122 F.2d 400 (4th Cir. 1941), 4813, E.I. Du Pont De Nemours & Co. v. Sylvania Indus. Corp.

Docket Nº:4813.
Citation:122 F.2d 400, 50 U.S.P.Q. 534
Case Date:August 16, 1941
Court:United States Courts of Appeals, Court of Appeals for the Fourth Circuit

Page 400

122 F.2d 400 (4th Cir. 1941)

50 U.S.P.Q. 534




No. 4813.

United States Court of Appeals, Fourth Circuit.

August 16, 1941

Page 401

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 deNemours 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 trade-mark, 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, 59 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 filed 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 master 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

Page 402

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 trade-mark 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 (83 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 trade-mark, 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 trade-mark, 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...

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