GROTRIAN, HELFFERICH SCHULZ, ETC. v. Steinway & Sons

• Citation: 365 F. Supp. 707
• Decision Date: 01 October 1973
• Docket Number: No. 69 Civ. 3320-LFM.,69 Civ. 3320-LFM.
• Parties: GROTRIAN, HELFFERICH, SCHULZ, TH. STEINWEG NACHF., a corporation, Plaintiff, v. STEINWAY & SONS, a corporation, Defendant.
• Court: U.S. District Court — Southern District of New York

365 F. Supp. 707

GROTRIAN, HELFFERICH, SCHULZ, TH. STEINWEG NACHF., a corporation, Plaintiff, v. STEINWAY & SONS, a corporation, Defendant.

No. 69 Civ. 3320-LFM.

United States District Court, S. D. New York.

October 1, 1973.

COPYRIGHT MATERIAL OMITTED

Von Maltitz, Derenberg, Kunin & Janssen, New York City, and Hume, Clement, Hume & Lee, Chicago, Ill., for plaintiff; V. T. Giordano, New York City, Dean A. Olds, and Richard H. Compere, Chicago, Ill., of counsel.

Morgan, Finnegan, Durham & Pine, New York City, for defendant; Granville M. Pine, Harry C. Marcus and Kurt E. Richter, New York City, of counsel.

OPINION

MacMAHON, District Judge.

This is an action for declaratory judgment, injunctive relief and damages by Grotrian, Helfferich, Schulz, Th. Steinweg Nachf., a German corporation engaged in the manufacture and sale of pianos, against Steinway & Sons, a New York corporation engaged in the same business. The action was tried by the court without a jury.

Plaintiff seeks a declaratory judgment that its trade name, Grotrian-Steinweg, and corporate name, Grotrian, Helfferich, Schulz, Th. Steinweg Nachf., do not conflict with, nor infringe, defendant's trademarks, Steinway & Sons and Steinway; that the use of plaintiff's marks or names in the United States does not constitute unfair competition; that defendant is barred by laches from asserting any claim of conflict between the respective marks or names; and that plaintiff has the right to use its trade or corporate name free from interference by defendant. Plaintiff also seeks to enjoin defendant from interfering with the use of plaintiff's mark or name by plaintiff or its licensees and from instituting suit anywhere challenging the right of plaintiff or its licensees to use plaintiff's mark or name. Finally, plaintiff seeks damages for defendant's alleged tortious interference with a prospective contract between plaintiff and The Wurlitzer Company ("Wurlitzer") for the sale and distribution of plaintiff's pianos through a chain of retail stores in the United States.

Defendant's answer generally denies the significant allegations of the complaint and counterclaims under the Lanham Act, 15 U.S.C. § 1051 et seq., for injunctive relief, an accounting and damages for wilful infringement of its trademark and unfair competition. Plaintiff's reply denies the significant allegations of the counterclaim and alleges affirmative defenses of laches and unclean hands.

Before discussing the issues, it is necessary to review the historical relationship between the parties.

Defendant Steinway & Sons, manufacturer and seller of renowned Steinway pianos, was founded in 1853 by Heinrich E. Steinweg, who emigrated to the United States from Germany in 1850. Heinrich's eldest son, C. F. Theodor Steinweg, remained in Germany and began to make pianos in 1851 under the firm name C. F. Theodor Steinweg, which was registered in Germany. Later, he sold his business to his three employees, F. W. Grotrian, Adolph Helfferich and H. G. W. Schulz, moved to New York and joined the defendant as a partner on January 1, 1866. C. F. Theodor Steinweg granted the German buyers the privilege of continuing the business under the firm name "Successors to C. F. Theodor Steinweg" for ten years, but because of confusion with defendant the name was changed by agreement to "Grotrian, Helfferich, Schulz, Successors to Th. Steinweg."

Later, however, plaintiff first registered the trademark Grotrian-Steinweg in Germany and then, in 1895, registered the name Steinweg. Plaintiff's use of the latter name caused defendant to bring an action in Germany resulting in the cancellation of the registration. Nevertheless, in December 1918, shortly after the armistice, the Grotrian family, plaintiff's owners, petitioned for an official change of the family name to "Steinweg or at least Grotrian-Steinweg," despite the fact that the Grotrians were never related by blood or marriage to anyone in a Steinway or Steinweg family. The petition admitted that "the focal point of our firm is on the name Steinweg. The word `Grotrian' is unpronounceable for an Englishman. . . . A shortening of the long business name would be an extraordinary blessing and benefit . . . especially for the export of the product." The petition was granted to the extent that the Grotrian family was permitted to change its name to "Grotrian-Steinweg."

There is no evidence that plaintiff ever spent any money or made any effort before 1925 to publicize, promote or sell its product outside Germany under the mark Grotrian-Steinweg, but since it acquired that name plaintiff's owners have often been called "Steinweg" and have been asked whether there is any connection between plaintiff and the defendant. Similarly, plaintiff's piano has often been identified as a "Steinweg."

Plaintiff first tried to enter the American market in 1925 when it established a Delaware corporation named "Grotrian-Steinweg Company" for the purpose of distributing pianos bearing the mark Grotrian-Steinweg which it registered in the United States. In 1926, plaintiff exported four pianos to the United States; in 1927 nine; and in 1928 twelve. During this period, plaintiff also sold pianos in the American market through a New York dealer named S. L. Curtis. When defendant learned, in 1928, that plaintiff was selling pianos in the United States, it immediately notified both the Delaware distributor and the New York dealer of defendant's rights to the trade names Steinway and Steinway & Sons, vigorously protested that the mark Grotrian-Steinweg infringed defendant's trade names, predicted that it was "bound to be a source of confusion with the trademark and trade name Steinway," and demanded that the distributor discontinue the use of the words "Grotrian-Steinweg" on pianos in the United States. Unimpressed, plaintiff's shipments mounted to forty-seven in 1929.

Confronted with an impasse, William Steinway, an officer of the defendant, decided to talk face to face with plaintiff about the trade name dispute. He therefore went to Germany in 1929, discussed the dispute and negotiated a settlement, signified by smoking a cigar with plaintiff's then principal owner.

There was no proof of the express terms of the settlement. Plaintiff contends that the "peace cigar" evidenced defendant's surrender to plaintiff's use of the trade name Grotrian-Steinweg in the United States. The ensuing conduct of the parties, however, points to the opposite inference, viz., that plaintiff agreed to cease using the names Steinweg and Grotrian-Steinweg in the United States. Thus, the distributing company was disbanded in 1930; the dealer, Curtis, stopped selling plaintiff's pianos; plaintiff's exports to the United States dwindled to four pianos by 1932; and not one Grotrian-Steinweg piano came into this country for the next twenty years. In 1950, plaintiff even abandoned its unused 1926 United States trademark registration which never had been published for opposition.

The inference is clear that the cordial relations which existed between the parties during the twenty-year period were attributable not to defendant's surrender of its rights but to a tacit, if not an express, understanding that plaintiff would cease using the names Steinweg and Grotrian-Steinweg in the United States.

However, in 1952, plaintiff quietly reentered the American market on a mail order basis and for the next twenty years regularly shipped a relatively insignificant number of pianos to small dealers who sold only in their own localities. During the next twenty years, plaintiff shipped a total of only 458 pianos, having an aggregate retail value exceeding $1,890,000, the shipments ranging from a low of four in 1954 to a peak of forty-eight in 1970. However, plaintiff itself never made or sold any pianos in the United States, never employed an advertising agency nor a public relations firm, nor did it require any advertising by its United States dealers, although, as we shall see, it did supply them with promotional material. No representative of the plaintiff ever came here for the thirty-seven year period from 1929 until 1966. Moreover, plaintiff never had a resident agent in the United States for service of process.

Commencing in August 1966, by an exchange of letters ending in January 1967, plaintiff entered into an agreement with Wurlitzer for the distribution and sale of plaintiff's pianos in Wurlitzer's chain of thirty-one retail music stores located in prime metropolitan markets throughout the United States, The agreement was not for any definite period of time, and, although plaintiff urged Wurlitizer to buy at least 200 pianos, Wurlitizer refused to agree to any definite number but did agree to use its best efforts to promote the sale of plaintiff's pianos throughout its chain of stores. Wurlitzer assured plaintiff that no time would be wasted in getting underway with an aggressive sales program and, upon plaintiff's insistence, agreed to describe plaintiff's piano as the "Grotrian-Steinweg."

Accordingly, in July 1967, Wurlitzer issued a press release announcing that the world-famous Grotrian-Steinweg piano would be sold in Wurlitzer's retail stores. The release proclaimed that Grotrian-Steinweg was an internationally renowned grand piano available up to the nine-foot concert size, that it was the most cultivated piano in the world, that it represented the most perfect product of the art of piano making, and that Grotrian-Steinweg, founded in 1835, was long known as the manufacturer of the classic grand piano which was the most famous piano in Germany and which was endorsed by eminent piano artists throughout the world. When the announcement came to defendant's attention, it promptly warned Wurlitzer that Steinway & Sons considered the mark Grotrian-Steinweg an infringement of its trademarks Steinway and Steinway & Sons, "long registered with the U.S. Patent Office" and "would take prompt legal action to...