Aladdin Mfg. Co. v. Mantle Lamp Co. of America

• Decision Date: 10 January 1941
• Docket Number: No. 7310.,7310.
• Citation: 116 F.2d 708
• Parties: ALADDIN MFG. CO. v. MANTLE LAMP CO. OF AMERICA.
• Court: U.S. Court of Appeals — Seventh Circuit

116 F.2d 708 (1941)

ALADDIN MFG. CO. v. MANTLE LAMP CO. OF AMERICA.

No. 7310.

Circuit Court of Appeals, Seventh Circuit.

January 10, 1941.

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W. H. F. Millar, of Waynesville, N. C., and Nicholas J. Madgey, of Chicago, Ill., for appellant.

Hood & Hahn, of Indianapolis, Ind., and G. B. Jones, of Chicago, Ill., for appellee.

Before EVANS and SPARKS, Circuit Judges, and LINDLEY, District Judge.

LINDLEY, District Judge.

The Mantle Lamp Company of America, plaintiff, in a counterclaim charging appellee with trade-mark infringement and unfair competition, appeals from a decree of the District Court overruling the report of the master upon accounting and denying to appellant profits and damages, on the ground that no evidence of lost sales or of actual damages had been introduced and decreeing that appellee, defendant in the counterclaim, was not a wilful or flagrant infringer of appellant's trade-mark.

In the original suit appellee filed its complaint alleging infringement of the trade-mark "Aladdin" upon portable electric lamps. Appellant filed its counterclaim, alleging priority in the use of the word "Aladdin" on lamps or any other merchandise similar to that sold by it, and charging appellee with unfair competition. The District Court decreed that appellee was entitled to use the word "Aladdin" on electric portable lamps and that neither party was entitled to an accounting. Both parties appealed, and this court, in Mantle Lamp Company of America v. Aladdin Mfg. Co., 7 Cir., 78 F.2d 426, found that appellant was entitled to the exclusive use of the word "Aladdin" as to all goods manufactured by it, that appellee had infringed, was guilty of unfair competition and should be enjoined from using the word "Aladdin" in connection with its business of manufacturing and selling portable electric lamps and that the alleged estoppel arising from laches and acquiescence urged by appellee was not sustained.

From the decree entered by the District Court in pursuance of our mandate, another appeal was prosecuted, which resulted in our decision, in Aladdin Mfg. Co. v. Mantle Lamp Company of America, 7 Cir., 86 F.2d 141, that the decree should include an accounting for profits and damages, and that appellant should be allowed to offer any evidence which would justify the allowance of exemplary and compensatory damages and appellee to introduce any evidence which would tend to establish laches, estoppel or other defense which might bar or mitigate recovery of damages. Following these adjudications, a reference to the master resulted in findings and conclusions recommending the recovery of profits and damages, which were disapproved by the court.

Appellant insists that inasmuch as this court has previously held that appellant was not guilty of laches, the renewal of assertion of such guilt defeats the prior adjudication. It points to the record in the earlier litigation as decisive of that question. On the original appeal the issue was fully briefed and argued in this court, and in the course of our opinion we said "we find nothing in this record which discloses such an acquiescence by appellant in the use of the trade-mark `Aladdin' * * * as will bar it from asserting the rights for which it here contends." 78 F.2d 429. Appellee filed a petition for rehearing and therein again urged laches and acquiescence. Rehearing was denied and appellee thereupon filed a petition for writ of certiorari in the United States Supreme Court, once more urging the same issue. Certiorari was denied. 296 U.S. 639, 56 S.Ct. 173, 80 L.Ed. 454. Thus is has been decided by us in at least two instances that there was no such estoppel by way of laches or acquiescence as would prevent appellant from securing an injunction against the continued infringement of its trade-mark. True, upon the second appeal, when we directed an accounting and provided that appellant might introduce evidence in support of its prayer for exemplary and compensatory damages, we also, obviously in an attempt to prevent any inequitable result, provided that appellee might offer any evidence that might mitigate or defeat the application for profits and damages. But at the hearing before the master, appellee offered no new or additional evidence in support of its insistence of estoppel by way of laches but relied solely upon the record previously presented upon which this court had previously held that no estoppel existed. Appellant insists, therefore, that it is too late for appellee to insist that the defense which it has asserted previously can upon the same evidence be renewed successfully and that the prior decision is res adjudicata upon this issue.

The decree previously entered was interlocutory in character. We assume, therefore, that all matters determined therein might under proper circumstances be relitigated until final decree. Undoubtedly courts possess discretion to permit renewal of applications to modify rulings made or orders entered in the course of litigation at any time before final disposition. Whether a second application shall be entertained depends entirely upon the circumstances of the cause. Courts have power to prevent vexatious and repeated pleadings upon the same point and exercise their discretion to preclude reagitation of the same question on the same state of facts. Consequently upon an application for re-examination, whether it be by way of motion for new trial, petition for rehearing or in other form, before the court will act affirmatively, some equitable ground for re-examination must be presented. And, ordinarily, where, no new evidence is offered or if new evidence is offered and lack of diligence in procuring it exists, the application will be denied. We find in the present record nothing that appeals to us as justifying re-examination of a question which, upon the same evidence, we have decided and an application for rehearing of which we have denied.

Under 15 U.S.C.A. Section 99 and Section 96, in an accounting for profits from infringement of a trade-mark, appellant was required to prove appellee's sales only and the latter was under obligation to prove all elements of costs which it claimed. Duro Co. v. Duro Co., 3 Cir., 56 F.2d 313 at page 315. Appellant proved gross sales from all sources of $4,126,025.52. From this there were admittedly proper deductions of $3,709,083.20, leaving a balance with which we are concerned of $416,942.32. The master allowed deductions therefrom as follows: salaries $106,000; cost accounting system $4,670; advertising $193,787.67; depreciation $45,027.95; Aladdin's Fellow advertising campaign $1,304.11; income tax $4,133.07, leaving a balance of profit of $62,019.52. In a supplemental report he deducted therefrom in addition, Durham royalties $3,150.41 and corrected an error of $2,243.03, leaving a balance of profit $56,626.08. The correctness of his methods is not disputed, but each party questions the propriety of certain of his items of debit and credit.

The Durham royalties arose from appellee's license to manufacture smoking trays. The master originally concluded that in view of appellee's advertising of "Aladdin smoking stands" and "Aladdin's smoking trays," it had failed to meet the burden of showing that this item was not within profits for which it should account. In his supplemental report, however, after objection by the Aladdin Company and re-examination of certain portions of the record, he concluded that the objection should be sustained and the amount recommended in his original report be reduced by the amount of the royalties. Upon examination of the record, we agree with the master in this respect and sustain the deduction.

The Florentine royalties were received from the sale of "Scene in Action Lamps," in Canada, and appellee contended before the master that this item, amounting to $2,674.38, was non-infringing income. The master found that the radio advertising by appellant through the power stations utilized, covered both Canada and the United States; that the proper inferences to be drawn from appellee's advertising were that these lamps were sold under the name of "Aladdin" and that appellee could easily have established the fact in evidence, if to the contrary, had it chosen but that it had failed to do so. Inasmuch as the burden was upon appellee, the master recommended that no deduction from income be permitted therefor. The record supports him in this respect. The facts about the matter were entirely within the knowledge of appellee and it would have been a simple matter for it to have negatived the liability if such were possible. Having failed to do so, it must account for this element of profit.

The total of salaries paid to officers of the company was $167,564. The master eliminated therefrom all compensation paid George Spencer and his brother, William Spencer, aggregating $42,670. The master found that during the time they drew these salaries, each of them owned one-fourth of the common stock, the balance being held by Sachsteder; that the same proportionate ownership of stock persisted throughout the accounting period; that Sachsteder managed the corporation and made all decisions as to its activities; that the record disclosed no instance of either Spencer's sitting in any conference, giving any advice, making any decision or doing anything in connection with the company's affairs. He concluded, quite reasonably it seems to us, that the payment of money to these two stockholders was a distribution of profit. Of this, we approve.

As to Sachsteder, it was shown that salaries paid him aggregated $124,494. He owned one-half of the stock. The master pointed out a parallel reduction in Sachsteder's salary from the time the Spencers failed to receive payments and concluded, therefore, that during the period when they did receive salaries, certain sums of money paid Sachsteder were distributions of profit and that,...