240 U.S. 403 (1916), 30, Hanover Star Milling Company v. Metcalf

Docket Nº:No. 30
Citation:240 U.S. 403, 36 S.Ct. 357, 60 L.Ed. 713
Party Name:Hanover Star Milling Company v. Metcalf
Case Date:March 06, 1916
Court:United States Supreme Court
 
FREE EXCERPT

Page 403

240 U.S. 403 (1916)

36 S.Ct. 357, 60 L.Ed. 713

Hanover Star Milling Company

v.

Metcalf

No. 30

United States Supreme Court

March 6, 1916

Argued May 10, 1915

CERTIORARI TO THE CIRCUIT COURT OF APPEALS

FOR THE FIFTH CIRCUIT

Syllabus

Two district courts in different circuits having granted temporary injunctions, and both circuit courts of appeals having reversed upon grounds that went to the merits and differed upon fundamental questions affecting the same trademark, writs of certiorari were allowed by this court before final decrees notwithstanding the general rule to the contrary.

Where neither of the parties, citizens of different states, has registered the trademark in dispute under any act of Congress or under the law of any state, and no local rule arising from statute or decision is shown, cases involving the use of such trademark must be determined according to applicable common law principles.

Redress accorded in trademark cases is based upon the party's right

Page 404

to be protected in the goodwill of the trade or business, and the English rule that a trademark is not the subject of property, except in connection with an existing business, prevails generally in this country.

The common law of trademarks is but a part of the broader law of unfair competition.

While common law trademarks and the right to their exclusive use may be classed among property rights, the right grows out of use, and not mere adoption.

Where two parties independently employ the same trademark or name, not in general use and susceptible of adoption, upon goods of the same class but in separate and remote markets, the question of prior appropriation is legally insignificant in the absence of intent on the part of the later adopter to take the benefit of the reputation, or to forestall extension of the trade, of the earlier adopter.

While property in a trademark is not limited, so far as its use has extended, by territorial bounds, the earlier adopter may not monopolize markets that his trade has never reached and where the mark signifies not his goods, but those of another.

So far as controversy over a trademark concerns intrastate distribution, as distinguished from interstate trade, the subject is not within the sovereign power of the United States.

Trademark rights, like others that rest in user, may be lost by abandonment, nonuser, laches, or acquiescence.

Where a later adopter, in good faith and without notice of its use in other territory by an earlier adopter, expends money and effort in building up a trade in a territory which the earlier adopter has left unoccupied for a long period -- in this case, more than forty years -- and into which his trade would not naturally expand, the earlier adopter is estopped to assert trademark infringement in that territory.

A third party who enters the territory of such second adopter and attempts to use the tradename in a manner calculated to, and which does, deceive by similarity of package, even though the name of the actual manufacturer is placed thereon, is guilty of unfair competition from which the user of the trademark is entitled to protection.

There being diverse citizenship and the jurisdiction of the district court resting thereon, the decision of the circuit court of appeals in a trademark case is final, and an appeal from the decree is dismissed and the decree is reviewed here on certiorari.

Page 405

204 F. 211 reversed.

208 F. 513 affirmed on certiorari, and appeal therefrom dismissed.

The facts, which involve the rights of manufacturers of and dealers in flour to the use of "Tea Rose" as a trademark for flour sold in certain territory, and the effect of nonuser on right to use a trademark, are stated in the opinion.

PITNEY, J., lead opinion

MR. JUSTICE PITNEY delivered the opinion of the Court.

These cases were argued together, and may be disposed of in a single opinion.

In No. 23, the Hanover Star Milling Company, an Illinois corporation engaged in the manufacture of flour in that state, filed a bill in equity on March 4, 1912, in the United States District Court for the Middle District of Alabama, against Metcalf, a citizen of the State of Alabama and a merchant engaged in the business of selling flour at Greenville, Butler County, in that state, to restrain alleged trademark infringement and unfair competition. The bill averred that, for twenty-seven years last past, complainant had been engaged in the manufacture of a superior and popular grade of flour, sold by it at

Page 406

all times under the name of "Tea Rose" flour, in a wrapping with distinctive markings, including the words "Tea Rose" and a design containing three roses imprinted upon labels attached to sacks and barrels; that this flour had been marketed thus by complainant in the State of Alabama for the preceding twelve years, during which time, by maintaining a high and uniform quality, by expensive advertising, and by diligent work of its representatives, it had built up a large and lucrative market, with annual sales of more than $175,000 of Tea Rose flour in that state, and had established a valuable reputation for the name "Tea Rose" and the distinctive wrappings in Alabama and other states, particularly Georgia, and Florida; that, until shortly before the commencement of the suit complainant's Tea Rose flour was the only flour made, sold, or offered for sale under that name in Butler County or elsewhere in the State of Alabama, and the name "Tea Rose" had represented and stood for complainant's flour, and that recently the Steeleville Milling Company, of Steeleville, Illinois, had, through Metcalf's agency, been marketing in Alabama, and [36 S.Ct. 358] particularly in Butler County, flour of its manufacture, in packages and wrappings substantially identical with complainant's and bearing a design containing three roses and the name "Tea Rose" upon the labels in a manner calculated to deceive and in fact deceptive to purchasers, thereby threatening pecuniary loss to complainant exceeding $3,000 in amount, and destroying the prestige of complainant's "Tea Rose" flour, and damaging its trade therein.

Defendant's answer denied all attempts to deceive purchasers, and further denied complainant's right to the exclusive use of the words "Tea Rose" or the picture of a rose as a trademark, averred that, long prior to complainant's first use of it, and as early as the year 1872, the name had been adopted, appropriated, and used as

Page 407

a trademark for flour by the firm of Allen & Wheeler, of Troy, Ohio, and used by it and its successor, the Allen & Wheeler Company, continuously as such, and alleged that the Steeleville Milling Company had used its "Tea Rose" brand for more than sixteen years last past, and, as early as the year 1899, had sold flour in Alabama under that label.

Upon consideration of the bill and answer and affidavits submitted by the respective parties, the district court granted a temporary injunction restraining Metcalf from selling flour labeled "Tea Rose," manufactured by the Steeleville Company or any person, firm, or corporation other than the Hanover Company at Greenville, or at any other place in the Middle District of Alabama. Upon appeal, the Circuit Court of Appeals for the Fifth Circuit reversed this decree and remanded the cause, with directions to dismiss the bill. 204 F. 211. A writ of certiorari was then allowed by this Court.

In No. 30, the Allen & Wheeler Company, a corporation of the State of Ohio, manufacturing flour at the City of Troy, in that state, filed a bill against the Hanover Star Milling Company on May 23, 1912, in the United States District Court for the Eastern District of Illinois, averring that, in or before the year 1872, the firm of Allen & Wheeler, then engaged in the manufacture of flour at Troy, adopted as a trademark for designating one of its brands the words "Tea Rose," and from thence until the year 1904 continuously used that trademark by placing it upon sacks, barrels, and packages containing the brand and quality of flour designated by that term and sold throughout the United States; that, in 1904, the Allen & Wheeler Company was incorporated and took over the mills, machinery, stock, trademark, and goodwill of the firm, since which time the corporation had continued to use the trademark upon flour of its manufacture, and had distributed and sold such flour in the markets

Page 408

of the United States, whereby the words "Tea Rose" had become the common law trademark of the Allen & Wheeler Company; that recently it had learned that the Hanover Star Milling Company had adopted the words "Tea Rose" as designating a brand of flour manufactured by it, and, notwithstanding notice of complainant's rights, was persisting in the sale of its flour under that name and threatening to continue so to do, and that defendant had sold large quantities of Tea Rose flour, particularly in the markets of the States of Alabama, Florida, and Mississippi, with large gross sales, and profits approximating $5,000 per year for the past five years, causing damage and loss to complainant in excess of $3,000. An injunction and an accounting of profits were prayed. Upon this bill, a demurrer filed by the Hanover Company, and affidavits presented by both parties, the district court granted a temporary injunction restraining the use of the words "Tea Rose" as a trademark for flour, without territorial restriction. The Circuit Court of Appeals for the Seventh Circuit reversed this decree, and remanded the cause to the district court for further proceedings not inconsistent with its opinion. Hanover Star Milling Co. v. Allen & Wheeler Co., 208 F. 513. An appeal was taken to this Court, and a writ of...

To continue reading

FREE SIGN UP