Allen Organ Co. v. Galanti Organ Builders Inc., Civ. A. No. 89-7636.

• Decision Date: 28 July 1992
• Docket Number: Civ. A. No. 89-7636.
• Citation: 798 F. Supp. 1162
• Parties: ALLEN ORGAN COMPANY v. GALANTI ORGAN BUILDERS INC., et al.
• Court: U.S. District Court — Eastern District of Pennsylvania

798 F. Supp. 1162

ALLEN ORGAN COMPANY v. GALANTI ORGAN BUILDERS INC., et al.

Civ. A. No. 89-7636.

United States District Court, E.D. Pennsylvania.

July 28, 1992.

Steven A. Bergstein, Frank, Frank, Penn & Bergstein, Allentown, Pa., for plaintiff.

Daniel P. Hogan, Chicago, Ill., for defendants.

MEMORANDUM

BARTLE, District Judge.

Plaintiff Allen Organ Company ("Allen") instituted this non-jury action against Defendants General Electro Music Corporation ("GEM USA"), GEM Industry S.p.A. ("GEM Italy"), and Galanti Organ Builders, Inc. ("GOBI"), seeking injunctive and compensatory relief for false advertising pursuant to section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a). Allen also sought relief based on common law claims of unfair competition, defamation and disparagement.¹ At the time of trial the only remaining defendants were GEM Italy and GEM USA. The following are this Court's findings of facts and conclusions of law pursuant to Rule 52(a) of the Federal Rules of Civil Procedure.

This Court has subject matter jurisdiction over this action under 15 U.S.C. § 1121 and § 1125 as well as 28 U.S.C. § 1338(b) and § 1331.

Allen is a leading manufacturer and seller of electronic church organs in the United States. GEM USA, an Illinois corporation, is a wholesale distributor of electronic organs. GEM Italy, an Italian company located in Mondaino, Italy, manufactured the electronic organs which GEM USA distributed.

The pipe organ is considered the ultimate in organ sound. However, due to price, many churches and congregations cannot afford one. Allen and other manufacturers of electronic organs produce a less expensive product but strive to reproduce tonal sounds of the classic pipe organs through the use of technology.² In 1971, Allen introduced an electronic church organ utilizing digital tone generation, its "digital computer organ." Allen's electronic organs apply digital technology to the tonal production of the organs. In digital tone generation, the sound of one or more of the pipes of a pipe organ is tape recorded. The sound is then converted into digital numbers. The information is fed in the form of binary numbers into the computer memory. When a key of the electronic organ is pressed, the information is retrieved and the sound is emitted. The digital tone generation enables more accurate tonal reproduction of pipe organ sounds than the systems previously used.

GEM Italy likewise manufactured electronic church organs utilizing digital tone generation. It began marketing them, under the name of GEM Organs, in the United States through GEM USA beginning in 1986. After about a year, GEM Italy recruited James Walls, formerly the president of Rodgers Organ Company, to head a separate United States company to market the church organs that GEM Italy had been distributing and marketing through GEM USA. The entity formed was Galanti Organ Builders, Inc. ("GOBI"), incorporated in April 1987. James Walls is GOBI's president and CEO.

In 1987, GOBI began marketing church organs with a "Galanti" nameplate. When GEM USA/GEM Italy first introduced their church organs with digital tone generation in the United States, they made an attempt to differentiate their organs from Allen's on the basis of price. However, for the newly named Galanti models, James Walls altered the marketing, advertising and promotional approach used previously for the GEM models. It is the materials Walls produced and disseminated beginning in 1987 which gave rise to this lawsuit.

The sound in electronic church organs is produced by a process known as "sampling." Allen contends that GOBI falsely described the extent to which the sampling technology was used in producing the Galanti organ sounds.

In sampling, notes are recorded from the ranks and stops of a pipe organ whose sound the manufacturer seeks to emulate, to the extent possible, in an electronic organ. A rank is a row of pipes belonging to one stop on the organ. A stop is a tuned set of organ pipes or reeds of the same specific type and tone quality.³ The notes of a pipe organ are recorded during the three "stages" of sound: the "attack," when the particular note is first activated; the "sustain," the sound as the note is maintained; and the "decay" or "release," the sound of the organ as the key is released. Samples of the sound, that is, various points along the time interval for which the sound is heard, are used. While many samples of individual notes are recorded, not all the recordings and not even recordings of every note are employed. Through a digital tone generation process, the samples of a few notes provide the basis for the reproduction of the full sound interval of all the notes in the electronic organ.

According to Allen, GOBI, in its brochures and other literature, falsely claimed it recorded samples of every note of every rank from a classic pipe organ and included samples of every note of every rank in the computer memory of its electronic organs. Thus, if there were 61 keys on a manual and there were 25 stops on an organ, the manufacturer would be recording each pipe in the rank of pipes for each stop. If 25 stops were selected by the manufacturer, the note-by-note claim suggests that 1,525 notes were recorded for any one manual, that is 61 keys multiplied by 25 stops, and that the 1,525 recorded notes were incorporated into the electronic organ.

GOBI disseminated information about the Galanti organ through mailers, training materials and brochures sent to dealers and through advertisements. The allegedly false and misleading representations about the sound production methods of the Galanti organ began appearing in 1987. The representations included the following:

(1) On the Galanti organ, "Europe's best pipe ranks are recorded note-by-note, with this information stored on a chip, then played back digitally" (Trial Exhibit 1180) (2) Galanti organs "feature the actual note-by-note recording of Europe's most notable pipe organs, with this information stored on a chip, then played back digitally to deliver real pipe sound" (Trial Exhibit 1181) (emphasis in original);

(3) Galanti organ features actual note-by-note recording of Europe's best pipe specimens, stored on a chip, then played back digitally to deliver perfect pipe sound. No digital synthesis or analogy tone generating circuitry is employed (Trial Exhibit 1183) (emphasis in original);

(4) Galanti organ sound is accomplished by actual note-by-note recording and digital play-back of Europe's best pipe ranks stored on a chip (Trial Exhibit 1186);

(5) "Sampled Wave Processing allows us to derive from selected recordings the information necessary to faithfully reproduce the sounds of each pipe organ stop, store that information in memory, and play it back digitally" (Trial Exhibit 1206) (emphasis in the original).

Along with the brochures, mailers, advertisements and training materials containing these "note-by-note" representations, GOBI claimed to be selling the world's first church organ to utilize digital sampling, which it called "Sampled Wave Processing." This "birthright" claim is found in an advertisement in the November 1989 issue of The American Organist, and bears the heading "Birthright World's First Digitally-Sampled Organ ... Galanti." (Trial Exhibit 1199). It is Allen's position that although Allen may not have used the term "sampling" in its advertisements and brochures,⁴ it used the sampling process in its digital electronic organs long before Galanti entered the U.S. market. In fact, Allen contended that it developed the process with Rockwell International.

Allen also complained about comparisons Allen believed GOBI was making between the Galanti organs and Allen organs in Galanti dealer manuals. In one manual, GOBI discusses its "engineering system which would enable information to be derived from actual pipe recordings to be encoded on a chip and played back digitally via Galanti's exclusive Sampled Wave Processing technology (not to be confused with ... digital synthesis)." (Trial Exhibit 1208) (emphasis in the original). In another document, GOBI stated "they Allen still do not offer a true sampled waveform system or microprocessor control as does Galanti." (Trial Exhibit 1214).⁵

In addition, Allen alleges a GOBI advertisement contained a statement that implied that the sound produced by a Galanti organ is like the sound of a state of the art compact disc player. GOBI stated that sampled wave processing "is in simple terms a play back system like a compact disk." (Trial Exhibit 1216).⁶ Allen argues that this is not only false but also implies that the sound produced by Allen is of lesser quality than that of the Galanti organ.

According to Allen, defendants GEM Italy and GEM USA, through these false statements, comparisons, implications and innuendo, have claimed that Galanti/GEM uses a superior process and technology to produce a higher quality sound compared with Allen organs, and that these misrepresentations were material and intended to, and were likely to, influence purchasing decisions of organ purchasers, in violation of § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a). Those misrepresentations, Allen alleges, led to increased sales in Galanti organs and a decrease in Allen sales.

§ 43(a) of the Lanham Act provides:

(a) Any person who, on or in connection with any goods or services, ... uses in commerce any word, term, name, symbol, or device, or any combination thereof, or ... false or misleading description of fact, or false or misleading representation of fact, which—

... (2) in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person's goods, services, or commercial activities,

shall be liable in a civil action by any person who believes that he or she is or is likely to be damaged by such act.

15 U.S.C. § 1125(a). In order to obtain injunctive relief or damages under these...