MASTERCRAFTERS C. & R. CO. v. VACHERON & CONSTANTIN, ETC.

• Court: United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
• Citation: 119 F. Supp. 209
• Docket Number: Civ. A. No. 79-383.
• Parties: MASTERCRAFTERS CLOCK & RADIO CO. v. VACHERON & CONSTANTIN-LE COULTRE WATCHES, Inc. (Jaeger Le Coultre, S. A., Intervenor-Counterclaimant).
• Decision Date: 11 March 1954

119 F. Supp. 209

MASTERCRAFTERS CLOCK & RADIO CO. v. VACHERON & CONSTANTIN-LE COULTRE WATCHES, Inc. (Jaeger Le Coultre, S. A., Intervenor-Counterclaimant).

Civ. A. No. 79-383.

United States District Court S. D. New York.

March 1, 1954.

As Corrected March 11, 1954.

Harry Meisnere, New York City, for plaintiff. Clarence E. Threedy and Edward C. Threedy, Chicago, Ill., of counsel.

Goodwin, Danforth, Savage & Whitehead, New York City, for defendant and intervenor-counterclaimant. Pennie, Edmonds, Morton, Barrows & Taylor, William F. Clare, Jr., W. Brown Morton, Jr. and Stanton T. Lawrence, Jr., New York City, of counsel.

McGOHEY, District Judge.

The plaintiff seeks a declaratory judgment that it is not unfairly competing with the defendant; damages allegedly resulting from suits by the defendant against the plaintiff's distributors; an injunction to restrain the prosecution of such suits.

The defendant, in a counterclaim in which the intervenor joins, charges unfair competition by the plaintiff and asks damages and an injunction.

At trial to the Court alone, the parties stipulated to try only the issue of liability, leaving questions of damages for later determination.

The facts found by the Court and the conclusions of law follow.

Mastercrafters Clock & Radio Co. (hereafter called Masters) is an Illinois corporation. Vacheron-Constantin Le Coultre Watches, Inc. (hereafter called Vacheron) is a New York corporation. Jaeger-Le Coultre, S. A. (hereafter called Jaeger) is a Swiss corporation.

The amount in controversy exceeds $3,000. The Court has jurisdiction of the parties and subject matter.

Since some time prior to 1937 a Swiss corporation, Le Coultre & Cie, S. A. (hereafter called Le Coultre Co.), not a party to this action, has manufactured a clock unique in the horological world by reason of its source of energy. Although spring driven, it is so contrived that the spring is wound by very slight changes in the temperature of the atmosphere. No manual winding or other external source of energy is required. These features induced the manufacturer at an early date to name the clock "Atmos — the Perpetual Motion Clock."

Initially it was made in a variety of designs, but by 1937 it was determined to give so unique a mechanism a distinctive outward appearance. Accordingly, the old designs were withdrawn and replaced by the one still in use which is the subject of this suit. It is a simple yet elegant open-dial model made of brass, set on a brass base and covered by a detachable case consisting of four crystal sides and a crystal top set in a brass framework.

Neither the mechanism nor the design has been patented. The name Atmos, however, which is always used to describe this atmospherically operated clock, has been registered in the United States Patent Office, as the property of Establissements Ed. Jaeger of France. It was assigned to Jaeger after this suit was commenced.

Le Coultre Co., the manufacturer, has no sales organization. Jaeger, the intervenor herein, is the sole sales outlet for all Le Coultre Co. products, including the Atmos clock. In 1939 Jaeger in a written contract granted Vacheron the right to sell and advertise the Atmos clock in the United States. This right, however, was not exclusive. The contract reserved to Jacques Cartier, Inc. of New York the right, granted some time in 1937 or before and which it at all times since has exercised, to import and sell Atmos clocks in the United States at retail under the name "Cartier" which appears prominently on the dial of all the Atmos clocks so sold.

Since 1939, all Atmos clocks, other than Cartier's, sold and displayed in the United States, have been imported by Vacheron and have borne prominently on the dial the name "Le Coultre" which during the life of their contract Jaeger has authorized Vacheron to use. "Le Coultre" is registered in the United States Patent Office as the property of Le Coultre Co., the manufacturer.

Vacheron is a wholly owned and controlled subsidiary of Longines-Wittnauer Watch Co., Inc. of New York (hereafter called Longines), not a party to this action. All Vacheron's accounts are carried in the books of Longines which handles all Vacheron's finances. From 1939 to 1949 Vacheron had no sales force of its own and the Atmos clocks it imported during those 10 years were advertised by Longines and sold by the latter's sales force. Payments were made to and received by Longines. Since 1949, however, a separate sales staff which is paid by Longines has been assigned to Vacheron. Payment for Atmos clocks sold by this staff is still sometimes made to and received by Longines. Since 1949, both Vacheron and Longines have advertised the Atmos as the "Le Coultre Atmos — The Perpetual Motion Clock."

From its introduction into the United States in 1937 by Jacques Cartier, Inc. until 1949, the retail price of all the Atmos clocks sold here was $315. Extensive retooling of the Swiss factory in 1949 resulted in increased production at lower cost. The price was then reduced to $165. This was later increased to the present price of $175.

Masters is a manufacturer of electrically operated clocks which it sells only to retail and wholesale jewelers throughout the United States. In January 1952, Masters commenced production of a clock known as its Model 308, which it introduced to the trade in July of the same year. This is an electrically operated clock and bears the seal of approval of the Electrical Underwriters' Laboratory, Inc. The Model 308, although in external appearance practically an exact copy of the Atmos, has the following prominent distinguishing features: (1) there is clearly visible, extending from the rear of the base, an electric cord equipped for attachment to an outlet of suitable current; (2) the name "Mastercrafters" is embossed or etched on the dial approximately at the place where either "Cartier" or "Le Coultre" appears on the Atmos; (3) "Made in U. S. A." is embossed on the dial, whereas the Atmos bears the legend "Made in Switzerland"; (4) there are various adhesive labels affixed to the case and works bearing the name and trademark of Mastercrafters and advising the purchaser that "This `Mastertime' Electric Clock operates only on 110 volt, 60 cycle, A. C. current."; (5) when in operation the pendulum of the Model 308 rotates whereas that of the Atmos oscillates.

The Atmos is always advertised under that name as an unique clock operated by changes in atmospheric temperature. The Model 308 has never been described or represented as the Atmos but is always described and advertised as a clock operated by electricity. Both clocks are packed in distinctive cartons plainly marked with the shipper's name and trade-mark and there is no serious claim that there is any likelihood of confusion arising from the packaging, especially since the clocks are not sold packaged at retail.

In the fall of 1952, shortly after the introduction of the Model 308, Vacheron, by telegram, notified Masters¹ and some 18 of its customer-distributors to "cease all sale or offer for sale of Mastercrafters Model 308 clock. Model 308 is a flagrant counterfeit of the distinctive appearance and configuration of our long-established Atmos clock. Unless we receive your agreement as above we must necessarily instruct our attorneys to proceed promptly to protect our interests." Following this notice Vacheron commenced state court actions against seven of Masters' distributors for damages and injunction. In verified complaints Vacheron alleged in part that "it and its parent Longines-Wittnauer Watch Co., Inc. * * * have been since 1939, the sole distributors in the State of * * * and the United States of a certain design of precision clock powered by changes in atmospheric temperature and glass encased, which it and its parent have always sold, and it is now selling, under the `Le Coultre' tradename and identified by the trade-mark `Atmos'".

Subsequent to the institution of these suits substantial orders for Model 308 were cancelled by distributors.

Masters countered by bringing the present action in which, prior to the trial, Jaeger was permitted to intervene as counterclaimant.

Large sums have been spent by Longines to advertise the "Le Coultre" Atmos in the United States, and extensive world-wide advertising has been done by Jaeger.

Prior to the introduction of Model 308 in July, 1952, the Atmos, whether designated "Cartier" or "Le Coultre," was readily distinguishable from all other clocks then on the market by virtue of its appearance alone as well as by its unique mechanism. Business concerns have frequently chosen the "Le Coultre" Atmos because of its outstanding appearance and performance as a presentation piece for merit awards.

In a survey of 249 dealers conducted by Vacheron while this litigation was pending each was shown a photograph of an Atmos with the name on the dial obliterated. 210 named Le Coultre as the maker. Of the remainder, some named Longines, others United Watch Co., and others didn't know the maker. It was not shown whether these dealers or any of them were Vacheron customers who might be presumed to know the manufacturer.

Three unidentified customers at separate unspecified times inquired about "the lower priced Atmos."

An unspecified number of unidentified persons said at various unstated times that they knew where they "could get a clock for $30 or $40 just like it the Atmos."

On two or three occasions the Model 308 has been described as "a copy of the Atmos"; once by a Masters' representative at an exhibit in Chicago; on the other occasions by distributors of the Model 308.

Since the introduction of the Model 308, Vacheron's salesmen have encountered considerable sales resistance and sales of the "Le Coultre" Atmos have fallen off.

The foregoing undoubtedly proves the uniqueness, and even the esthetic qualities of the Atmos, but it hardly establishes secondary meaning² which I apprehend to be an...