Deering, Milliken & Co. v. Gilbert

Decision Date03 August 1959
Docket NumberDocket 25284.,No. 242,242
Citation269 F.2d 191
PartiesDEERING, MILLIKEN & CO., Inc., Plaintiff-Appellee, v. Joseph GILBERT, individually and doing business as Gilbert Textile Company, Defendant-Appellant.
CourtU.S. Court of Appeals — Second Circuit

Walter E. Shuttleworth, New York City (Townley, Updike, Carter & Rodgers, and Stuart N. Updike, New York City, on the brief), for plaintiff-appellee.

Mario Matthew Cuomo, Brooklyn, N. Y. (M. Malcolm Friedman, and William C. Mattison, Brooklyn, N. Y., on the brief), for defendant-appellant.

Before HINCKS, LUMBARD and WATERMAN, Circuit Judges.

HINCKS, Circuit Judge.

This appeal is taken from a judgment and decree of the District Court, Southern District of New York, Edmund L. Palmieri, Judge, entered after a trial without a jury on two causes of action, the first alleging trademark infringement under the Lanham Act (15 U.S. C.A. § 1051 et seq.) and the second alleging a substantial and related claim of unfair competition pursuant to 28 U.S.C. § 1338.

Judge Palmieri, having found that the defendants, Gilbert and his alter ego the Gilbert Textile Company, had infringed upon Deering, Milliken & Company's registered trademark Milium, enjoined Gilbert from further use of the mark. He also awarded Deering Milliken the sum of $23,419.26, which in part represented $6,056.25 actual damages sustained by it, trebled to $18,168.75.

The questions raised here by the appellant Gilbert concern the validity of the findings of actual damages and the propriety of trebling the amount so found. No error is predicated upon the balance of the judgment which includes attorneys' fees and costs.

Deering Milliken at all times relevant to this action was the owner of the trademark Milium, said mark having been duly registered upon the Principal Register maintained in the United States Patent Office. It also was the owner of patents upon certain textile products and finishes in conjunction with which the Milium mark was used. At no time was Gilbert licensed to use the trademark or manufacture the patented product.

In July of 1954 Gilbert embarked on a criminal scheme, calculated to trade upon the Milium trademark. On three occasions between July 1954 and May 1955 Gilbert caused to be printed and delivered to his place of business a total of 67,600 counterfeit hang tags bearing appellee's Milium trademark.1 During this period Gilbert also had in his possession an unknown quantity of fabric imitative of the distinctive fabric processed under the Deering Milliken patents. This fabric had been stolen from another textile company and criminally received by Gilbert for use in conjunction with the counterfeit tags.2

In May 1955, New York City Police, acting under a search warrant, entered the premises occupied by Gilbert and the Gilbert Textile Company and pursuant to the warrant seized a substantial quantity of cardboard hang tags and fabric labels bearing the Milium mark. These tags and labels remained in possession of the New York County District Attorney until and throughout the trial below.

Upon pre-trial examination Gilbert exercised his privilege against self incrimination. At the trial, he denied all sales of Milium but even after the judge stated that his testimony was "not worthy of belief," instead of producing records to show what it was he had sold, he produced no records at all. His position then, as it has been throughout these proceedings, was one of "sitting tight" and demanding that Deering Milliken prove the damages sustained by it as a result of his infringing sales. Faced with the task of proving the scope of Gilbert's shady operation, Deering Milliken was forced to resort to indirect and circumstantial evidence.

First it attempted to establish the number of tags that were in Gilbert's possession at the time of the police seizure in May 1955, and from this it asked the trial judge to infer that the balance of the tags were used by Gilbert. Expert testimony was then introduced which established that one tag is used in connection with the sale of one garment lining and that one garment lining contains two and one-half yards of the special Milium fabric. On this evidence, Judge Palmieri found that the missing hang tags represented 80,750 yards of fabric which had probably been sold to the public as Milium fabric under the Milium trademark. Multiplying this figure by the minimum royalty received by Deering Milliken (seven and one-half cents per yard) he arrived at the contested $6,056.25 amount.

Appellant first challenges this method of computation of damages, claiming that there was no direct proof of his sales and that the District Court improperly inferred that 32,300 garment linings were sold in order to exploit the like number of missing tags.

Under the circumstances, we think this method of proof was proper. At the trial, when called as a witness for the plaintiff, Gilbert was patently evasive: he denied any palming off and cloaked his answers by a short memory. When the plaintiff rested, the trial judge stated that the witness was unworthy of belief. At this point, the burden of going forward with evidence to refute the plaintiff's estimates of sales passed to Gilbert. His failure and refusal to produce the most satisfactory evidence of sales — or absence of sales — leaves his cause exposed to indirect and less definite and certain methods of proof. Armstrong v. Belding Bros. & Co., 2 Cir., 297 F. 728, certiorari denied 265 U.S. 585, 44 S.Ct. 459, 68 L.Ed. 1192; Yesbera v. Hardesty Mfg. Co., 6 Cir., 166 F. 120, certiorari denied 214 U.S. 513, 29 S.Ct. 696, 53 L. Ed. 1063. And where, as here, the defendant controls the most satisfactory evidence of sales the plaintiff needs only establish a basis for a reasoned conclusion as to the extent of injury caused by the deliberate and wrongful infringement. Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 688, 66 S.Ct. 1187, 90 L.Ed. 1515; Story Parchment Co. v. Paterson Parchment Paper Co., 282 U.S. 555, 51 S.Ct. 248, 75 L.Ed. 544; Gotham Silk Hosiery Co. v. Artcraft Silk Hosiery Mills, 3 Cir., 147 F.2d 209.

In Shapiro, Bernstein & Co. v. Remington Records, 2 Cir., 265 F.2d 263, this court in applying the ancient but viable...

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