White Tower System v. WHITE CASTLE SYSTEM, ETC.

Citation90 F.2d 67
Decision Date04 May 1937
Docket NumberNo. 7133.,7133.
PartiesWHITE TOWER SYSTEM, Inc., v. WHITE CASTLE SYSTEM OF EATING HOUSES CORPORATION.
CourtUnited States Courts of Appeals. United States Court of Appeals (6th Circuit)

C. R. Fletcher, of Minneapolis, Minn., and I. A. Fish, of Milwaukee, Wis. (Junell, Driscoll, Fletcher, Dorsey & Barker, of Minneapolis, Minn., Stevenson, Butzel, Eaman & Long, of Detroit, Mich., and Fish, Marshutz & Hoffman, of Milwaukee, Wis., on the brief), for appellant.

E. W. Evans, of Wichita, Kan., and O. C. Hull, of Detroit, Mich (Oxtoby, Robinson & Hull, of Detroit, Mich., and Vermilion, Evans, Carey & Lilleston, of Wichita, Kan., on the brief), for appellee.

Before HICKS, SIMONS, and ALLEN, Circuit Judges.

ALLEN, Circuit Judge.

This appeal deals with the question whether one who has substantially appropriated a trade name and advertising slogan and has knowingly imitated a building of peculiar style, with knowledge of their previous use in the same business by another, can enjoin the originator from using its own style of building, trade name and slogan in territory in which the junior user first operated, and whether the originator in turn can enjoin the junior user from such use.

Appellant filed its bill of complaint, seeking relief from alleged unfair competition. Appellee filed a cross-bill, seeking similar relief. The cause was referred to a special master, who filed a report recommending that a decree be entered in favor of appellee. The District Court confirmed the master's report, made findings of fact and conclusions of law, and permanently enjoined appellant as prayed in the cross-petition.

Both parties operate stands for the sale of hamburger sandwiches and other food products in Detroit, Michigan, each using a white structure designed like a miniature castle. As each party pleads that the names, types of buildings and advertising slogans are so similar as to mislead and deceive the public, confusion is conceded. Appellant entered Detroit in 1928 and appellee in 1929.

Appellee's predecessors began business in Wichita, Kansas, in 1921. The business expanded from Wichita through Omaha, Kansas City, St. Louis, Louisville, Cincinnati, Indianapolis, Minneapolis and St. Paul, later entering Detroit, Chicago, Columbus, Newark and New York. It now includes 120 stands in the major cities of eleven states. Since commencement of its business appellee has called its stands "White Castle," and its slogan has been "Buy 'Em By the Sack."

In 1926 appellant's predecessors and organizers began business in Milwaukee, Wisconsin, using a building similar in design to appellee's, under the name "White Tower," and the slogan "Take Home a Bagful." Appellant's organizers had been attracted to the possibilities of such a business by appellee's success in Minneapolis. They deliberately used one of appellee's stands as a model, obtained measurements and photographs thereof, and later secured plans and specifications of appellee's building and gave them to their architect. Appellant employed one of appellee's countermen at four times the salary received from appellee, to install the equipment. It was a part of the consideration for his employment that he should give information about the White Castle methods. He came into appellant's service equipped with a White Castle hamburger paddle, with specimens of the peculiar metal used in the White Castle griddle, and with appellee's accounting forms. Thus appellant secured access to, and in the main adopted, appellee's business methods.

The District Court found that appellee's food products, trade name, slogan, and style of building were known in Detroit and to the purchasing public of that city before appellant located there, and that Detroit was at that time within the normal scope of expansion of appellee's business, and that appellee then had substantial good will in that city. These findings were based upon testimony that appellee advertised in various newspapers, trade journals and over the radio, and also upon the testimony of residents of Detroit who had known of the White Castle lunchrooms prior to the opening of the White Tower stands.

Appellant vigorously urges that there was no evidence to support these findings. We cannot agree with this contention. Appellee's expansion into the cities east and north of Wichita, as found by the court, was made pursuant to a plan formed in 1921 by which it proposed to locate in cities where its name, slogan and style of architecture were already known, either because of their proximity or because there was flow of travel between them and cities in which it was already located. This plan was pursued with such success that when in 1926 appellant opened its stand in Milwaukee, it did so because it had observed the popularity of appellee's business and desired to profit by its good will. We cannot ignore the fact that appellee established its stands along arterial highways, with the result that the traveling public carried its reputation to far distant points, and by personal recommendation its good name became an asset in Detroit. Good will may be defined as the favorable consideration shown by the purchasing public to goods known to emanate from a particular source. While its existence may be shown by proof of actual successful operation, it may also be shown by proof of the reputation which arises from such operation. It may exist in territory where no business is done by the possessor of the good will. Cf. Buckspan v. Hudson's Bay Co., 22 F.(2d) 721 (C.C.A.5). The right...

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    ...N.S., 762; Martin v. Jablonski, 253 Mass. 451, 149 N.E. 156;White Tower System, Inc. v. White Castle System of Eating Houses Corp., 6 Cir., 90 F.2d 67;Schuh Trading Co. v. Commissioner of Internal Revenue, 7 Cir., 95 F.2d 404;William E. Dee Co. v. Proviso Coal Co., 290 Ill. 252, 125 N.E. 24......
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    ...Foo's Den, Inc. of Maryland, 232 F.2d 683, 686, 98 U.S.App.D.C. 126, 129 (D.C.Cir. 1956); White Tower System Inc. v. White Castle System of Eating Houses Corp., 90 F.2d 67, 70 (6th Cir. 1937); R. H. Macy & Co. v. Colorado Clothing Mfg. Co., 68 F.2d 690, 692 (10th Cir. 1934); Western Oil Ref......
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    ...first user. Sweet Sixteen Co. v. Sweet "16" Shop, Inc., 8 Cir., 1926, 15 F.2d 920, at page 923; White Tower System, Inc., v. White Castle System, etc., 6 Cir., 1937, 90 F.2d 67, at pages 68, 69; Food Fair Stores, Inc., v. Food Fair, Inc., 1 Cir., 1949, 177 F.2d 177, at page 183; Hub Clothin......
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    ...Bristol-Myers Co. v. Approved Pharm. Corp., 149 U.S.P.Q. (BNA) 896 (N.Y. Sup. Ct. 1966). 53. White Tower Sys., Inc. v. White Castle Sys., 90 F.2d 67 (6th Cir. 1937). 54. Clayton v. Howard Johnson Franchise Sys., Inc., 730 F. Supp. 1553 (M.D. Fla. 1988). 55. Kentucky Fried Chicken Corp. v. D......
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    ...and theme could qualify as trade dress by showing inherent distinctiveness); White Tower Sys. v. White Castle Sys. of Eating Houses Corp., 90 F.2d 67, 69 (6th Cir. 1937) (finding that unfair competition law provided protection to the plaintiff's style of building); Andrew T. Spence, Note, W......
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    ...Bristol-Myers Co. v. Approved Pharm. Corp., 149 U.S.P.Q. (BNA) 896 (N.Y. Sup. Ct. 1966). 53. White Tower Sys., Inc. v. White Castle Sys., 90 F.2d 67 (6th Cir. 1937). 54. Clayton v. Howard Johnson Franchise Sys., Inc., 730 F. Supp. 1553 (M.D. Fla. 1988). 55. Kentucky Fried Chicken Corp. v. D......
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