Affiliated Enterprises v. Gruber

• Decision Date: 18 December 1936
• Docket Number: No. 3153.,3153.
• Citation: 86 F.2d 958
• Parties: AFFILIATED ENTERPRISES, Inc., v. GRUBER et al.
• Court: U.S. Court of Appeals — First Circuit

86 F.2d 958 (1936)

AFFILIATED ENTERPRISES, Inc., v. GRUBER et al.

No. 3153.

Circuit Court of Appeals, First Circuit.

December 18, 1936.

George S. Ryan, of Boston, Mass. (Emmett Thurmon, of Denver, Colo., on the brief), for appellant.

Matthew Brown, of Boston, Mass. (James S. Stewart, of Boston, Mass., on the brief), for appellees.

Before BINGHAM, WILSON, and MORTON, Circuit Judges.

BINGHAM, Circuit Judge.

This is an appeal from a decree of the District Court for Massachusetts dismissing the plaintiff's bill of complaint on the ground that plaintiff's plan or system for which it sought protection by injunction was a gambling transaction.

The bill set out that for advertising purposes plaintiff had devised and used a plan or system contemplating "the gratuitous award of a specified sum of money at stated periods to the persons who may then be designated in accordance with the terms and stipulations of the plan." Under this plan any person above 17 years of age had the right to register and have his name, or a serial number identifying him, placed in a receptacle from which at a specified time or place (usually in a moving picture theater) it might be drawn, and he would then be entitled to the award which had previously been determined and made known to the public. The registration was free and open to the public generally, the purchase of a ticket of admission to the theater not being "a condition to registration or to participation in the plan." "The name of the person whose number is drawn is announced as the donee of the award, both from the stage and outside the theatre and at any other place that may have been designated. If such person is outside the theatre at the time he will be admitted free for the purpose of claiming the award." He must, however, appear within a reasonable time or he will lose his right to the award, and the amount will be carried over and added to that of the next drawing. It thus appears from the bill that no consideration is demanded for the right to participate in the drawing.

"The three essential elements of a lottery or other gambling device are: First, consideration; second, prize; and third, chance," and "the gratuitous distribution of property by lot or chance, if not resorted to as a device to evade the law, and if no consideration is derived directly or indirectly from the party receiving the chance, does not constitute a lottery." 17 R.C.L. 1222. This is supported by the great weight of authority. Post Publishing Co. v. Murray (C.C.A.) 230 F. 773; People v. Farmer Miller et al., 271 N.Y. 44, 2 N.E. (2d) 38; Yellow-Stone Kit v. State of Alabama, 88 Ala. 196, 7 So. 383, 7 L.R.A. 599, 16 Am. St.Rep. 38.

This particular plan has been before the courts, and, on such facts as are here alleged, has been declared legal. State v. Eames, 87 N.H. 477, 183 A. 590; Commonwealth v. Wall (Mass.) 3 N.E.(2d) 28; State v. Hundling, 220 Iowa, 1369, 264 N.W. 608, 103 A.L.R. 861; State ex rel. Dist. Attorney Gen. v. Crescent Amusement Co. (Tenn.Sup.) 95 S.W.(2d) 310. True evidence might develop a situation where it could be found that the registration privilege was not free and open to the public, and in the practical operation of the device there would necessarily be some consideration for the privilege of taking a chance. State v. Eames, supra; Commonwealth v. Wall, supra; State v. Hundling, supra. But here the allegations of the bill must be taken as true.

We think the dismissal of the bill of complaint on the ground stated was erroneous.

As stated in plaintiff's brief, "the bill asks for relief on two principal grounds: Infringement of copyright and unfair competition." It sets out that the plaintiff is now, and has been for some time, "engaged in the business of vending or licensing throughout the United States a plan or system originated, prepared, arranged and compiled by it, for the purpose of advertising the business of, and of encouraging, stimulating and promoting patronage in commercial establishments, particularly in motion picture theatres"; that the plan is generally known as "Bank Night," but may be designated by other similar names; that in connection with the plan plaintiff is engaged in manufacturing or otherwise acquiring, and in supplying to its licensees, "the necessary registration books and cards, `trailers' or screen advertising, and in furnishing them printed instructions and other information and suggestions for the successful operation of the plan."

The bill further alleges that the plaintiff is the sole and exclusive owner of the plan or system, "of the good-will appurtenant thereto, of a form of license agreement, and of the right to print, publish and use said plan or system, the said trade names, instructions for operation of plan, special notice to licensees, and the advertising trailers, circulars, registration book and cards, drawing cards and devices, and other matter printed or published for the effective operation of said plan or system and in these it has acquired a property right, and the sole right, title and ownership"; that "the plaintiff is the sole and original author of writings describing the said plan or system and providing for its successful operation, including a form of license agreement, an explanation of the system, a special notice, and instructions to licensees, the contents of which may be profitably used, in whole or in part, on `heralds' or `trailers' of motion picture theatres," and has copyrighted such publications and instructions; that it had secured a property right and interest and the sole right to use the name "Bank Night" and similar names to designate similar plans or systems. The bill states that a patent had been applied for to secure the sole rights of the plaintiff in the plan or system, but that no patent had been granted when the bill was filed.

The defendants are charged with appropriating to themselves the benefits to be derived from the advertising done by the plaintiff and its licensees, and with appropriating the income and profits of plaintiff's business, by engaging in the business of selling, or attempting to sell, licenses to use a scheme or plan known as "Parlay Cash Night," which is substantially the same as that of plaintiff; that they have delivered, or offered to deliver, to exhibitors, advertising matter and notices and instructions in connection with the "Parlay Cash Night" plan substantially the same as those used by plaintiff; that the language used in defendants' publications is "substantially identical in all material respects with the language in the plaintiff's copyrighted publications, and compliance with the instructions will result in the operation of a plan or system substantially the same as the plaintiff's."

The prayers of the bill are that plaintiff's right, title, and interest in and to the plan or system known as "Bank Night" be adjudged and established; that defendants be adjudged to have infringed upon such right, title, and interest and particularly upon said copyrights, and to have been guilty of unfair competition with the plaintiff; for an accounting; and for an injunction against the defendants.

The defendants moved to dismiss the bill on ten grounds. It is not necessary to specify them. The principal ones in substance allege that the bill of complaint does not state a cause entitling plaintiff to the relief prayed for, in that it does not show infringement of copyrights, infringement of any trade-mark, or invasion of plaintiff's right through unfair competition.

As stated, the bill asks for relief on two principal grounds — infringement of copyright and unfair competition. It will be sufficient to consider whether the bill, fairly interpreted, can be said to show either.

There is no claim that the defendants represent their exhibitions or drawings to be those of the plaintiff or to be authorized by the plaintiff, or that they are in any way subject to being confused with the plaintiff's exhibitions or drawings.

"Bank Night" indicates to a certain extent the character of the plaintiff's business, while "Parlay Cash Night" is used to indicate to a like extent the character of the defendant's business. Since the businesses are substantially the same, the descriptive trade-names necessarily carry the same idea. One cannot adopt a descriptive name as a trade-mark and thus bar others from using all names tending to describe the same article or business. See 63 C.J. 346,...