Jewel Tea Co. v. Kraus

• Decision Date: 06 March 1951
• Docket Number: No. 10154.,10154.
• Citation: 187 F.2d 278
• Parties: JEWEL TEA CO., Inc. v. KRAUS.
• Court: U.S. Court of Appeals — Seventh Circuit

187 F.2d 278 (1950)

JEWEL TEA CO., Inc. v. KRAUS.

No. 10154.

United States Court of Appeals Seventh Circuit.

December 5, 1950.

Rehearing Denied March 6, 1951.

COPYRIGHT MATERIAL OMITTED

Francis V. Healy, Robert G. Dreffein, and Arthur Abraham, all of Chicago, Ill., for appellant.

Leslie M. Parker, Avern B. Scolnik, Chicago, Ill., Parker & Carter, Chicago, Ill., for appellee.

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

DUFFY, Circuit Judge.

Plaintiff brought this action alleging trade-mark infringement and unfair competition. The claim that there was trade-mark infringement was dismissed, because of the local, intrastate nature of defendant's business, however, the district court sustained the plaintiff's claim as to unfair competition and entered a judgment and decree, permanently enjoining and restraining defendant from using the word "Jewel" or any name similar to or in imitation thereof in the names of his stores, and in, about or in connection with the conduct and operation of his business in the city of Chicago, its suburbs, and the State of Illinois.

Jewel Tea Company was incorporated as an Illinois corporation in 1904. Jewel Tea Company, Inc., the plaintiff herein, is a New York corporation incorporated on January 14, 1916, and was authorized to do business in Illinois on January 16, 1916. Plaintiff acquired the assets of the previously incorporated Illinois corporation. On March 8, 1932, Jewel Food Stores, Inc., was incorporated as a New York corporation. It merged with plaintiff on February 19, 1934.

In the beginning plaintiff engaged in merchandising certain food products by means of wagons and trucks. At the time of trial plaintiff had routes for door-to-door delivery in 41 States. From March 11, 1932, until the merger on February 19, 1934, Jewel Food Stores, Inc., as a subsidiary of plaintiff, operated a chain of retail grocery stores in Chicago and suburbs. At the time of the trial plaintiff operated 150 retail food stores in the Chicago area, including four in Berwyn, two in Cicero and seven in Oak Park, under the name "Jewel Food Stores, A Department of Jewel Tea Co., Inc." Since February 19, 1934, the name "Jewel Food Stores, Inc." has not been used as a corporate name by plaintiff.

Plaintiff's business is nationwide in scope and from 1936 to 1945 plaintiff spent $1,500,000 in advertising its business conducted in its stores. In 1945 its total store business was in excess of $37,000,000, of which more than $4,000,000 was from the sale of dairy products. Plaintiff first sold ice cream in its stores commencing in February, 1945, and sold it in packages bearing the name "Jewel" since August 1, 1946.

Plaintiff first used the word "Jewel" on a store sign on November 1, 1932. At the trial it was stipulated, "No store or other establishment has been found dealing in food of any sort under the name `Jewel' prior to plaintiff's opening of their (sic) food stores as stipulated hereinabove." On November 1, 1934, plaintiff first installed a sign on one of its stores, containing the word "Jewel" in large letters and the words "Food" and "Store" on either side in smaller letters. In every store sign used by plaintiff since November, 1932, on the outside of its store buildings, which signs were visible to the public, the word "Jewel" appeared in letters twice as high and wide as the letters in other words appearing on the sign. The words "Jewel Tea" have never been used in combination on store signs by the plaintiff or by Jewel Food Stores, Inc. In 1945, 16% of the grocery items sold by plaintiff in its stores bore the name "Jewel."

Plaintiff uses one of three types of signs on its stores: The type most commonly used has the word "Jewel" in the center and has two side panels, the one on the left containing the words "Serve Yourself" and the one on the right containing the words "Save Money." In the second type the word "Jewel" is in the center while the left panel contains the word "Food" and the right panel contains the word "Store." And in the third type only the word "Jewel" is used.

Defendant entered the milk business in 1930 in Cicero, Illinois, operating a retail dairy selling milk, cream, butter, eggs and cheese. In 1934 defendant opened two retail milk stores in Cicero, specializing in the sale of milk in gallon jugs. At the time of the trial defendant owned and operated eight stores located in Berwyn, Cicero and Oak Park. One of defendant's stores was located immediately adjacent to and in the same building as one of plaintiff's stores; one was located five doors from the nearest store of plaintiff; and the remaining six were located respectively 1, 2, 6, 7, 14 and 17 blocks distant from the nearest store operated by plaintiff.

The largest volume of defendant's business is in the sale of dairy products, but he also sells a line of miscellaneous grocery items. The word "Jewel" or "Jewels" in combination with the word "Dairy" was first used by defendant on a milk and dairy store in 1940. The name "Jewel" was first placed by the defendant on a product — ice cream — in 1940. On September 30, 1946, defendant, doing business as Jewel Milk Stores, registered the name "Jewel" with the Secretary of the State of Illinois, and was issued a certificate of registration. The word "Jewel" has not and presently is not being used by defendant on any product other than ice cream. In 1945 defendant's total business amounted to $300,000.

Contending that the likelihood of confusion is negligible defendant points to a number of differences in the physical characteristics and methods of operation between plaintiff's and defendant's stores: plaintiff's stores are larger than defendant's, and are largely self-serviced, thus involving a difference in interior arrangements; defendant's stores are open Sundays, holidays and until eleven o'clock in the evening, whereas plaintiff's stores are closed at such times (at least they were prior to the time of the trial); plaintiff does not sell milk in gallon or half-gallon containers whereas such sales are large items of defendant's business; defendant uses window signs, "Jewel Milk Stores," in which the word "Jewel" is in script in white letters on a black background, whereas in plaintiff's signs the word "Jewel" is not in script and is in black letters on a white background; plaintiff's employees wear distinctive uniforms, whereas those of defendant do not; and further, defendant's stores do not sell fruits, vegetables and fresh meats.

The district court found that the plaintiff had so identified the word "Jewel" with itself in connection with the retail grocery business in Chicago and suburbs as to give it a secondary meaning as applied to the business in which it is engaged; that defendant is a subsequent user of the word "Jewel" and that the businesses conducted by plaintiff and defendant are so similar that there has been, and there will be a likelihood of, confusion by the public, trade and customers; that the testimony disclosed instances of actual confusion between plaintiff's and defendant's stores; and that there existed in the minds of the public an association between the word "Jewel" and the plaintiff's business.

There is no hard and fast rule by which it can be determined when a court should interfere by injunction to prevent unfair methods of business. Many of the decisions on the question of unfair competition seem to be in conflict. One line of cases adopts a narrow rule of construction, where the word appropriated as a trade-mark or trade name was originally descriptive and thus is not distinctive, while another line of cases extends broad protection where the trade-mark or trade name is arbitrary and fanciful. Consideration is also given in many cases as to whether the trade-mark or trade name is "strong" or "weak." In other cases the matter of prime concern is whether competition actually existed between the parties in the dispute.

Whether a claim based on unfair competition exists depends upon the peculiar facts of each case. Sinko v. Snow-Craggs Corp., 7 Cir., 105 F.2d 450, 452. Generally speaking, however, it can be said that in all cases of unfair competition it is the principles of old-fashioned honesty which are controlling. Radio Shack Corp. v. Radio Shack, Inc., 7 Cir., 180 F.2d 200, 206. Also we must follow the rule stated by the Supreme Court in Pecheur Lozenge Co., Inc. v. National Candy Co., Inc., 315 U.S. 666, 62 S.Ct. 853, 86 L.Ed. 1103; Fashion Originators' Guild of America, Inc., v. Federal Trade Commission, 312 U.S. 457, 61 S.Ct. 703, 85 L.Ed. 949, and apply the appropriate State law, which in this case is that of Illinois.

The word "Jewel" has been widely used in connection with various products. It has been registered at the U. S. Patent Office 25 times by others than plaintiff on food products, 93 times on other classes of goods, and 67 times in combination with other words. In its usual and ordinary connotation "Jewel" refers to a precious stone, gem or ornament. In a secondary or figurative sense, it stands for high quality, merit or value.

When plaintiff adopted the name "Jewel" as a part of its corporate name, and when plaintiff and defendant used the word "Jewel" as a part of the name by which they designated their retail stores, they of course did not contemplate operating jewelry stores. On the other hand "Jewel" is not a coined or fanciful name, such as "Kodak," "Philco," or "Budweiser."

In trade-mark cases courts have pointed out the weakness of "Jewel" as a mark. In Pro-phy-lac-tic Brush Co. v. Jordan Marsh Co., 1 Cir., 165 F.2d 549, at page 552, involving the marks "Jewelite" and "Gemlite," the court said: "Furthermore both marks are weak. The words `gem' and `jewel' equally share the connotation of value and beauty combined, and the suffix `lite' is in common use as the equivalent of `lith' to denote a mineral or mineral like substance, as in cryolite or bakelite. * * * Their obvious...