Cerruti, Inc. v. McCrory Corporation, 371

• Decision Date: 08 February 1971
• Docket Number: Docket 35366.,No. 371,371
• Citation: 438 F.2d 281
• Parties: CERRUTI, INC., Plaintiff-Appellant, v. McCRORY CORPORATION, Lanificio F.LLI Cerruti S.A.S. and Antonio Cerruti, Defendants-Appellees.
• Court: U.S. Court of Appeals — Second Circuit

438 F.2d 281 (1971)

CERRUTI, INC., Plaintiff-Appellant, v. McCRORY CORPORATION, Lanificio F.LLI Cerruti S.A.S. and Antonio Cerruti, Defendants-Appellees.

No. 371, Docket 35366.

United States Court of Appeals, Second Circuit.

Argued January 12, 1971.

Decided February 8, 1971.

Robert R. Keegan, New York City (Egon E. Berg, Darby & Darby, New York City, of counsel), for plaintiff-appellant.

Gerald W. Griffen, New York City (R. Bradlee Boal, Cooper, Dunham, Henninger

& Clark, New York City, of counsel), for defendants-appellees.

Before WATERMAN, FRIENDLY and KAUFMAN, Circuit Judges.

FRIENDLY, Circuit Judge:

Cerruti Incorporated brought this action for trademark and trade name infringement and unfair competition in the District Court for the Southern District of New York. The complaint named as defendant McCrory Corporation, whose Best & Co. Division had recently opened a "Cerruti 1881" boutique in the men's department of its Fifth Avenue store in New York City, just a few blocks away from Cerruti Incorporated's retail store on East 54th Street. This boutique stocked men's apparel and accessories sold to Best by a well-known Italian firm established in 1881, Lanificio Fratelli Cerruti S.A.S. Many of these products were designed by a contemporary scion of the family and the company's president, Antonio ("Nino") Cerruti. Both the company and Nino were joined as defendants in an amended complaint, the defendants answered and counterclaimed, and plaintiff replied. Plaintiff sought an injunction pendente lite against defendants' use of the words Cerruti or Cerruti 1881 in connection with the sale of ties, scarves, shirts, handkerchiefs, sweaters, belts, socks, robes and jewelry, in any advertising, or in any other manner which "may reasonably have the effect of injuring plaintiff's business reputation or of diluting plaintiff's trade names and trademarks." Extensive affidavits were submitted. Judge Motley denied the motion for a preliminary injunction on the grounds that plaintiff had not sustained its burden of showing either probability of success at trial or irreparable injury pendente lite, and plaintiff appeals.¹

Until the middle 1960's the business of Lanificio Cerruti was the manufacture and sale of clothing fabrics, admittedly of high quality.² In 1934 it began exporting these to the United States for the fabrication of custom tailored and ready-to-wear suits and coats. The shipping containers and the cloth bales for bolts of fabric were allegedly marked with the Cerruti name and the trademark Cerruti 1881 from the outset. Later, plaintiff says much later, Lanificio Cerruti affixed string tags to the bolts, imprinted its name upon the piece goods, and distributed labels for tailors to sew into the finished garments.

The plaintiff, Cerruti Incorporated, was organized in New Jersey in October 1945.³ After some two years of operation in that state, it moved its headquarters to New York City and has continuously had an office and showroom there. Initially it designed and sold silk fabrics for ties, robes, scarves, handkerchiefs and shirts; cotton fabrics for shirts; woolen fabrics for ties and scarves; and rayon acetate fabrics for ties, scarves and shirts. Apparently Cerruti, Inc. did not then cause its name to be generally made known beyond the immediate purchaser, although its president alleged that it commenced selling some finished clothing items, particularly neckwear, around 1947. However, at various later times, the precise dates of which are in dispute, it began to sell various retail items, at first ties, shirts, scarves, handkerchiefs, robes, cologne and soap, later also belts, jewelry, (cuff links), footwear, travel cases, wallets, umbrellas, leather goods and canes. Many, perhaps most, of these items were not manufactured by plaintiff, and the precise extent to which it applied its name to them is unclear. In 1965 it adopted the trade name Cerruti CXIII. About December 1966 it began using this as a trademark on ties, scarves, shirts, handkerchiefs and sweaters, and received a United States trademark registration for such use in July 1968. Meanwhile Lanificio Cerruti, on August 8, 1967, had received such a registration for Fratelli Cerruti 1881 for coverlets and tablecovers, and fabrics to be used in making dresses, overcoats, jackets and raincoats, and for 1881 Fratelli Cerruti, with a design, for clothing fabrics.

In addition to supplying stores of high reputation with items under its trade name or trademark, plaintiff has operated a New York City retail store since 1955. Originally the store was operated under the name of the French manufacturer of men's neckwear and other items, Charvet et Fils, although allegedly some of the ties, shirts, scarves, handkerchiefs and sweaters were sold under the Cerruti name. In 1968 the name of the store was changed to Cerruti CXIII, and the Charvet et Fils business was moved next door.

The parties might have remained in a state of peaceful coexistence with Lanificio Cerruti using the name for clothing fabrics and such of their products as suits, overcoats, jackets, etc., as were finished in the United States, and Cerruti Incorporated its name for ties, shirts, etc., and the fabrics used in making them, if Lanificio Cerruti had not decided to broaden its product line, first in Europe and, beginning in 1967, in the United States. In that year it commenced the sale, under its trademark, of finished suits and coats in this country; in 1968 it added ties, sweaters, jackets, slacks, scarves, handkerchiefs and other men's apparel and accessories. Its sales, also to American stores of the highest reputation, were stimulated by the opening in 1967 of the Cerruti 1881 boutique on the Rue Royale in Paris, the resulting réclame, and the Tiberio D'Oro award made in Capri in 1969, to Nino Cerruti as the "most outstanding men's fashion designer in the world." It was this that prompted...