Stauffer v. Exley

Decision Date22 November 1950
Docket NumberNo. 12258.,12258.
PartiesSTAUFFER et al. v. EXLEY.
CourtU.S. Court of Appeals — Ninth Circuit

Forrest F. Murray, Harris, Kiech, Foster & Harris, Ford Harris, Jr., Jack Barry, Jr., all of Los Angeles, Cal., for appellants.

Frank P. Doherty, William R. Gallagher and Frank W. Doherty, all of Los Angeles, Cal., for appellee.

Before DENMAN, Chief Judge, and ORR and POPE, Circuit Judges.

ORR, Circuit Judge.

This action was brought for the recovery of damages arising out of alleged acts of unfair competition and for the issuance of an injunction against the commission of future similar acts. A separate trial was had on the issue of jurisdiction, following which the trial court made findings of fact and conclusions of law and dismissed the complaint for lack of jurisdiction. The trial court found that appellant, Stauffer System, Inc., is a corporation of California and that both individual appellant and appellee are citizens and inhabitants of California. It also found that appellants are engaged in interstate commerce and use the unregistered trade name "Stauffer System" in interstate commerce and that the action is a simple action for unfair competition, not joined with a substantial and related claim under the copyright, patent or trade-mark laws. The wrongful acts alleged in the complaint are the use by appellee of the name "Stauffer" and the use of advertising, similar to that in use by appellants, in such a way as to deceive the public into believing that the services offered by appellee originate with appellants.

The trial court reached the conclusion that the Trade-Mark Act of July 5, 1946 does not confer original jurisdiction upon the district courts of the United States in actions for unfair competition in the absence of diversity of citizenship of the parties where there is no substantial and related claim under the copyright, patent or trade-mark laws joined to such actions. We do not agree.

The Lanham Trade-Mark Act of July 5, 1946, 15 U.S.C.A. §§ 1051-1127, hereinafter referred to as the Act, provides comprehensively for federal registration and protection of trade-marks, for protection of trade names, and for remedies against unfair competition. Section 1126(b) provides that nationals, etc., of foreign countries with which the United States has a convention or treaty relating to trade-marks, trade names or unfair competition shall be entitled to the benefits and subject to the provisions of the Act insofar as essential to give effect to such conventions and treaties.1 Subsection (i) of the same section provides: "Citizens or residents of the United States shall have the same benefits as are granted by this section to persons described in subsection (b) * * *." Subsection (h) provides that the persons described in subsection (b) "shall be entitled to effective protection against unfair competition, and the remedies provided in this chapter for infringement of marks shall be available so far as they may be appropriate in repressing acts of unfair competition." Subsection (g) provides: "Trade names or commercial names of persons described in subsection (b) of this section shall be protected without the obligation of filing or registration whether or not they form parts of marks." Therefore, under the provisions above mentioned, any citizen or resident may invoke in the United States District Court, for acts of unfair competition, whatever appropriate remedies would be available under the Act if infringement of a registered trade-mark were charged.

Appellee contends that Congress, in enacting the revision of Title 28, effective September 1, 1948, partially withdrew the jurisdiction over the repression of unfair competition which had been granted to the district courts by the Lanham Trade-Mark Act.2 28 U.S.C.A. § 1337, giving the district courts jurisdiction over actions arising under any Act of Congress regulating commerce, and § 1338(a), giving the district courts jurisdiction over actions arising under any Act of Congress relating to trade-marks, are rather a reaffirmation of the grant of jurisdiction in the Lanham Act. Appellee relies, however, upon § 1338(b), which provides: "The district courts shall have original jurisdiction of any civil action asserting a claim of unfair competition when joined with a substantial and related claim under the copyright, patent or trade-mark laws."

In construing the sections of title 28 weight should be given to the reviser's notes which were included in the committee reports when the legislation was before Congress. See Ex parte Collett, 1949, 337 U.S. 55, 69 S.Ct. 944, 959, 93 L.Ed. 1207, 10 A.L.R.2d 921; United States v. National City Lines, 1949, 337 U.S. 78, 69 S.Ct. 955, 93 L.Ed. 1226. The reviser's note to § 1338 states: "Subsection (b) is added and is intended to avoid `piecemeal' litigation to enforce common-law and statutory copyright, patent, and trade-mark rights by specifically permitting such enforcement in a single civil action in the district court. While this is the rule under Federal decisions, this section would enact it as statutory authority. The problem is discussed at length in Hurn v. Ousler, 1933, 289 U.S. 238, 53 S. Ct. 586, 77 L.Ed. 1148, and in Musher Foundation v. Alba Trading Co., 2 Cir., 1942, 127 F.2d 9, majority and dissenting opinions."

In Hurn v. Oursler, the plaintiff sought an injunction against presentation of a play which allegedly (a) infringed the copyright on a play of the plaintiff's and (b) was so similar to the plaintiff's copyright play as to make the threatened presentation an act of unfair competition. The Supreme Court held that because the federal claim, copyright infringement, and the non-federal claim, unfair competition, were two grounds supporting a single cause of action, i. e., violation of the right to protection of the copyrighted play, the district court had jurisdiction over the entire complaint. In Musher Foundation v. Alba Trading Co., 2 Cir., 1942, 127 F.2d 9, the complaint alleged both infringement of the plaintiff's patent for infusion of olive oil or paste into corn oil and unfair competition through the use of the word "infused" in advertising the defendant's product. The court held that on the facts the two claims were not closely enough related to come under the rule of Hurn v. Oursler. The dissenting opinion, referred to in the reviser's note, is illuminating: "The conceptual yardstick of the Hurn doctrine is the `cause of action'; a single cause of action giving rise to both federal and non-federal rights may be completely adjudicated in the federal courts, where it must be anyhow because of the federal rights. * * * The cause or ground of the action is, broadly, the unfair appropriation by defendant of plaintiff's property, protected by either state law or federal law or both, in a trade-mark or a book or an invention." 127 F.2d 11.

It is clear that both the Hurn and the Musher Foundation cases and, therefore, § 1338(b) are concerned with the conditions under which federal courts may, in the absence of diversity of citizenship, adjudicate rights against unfair competition arising under state law. The purpose of § 1338(b) is to extend federal jurisdiction to the furthest possible extent by means of the rule that where jurisdiction is established on a federal ground, the court may dispose of the entire case before it, including the adjudication of any non-federal grounds invoked for relief. Reliance on § 1338(b) is unnecessary where there is an independent ground of federal jurisdiction over an action for unfair competition. The ground of jurisdiction over the unfair competition alleged in the instant case is the exercise by Congress of its power to repress unfair competition which affects interstate commerce, through the enactment of the Lanham Act and the granting of jurisdiction over actions arising under that Act in §§ 1337 and 1338(a) of title 28. If the alleged unfair competition before us is purely local and did not affect interstate commerce, we then have to look for federal jurisdiction in § 1338(b), or in diversity of citizenship. But if the alleged unfair competition, though local in the sense that the defendant was transacting only intrastate business, nevertheless affected the plaintiffs' interstate business, the situation is otherwise.

A case of the kind last mentioned is not an appropriate one for the application of the rule that grants of federal jurisdiction should be construed strictly. Jurisdiction in such a case is unequivocally granted by the Lanham Act and by §§ 1337 and 1338(a) of title 28. If § 1338(b) is looked upon as limiting the jurisdiction thus granted, it can be only by construing § 1338(b) as an implied repeal of part of the Lanham Act. The rule that implied repeals are not favored and should be avoided if a reasonable construction permits is reinforced here by § 39 of the Act of June 25, 1948, c. 646, 62 Stat. 992, the statute by which the revision of Title 28 was enacted. Section 39 sets out schedules of statutory provisions which it declares to be "hereby repealed." No provision of the Lanham Act appears in the schedule of repealed laws. We construe § 1338(b) as not affecting the jurisdiction granted under the Lanham Trade-Mark Act.

The protection granted by the Lanham Act against unfair competition, however is limited by § 1126(h) of the Act to "the remedies provided in this chapter for infringement of marks * * * so far as they may be appropriate in repressing acts of unfair competition." The general provision for remedies against trade-mark infringement is § 1114(1), which provides: "Any person who shall, in commerce, (a) use, without the consent of the registrant, any reproduction, counterfeit, copy, or colorable imitation of any registered mark in connection with the sale, offering for sale, or advertising of any goods or services on or in connection with which such use is...

To continue reading

Request your trial
86 cases
  • Smith v. Sperling
    • United States
    • United States District Courts. 9th Circuit. United States District Court (Southern District of California)
    • December 16, 1953
    ...of jurisdictional issues in advance of the trial of other issues. Fed.Rules Civ.Proc. rule 12(d), 28 U.S.C.A.; Stauffer v. Exley, 9 Cir., 1950, 184 F.2d 962, 967; 2 Moore's Federal Practice § 12.16 (2d ed. And the Supreme Court has declared that: "As there is no statutory direction for proc......
  • Haeger Potteries v. Gilner Potteries, Civ. No. 16391.
    • United States
    • United States District Courts. 9th Circuit. United States District Court (Southern District of California)
    • June 28, 1954
    ...controversy or to diversity or lack of diversity of the citizenship of the parties." 15 U.S.C.A. § 1121. It is urged that Stauffer v. Exley, 9 Cir., 1950, 184 F.2d 962, and more recently Pagliero v. Wallace China Co., 9 Cir., 1952, 198 F.2d 339, serve as authority for the contention that pl......
  • Steele v. Bulova Watch Co
    • United States
    • United States Supreme Court
    • December 22, 1952
    ...C. Johnson & Son v. Johnson, 2 Cir., 1949, 175 F.2d 176; Campbell Soup Co. v. Armour & Co., 3 Cir., 1949, 175 F.2d 795; Stauffer v. Exley, 9 Cir., 1950, 184 F.2d 962. See also National Fruit Product Co. v. Dwinell-Wright Co., D.C.1942, 47 F.Supp. 499. And see Zlinkoff, Erie v. Tompkins: In ......
  • Shaffer v. Coty, Inc.
    • United States
    • United States District Courts. 9th Circuit. United States District Court (Southern District of California)
    • May 3, 1960
    ...D.C.S.D.Cal. 1954, 123 F.Supp. 261, 264-266; cf.: Pagliero v. Wallace China Co., 9 Cir., 1952, 198 F.2d 339, 340-341; Stauffer v. Exley, 9 Cir., 1950, 184 F.2d 962, 964-967; In re Lyndale Farm, 1951, 186 F.2d 723, 725-727, 38 CCPA 825, Plaintiff then filed by leave of court an amended compl......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT