Adam Hat Stores v. Scherper

• Decision Date: 15 July 1942
• Docket Number: Civ. A. No. 305.
• Citation: 45 F. Supp. 804
• Parties: ADAM HAT STORES, Inc., v. SCHERPER et al.
• Court: U.S. District Court — Eastern District of Wisconsin

45 F. Supp. 804

ADAM HAT STORES, Inc., v. SCHERPER et al.

Civ. A. No. 305.

District Court, E. D. Wisconsin.

July 15, 1942.

Rogers, Woodson and Rogers, of Chicago, Ill., and Herbert L. Mount, of Milwaukee, Wis., for plaintiff.

David Charness, of Milwaukee, Wis., for defendants.

DUFFY, District Judge.

The plaintiff, a New York corporation, claims trade-mark infringement and unfair competition. Plaintiff's business was established in 1924. Its income from the sale of hats amounts to approximately $10,000,000 annually. Plaintiff's hats, bearing the trademark "Adam", are sold throughout the United States and in some foreign countries. It has its own stores in approximately 200 cities, each store being designated by a large sign reading "Adam Hats". It also sells its merchandise through approximately 2,000 additional stores throughout the country. It has spent large sums in advertising Adam hats. During the past ten years the advertising has principally been by sponsoring radio broadcasts of championship prize fights. Up until the past year, and after the time this action was commenced, plaintiff featured the price of its hats at $2.95 each. It also featured the words "The Bomber" and "Broadcast Special" as brand names for hats.

Plaintiff's trade-mark "Adam" was registered in the United States Patent Office as follows: "`Adam Hats' for men's hats, on April 14, 1931; `Adam' for men's hats on May 14, 1935." Plaintiff qualified to do business in Wisconsin on February 4, 1935, but did not open a hat store in this State until January 6, 1939, locating on Wisconsin Avenue in Milwaukee, under its corporate name "Adam Hat Stores, Inc."

About October 15, 1935, the defendant Scherper opened a store in Milwaukee, under the name of "Adams Hat and Shirt Shop". He featured "Adams" hats at $2.95. He caused the defendant corporation to be organized on January 31, 1936, and the business is now managed by Scherper and owned by the corporation. The defendants adopted the words "Broadcast Special" and "The Bomber", as brand names for hats. From time to time, and especially just prior to championship prize fights, pictures of prize fighters were featured in their store window. Clerks in the store represented to customers that defendant corporation was sponsoring the radio broadcasts of the prize fights. Customers purchased hats from the defendant corporation believing that it was sponsoring the prize fight broadcasts.

Plaintiff asks that defendants be enjoined from (a) using the name "Adams" in their corporate name or business style; (b) using the names "Adams" or "Adam" or any like name as a brand name or trade-mark for hats and other men's wearing apparel; and (c) otherwise infringing plaintiff's trade-mark and competing unfairly with plaintiff.

Defendants, by a counterclaim, seek to enjoin the plaintiff from using the name "Adam" in the State of Wisconsin.

At the time defendant Scherper opened his store in 1935 and adopted the name "Adams" as a brand name for hats, plaintiff had a well-established business, operating in various eastern States, and as far west as Detroit, Michigan. The business was rapidly expanding. Although plaintiff qualified to do business in Wisconsin in February, 1935, it was not in fact doing business in this State at the time defendant opened his store in October of that year. Defendant Scherper visited New York in 1926, 1927, 1928, 1929, 1930, and 1931, buying hats for his then employer. He dealt with manufacturers having offices and stores in that part of the city known as the hat district. The store of the plaintiff was in a prominent location in that district on Broadway. In the front of the store was a large sign advertising "Adam Hats". In dealing with the Arkin Hat Company and others mentioned by defendant Scherper, he would of necessity have to pass the doors of the plaintiff's store and offices. The merchandise in the window of this store was so displayed that it customarily attracted much attention from buyers of hats. The statement of Mr. Scherper that in October, 1935, he never had heard of the plaintiff or the brand name "Adam" is quite incredible.

The question for decision is whether the defendants had the right to adopt and use the word "Adams" as a trade-mark for hats and as a part of their corporate name, in view of the fact that the plaintiff had a registration of the trade-mark "Adam" for hats and had a large established business which was rapidly expanding, and the State of Wisconsin and the City of Milwaukee were within its natural territory.

Defendant relies upon the doctrine that the second user of a trade-mark, in territory not already occupied by the first user of the mark, is entitled to that territory. Hanover Star Milling Co. v. Metcalf, 240 U.S. 403, 36 S.Ct. 357, 60 L.Ed. 713, United Drug Co. v. Theodore Rectanus Co., 248 U.S. 90, 39 S.Ct. 48, 63 L.Ed. 141. This rule of law was adopted before the days of extensive national advertising, especially by means of radio. It established that where plaintiff was doing a local business, it could not enjoin a defendant in a wholly removed territory where the plaintiff was not selling and where the people had not heard of the plaintiff's trade-mark. A more modern conception is expressed in the recent case of Brass Rail, Inc., v. Ye Brass Rail of Massachusetts, Inc., D.C., 43 F.Supp. 671, where the court enjoined the use of the name "Brass Rail" by a restaurant in Boston in view of the plaintiff's having previously established a restaurant under a similar name in New York. The court there said at page 672 of 43 F.Supp.: "* * * From the different characters of the businesses, it cannot be said that they actually compete with one another. This is, however, no longer the essential test for injunctive relief under the doctrine of unfair competition. Such relief will be afforded where there is a possible danger to reputation and credit arising from a confusion of identity where the parties are engaged in a business of a kindred character. * * *"

In any event, even under the old rule there was a well-established exception that the second user must have innocently adopted the mark and must show it was not adopted for the purpose of forestalling the first user's extension of his mark in that territory. Sweet Sixteen Co. v. Sweet "16" Shop, Inc., 8 Cir., 15 F.2d 920; R. H. Macy & Co. v. Macys, Inc., D.C., 39 F.2d 186. In the Hanover Star Milling Co. case, supra, the court said at page 420 of 240 U.S., at page 363 of 36 S.Ct., 60 L.Ed. 713: "* * * We are not dealing with a case where the junior appropriator of a trade-mark is occupying territory that would probably be reached by the prior user in the natural expansion of his trade, and need pass no judgment upon such a case. * * *"

This court stated in Weiner et al. v. National Tinsel Manufacturing Co., D.C., 35 F.Supp. 771, 772: "The trade-marks in question were established in the trade after many years of effort. The late comer in such an established field is under a special duty to avoid confusion. Northam Warren Corp. v. Universal Cosmetic Co., 7 Cir., 18 F.2d 774."

In a case decided on the...