Miller Brewing Co. v. Jos. Schlitz Brewing Co.

• Citation: 605 F.2d 990
• Decision Date: 06 September 1979
• Docket Number: No. 78-2011,78-2011
• Parties: MILLER BREWING COMPANY, Plaintiff-Appellant, v. JOS. SCHLITZ BREWING CO., Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 990

605 F.2d 990

203 U.S.P.Q. 642

MILLER BREWING COMPANY, Plaintiff-Appellant, v. JOS. SCHLITZ BREWING CO., Defendant-Appellee.

No. 78-2011.

United States Court of Appeals Seventh Circuit.

Argued Nov. 8, 1978.

Decided Sept. 6, 1979.

Anthony L. Fletcher, New York City, for plaintiff-appellant.

Charles W. Bradley, New York City, for defendant-appellee.

Before FAIRCHILD, Chief Judge, and SWYGERT and TONE, Circuit Judges.

TONE, Circuit Judge.

Two years ago we reversed a preliminary injunction order against infringement of Miller Brewing Company's trademark "LITE" for beer. We did so on the ground that "because 'light' is a generic or common descriptive word when applied to beer, neither that word nor its phonetic equivalent may be appropriated as a trademark for beer." Miller Brewing Co. v. G. Heileman Brewing Co., 561 F.2d 75, 77 (7th Cir. 1977), Cert. denied, 434 U.S. 1025, 98 S.Ct. 751, 54 L.Ed.2d 772 (1978). The principal question before us now is whether that determination in an interlocutory appeal should be given preclusive effect in another trademark action by Miller to enforce the same trademark against a different defendant, Jos. Schlitz Brewing Company. Holding that it should, the district court entered a summary judgment against Miller, Miller Brewing Co. v. Jos. Schlitz Brewing Co., 449 F.Supp. 852 (E.D.Wis.1978). The judgment is affirmed with respect to the trademark claims and vacated with respect to a joined unfair competition claim, and the case is remanded for further proceedings.

The present action was filed by Miller one year earlier than the Heileman action, and extensive discovery and other trial preparation took place during that year. Nevertheless, Miller chose to seek a preliminary injunction in the Heileman case rather than in this or any of six other cases it had earlier filed against other competitors. After our decision reversing the preliminary injunction in Heileman, Schlitz, which had filed a brief Amicus curiae in this court in Heileman, moved in this case for summary judgment on the ground of collateral estoppel with respect to all claims of the complaint except those for knowingly false disparagement of a competitor's product.

The district court granted the motion, holding that the doctrine of collateral estoppel was applicable under Blonder-Tongue Laboratories, Inc. v. University of Illinois Foundation, 402 U.S. 313, 91 S.Ct. 1434, 28 L.Ed.2d 788 (1971), to preclude Miller from litigating further, because this court in Heileman, although deciding an interlocutory appeal, had "found an insuperable obstacle to Miller's maintenance of the litigation." Therefore, under the principles laid down in Mast, Foos & Co. v. Stover Mfg. Co., 177 U.S. 485, 20 S.Ct. 708, 44 L.Ed. 856 (1900), and CES Publishing Corp. v. St. Regis Publications, Inc., 531 F.2d 11 (2d Cir. 1975), a final judgment without further litigation was appropriate. Miller's argument that it had not had a full and fair opportunity in Heileman to litigate the question whether "light" or "LITE" is generic was rejected. 449 F.Supp. at 855. In granting summary judgment the district court ordered the Commissioner of Patents and Trademarks to cancel the trademark registrations of the mark, and, acting pursuant to Rule 54(b), Fed.R.Civ.P., found no just reason for delay and made the judgment final with respect to all claims that depended on the validity of the trademark. 449 F.Supp. at 855-856. This appeal followed.

I.

Availability of Collateral Estoppel to a Non-Party to the Prior Case.

The fact that Schlitz was not a party to the Heileman case will not preclude giving collateral estoppel effect to a determination necessarily made in that case, if Miller had a full and fair opportunity to litigate on the issue determined. Blonder-Tongue Laboratories, Inc. v. University of Illinois Foundation, supra, 402 U.S. at 332-334, 91 S.Ct. 1434. Whether a full and fair opportunity to litigate was afforded in the other action depends, Blonder-Tongue teaches, upon several factors, including who chose the forum, incentive to litigate, whether (speaking of the patent issues before the court in that case) "the prior case was one of those relatively rare instances where the courts wholly failed to grasp the technical subject matter and issues in suit," and "whether without fault of his own the (party against whom preclusion is sought) was deprived of crucial evidence or witnesses in the first litigation." Id. at 333, 91 S.Ct. at 1445. And, "(i)n the end, decision will necessarily rest on the trial courts' sense of justice and equity." Id. at 334, 91 S.Ct. at 1445.

Although the opinion in Blonder-Tongue demonstrates that the reasons for eliminating the doctrine of mutuality of estoppel weigh especially heavily in patent cases, they are applicable generally. E. g., Samuel C. Ennis & Co. v. Woodmar Realty Co., 542 F.2d 45, 49 (7th Cir. 1976). The Restatement (Second) of Judgments § 88 (Tent. Draft No. 3, 1976) states,

A party precluded from relitigating an issue with an opposing party, . . . is also precluded from doing so with another person unless the fact that he lacked full and fair opportunity to litigate the issue in the first action or other circumstances justify affording him an opportunity to relitigate the issue.

The "other circumstances to which consideration should be given" are those applicable in deciding whether the opposing party in the prior case should be allowed to relitigate, Id. § 68.1, and additional ones applicable when mutuality of estoppel is lacking, Id. § 88. Because of the nature of Miller's suits against Heileman and Schlitz and the identity of the central issue in both, none of these "other circumstances" described in the Restatement are present in the case at bar, so the test to be applied is whether Miller had a full and fair opportunity to litigate, which is to be determined by applying the factors stated in Blonder-Tongue. See also Restatement, supra, § 68.1, Comment J, § 88, Comment B. ¹

A. Who Chose the Forum

Miller chose the forum in the Heileman case. Moreover, when Miller sued Heileman the instant action against Schlitz had been pending for one full year, during which extensive discovery and trial preparation had been conducted by both Miller and Schlitz. Nevertheless, Miller had not sought a preliminary injunction against Schlitz. Simultaneously with the filing of the Heileman complaint, however, Miller moved for a preliminary injunction against Heileman. Whatever the litigation strategy that motivated Miller's decision to seek a preliminary injunction and to seek it against Heileman rather than Schlitz despite the extensive preparation that had already gone into the Schlitz case, that decision entailed the risk, familiar to any experienced litigation lawyer, that the decision on the preliminary injunction might have the effect of determining the merits, either legally, through law of the case, or as a practical matter. In addition, Miller assumed the risk that the decision might determine the results of its other "LITE" beer cases through Stare decisis or, since decisions on preliminary injunctions may have a preclusive effect, See Part II, Infra, through collateral estoppel. The effect of an adverse determination on other cases could not have come as a surprise to Miller. ²

B. Incentive to Litigate

The factor of incentive to litigate requires little discussion. Miller had the same incentive to litigate in the Heileman case that it has in the case at bar, an incentive that must have been enhanced by the knowledge that what it had selected as its pilot proceeding, a preliminary injunction motion against Heileman, would be of critical importance to the case at bar and all its other pending "LITE" cases against competitors. See note 2, Supra.

C. The Court's Grasp of the Subject Matter and Issues in Heileman

The next factor to be considered is whether "the prior case was one of those relatively rare instances where the courts wholly failed to grasp the technical subject matter and issues in suit." Blonder-Tongue Laboratories, Inc. v. University of Illinois Foundation, supra, 402 U.S. at 333, 91 S.Ct. at 1445. Miller contends that it was.

The kind of judicial failure described in Blonder-Tongue is not merely reaching a wrong result and is, we hope, unlikely to occur except when a court is faced with esoteric and complex subject matter beyond its experience and comprehension, which the Supreme Court thought might occur in some patent cases. ³ It did not occur in the Heileman case. ⁴ The subject matter was not "technical," See note 3, Supra, and was grasped by the court. The controlling issue was simple. Both parties agreed that the applicable law was correctly stated by Judge Friendly in Abercrombie & Fitch Co. v. Hunting World, Inc., 537 F.2d 4, 9-11 (2d Cir. 1976). ⁵ In taking this position, the parties made no distinction between the statutory and common law standards. In summarizing that applicable law, Miller expressly acknowledged ⁶ that if "light" was generic no trademark protection could be acquired for it. ⁷ The issue then which Miller as well as Heileman represented to be controlling and which we treated accordingly was whether "light" is generic. The court in Heileman did not fail to grasp the subject matter and the issue in suit. ⁸

D. Deprivation of Crucial Evidence

The last factor mentioned in Blonder-Tongue is whether Miller was deprived of crucial evidence or witnesses in the prior case.

Miller was not foreclosed from offering any evidence it chose in support of its motion for preliminary injunction in the Heileman case. While Miller now complains that there was no evidentiary hearing in that case, it did not seek one, choosing rather to present its case by affidavits, which of course allowed counsel to participate in the composition of the testimonial statements. Indeed, when Heileman referred in its brief in this court to the absence of an evidentiary hearing,...