Anheuser-Busch v. Du Bois Brewing Co.

• Decision Date: 12 May 1949
• Docket Number: No. 9527.,9527.
• Citation: 175 F.2d 370
• Parties: ANHEUSER-BUSCH, Inc. v. DU BOIS BREWING CO.
• Court: U.S. Court of Appeals — Third Circuit

175 F.2d 370 (1949)

ANHEUSER-BUSCH, Inc. v. DU BOIS BREWING CO.

No. 9527.

United States Court of Appeals Third Circuit.

Argued January 21, 1949.

Decided May 12, 1949.

Rehearing Denied July 27, 1949.

Elder W. Marshall, Pittsburgh, Pa. (John C. Bane, Jr., Sherman T. Rock, and Reed. Smith, Shaw & McClay, Pittsburgh, Pa., Leo R. Brockbank, Du Bois, Pa., on the brief), for appellant.

Wallace H. Martin, New York City (Alter, Wright & Barron, Pittsburgh, Pa., attorneys for plaintiff-appellee, Minturn De S. Verdi, Walter J. Halliday, and Marion L. Severn, New York City, Alexander J. Barron, and James Milholland, Pittsburgh, Pa., Nims, Verdi & Martin, New York City, and Shepley, Kroeger, Fisse & Ingamells, St. Louis, Mo., on the brief), for appellee.

Before GOODRICH, McLAUGHLIN, and O'CONNELL, Circuit Judges.

O'CONNELL, Circuit Judge.

We are called upon to decide whether or not the district court erred in granting plaintiff ("Anheuser") a permanent injunction against the use of the words "Budweiser" and "Bud" by defendant ("Du-Bois") in connection with beer or any similar or related product.¹ The claim of Anheuser is grounded upon its assertion of a common law trade name.² The parties are in federal court by reason of diversity only, and Pennsylvania law controls.

Two principal issues are presented: (1) Has Anheuser established its common law right to the name of "Budweiser" as its exclusive trade name? and (2) if so, is Anheuser entitled to an injunction under the circumstances disclosed by this record?

Certain facts are not in dispute. The name "Budweiser" traces its origin to Budweis, also known as Budejovice, a Bohemian town with some reputation for the beer brewed there. In 1876, one Conrad, a St. Louis beverage dealer, first applied the name to a beer brewed in the United States.

Conrad obtained a registered trade-mark for "Budweiser" in 1878.³ About 4½ years later, the Anheuser-Busch Brewing Association ("the Association"),⁴ manufacturer of this beer for Conrad, was given permission by him to sell with his trade-mark such "Budweiser" beer as the Association had on hand.

In 1886, Conrad registered a second trade-mark for "Budweiser." Twenty-five days later, the Association (predecessor of Anheuser) also applied for a registered trade-mark involving a representation of the words "Original Budweiser." The Patent Office rejected the application on the basis of Conrad's 1878 registration. The Association replied that "there is nothing in common between the parties in the manner in which they use the words `Original Budweiser' to which words no one can have an exclusive right." The Examiner then declared that "The words `Original Budweiser' * * * are public property and cannot of themselves constitute a trade-mark." The Association eventually was granted registration of a trade-mark readily distinguishable in arrangement from Conrad's.

In 1891, Conrad sold out to the Association. Between 1891 and 1898, the Association sold 785,970 barrels of "Budweiser" beer, with sales continuing to grow thereafter, so that in 1905 alone the Association sold the equivalent of 444,265 barrels; in 1945 Anheuser, its successor corporation, sold the equivalent of more than 3,000,000 barrels.

In the period prior to 1905, the word "Budweiser" was also used by a number of other persons to designate their beer. These may be divided into two groups: (1) Importers selling European beer, who, except during the effective period of the 18th Amendment, continued to sell such beer in the United States until shortly before trial of the instant case, and (2) persons selling domestic beer, who, with one minor exception, were dissuaded, by legal action or otherwise, from continuing to use the name.

In June of 1905, Du Bois, owner of a brewery which (until 1945) never has sold more than 90,000 barrels of beer annually, began selling some of its beer under the name "DuBois Budweiser." The labels on the bottles were and still are vastly different from those of the Association and Anheuser. The record amply supports the finding of the court below, however, that DuBois began marketing "DuBois Budweiser" with full knowledge of the extensive use of the word "Budweiser" by the Association. Several months later, DuBois applied for a registered trade-mark, in which application DuBois laid claim to the word "Budweiser" for beer, ale, and porter. The Association successfully opposed that application.

After also making timely demand that DuBois discontinue using the name, the Association (predecessor of Anheuser) took the controversy to court in September, 1908, by filing a bill of complaint in the federal court for the Western District of Pennsylvania. The bill sought a permanent injunction against the use of the word "Budweiser" by DuBois. DuBois filed an answer in due course. In August, 1909, the Association moved for, and was granted, a discontinuance, to which DuBois agreed. With that, the controversy remained dormant until the filing of the instant complaint in April, 1940. It is not inapposite to note that Anheuser and the Association brought nine other suits in protection of the name "Budweiser" between 1920 and 1939, besides inducing others, without court action, to refrain from using "Budweiser" and "Bud," but that no communication with DuBois, formal or otherwise, was had on this subject during that entire period; and that Anheuser and its predecessor Association advertised widely and sold "Budweiser" malt syrup, yeast, and near-beer between 1918 and 1932.

The first issue which arises from these facts is clear-cut. DuBois says the term "Budweiser" has always been descriptive of the type of beer which has been brewed in the town of Budweis, and that this descriptive name was and is available to anybody who wishes to make beer of the type which originally came from that community; in short, that "Budweiser" is, like "Pilsener," a word not subject to exclusive appropriation. Anheuser, on the other hand, says that "Budweiser" is not now, and never has been, used as the name of a type of beer. As the background outlined above indicates, both the Association (predecessor of Anheuser) and DuBois have taken inconsistent positions in the past, the Association when pressing for the 1886 registration and DuBois when seeking registration in 1905. The trial judge agreed with Anheuser, in a finding which we think is not completely harmonious with other facts he found.⁵

This much, however, does seem beyond dispute: (1) Bohemian beer never contains raw cereal, which is an ingredient of the beer of both Anheuser and DuBois, and (2) the town of Budweis was not shown by either litigant to have even manufactured, much less to have been noted for, products such as near-beer which the parties marketed during the 20's under the "Budweiser" label. Actually, the conclusion is not strained that both Anheuser and DuBois have adopted a name which they deemed advantageous for consumer acceptance of the commodities they were offering for sale, just as they would have sought a Scotch name for tweeds or a French for wines.

Much argument has been directed to this question, whether "Budweiser" is a descriptive word in the sense that nobody can appropriate it to his exclusive use, as was the situation with "Shredded Wheat," Kellogg Co. v. National Biscuit Co., 1938, 305 U.S. 111, 59 S.Ct. 109, 83 L.Ed. 73; or whether "Budweiser" is a geographical term which may and did acquire a secondary meaning as the product of a particular manufacturer, as the Supreme Court of Pennsylvania found "Dundee" to be in Hartman v. Cohn, 1944, 350 Pa. 41, 38 A.2d 22. As the majority of this court views the facts, the resolving of this interesting question is unnecessary, because Anheuser would be denied injunctive relief here even if "Budweiser" does have a secondary meaning as the product of Anheuser. Consequently, we limit ourselves to the observation that, on the whole, we believe the "Dundee" rationale is that which a Pennsylvania court would apply to this record, on the ground that the record does not sustain the DuBois contention that "Budweiser" in either common parlance or even brewing circles was denominative of a beer which can be prepared and aged only with specific ingredients and according to an undeviable formula. See cases collected at Annotation, 150 A.L.R. 1067.

This brings us to the question whether Anheuser is here entitled to injunctive relief, if it be assumed arguendo that the word "Budweiser" did acquire a secondary meaning as a product of Anheuser. A preliminary problem is whether we refer to Pennsylvania or federal authorities. This court has said that whether an equitable remedy, as contrasted with a judgment at law, is to be granted is a matter for the federal court to decide for itself. See Black & Yates v. Mahogany Ass'n., 3 Cir., 1942, 129 F.2d 227, 233, 148 A.L.R. 841, certiorari denied, Mahogany Ass'n v. Black & Yates, 1942, 317 U.S. 672, 63 S.Ct. 76, 87 L.Ed. 539, and Campbell Soup Co. v. Wentz, 3 Cir., 1948, 172 F.2d 80. On the other hand, the state doctrine of laches was upheld by our decision in Overfield v. Pennroad Corp., 3 Cir., 1944, 146 F.2d 889, an approach which finds support in Guaranty Trust Co. v. York, 1945, 326 U.S. 99, 65 S.Ct. 1464, 89 L.Ed. 2079, 160 A.L.R. 1231. See Annotation, 148 A.L.R. 139. The problem here, however, is largely academic, as we believe the Pennsylvania and federal decisions are in full accord.

Under both federal and Pennsylvania law, it is settled that mere laches on the part of a holder of trade-mark rights would be sufficient to deny him an accounting, but would not necessarily prevent him from obtaining injunctive relief against one guilty of fraudulent infringement of the trade-mark. See Klepser v. Furry, 1927, 289 Pa. 152, 159, 137 A. 175, 177, and McLean v. Fleming, 1877, 96 U.S. 245, 257-258, 24 L.Ed. 828.

The questions, then, are (a) whether "laches" is the most appropriate term which may properly be...