explaining to the purchaser that the goods were not DuPont's.

On appeal this finding as to the character of the word was reversed. The Circuit Court of Appeals said (85 F.2d 77):

"The court below made a finding that the name `characterizes a single thing coming from a single source, and is a valid trademark, even if it should be shown that the product is more emphasized than the producer or that the identity of the producer is unknown.' This finding seems to us not only not warranted by the evidence but clearly disproved. * * *

"It would have served as a useful trademark, at least in the beginning, if it had not almost immediately lost ground as such because it was employed to describe the article itself. Indeed, no other descriptive word was adopted."

After reviewing the evidence as to the origin of the product, and of the descriptive word in France and its use in France and elsewhere prior to 1923, the court said (85 F.2d 78): "It seems quite evident that the French manufacturers and their agents, as well as the relatively limited public that were interested in using these cellulose films before DuPont entered the field, constantly employed the word `cellophane' to describe the product and that it was used in a generic sense from the beginning."

The court then reviewed the evidence on the same subject after the acquisition of the French interests by the DuPont Company in 1923, and said (85 F.2d 80):

"The course of conduct of the complainant and its predecessors, and especially complainant's advertising campaign, tended to make cellophane a generic term descriptive of the product rather than of its origin and, in our opinion, made it so to at least a very large part of the trade. * *

"The evidence we have summarized demonstrates that `cellophane' is used to designate the cellulose product we are concerned with, far more commonly than any other term, and is certainly the descriptive word in general use."

Summarizing the whole question as to the signification of the word "cellophane", the court said (85 F.2d 82): "In the present case the word `cellophane' ordinarily signifies the cellulose product we have been discussing and nothing more, but to certain persons it is probable that it means the complainant's goods."

The court then held that the decree of the District Court should be modified so as to conform to the following statement (85 F.2d 82): "The defendant should be allowed to use the word cellophane unconditionally in dealing with those to whom it means no more than the product and should be able to fill orders for cellophane received from such persons either with Sylvania cellophane or any other cellophane. But as the complainant's use of the word `cellophane' has had a wide publicity, there may be some persons who desire DuPont cellophane. Accordingly, it seems to us in the interest of justice that, when filling orders for cellophane, ...