Landers, Frary & Clark v. Universal Cooler Corporation

• Decision Date: 06 July 1936
• Docket Number: No. 388.,388.
• Citation: 85 F.2d 46
• Parties: LANDERS, FRARY & CLARK v. UNIVERSAL COOLER CORPORATION et al.
• Court: U.S. Court of Appeals — Second Circuit

85 F.2d 46 (1936)

LANDERS, FRARY & CLARK v. UNIVERSAL COOLER CORPORATION et al.

No. 388.

Circuit Court of Appeals, Second Circuit.

July 6, 1936.

Bartlett, Eyre, Scott & Keel, of New York City (John P. Bartlett, Richard Eyre, and George N. Robillard, all of New York City, of counsel), for plaintiff.

Pennie, Davis, Marvin & Edmonds, of New York City (George E. Middleton, of New York City, Edwin C. Lewis, of Detroit, Mich., and Ernest H. Merchant, of New York City, of counsel), for defendants.

Before L. HAND, SWAN, and CHASE, Circuit Judges.

L. HAND, Circuit Judge.

This is a suit to prevent the use upon electric refrigerators of the word, "Universal," which the plaintiff had used for many years in the sale of other electric household appliances of many kinds. The defendant counterclaimed to enjoin the plaintiff's use. A predecessor of the defendant, the Universal Cooler Company, had been organized in the year 1923, and began to manufacture refrigerators in the spring of 1924. These were sold in two ways; either as bare "units" to manufacturers who put them in their own cabinets, marked with their own names; or direct to the trade in cabinets, bought by the defendant and marked "Universal Cooler." Only the last are here in issue. The sales of all sorts were not large during the years 1924-5; six hundred and forty-four bare "units" and fifty-seven "Universal" cabinets. In October, 1925, the present defendant was organized and took over the business of the old company in 1926. Since that time and up to September 30, 1934, it has manufactured and sold 112,000 bare "units" and 31,000 cabinets, an average of about sixteen hundred a year until 1932, when the number began greatly to increase, so that for the year ending September 30, 1934, it was over ten thousand. The plaintiff's position is that, as it had been for many years in the field of electrical household appliances of all sorts, sold under the name, "Universal," it can protect that word against use upon any new appliance of the same general kind, even though it has not yet made or sold it. The defendant answers that a word such as "Universal," drawn from common speech and descriptive, unlike a coined word, will protect no more than the goods on which it has been actually used. Besides, it argues, the plaintiff gave it implicit assurance before the bill was filed in 1934 that it would not interfere with the name, and it has built up its business in reliance upon this. For these reasons it claims to be itself the owner of the word, "Universal," upon refrigerators, and it seeks an injunction against the plaintiff.

The plaintiff first heard of the defendant's business some time in the spring of 1926, when the defendant began to advertise on a large scale, occupying a full page of the Saturday Evening Post on April 3, 1926. On May thirteenth the plaintiff's attorneys wrote, saying that the plaintiff had for long been selling household appliances under the name, "Universal," many of them electrical, so that the word had come to mean its manufacture; that for some time in the past it had been preparing the manufacture of electrical refrigerators which it proposed to sell under that name; and that it had succeeded to the business of a well-known firm from whom it had bought the trade-mark, "Universal," and who had used it upon wooden refrigerators. For these reasons it declared that the defendant was "open to the charge of infringement," and in substance it requested it to abandon the word. (The business of which the plaintiff spoke in this letter was that of the American Wringer Company, which in 1926 sold to the plaintiff its trademark, "Universal," for use on electrical refrigerators; but as the sale was gross, nothing passed). By the summer of 1931 the plaintiff had not yet perfected its electric refrigerator; one difficulty was in getting a suitable compressor. The defendant controlled the Climax Company, which made a compressor that the plaintiff thought might serve; and the parties met in August of that year, at which time the plaintiff proposed to buy a substantial block of the defendant's shares, and that the two should manufacture in common. On August twenty-eighth, after this interview, it wrote a letter to straighten out some matters not dealt with orally. Especially it spoke of the use of the word "Universal," declaring that that would not "bother us much" unless the plaintiff went into the refrigerator business itself; in that event it could not see how it could successfully establish a dealer who could sell refrigerators if the defendant was selling a "Universal Cooler" in the same territory; the plaintiff ought then to be the only one to sell the "Universal" refrigerators. The plaintiff did buy over six thousand of the defendant's shares for about $26,000, and became one of its largest stockholders; but the Climax compressor did not turn out well, and the parties never engaged in joint manufacture or distribution. On April 19, 1932, after this proposal had fallen through, the plaintiff again wrote, speaking of its own prospects in refrigerators, and asking whether the defendant could not manufacture them for it, using the plaintiff's compressors; nothing was said about stopping the use of the word, "Universal." To this the defendant replied on the twenty-first saying that it was manufacturing in its new plant, buying its own cabinets and so forth; it discussed the general conditions in the industry, and declared that its own operations were encouraging and that its sales showed a sixty per cent. increase; it made no direct answer to the proposal of the defendant except to suggest that there might be an interview. Not before the end of the year 1932, or the beginning of 1933, did the plaintiff make any real complaint, and even then it would have been content with the use of the phrase, "Universal Cooler." Yet on April 1, 1933, apparently out of the blue, it sued a distributor to suppress the word, "Universal," altogether. That suit was dismissed by consent, though "without prejudice," and the record tells nothing more about it; neither when it was dismissed, nor why. So far as appears, it had been no more than a gesture and after its dismissal the event need not have disturbed the defendant's supposition that no real attempt would be made to stop the use, then seven years old, of a mark upon which its business had been founded. This suit was brought on June 27, 1934. The judge held that the defendant was free to use the word, "Universal," on its refrigerators, but must add the suffix, "Cooler," as it had offered to do. Both parties appealed.

It has now become settled that a man who has established his mark upon one kind of goods may prevent another from using it upon another kind, if that be not too foreign to the first. The earliest instance we have found is Collins Co. v. Ames & Sons Corporation (C.C.A.) 18 F. 561, where Mr. Justice Blatchford while a Circuit Judge so ruled in 1882, without giving extended reasons. His decision has been frequently followed. Godillot v. American Grocery Co. (C.C.) 71 F. 873; Florence Mfg. Co. v. Dowd Co., 178 F. 73 (C.C.A. 2); Aunt Jemima Mills Co. v. Rigney & Co., 247 F. 407, L.R.A.1918C, 1039 (C.C.A. 2); E-Z Waist Co. v. Reliance Mfg. Co., 52 App.D.C. 291, 286 F. 461; Anheuser-Busch v. Budweiser Malt Products Corporation, 295 F. 306 (C.C.A. 2); Yale Electric Corporation v. Robertson, 26 F.(2d) 972 (C.C.A. 2); Duro Co. v. Duro Co., 27 F.(2d) 339 (C.C.A. 3); Waterman Co. v. Gordon, 72 F.(2d) 272 (C.C.A. 2). At times it has been suggested that the new goods must be of the same "class" as those sold by the first user of the mark. Layton...