156 F.2d 474 (7th Cir. 1946), 8777, General Industries Co. v. 20 Wacker Drive Bldg. Corp.

Docket Nº:8777.
Citation:156 F.2d 474, 70 U.S.P.Q. 282
Case Date:July 16, 1946
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit

Page 474

156 F.2d 474 (7th Cir. 1946)

70 U.S.P.Q. 282




No. 8777.

United States Court of Appeals, Seventh Circuit.

July 16, 1946

Rehearing Denied Aug. 10, 1946.

Page 475

Ralph M. Snyder, of Chicago, Ill., and King Fauver, of Elyria, Ohio, for appellee.

Before EVANS and MINTON, Circuit Judges, and LINDLEY, District Judge.

MINTON, Circuit Judge.

The defendants appealed from a judgment in favor of the plaintiff which enjoined them from adopting and using the name General Industries Corporation.

The plaintiff, incorporated in Ohio in 1914, first adopted the name, The General Industries Company, in 1925. During World War II it manufactured largely military equipment. Before the war it had made and sold plastic parts, spring motors, electric motors, phonograph record changers, sound recording units, typewriters, heat regulators, road markers, automobile horns, movie projectors, massage machines, plumbing supplies, telephone switchboards, and other devices. At the present time, it operates a plastic division and a mechanical division. It is licensed to transact business only in the State of Ohio but sells generally all over the country, maintaining one of its soliciting offices under its own name in Chicago. It accepts transmitted orders at its home office in Ohio and then ships the goods to various States.

The trial court found that the plaintiff's products have been long and favorably known, but there was no finding that they were known by its corporate name. The court further found that plaintiff advertises extensively in trade papers, where its name is actively featured; that its annual business by 1943 exceeded $10, 000, 000 in volume; and that by fair dealing, integrity, prompt deliveries, and excellence of its product, plaintiff has during twenty years built up a valuable good will in its corporate and trade name.

The defendant General Finance Corporation was previously engaged only in the general finance business. When the war interrupted its ordinary operations, it purchased several subsidiary manufacturing corporations. It also controls a building corporation which owns the Civic Opera Building in Chicago. All three defendants, 20 Wacker Drive Building Corporation, LaSalle Industrial Finance Corporation, and General Finance Corporation, proposed to merge in one corporation to be known as General Industries Corporation. When the plaintiff learned of this plan, it brought the present suit.

Upon the trial the court found the foregoing facts and additionally that a likelihood of confusion would arise from the defendants' use of a name practically identical with that of the plaintiff and that the nearly exact identity of the two names would be very confusing to any person dealing in the stock of either corporation and in identifying products produced or to be produced by the two companies.

The court concluded that the plaintiff is entitled to be protected from confusion arising from the practical identity of the names, from confusion as to identity of the corporations, and from probable damage to its credit or to its reputation for fair dealing and responsibility. There is no finding to support this latter conclusion. The court further concluded that the public is

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likewise entitled to be protected from the effects of such confusion, and that under the laws of Illinois it is not necessary to establish direct competition but that it is sufficient to show that confusion in the trade and on the part of the public is likely to result and that the plaintiff has a property right in its nationally known corporate and trade name and is entitled to be protected against its appropriation by a later comer in the same general field. The court then enjoined the defendants from using or causing to be used the name General Industries Corporation or any name similar thereto.

Two questions are presented. First, may the plaintiff, a foreign corporation that has not received a license to do business in the State of Illinois, maintain this suit in a Federal court in Illinois? Second, if it has the right to maintain the suit, is the finding of fact that there is likelihood of confusion in the minds of the public sufficient to support an injunction?

As to the first question, we think it clear that the State of Illinois may deny to a foreign corporation the right to sue in its courts to enjoin a domestic corporation from using a name similar to that of the foreign corporation where such foreign corporation has not complied with the statute of Illinois which permits such corporation to do business in the State. Hazelton Boiler Co. v. Hazelton Tripod Boiler Co., 142 Ill. 494, 30 N.E. 339. Neither can a foreign corporation with a name 'deceptively similar' to that of a domestic corporation in Illinois mandate the Secretary of State to admit such foreign corporation to do business under such 'deceptively similar' name. Investors Syndicate v. Hughes, 378 Ill. 413, 38 N.E.2d 754. In that case the court held that the Secretary of State, who had found that the Investors Syndicate of America, the name of the plaintiff Minnesota corporation, was in the words of the statute 'deceptively similar' to Investors Syndicate, the name of the existing Illinois corporation, had not abused his administrative discretion in refusing to license the Minnesota corporation in Illinois. This was a case where the legislature had acted to protect the public from confusion that might arise from the use of 'deceptively similar' names. The standard was set by the legislature and the discretion was placed in the Secretary of State to apply that standard. It did not involve the law of unfair competition and the standards of confusion pertinent thereto where the suits are brought by private parties.

While these two cases seem to effectively foreclose the plaintiff from any remedy in the courts of Illinois, it does not follow that the Federal courts are also closed to the plaintiff. We think the plaintiff has a right to sue the defendants in the Federal courts on a cause in which the courts of Illinois may be closed to it. David Lupton's Sons Co. v. Automobile Club of America, 225 U.S. 489, 500, 32 C.Ct. 711, 56 L.Ed. 1177, Ann. Cas. 1914A, 699; Metropolitan Life Insurance Co. v. Kane, 7 Cir., 117 F.2d 398, 133 A.L.R. 1163; Peck Bros. & Co. v. Peck Bros. Co., 7 Cir., 113 F. 291, 62 L.R.A. 81.

Having brought the suit in the Federal court because of a likelihood of confusion in names, the law of Illinois as to the right of the plaintiff to any equitable relief must control. Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, 114 A.L.R. 1487.

We must now answer the second question: Is the finding of fact that there is likelihood of confusion in the minds of the public sufficient to support an injunction?

The plaintiff's name is composed of generic words incapable of exclusive appropriation by the plaintiff. They are words publici juris. There is no finding of fraud by the defendants in the proposed use of the similar name. The parties are not found to be or likely to be in competition with each other. There is no finding that the defendants now do business outside the State of Illinois or that they intend to do so in the future under the name General Industries Corporation. The court found that the plaintiff sells mostly to manufacturers, to a lesser extent to jobbers and dealers, and occasionally to individuals. There is no finding that the goods of the plaintiff are sold to or are known to the trade by the plaintiff's name. In other words, there is no finding of a secondary meaning attaching to the plaintiff's name in

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relation to the sale of its products. We have the bare naked question of whether the plaintiff can enjoin the defendants from the use of a similar corporate name, the mere use of which is likely to lead to confusion. The authority in Illinois would seem to indicate that the plaintiff is not entitled to such equitable relief.

The case of Hazelton Boiler Co. v. Hazelton Tripod Boiler Co., supra, is attempted to be distinguished on the ground that the court there held that its courts were not open to a foreign corporation that had not complied with the Foreign Corporation Act of Illinois. This Act provided that a foreign corporation must be licensed to do business in Illinois before it is entitled to sue in the State courts to enjoin a domestic corporation of Illinois from using a similar corporate name. While the court did decide this point quite clearly, it went further and said:

'If any confusion has occurred, it has arisen from the similarity of the two...

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