Wells Fargo & Co. v. Wells Fargo Express Co.

Decision Date10 April 1973
Docket NumberCiv. No. LV-1496.
Citation358 F. Supp. 1065
PartiesWELLS FARGO & COMPANY, a corporation, and Baker Industries, Inc., a corporation, Plaintiffs, v. WELLS FARGO EXPRESS COMPANY, a Nevada corporation, Defendant, Wells Fargo Express Company, A. G., a Lichtenstein corporation, Additional Defendant.
CourtU.S. District Court — District of Nevada






Beckley, DeLanoy & Jemison, Las Vegas, Nev., Flehr, Hohbach, Test, Albritton & Herbert, San Francisco, Cal., Albert L. Ely, Jr., Cleveland, Ohio, for plaintiffs.

Wiener, Goldwater & Galatz, Las Vegas, Nev., Albert L. Jacobs, Jr., Jesse Reingold, New York City, for defendants.



ROGER D. FOLEY, Chief Judge.

Plaintiff Wells Fargo & Company, a California corporation (the Bank), is engaged in business in the United States and various foreign countries. The Bank uses registered trade names, trademarks and service marks comprising in whole or in part the name "Wells Fargo". The Bank is involved in banking services, trust services, toy manufacturing, restaurant services and the travel agency business and has registered trade-marks to cover these services.

Plaintiff Baker Industries, Inc., a Delaware corporation (Baker), owns and has registered the "Wells Fargo" trademark for the armored car business, i. e., the transportation of money and valuables.

The defendant Wells Fargo Express Company is a Nevada corporation, incorporated September 1, 1961.

The complaint was filed on September 18, 1970, alleging that the defendant is infringing on the Bank's and Baker's trade-marks, all of which have been registered under the Lanham Act, 15 U.S.C. §§ 1051-1127. The plaintiffs also allege unfair competition. The plaintiffs allege that the defendant uses the name "Wells Fargo Express Co." in its American and foreign business activities and that the defendant has registered the plaintiffs' trade-mark and trade name in various foreign countries. Plaintiffs allege that the defendant has appropriated the trade-mark without their consent, that this use by the defendant confuses the public, that this use is likely to ultimately dilute their property rights in the registered trade-mark, that this use causes the plaintiffs irreparable harm and that the use unjustly enriches the defendant.

Both plaintiffs seek to enjoin the defendant from infringing their registered trade-marks and from using the words "Wells Fargo" in the United States or in foreign nations. Plaintiffs also seek an accounting for damages and profits, an order directing the destruction of labels, etc., in defendant's possession which bear the name "Wells Fargo", and costs.

The defendant's answer of May 20, 1971, alleges that it was a dormant corporation from its September 1, 1961, incorporation until 1968 and that it has never sold or offered for sale any goods or services. The defendant alleges that it changed its name from Wells Fargo Express Co. to Modern Research, Inc., on October 7, 1970, three weeks after the complaint was filed, so the lawsuit is therefore moot. The defendant, as Modern Research, Inc., alleges that it always has been, and presently is, engaged only in the business of research and development (inventing), which activity is not covered by either plaintiff's trade-mark registration and which is not a part of either plaintiff's business. The defendant further contends that the plaintiffs' trade-mark is not very strong and has been weakened by the extensive use in commerce of the words "Wells Fargo" by several other companies and by the use of the words by both plaintiffs, which are unrelated companies. The defendant alleges that the scope of protection afforded such a weak mark is narrow, indeed. The defendant further alleges that the plaintiffs are without clean hands since this suit is brought as a misuse of judicial machinery in order to obtain discovery for use in foreign suits. The defendant's answer contains a counterclaim for treble damages under the United States antitrust laws and the Nevada civil conspiracy laws.

On December 22, 1971, the plaintiffs filed an amended complaint which alleged trade-mark infringement and unfair competition against the original Nevada defendant and the newly added additional defendant Wells Fargo Express Company, A. G., a Lichtenstein corporation. Service was made by mail to a foreign address, supposedly relying on Nevada's long-arm statute to confer jurisdiction. The newly added defendant has never made an appearance.

The following is a brief history of the Nevada defendant. The defendant was incorporated on September 1, 1961, by Mr. Wilkinson, Sr., now deceased. Mr. Wilkinson, Jr., is now the president of the defendant, Modern Research. Mr. Wilkinson, Sr., decided that he wished to name the corporation Wells Fargo Express Co. Mr. Wilkinson, Sr., was aware of the San Francisco Bank of the same name, but a check with the Secretary of State of Nevada revealed that the name Wells Fargo Express Co. was available as a corporate name in Nevada. The defendant apparently remained dormant as a corporate shell until October 14, 1968, at which time the defendant opened a bank account. On this date the Nevada defendant corporation was apparently sold to the Lichtenstein corporation. The Lichtenstein corporation owned the Nevada defendant corporation until November 2, 1970, when the stock was purchased by Mr. Jacobs, the attorney for the defendant Modern Research. Apparently the defendant Modern Research is still owned by Mr. Jacobs.

On December 13, 1968, the defendant hired its first employee, Mr. Anthony Germano, who was hired to run an office and write checks. On January 1, 1969, offices were rented at 120 East Flamingo Road. On March 7, 1969, Ronald C. Davies, an inventor, was hired. On October 13, 1969, the assets of the defendant Wells Fargo Express Co. of Nevada were sold to Wilky Research and Development Corporation, a wholly owned subsidiary of Salem Electronics, Inc., a publicly owned and publicly traded company. Salem Electronics, a U. S. holding company which is now known as Salem Industries, is owned by the Lichtenstein corporation. So, on October 13, 1969, the assets of the Nevada corporate defendant were sold by the Lichtenstein corporation to a subsidiary of Salem Electronics, which is also owned by the Lichtenstein corporation. This just being a shuffle of ownership among subsidiaries, apparently the Lichtenstein corporation actually owned the defendant Nevada corporation until it was sold to Mr. Jacobs on November 2, 1970.

Before the Nevada defendant's assets were sold to Wilky Research and Development Corporation (owned by Salem) and after the sale the inventor, Mr. Davies, was busily working on various prototypes. On August 20, 1970, Baker advised the Nevada defendant by letter that the use of the words "Wells Fargo" constituted an infringement of registered trade-marks. On September 22, 1970, the Bank and Baker filed the original complaint charging the Nevada defendant with trade-mark infringement and unfair competition. On October 7, 1970, the defendant Wells Fargo Express Co. of Nevada changed its name to Modern Research, Inc. On October 13, 1970, Wilky Research and Development Corporation defaulted on its note to Modern Research, so the assets (the prototypes and the employment contract of Mr. Davies) went back to the Nevada defendant. Modern Research paid Wilky Research $400 and simply acquired the assets, as well as the corporate shell, of Wilky, so that on October 13, 1970, Wilky Research was acquired by, and became a subsidiary of, Modern Research of Nevada, which was still owned by the Lichtenstein corporation. Then, on November 2, 1970, Modern Research and its subsidiary, Wilky Research, were purchased by Mr. Jacobs, the present owner of the stock.

The following facts are well substantiated in the discovery materials and are deemed admitted by the defendant Modern Research for the purposes of its summary judgment action which is before this Court. It is the position of the defendant Modern Research that even admitting all of these facts, it is entitled to summary judgment as a matter of law because of lack of jurisdiction and/or failure to state claims upon which relief can be granted.

The defendant had the name Wells Fargo Express Co. listed in the yellow pages of the Las Vegas telephone directory under the category "Research and Development". The defendant concedes the listing but does not concede the fact that this listing is advertising.

The defendant has stationery printed with its corporate name on it and used approximately twenty sheets.

The defendant leased an automobile under its corporate name.

At the Flamingo Road office of the defendant, the corporate name was on the door and on the building directory.

Ron Davies, the inventor, purchased electronic supplies.

The defendant had a checking account with the corporate name imprinted on the checks.

During the period between the hiring of Ron Davies and the sale of the assets of the defendant to Wilky (Salem), the plaintiffs allege that the defendant, through Mr. Davies, was developing various products to be sold through Salem. But the defendant disagrees and says the affidavits show that even before the formal sale of the defendant's assets to Wilky, the parties involved in the sale had already informally agreed to the sale and all persons concerned thought Mr. Davies was already working for Salem and his inventions would be owned by Salem and promoted by Salem. But the defendant is willing to concede that prior to the formal sale of its assets to Salem, the defendant was developing various products which were to be sold through Salem. But the defendant states that even admitting this fact for the summary judgment motion, the defendant should still succeed as a matter of law.

The plaintiffs also allege that the defendant's...

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