Bechik Products v. Federal Silk Mills, 7172.

• Decision Date: 04 November 1955
• Docket Number: No. 7172.,7172.
• Citation: 135 F. Supp. 570
• Parties: BECHIK PRODUCTS, Inc. v. FEDERAL SILK MILLS, Inc., David Goetz and Rose Goetz, individually and doing business as Federal Silk Mills.
• Court: U.S. District Court — District of Maryland

135 F. Supp. 570

BECHIK PRODUCTS, Inc. v. FEDERAL SILK MILLS, Inc., David Goetz and Rose Goetz, individually and doing business as Federal Silk Mills.

No. 7172.

United States District Court D. Maryland, Civil Division.

November 4, 1955.

COPYRIGHT MATERIAL OMITTED

Thomas W. Y. Clark, Baltimore, Md., and L. E. Matteson, St. Paul, Minn., for plaintiff.

Thomas J. Kenney, and Kenney & Kaiser, Baltimore, Md., and Bernard R. Garvey, of Washington, D. C., for defendants.

THOMSEN, Chief Judge.

Plaintiff, a distributor of bedding accessories, charges defendant¹ with unfair competition in the sale of mattress tape, and with violation of plaintiff's rights under the Lanham Act, 15 U.S.C. A. § 1051 et seq., in that for many years defendant manufactured certain tapes for plaintiff, which plaintiff sold under certain pattern numbers; that in 1953 defendant started to sell these tapes direct to mattress manufacturers at prices lower than plaintiff was charging; that for three months early in 1953 defendant advertised and sold four patterns under the same pattern numbers used by plaintiff to identify these patterns; and that plaintiff was forced to reduce its prices on its entire line of tapes. Plaintiff admits that defendant had the right to sell the identical patterns and at whatever price he chose, but contends that defendant had no right to designate them by the particular pattern numbers used by plaintiff, and that such designation tended to confuse the public as to the business source of the goods.

Defendant takes the position that the numbers were not trade marks; that plaintiff had no exclusive right to use the numbers, which were used by other distributors; and that, in any event, plaintiff lowered its prices because defendant was selling identical tapes at lower prices, not because defendant identified his tapes by any particular pattern numbers. As soon as he learned that plaintiff objected to the use of the numbers, defendant stopped using numbers and began to identify his tapes by letters — AAA, BBB, etc. — because, he said, he did not want to get into trouble, whether he was right or wrong.

At a pre-trial conference, counsel for defendant stated that defendant did not intend to use numbers to identify his tapes in the future, and would consent to an injunction against such use, without prejudice to his contention that he had not been guilty of any unfair competition. It was further agreed that defendant need not check the mass of evidence offered by plaintiff on the issue of damages unless and until the court rules that plaintiff is entitled to recover damages in this action.

Facts

The Parties.

Plaintiff has manufactured and sold bedding accessories since 1932, and is now reported to be the largest distributor of bedding accessories in the world. It sells to mattress manufacturers some forty parts that go into the making of mattresses, including mattress tape, which plaintiff has been selling since about 1940. It did not start manufacturing such tape until 1953 or 1954, but has purchased such tape from three or four companies from 1940 to date.

Defendant David Goetz, who trades as Federal Silk Mills, was originally a ribbon manufacturer. About 1933 he caused Federal Silk Mills, Inc., to be incorporated in Maryland, and transferred to the corporation the real estate and the machinery in his mill. The corporation still owns the real estate and the machinery, which are assessed for taxation at over $200,000, but sometime before 1940 the corporation ceased manufacturing and David Goetz, individually, trading as Federal Silk Mills, resumed his manufacturing activities. He pays rent to the corporation, of which he and his wife own all of the stock. Separate sets of books are kept for the corporation and for the individual enterprise. I find that plaintiff had no reason to believe that it was dealing with the corporation. None of the letters or other papers offered in evidence purport to be signed by any officer of the corporation, but all are signed "Federal Silk Mills", with the name "David Goetz", or some other name, on the line below, without title.

Defendant Rose Goetz, wife of David Goetz, is associated with him in the business, but I find that she has not been his partner and would not be liable as such in this case. The facts that her signature, as well as that of the plant manager, was an authorized signature on the checking account of David Goetz, trading as Federal Silk Mills, and that she works in the office, took an active part in certain discussions with the plaintiff's officers, and referred to Federal Silk Mills as "we", are not sufficient to overcome the flat and uncontradicted testimony of David Goetz that she has no proprietary interest in the business, but that she is paid a salary by him individually, trading as Federal Silk Mills, and is also paid a salary by Federal Silk Mills, Inc. And I find the evidence insufficient to show that she had such knowedge of or participation in the acts alleged to constitute unfair competition as would make her liable as a tort feasor.

All dealings were between plaintiff and David Goetz, individually, trading as Federal Silk Mills.

The Industry, and Plaintiff's Position Therein.

Mattress tape is used to join the side wall and the top of a mattress. Its quality depends upon the number of "ends" and "picks" in the warp and woof of the pattern, and on the size or weight of the yarn. It must be dense enough not to "pucker" in the sewing machines. The machines in general use in the United States call for 5/8 inch tape with a tolerance of 1/32 inch.

Most patterns and designs have been used for many years by all manufacturers, long before either the plaintiff or defendant went into the business, though there may be slight variations in the construction (i. e. the number of ends and picks or the size or weight of the yarn) of the same pattern made by different manufacturers.

Mattress tape is distributed by several dozen manufacturers, jobbers and mill representatives, of whom some identify their patterns by numbers and some by descriptive names such as "Diagonal" or fanciful names such as "Marcy"; at least one distributor identifies some of its patterns by numbers and some by names.

Plaintiff uses numbers to designate its patterns, and makes an effort to select numbers which are not in current use by other distributors, although some other distributors use some of the numbers, e. g. 501 and 526, which plaintiff uses to designate the same or different patterns.

Neither the distributor's name nor the pattern number customarily appears on the tape itself or on the core on which the tape is wound. The loose end of a roll of tape is usually sealed with a tab or a pin. Plaintiff uses a tab on which is printed plaintiff's name but not the pattern number. Plaintiff supplies these tabs to the manufacturers from whom it buys tape, who attach the tabs, wrap ten rolls of the same pattern in a paper package, and seal the package at the top with a blue label, supplied by plaintiff, containing its name and the pattern number and color. Other labels are used to seal the bottom and sides of the package.

Most sales to a new customer are made by sample. Thereafter, a mattress manufacturer usually orders by pattern number and color.

It is possible for an experienced person to identify tape made by a particular manufacturer by noting the method of splicing and the method of rolling on the core.

Plaintiff is careful about the quality of its tape, and before selling a new pattern or construction has a sample run tried out by a mattress manufacturer. The Bechik tapes are recognized in the industry as being of good quality.

Defendant's Activities, and the Course of Dealings Between The Parties.

Defendant entered the mattress tape business at about the same time as plaintiff, i. e. between 1939 and 1941. At first defendant sold through a distributor known as Interstate Ribbons Company, in which defendant and Penn Textile Company were interested. Defendant was then manufacturing most of the patterns which it subsequently manufactured for plaintiff, and was selling them under the pattern numbers used by Penn Textile Company. At or about the same time, defendant also sold tape to the Southern Bedding Company and to Lea & Sachs.

In April, 1941, defendant wrote plaintiff soliciting mattress tape business and stating that it understood plaintiff was "using tapes that we manufacture". Plaintiff replied, referring to "your number 1004", "our number 586" and other patterns. All of these numbers were the Penn Textile numbers, which both plaintiff and defendant had been using up to that time and continued to use for some years. Plaintiff began to buy a substantial part of its mattress tape requirements from defendant, but always bought from several other manufacturers. Plaintiff insisted, however, that defendant agree not to sell to Southern Bedding or any other distributor except Lea & Sachs, to whom plaintiff agreed defendant might sell four colors of the pattern originally known as number 586 and later sold by plaintiff as number 2005.

About 1945 defendant adopted a new system of numbering mattress tapes produced in his factory. Under that system, the number 4517 indicated that the pattern so designated was first made in the year 1945, and was the 7th sample produced in the 1st month of that year. Defendant assigned the number 4517 and similar numbers to each pattern which he made for plaintiff and to each change in the construction of each Bechik pattern. Plaintiff would sometimes either raise or lower the quality of a particular pattern for competitive reasons, and the new construction would be given a new factory number by defendant, although plaintiff continued to sell the new construction under the old pattern number.

The general course of business between the parties was that plaintiff would place an order for so many thousand gross of a particular pattern to be made...