DM & Antique Import Corp. v. Royal Saxe Corp.

• Decision Date: 22 April 1970
• Docket Number: No. 67 Civ. 4954.,67 Civ. 4954.
• Citation: 311 F. Supp. 1261
• Parties: D. M. & ANTIQUE IMPORT CORPORATION, Plaintiff, v. ROYAL SAXE CORPORATION and Chelsea Import Company, Inc., Defendants.
• Court: U.S. District Court — Southern District of New York

311 F. Supp. 1261

D. M. & ANTIQUE IMPORT CORPORATION, Plaintiff, v. ROYAL SAXE CORPORATION and Chelsea Import Company, Inc., Defendants.

No. 67 Civ. 4954.

United States District Court, S. D. New York.

November 14, 1969.

Supplemental Opinion April 22, 1970.

As Modified April 22, 1970.

COPYRIGHT MATERIAL OMITTED

Botein, Hays, Sklar & Herzberg, New York City, for plaintiff.

Baker & McKenzie, New York City, for defendants.

OPINION

LASKER, District Judge.

Plaintiff D. M. Antique Import Corporation ("D.M.") brings this motion for summary judgment, pursuant to Rule 56 of the Federal Rules of Civil Procedure. D.M. seeks three forms of relief: first, a declaratory judgment that defendant Royal Saxe Corporation ("Royal Saxe") has no rights in certain registered trademarks and that the Patent Office should cancel those marks; second, an injunction restraining Royal Saxe and its American distributor, Chelsea Import Company, Inc. ("Chelsea") from interfering with D.M.'s china import business; and third, damages for allegedly false and fraudulent statements which Royal Saxe made in obtaining its registrations and for falsely designating the origin of goods it sells.

The crux of this dispute is whether Royal Saxe has the right to use on porcelain items either a mark consisting of crossed swords¹ ("the crossed swords mark") or another mark consisting of crossed swords within a shield ("the Prince de Saxe mark"). Also at issue is whether D.M. has the right to prevent Royal Saxe from barring D.M. from dealing in merchandise bearing the former mark. It is important at the outset to note that D.M. does not claim or seek to establish that it is the owner of the crossed swords trademark.

D.M.'s position is that when Royal Saxe applied for and obtained registrations in these marks, it was not entitled to them because it was not the first to use them; that Royal Saxe knew it was not entitled to them and thus made false statements in order to support its application; that having obtained the registrations falsely, Royal Saxe then tried to invoke them to prevent D.M. from importing other East German-manufactured items which rightfully contained the mark; and that Royal Saxe failed to use its marks to the commercial extent necessary to preserve them.

Royal Saxe's defenses are that D.M. lacks trademark rights sufficient to give it standing to bring this action; that the real party in interest whose claims D.M. is asserting is an East German, state-owned enterprise, and thereby barred fom invoking any alleged rights by the Trading With the Enemy Act; and that its use of the registered marks is sufficient to withstand D.M.'s attempt to have them cancelled.

* * *

The crossed swords mark is of significant value because for more than 250 years it has been associated with fine quality porcelain manufactured in Meissen, Germany. In 1710, August II, King of Poland and Elector of Saxony, established the Koenigliche (Royal) Porzellan Manufaktur Meissen ("K.P.") as a royal enterprise. In 1723 the tradition arose of affixing to the manufactured goods a mark consisting of crossed swords, which were also a part of August II's family coat of arms. That tradition has continued to the present. The enterprise was transferred to the State of Saxony in 1831, and has remained state-owned since then. In 1918 it was renamed Staatliche Porzellan Manufaktur ("S.P."). K.P. registered the crossed swords mark in the United States in 1895. In 1925, S.P. registered the same mark, but with a point appearing between the sword blades. S.P. continued to use the mark on china sold here prior to World War II, but the war caused an interruption in its sales and after 1945 it did not obtain a renewal of either the 1895 or 1925 registration.

The preceding facts are not contested. What is in dispute has to do with (a) the significance of the post-World War II history of Meissen china and (b) the extent and method of S.P.'s commercial activities in the United States.

The division of Germany left Meissen in the Eastern zone, and since 1950, following the establishment of the German Democratic Republic (East Germany) in 1949, the legend V.E.B. has preceded S.P.'s name to indicate that it is a "People's Owned Enterprise." However, the operating entity has gone on using the same plant that S.P. continuously used since 1865. Nevertheless, Royal Saxe (in its statement pursuant to Rule 9(g) of this court as to material facts which it alleges must be tried) asserts that "it must be determined whether V.E.B.-S.P. is indeed the legal `predecessor in interest' sic; Royal Saxe apparently meant "successor in interest" to * * * S.P. from whom Plaintiff D.M. allegedly claims an interest." However, since the affidavit of Herbert Baessler, commercial director of V.E.B.-S.P., describes without qualification the line of succession which establishes that V.E.B.-S.P. is indeed the successor to S.P., and since defendant's affidavit in opposition contains literally no evidence on the subject, there clearly is no "genuine" issue as to any material fact on this point within the meaning of Rule 56(c). As to S.P.'s commercial activities in the United States, they are relevant only insofar as they demonstrate that D.M. has an interest in the marks that entitles it to protection. (See the discussion of D.M.'s standing under the Trade Mark Act, infra.) In affidavits in support of the motion, Natan Celnik, the president, and together with his wife the sole shareholder in D.M., and Herbert Baessler, commercial director of V.E.B.-S.P., state that since 1945 S.P. has sold $500,000 worth of goods bearing the crossed swords mark for export to the United States, and that D.M. has been the exclusive United States distributor of those goods since 1951. (Of course, the retail value of such merchandise is up to four times as great as the amount paid by D.M. as importer.) In its Rule 9(g) statement, Royal Saxe again asserts that the extent of these sales "must be determined." If by this claim Royal Saxe means to put the facts in dispute, it has not effectively done so, since, again, its affidavit in opposition to the motion contains not a shred of evidence as to D.M.'s commercial activities. "Vague and conclusory allegations" are not sufficient to meet the requirements of Rule 56. Dressler v. MV Sandpiper, 331 F.2d 130 (2d Cir. 1964). Furthermore, the only affidavit submitted by Royal Saxe in opposition to the motion is that of its attorney, who states:

"To my best information and belief, the historic pattern leading to these proceedings, as I have been advised by F.W. Methlow, President of the Royal Saxe Corporation, is * * *"

Such an affidavit, based as it admittedly is on second-hand information, does not meet the requirements of Rule 56(e) that "supporting and opposing affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein". Accordingly, the facts are found to be as stated in the affidavits submitted by D.M.

Royal Saxe traces its post-World War II rights to the marks in question from Prince Ernst Heinrich von Sachsen, son of the last King of Saxony. Prince Ernst in 1952 applied to the United States Patent Office for registration of the mark consisting of his family shield. This mark, the Prince de Saxe mark, was registered by the Patent Office in December 1957 (No. 655,242). Prince Ernst assigned all rights in that mark to Royal Saxe in the same month. Registration No. 655,242 was abandoned, but Royal Saxe filed a new application for the registration of the Prince de Saxe mark in March 1962 and obtained registration in June 1964 (No. 772,301).

Royal Saxe first applied for the crossed swords mark in January 1962. The Patent Office granted Royal Saxe's application in October 1962 (No. 740,005). However, subsequent to the filing of this motion, the Patent Office cancelled No. 740,005 for failure to file affidavits of use under Section 8 of the Lanham Act. Royal Saxe has appealed that cancellation. In addition, S.P. has applied for re-registration of the crossed swords mark.

I. STANDING

At the outset, it is necessary to dispose of Royal Saxe's contentions that D.M. has no standing to bring this action under either (1) 8 C.F.R. § 507.46 (a), a regulation issued under the authority of the Trading With the Enemy Act, 50 U.S.C. App. § 5(b), which authorizes regulations prohibiting acquisition, use or transfer of rights in property subject to United States jurisdiction in which a foreign country has an interest, or (2) the Trade Mark Act. 8 C.F.R. § 507.46(a) provides that:

"Any transaction, transfer, or the exercise of any right, power or privilege by or on behalf of or pursuant to the direction of Germany, or nationals of Germany with respect to any trade-mark or trade-name, or rights or interests therein or related thereto, which was in or registered in the United States on December 31, 1946, is prohibited, unless authorized by or on behalf of the Attorney General or the Director, Office of Alien Property."

Section (b) of the same regulation makes it clear that the above provision applies only to East Germany or East German nationals.

The substance of Royal Saxe's argument is that D.M. is asserting rights for S.P. that the latter could not invoke itself, since it is situated in East Germany. The problem with this argument is that D.M. is asserting its own rights, and not S.P.'s. Royal Saxe cites Carl Zeiss Stiftung v. V.E.B. Carl Zeiss, Jena, 293 F.Supp. 892, 916 (S.D.N.Y.1968), for the proposition that D.M. is barred because it is S.P.'s assignee, but it offers no proof whatever that there has been any such assignment of the mark. D.M., however, submits proof to the contrary—an affidavit of the commercial director of V.E.B.-S.P., who states that V.E.B.-S.P. and no one else has applied for reregistration of the crossed swords mark. In...