88 cents Stores, Inc. v. Martinez

• Citation: 227 Or. 147,361 P.2d 809
• Parties: , 129 U.S.P.Q. 491 88cents STORES, INC., Respondent, v. Gil MARTINEZ, Appellant.
• Decision Date: 10 May 1961
• Court: Oregon Supreme Court

Page 809

361 P.2d 809

227 Or. 147, 129 U.S.P.Q. 491

88cents STORES, INC., Respondent, v. Gil MARTINEZ, Appellant.

Supreme Court of Oregon, Department 2.

Argued and Submitted Feb. 15, 1961.

Decided May 10, 1961.

Donald E. Kettleberg, Portland, argued the cause for appellant. With him on the brief were Milton O. Brown and Garrett L. Romaine, Portland.

Richard E. Miller, Eugene, argued the cause for respondent. With him on the brief was John R. Gilbertson, Portland.

Before McALLISTER, C. J., and WARNER, SLOAN, O'CONNELL and LUSK, JJ.

O'CONNELL, Justice.

This is a suit in equity in which plaintiff seeks to enjoin the use of its alleged trade name and to recover damages for past use. The trial court granted an injunction and gave judgment in the amount of $2,500 for past infringement.

In 1956 plaintiff originated the idea of selling the various items of merchandise in its store at a single price of 88 cents. It adopted the name 'The 88cents Store' and developed its advertising around the idea that all items of merchandise offered for sale in its store were 'one price,' viz., 88 cents. The repetition of the number '8' was further carried out in its advertising slogan '8888 items at 88cents.'

This technique of merchandising proved so successful that others sought its use and eventually plaintiff enfranchised nine stores in Oregon and several others in Washington and California to use the name 'The 88cents Store,' at a monthly charge of fifty dollars.

In 1959 defendant opened a store in the city of Portland using the name 'Gil's Super 88cents Store.' Most of the items of merchandise in defendant's store are sold at 88cents; but some items are sold at a higher price, and when several items together are priced at 88cents a single item in that group may be sold at the proportionate fraction of 88cents. Defendant has used advertising indicating that he offers '8888 items at 88cents.' He testified that he got the idea of opening an 88cents store when he was 'wholesaling for a while to a lot of 88cents stores,' and that he was finally prompted to adopt this method of merchandising in his store when various wholesale companies offered a catalogue of items all priced to sell at 88cents.

Defendant's store was located within one mile of one of the stores enfranchised by plaintiff. Under the terms of the franchise agreement the enfranchisee was to be free from competition from 88cents stores within a mile radius. For a period of seven months prior to the filing of the complaint in the present action the Portland enfranchisee refused to pay the $50 monthly franchise fee, on the ground that he was subjected to competition from defendant's store.

Plaintiff's complaint alleges that plaintiff and its franchise holders have an established reputation for selling merchandise of good quality at a low price; that many of its customers purchase merchandise from plaintiff and its enfranchisees in reliance upon their reputation for such merchandising; that the name 'The 88cents Store' has become distinctive and has acquired a secondary meaning identifying the stores of plaintiff and its franchise holders; that defendant appropriated plaintiff's name in an effort to deceive and cheat the public by inducing them to believe that they were dealing with plaintiff or its associates; all of which causes the public to be confused as to the ownership of defendant's store, identifying it with plaintiff, and deprives plaintiff and its associates of sales and business good will. It is alleged that defendant's use of plaintiff's name constitutes unfair competition resulting in damage to plaintiff in the amount of $10,000.

The designation, 'The 88cents Store' is unquestionably a descriptive term. It announces to the public in an elliptical way the information that the merchandise offered for sale is priced at 88 cents. If plaintiff's name is solely descriptive the law affords plaintiff no remedy against those who imitate it. Truck Ins. Exchange v. Truck Ins. Exchange, 1940, 165 Or. 332, 365, 107 P.2d 511; Liquidators v. Clifton, 1930, 132 Or. 448, 286 P. 152; Kellogg Co. v. Nat. Biscuit Co., 1938, 305 U.S. 111, 116-117, 59 S.Ct. 109, 83 L.Ed. 73; Keller Products v. Rubber Linings Corp., 7 Cir., 1954, 213 F.2d 382, 47 A.L.R.2d 1108; General Industries Co. v. 20 Wacker Drive Bldg. Corp., 7 Cir., 1946, 156 F.2d 474; Choynski v. Cohen, 1870, 39 Cal. 501; 3 Restatement, Torts, §§ 716(b), 721 (1938). Plaintiff concedes as much, but contends that the name has overtones which cause the public to understand it as signifying not a method of merchandising, but rather as being informative of the origin or source of the goods and services purveyed in the stores bearing that name. That is, plaintiff contends that the predominant meaning, in the minds of present and prospective consumers, is that the name identifies him or his enfranchisees as the source of the goods or services, or at least, that it indicates that all stores similarly denominated feature goods or services sponsored by a common source, although the identity of that common source may be unknown to the general consuming public.

This concept of the business name denoting an association of the goods or services with a common source is known as the secondary meaning doctrine. Kellogg Co. v. Nat. Biscuit Co., 1938, 305 U.S. 111, 118, 59 S.Ct. 109, 83 L.Ed. 73; Barton v. Rex-Oil Co., 3 Cir., 1924, 2 F.2d 402, 405, 40 A.L.R. 424, decree modified 3 Cir., 1928, 29 F.2d 474; Crescent Tool Co. v. Kilborn & Bishop Co., 2 Cir., 1917, 247 F. 299; G. & C. Merriam Co. v. Saalfield, 6 Cir., 1912, 198 F. 369, 373; Brooks Bros. v. Brooks Clothing of California, D.C.S.D.Cal.1945, 60 F.Supp. 442, 450; 1 Nims, Unfair Competition and Trade-Marks (4th Ed. 1947) § 37; 3 Restatement, Torts, § 716(b) (1938); Note, Trade Names: Protection Accorded Under Secondary Meaning Doctrine, 6 Fla.L.Rev. 256 (1953); Note, Unfair Competition--Secondary Meaning of Trade Names--Injunctive Relief, 13 Ohio St.L.J. 303 (1952); Note, The Doctrine of Secondary Meaning, 62 W.Va.L.Rev. 254 (1960). And, it is essential that plaintiff's business name have acquired a secondary meaning before it can be considered a protectible trade name. 3 Restatement, Torts, § 716(b), Comment b (1938).

To acquire a secondary meaning a business name must acquire a special significance to the purchasing public. As stated in 3 Restatement, Torts, § 716, Comment b, p. 560 (1938):

'* * * The issue in each case is whether or not in fact a substantial number of present or prospective purchasers understand the designation, when used in connection with goods, services or a business, not in its primary lexicographical sense, but as referring to a particular person or association.'

If a name acquires a secondary meaning, the originator of the name is entitled to exclude use of it by others to the extent that the imitator's use causes or is likely to cause confusion of source in the market. 3 Restatement, Torts, Ch. 35 (1938). Confusion of source results if the imitator's use of the name misleads present or prospective purchasers into believing that the imitator's goods or services are in fact those of the originator of the trade name, with the attendant consequences of diverting business from the originator or obtaining the benefits of the originator's advertising or otherwise interfering with his protectible business interests. 3 Restatement, Torts, §§ 728-730, and especially Comment a to § 730 (1938). See, Federal Securities Co. v. Federal Securities Corp., 1929, 129 Or. 375, 394, 276 P. 1100, 66 A.L.R. 934; Triangle Publications v. Rohrlich, 2 Cir., 1948, 167 F.2d 969, 981 (dissenting opinion per Frank, J.); Best & Co. v. Miller, 2 Cir., 1948, 167 F.2d 374, 376-377; Esso, Inc. v. Standard Oil Co., 8 Cir., 1938, 98 F.2d 1, 5; Comment, Developments in the Law: Trade-Marks and Unfair Competition, 68 Harv.L.Rev. 814, 850 (1955).

Whether a secondary meaning is associated with a name and whether confusion has resulted or is likely to result from the appropriation of a name by a subsequent user are questions of fact in each case. Triangle Publications v. Rohrlich, 2 Cir., 1948, 167 F.2d 969, 972, 974, 976, and dissenting opinion per Frank, J.; Best & Co. v. Miller, 2 Cir., 1948, 167 F.2d 374, 376, 377; Little Tavern Shops v. Davis, 4 Cir., 1941, 116 F.2d 903, 906; Landers, Frary & Clark v. Universal Cooler Corporation, 2 Cir., 1936, 85 F.2d 46, 48; Atlas Assurance Co. v. Atlas Ins. Co., 1907, 138 Iowa 228, 112 N.W. 232, 233, 15 L.R.A.,N.S., 625, modified 138 Iowa 228, 114 N.W. 609, 15 L.R.A.,N.S., 625; Drive It Yourself Co. v. North, 1925, 148 Md. 609, 130 A. 57, 60, 43 A.L.R. 206; Rogers v. Broughton, Tex.Civ.App.1952, 250 S.W.2d 606-607; 1 Callman, Unfair Competition and Trade-Marks (2nd ed. 1950), § 7.3 (1959 Cum. Supp.); 3 Restatement, Torts, § 716, Comment b, § 728, Comment a (1938). The burden of proving the facts of secondary meaning and confusion of source is on the plaintiff. Kellogg Co. v. Nat. Biscuit Co., 1938, 305 U.S. 111, 118-119, 59 S.Ct. 109, 83 L.Ed. 73; Norwich Pharmacal Company v. Sterling Drug, Inc., 2 Cir., 1959, 271 F.2d 569, 572-573; Checker Food Products Co. v. Ralston Purina Co., 8 Cir., 1956, 232 F.2d 477, 480-481; Keller Products v. Rubber Linings Corp., 7 Cir., 1954, 213 F.2d 382, 386, 47 A.L.R.2d 1108; Hiram Walker & Sons v. Penn-Maryland Corporation, 2 Cir., 1935, 79 F.2d 836, 838-839; Kellogg Toasted Corn Flake Co. v. Quaker Oats Co., 6 Cir., 1916, 235 F. 657, 664; Riverbank Laboratories v. Hardwood Products Corp., D.C.N.D.Ill.1958, 165 F.Supp. 747, 757; Food Fair Stores v. Square Deal Market Co., D.C.D.C.1952, 109 F.Supp. 637, 638; Hospital Liquids, Inc. v. G. H. Sherman, M.D., Inc., D.C.E.D.Mich.1941, 38 F.Supp. 828; De Long Hook & Eye Co. v. Hump Hairpin Mfg. Co., 1921, 297 Ill. 359, 130 N.E. 765, 769; Silbert v. Kerstein, 1945, 318 Mass. 476, 479, 62 N.E.2d 109; Renofab Process Corp. v. Renotex Corporation, Sup.1960, 158...