Wrist-Rocket Mfg. Co., Inc. v. Saunders Archery Co.

• Decision Date: 09 June 1975
• Docket Number: Nos. 74-1664,74-1728,WRIST-ROCKET,s. 74-1664
• Citation: 516 F.2d 846
• Parties: MANUFACTURING CO., INC., Appellant-Cross Appellee, v. SAUNDERS ARCHERY COMPANY, substituted for Charles Saunders d/b/a SaundersArchery Co., Appellee-Cross Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 846

516 F.2d 846

186 U.S.P.Q. 5

WRIST-ROCKET MANUFACTURING CO., INC., Appellant-Cross Appellee, v. SAUNDERS ARCHERY COMPANY, substituted for Charles Saunders d/b/a SaundersArchery Co., Appellee-Cross Appellant.

Nos. 74-1664, 74-1728.

United States Court of Appeals,

Eighth Circuit.

Submitted Feb. 13, 1975.

Decided May 12, 1975.

Rehearings Denied June 9, 1975.

William E. Holland, Omaha, Neb., for Saunders Archery Co.

Esther O. Kegan, Kegan, Kegan & Berkman, Chicago, Ill., for Wrist-Rocket Mfg. Co.

Before HEANEY and WEBSTER, Circuit Judges, and NANGLE, District Judge. ^*

HEANEY, Circuit Judge.

This appeal involves the right to use the trademark "Wrist Rocket" on wrist-braced slingshots. The mark is registered in the United States Patent Office to the appellant. Suit was brought in the United States District Court for the District of Nebraska by the appellant alleging infringement of its registered mark and breach of fiduciary duty by the appellee. Relief in the form of an injunction and damages was sought. The appellee counterclaimed seeking a declaratory judgment that the exclusive right to use the mark was in it and an injunction against the further use of the mark by the appellant. It also sought damages for unfair competition and deceptive trade practices under the Nebraska Deceptive Trade Practices Act, Neb.R.R.S. § 87-301 et seq., and for false or fraudulent registration of the trademark under 15 U.S.C. § 1120. ¹ The trial was to the court. It held that: ²

1. The appellant's action for trademark infringement and unfair competition had not been sustained by the evidence and must fail;

2. A hearing must be scheduled to determine the damages to which the appellant was entitled for the appellee's breach of fiduciary duty;

3. The appellee is the common law owner of the trademark "Wrist Rocket" as used in the sale of wrist-braced slingshots and replacement rubbers therefor and has the exclusive right to its use.

4. The registration issued to the appellant should be cancelled, and the Commissioner of Patents be directed to issue a registration of the mark "Wrist Rocket" to the appellee upon proper application therefor;

5. The appellant had infringed upon the appellee's trademark by its use of the mark "Wrist Rocket" after January 19, 1972, and that the appellant had engaged in deceptive trade practices and unfair competition by its actions following said date. On the basis of this finding, the court ordered that:

a) The appellant be permanently enjoined from using the corporate name "Wrist Rocket Manufacturing Company, Inc." or any name confusingly similar thereto;

b) The appellant be permanently enjoined from using the mark "Wrist Rocket" in any manner on wrist-braced slingshots or replacement rubbers; and

c) A hearing be held to determine the damages to which the appellee was entitled for the appellant's use of the trademark "Wrist Rocket" sustained after January 19, 1972.

6. A hearing be held to determine the damages sustained by the appellee as a consequence of the false statements contained in the appellant's application for registration of the trademark "Wrist Rocket."

7. The appellee not entitled to attorneys' fees and costs under Nebraska law.

Both parties appeal. The appellant assigns as error the District Court's findings in Items 1, 3, 4, 5(a-c) and 6. The appellee assigns as error the District Court's findings in Items 2 and 7. For the reasons hereinafter stated, we affirm the District Court's findings in Items 1 and 7, we reverse its findings in Items 4 and 5(a-b), we partially reverse its finding in Item 3, and we express no opinion as to the District Court's findings in Items 2, 5(c) and 6.

I.

Initially, we must examine the jurisdictional basis for our review. The parties assume that we can consider the cause pursuant to 28 U.S.C. § 1291, which provides for review by Courts of Appeal from all final decisions of the District Court. Generally, a final decision ends the litigation and leaves nothing for the court to do but execute the judgment. Gialde v. Time, Inc., 480 F.2d 1295, 1299 (8th Cir. 1973). Here, the litigation is not concluded. As regards the issues of breach of fiduciary duty, unfair competition and deceptive trade practices and false or fraudulent registration, the District Court has determined only the liability; the amount of damages therefor has been reserved for later determination. The order appealed from is interlocutory in nature, and we do not have jurisdiction under 28 U.S.C. § 1291. See Smith v. United States, 332 F.2d 731, 732 (8th Cir. 1964); Zwack v. Kraus Bros. & Co., 237 F.2d 255, 261 (2nd Cir. 1956); Fidelity Trust Co. v. Board of Education, 174 F.2d 642, 645 (7th Cir. 1949). Nevertheless, we do have jurisdiction, pursuant to 28 U.S.C. § 1292(a)(1), ³ to examine the merits of that part of the order granting to the appellee a permanent injunction and ordering the cancellation of the appellant's registration. See Smith v. Vulcan Iron Works, 165 U.S. 518, 17 S.Ct. 407, 41 L.Ed. 810 (1897); Abercrombie & Fitch Co. v. Hunting World, Inc., 461 F.2d 1040, 1042 (2nd Cir. 1972); Zwack v. Kraus Bros. & Co., supra at 261-262.

II.

The appellant, Wrist-Rocket Manufacturing Company, Inc., ⁴ is a Nebraska corporation and successor to Tru-Mark Manufacturing Company, which succeeded the proprietorship of Howard J. Ellenburg. The appellee, Saunders Archery Company, is also a Nebraska corporation and is successor to Saunders Archer-Target Company, a partnership of Charles and Phyllis Saunders, husband and wife. For purposes of clarity, the parties will be referred to as Ellenburg and Saunders, respectively.

Howard Ellenburg is the inventor of a wrist-braced slingshot that he initially marketed, through an Iowa sporting goods distributor, as "Howard's Wrist Locker Slingshot." This initial marketing arrangement was soon terminated by agreement of the parties, and Ellenburg thereafter entered into a distributorship agreement with Saunders, an established distributor of archery related sporting goods. This agreement, reduced to writing in July, 1954, gave Saunders the exclusive right to sell the slingshots manufactured by Ellenburg, with the latter retaining the right to make direct sales to customers, but not to dealers. The agreement was not strictly followed by either party, and it terminated by its own force in 1964. The agreement, nevertheless, did form the basis of the parties' business relationship which continued until November, 1971, when it was terminated by Saunders. After the termination, Ellenburg revived his distributorship agreement with the Iowa company and continued to manufacture "Wrist Rocket" slingshots. Saunders also continued to market similar slingshots under the "Wrist Rocket" label after establishing his own manufacturing facility. This suit followed.

A.

Before the commencement of this suit, Ellenburg's right to use the trademark "Wrist Rocket" in interstate commerce had become incontestable pursuant to 15 U.S.C. § 1065. ⁵ This incontestable status did not, however, aid the appellant in his infringement action against Saunders, and properly so. An incontestable registration does not confer upon the registrant rights not possessed at common law. It is not a sword. To prevail in the infringement action, Ellenburg had to establish his exclusive right to use the trademark independent of the registration. See Morehouse Manufacturing Corp. v. J. Strictland And Co., 407 F.2d 881, 888, 56 CCPA 946 (1969); Tillamook County Cream. Ass'n v. Tillamook Cheese & D. Ass'n, 345 F.2d 158, 160 (9th Cir.), cert. denied, 382 U.S. 903, 86 S.Ct. 239, 15 L.Ed.2d 157 (1965); 4 Callmann, Unfair Competition, Trademark, and Monopolies, § 97.3(c)(1) at 599 (3rd Ed. 1970). The burden was upon Ellenburg to prove prior appropriation and use of the trademark in connection with his business. See Sweetarts v. Sunline, Inc., 380 F.2d 923, 926 (8th Cir. 1967).

The appellant argues, as he did in the court below, that the business relationship of the parties is dispositive of the issue of exclusive right to use. Ellenburg characterizes the relationship as that of manufacturer and exclusive distributor and contends that all actions of Saunders taken to promote the sales of the slingshot inured to the former's benefit. Saunders rejects this characterization of the business relationship and contends that their agreement was merely a buy-sell arrangement.

The initial written agreement of the parties was silent as regards the ownership of the trademark "Wrist Rocket," for at the time of its formation, that mark had not been created. Both parties then referred to the slingshot as "Howard's Wrist Locker Slingshot." This is not then a case where a distributor appropriates to its own use an existing trademark of the manufacturer. The issue here is who, as between the manufacturer and distributor, has ownership of a trademark created after the formation of the business relationship. In this context, the relationship of the parties is clearly relevant, but the underlying and dispositive question remains: which party has priority of appropriation and use of the trademark in connection with his business. See Atlas Beverage Co. v. Minneapolis Brewing Co., 113 F.2d 672, 674-675 (8th Cir. 1940); 3 Callmann, supra § 68.2 at 72-74.

We conclude that the appellee had a common law right to use the trademark, but that the right was not exclusive. We base our holding that Saunders had a common law right of use on the following findings of the District Court, none of which are clearly erroneous:

1. Saunders was the first to use the trademark "Wrist Rocket" on slingshots sold by him. Prior to 1955, when Ellenburg was selling slingshots under the name "Howard's Wrist Locker Slingshots," Saunders affixed tags to the slingshots that carried his house mark "Saunders" along with the trademark "Wrist Rocket."

2. Saunders was the party with whom the public identified the slingshot, and was the party...