Radio Shack Corp. v. Radio Shack, Inc.

• Decision Date: 28 February 1950
• Docket Number: No. 9854.,9854.
• Citation: 180 F.2d 200
• Parties: RADIO SHACK CORPORATION v. RADIO SHACK, Inc.
• Court: U.S. Court of Appeals — Seventh Circuit

180 F.2d 200 (1950)

RADIO SHACK CORPORATION v. RADIO SHACK, Inc.

No. 9854.

United States Court of Appeals Seventh Circuit.

February 28, 1950.

Edward Sternberg, Chicago, Ill., Sol H. Asbach, Chicago, Ill., for appellant.

James W. Close, W. S. Bodman, G. E. Hale, Chicago, Ill. (Wilson & McIlvaine, Chicago, Ill., of counsel), for appellee.

Before MAJOR, Chief Judge, and KERNER and DUFFY, Circuit Judges.

DUFFY, Circuit Judge.

This is an action for unfair competition. Plaintiff, a Massachusetts corporation organized in 1935, is and has been engaged in the selling of radio and electronic parts and equipment to amateur radio operators, referred to as "ham operators," to servicemen who repair radio sets, to colleges, laboratories, and others. Plaintiff advertises on a national scale, issues catalogues, and does a large mail order business in all parts of the United States. Plaintiff and its predecessors have operated under the business name of "Radio Shack" since 1924.

In July, 1946, the individual defendants named in the complaint organized the defendant corporation under the laws of the State of Illinois. Defendant Ashbach had been engaged as a distributor of radio parts for some 15 years, and defendant Friedman had been a ham operator since 1935, and in the radio business for about 17 years. Defendant corporation proceeded to conduct its business in direct competition with plaintiff, selling similar articles of radio equipment, advertising in magazines of national distribution, and issuing catalogues or fliers. Mail orders from various persons and concerns throughout the United States accounted for a part of the business of defendant corporation. Defendant corporation claims, however, that a large proportion of its entire business was done in the State of Illinois.

Defendants filed an answer denying unfair competition, and several months later filed an amended answer which presented affirmative defenses of estoppel, laches, abandonment, acquiescence, and that the trade name of "Radio Shack" was publici juris. Defendants also filed a counterclaim, based upon an alleged conspiracy between plaintiff and various manufacturers and jobbers to have the manufacturers and jobbers refuse to sell goods and equipment to defendants.

The term, "Radio Shack," refers primarily to that part of a ship where the radio apparatus is located and operated. The term is also applied by ham operators to the location in their homes or other buildings where their radio sending and receiving apparatus is located and operated.

The trial court found that as applied to a business operation, the name, "Radio Shack," refers to the enterprise operated by plaintiff, that customers of radio and electronic equipment are familiar with the phrase as plaintiff's trade name, and that the adoption and use by the defendants of the phrase, "Radio Shack," as a trade name has caused, and its continued use would cause, confusion in the minds of the customers in the field in which plaintiff and defendants have carried on their business operations, and in the mind of the public generally. In the decree defendants were "permanently enjoined from carrying on business in the name of the plaintiff, or in any approximation thereof likely to confuse purchasers of radio equipment, or in any way infringing plaintiff's trade name." Defendants' counterclaim was dismissed and the court reserved jurisdiction as to accounting and damages.

Some 22 years after plaintiff herein was organized, and long after the plaintiff had widely used its corporate name as its trade name, defendants deliberately went into direct competition, using for all practical purposes the identical corporate and trade name. For some four years prior to incorporation of the defendant company at least one of its officers had knowledge of the plaintiff and of the operation of its business. Sufficient credible evidence sustains the findings of the trial court, and its conclusions of law are justified unless, as defendants claim, Illinois recognizes a most unusual principle of law, which we are bound to apply in the case at bar.

We must follow the rule stated by the Supreme Court in Pecheur Lozenge Co., Inc. v. National Candy Co., Inc., 1942, 315 U.S. 666, 62 S.Ct. 853, 86 L.Ed. 1103, and Fashion Originators' Guild of America, Inc., et al. v. Federal Trade Commission, 1941, 312 U.S. 457, 468, 61 S.Ct. 703, 85 L.Ed. 949, that in an action for unfair competition we are required to apply the appropriate State law¹ which in this case is that of Illinois.

Defendants rely almost entirely on Hazelton Boiler Co. v. Hazelton Tripod Boiler Co., et al., 142 Ill. 494, 30 N.E. 339, 343, decided in 1892. Our labors have been increased considerably by the fact that the opinion printed in the Northeastern Reporter and dated March 24, 1892, differs in several material aspects from the opinion printed in Vol. 142 of the Illinois Reports and dated October 14, 1892. The latter opinion is not only later in date, but the Illinois Reports are the official reports for the Supreme Court of Illinois. It is apparent that on a petition for rehearing, the court deleted portions of the opinion which it had released on March 24, 1892.

An examination of the opinion in the Hazelton case on file in the office of the Clerk of the Supreme Court of Illinois discloses those portions of the original opinion which were deleted. Before setting same forth, so far as they may be pertinent to the decision in the case at bar, a review of the facts in the Hazelton case seems desirable.

In 1881 Hazelton invented certain improvements for steam boilers and formed a partnership in New York with one Kennedy to manufacture and sell boilers. The partnership was dissolved and Hazelton went to Illinois. Early in 1884 the partners reconciled their differences and a new partnership was organized under the name of The Hazelton Boiler Company. The manufacture of boilers was undertaken and the product was widely advertised as Hazelton boilers. However, on July 10, 1884, the second partnership was dissolved, and Hazelton sold and assigned all of his interests, including his letters patent, to a brother of his former partner. Kennedy and two brothers continued to operate the business as partners, under the name of The Hazelton Boiler Company. On June 23, 1888, The Hazelton Boiler Company was organized as a New York corporation, and it acquired the business of the Kennedy partnership on April 13, 1889. In the meantime Hazelton had moved to Chicago, and on February 29, 1888, with several associates organized Hazelton Tripod Boiler Company, as an Illinois corporation, which manufactured boilers in the State of Illinois. Both plaintiff and defendant company sold directly to customers. The New York corporation, as plaintiff, sued in a State court of Illinois to restrain the Illinois corporation from using the name, "Hazelton Tripod Boiler Company," and the words, "Hazelton Boiler," and the word, "Hazelton," in their business of manufacturing and selling steam boilers. The Supreme Court of Illinois decided plaintiff was not entitled to injunctive relief.

In its opinion the court pointed out that so far as the suit related to the right of the defendant to make use of its corporate name in the transaction of business, two obstacles confronted the plaintiff, saying: "* * * The first grows out of the fact that the complainant is a junior corporation seeking to contest with a senior corporation the right of the latter to the use of its corporate name; and the second arises from the position of the complainant as a foreign corporation seeking to contest with a domestic corporation the right of the latter to the corporate name given by the sovereignty which created it." The court then strongly emphasized that the incorporation of the defendant corporation antedated that of plaintiff by four months, and that if there were any infringement, it was the plaintiff and not the defendant who was the aggressor. Then follows the paragraph relied on by defendants (with the portion, deleted on the rehearing, italicized), to-wit: "But the complainant is in the attitude of a foreign corporation coming into this state, and seeking to contest the right to the use of a corporate name which this state, in furtherance of its own public policy and in the exercise of its own sovereignty, has seen fit to bestow upon one of its own corporations. For such a purpose a foreign corporation, ordinarily, at least, can have no standing in our courts. Such corporations do not come into this state as a matter of legal right, but only by comity; and they cannot be permitted to come for the purpose of asserting rights in controvention of our laws or public policy. It is competent for this state, whenever it sees fit to do so, to debar any or all foreign corporations from doing business here; and whatever it may do by way of chartering corporations of its own cannot be called in question by corporations which are here only by a species of legal sufferance." In the original opinion, the paragraph just quoted contained the following additional language: "We would not be understood, however, as holding that cases may not arise where the name of a foreign corporation has so far become its trade-mark or trade name as to entitle it to protection in our courts against infringement caused by the chartering of a domestic corporation by the same name. We only wish to hold that the present case is not of that character."²

We do not know of any State court which has cited the Hazelton Boiler Co. case with approval. On its face, the opinion is legally unsound, and quite understandably other courts have refused approval of its doctrine. Judge Learned Hand, in United States Light & Heating Co. of Maine v. United States Light & Heating Co. of New York, et al., C.C., 181 F. 182, page 184, paid his respects to the Hazelton decision in the following language: "* * * No one contends that a domestic corporation...