Stork Restaurant v. Sahati

• Decision Date: 18 February 1948
• Docket Number: No. 11657.,11657.
• Parties: STORK RESTAURANT, Inc. v. SAHATI et al.
• Court: U.S. Court of Appeals — Ninth Circuit

166 F.2d 348 (1948)

STORK RESTAURANT, Inc. v. SAHATI et al.

No. 11657.

Circuit Court of Appeals, Ninth Circuit.

February 18, 1948.

COPYRIGHT MATERIAL OMITTED

Malone & Sullivan, William M. Malone and Raymond L. Sullivan, all of San Francisco, Cal., for appellant.

Albert Picard, of San Francisco, Cal. (Alfred E. Graziani, of San Francisco, Cal., of counsel), for appellee.

Before GARRECHT, MATHEWS and HEALY, Circuit Judges.

GARRECHT, Circuit Judge.

The appellant seeks to enjoin the appellees from using its trade name, "The Stork Club", and its insigne, consisting of a stork standing on one leg and wearing a high hat and a monocle. The complaint likewise asked for damages in the sum of $5,000, but that prayer was waived.

The court below entered judgment denying injunctive relief. From that judgment the present appeal has been taken.

1. The Facts

There is no dispute concerning the salient facts of this case. In their brief, the appellees concede that factual statement given in the appellant's opening brief is "substantially correct for the purpose of this appeal."

The appellant owns and operates a cafe and night club at No. 3 East 53d Street, New York, N. Y., known as "The Stork Club", described in a newsreel as "the best and most publicized night club in the entire world". The name had been used in New York by the appellant's two predecessor corporations since 1929.

As found by the court below, the appellant has been operating that establishment since on or about August 15, 1934. The cafe supplies "expensive food, beverages, music and dancing facilities", employs approximately 240 persons, and yields an average annual gross income of more than $1,000,000.

The appellant has spent more than $700,000 during the past eleven years in advertising on a nation-wide scale. This advertising was conducted through various media, including radio, newspapers, magazines, books, motion pictures, and established mailing lists. Another form of the publicity technique used by the appellant has been "cash advertising" — gifts to customers which included automobiles, 400 radios, one of which is an exhibit in this case; thousand dollar bills, none of which are exhibits here; five hundred dollar bottles of perfume, and "thousands" of thirty-five dollar bottles of perfume. Still another form of promotion has been "house advertising" — food and liquor given away to newspaper people, to radio, stage, and screen celebrities, and to "men in prominent and public life in the industrial world".

Newspapers throughout the country publish articles and photographs relating to the Stork Club. Many of America's leading syndicate writers mention it in their columns. Articles and advertisements relating to it appear in magazines of national circulation, and books have been written about it.

The club has been mentioned in many national hook-up radio programs, such as those of Bing Crosby, Frank Sinatra, Eddie Cantor, Walter Winchell, Jack Benny, Jimmy Durante, and Fred Allen.

A motion picture entitled "The Stork Club", produced by Paramount Pictures at a cost of nearly $1,700,000 and starring Betty Hutton and Barry Fitzgerald, was given 14,457 exhibitions throughout the United States, during a run of fifty-nine weeks, at a rental of $3,018,676.26. In northern California and adjacent territory, that picture was given 532 showings, during a run of sixty weeks, at a rental of $126,588.89. And in San Francisco alone, during a ten-day run at the Fox Theater, it was viewed by 83,729 persons. According to the deposition of George A. Smith, western sales manager for Paramount, one of the reasons for popularity of the picture was that "it had a very salable title, the popularity of the Stork Club was spread all over the United States". The Stork Club was paid $27,500 for the use of its name. Pathe News and "March of Time" have shown scenes from the Stork Club.

Despite the fact that it decided that the appellant was not entitled to an injunction to prevent its trade name from being appropriated by another, the court below did make the following finding of fact:

"By reason of the manner in which plaintiff has been conducting and operating `The Stork Club', * * * and by reason of the large sums of money expended by plaintiff in advertising and otherwise promoting its said business in the State of New York, the said plaintiff's `The Stork Club' has acquired a widespread and valuable reputation, and has commanded and now commands patronage from visitors to New York from throughout the United States; during all of the time said business has been conducted, the same has been, and now is patronized by visitors to New York both from in and about the City of New York and from the United States at large, including the metropolitan area of San Francisco, California; * * * that by reason of the foregoing, the said business of plaintiff conducted and operated under the name `The Stork Club' and with the aforesaid insignia used in conjunction therewith, became and now is known to many persons in and about the City and County of San Francisco * * * as a club in New York." (Emphasis supplied.)

On the other hand, the court found that, on or about April 6, 1945, the appellees "began the operation of, and continuously since that date have been operating and conducting a small bar, tavern and cocktail lounge at No. 200 Hyde Street, in * * * San Francisco * * * under the name of `Stork Club' * * * ." In another finding, the court indicated that a predecessor of the appellees had used the name at that location since March 1, 1943. The establishment has about ten stools at the bar, and will accommodate about fifty persons. It has about four steady employees, and serves only such food as is necessary to "conform with the law regulating the operation of bars." There are a few tables. There is no dancing, although the match pads distributed by the appellee for advertising purposes depict a dancing couple.

The appellees had a pianist "at one time", and when they "took over from the previous ownership there was a three-piece orchestra that they had on their payroll for probably two years". This orchestra continued with the appellees for about a month after the latter took over. The appellees have displayed a panel, suspended from the marquee and extending all around its three sides, with the word "Entertainment" emblazoned on each of the three sides. Napkins used in the appellee's establishment carried the picture of a stork standing on one leg and wearing a high hat, with the legend, "Stork Club * * * Finest Liquors. Expertly Blended Entertainment sic". Nicholas M. Sahati, one of the appellees, testified in this connection: "There might have been a few leftover napkins that the former owners had in the place when we took over, with the picture of a stork, which we used up, but never did order any napkins of that type. * * * I couldn't say exactly, maybe a few dozen. * * * There might have been a larger quantity; I have no method of knowing."

2. The Weight to Be Given to the Findings

At the threshold of our discussion of the law and the facts of this case, it should be pointed out that the bulk of the testimony was by deposition. In so far as such testimony is concerned, it is well settled that in an equity case "the reviewing court gives slight weight to the findings." Equitable Life Assurance Soc. v. Irelan, 9 Cir., 123 F.2d 462, 464; cf. Smith v. Royal Ins. Co., 9 Cir., 125 F.2d 222, 224, certiorari denied, 316 U.S. 695, 696, 62 S. Ct. 1291, 86 L.Ed. 1765.

In their brief, the appellees repeatedly advert to the fact that "There is not involved in this appeal any question of a registered trade mark". While this statement is undoubtedly true, the appellees can derive little comfort from it.

3. Trade Names and Trademarks Stand on a Similar Footing

In California and elsewhere, a firmly established trade name receives the same protection from the law as a trade mark. In the recent case of Eastern Columbia, Inc. v. Waldman, 30 Cal.2d 268, 271, 181 P.2d 865, 867, the Supreme Court of California said:

"It is asserted by defendant that an absolute injunction will not be granted for the infringement of the right to use a word in what is called a `secondary meaning' as distinguished from a technical trademark. Where words have acquired, as is established beyond dispute in this case, a fanciful meaning — a meaning that has no connection with their common meaning, it may be more properly said that such meaning is their primary meaning in so far as their use in business is concerned. Their common meaning has dropped into the background. Otherwise no right to use them to the exclusion of others would have been acquired. When, however, words have acquired such a sense and are the subject of the good will and reputation of a business which they designate, there is little if anything left to distinguish them from a trademark, a symbol, characters or words which have no common meaning and which are artificial, insofar as the scope of protection afforded to the one who has the prior right.

"An absolute injunction is proper where defendant's conduct is unlawful. Authority cited The protection afforded trade names which have acquired the status here reached is treated in the same category as trademarks, where it is not necessary that the competitor use the words to describe his product. Many cases cited" (Emphasis supplied.)

See also R. H. Macy & Co., Inc. v. Macys, Inc., D.C.Okl., 39 F.2d 186, 187; Restatement of the Law, torts, vol. 3, pages 562-566.

Accordingly, in the present inquiry it will be helpful to consider decisions dealing with trademarks as well as those concerned simply with trade names.

4. A Trade Name Gives Rise to a Property Right

Ownership of a trade name is a property right. It is made so by statute in California. Sections 14400, 14401 and 14402 of the Business and Professions Code (Deering, 1944) read as follows:

"§ 14400. Ownership. Any person who has...