Beech-Nut Packing Co. v. P. Lorillard Co.

• Decision Date: 11 September 1925
• Docket Number: No. 3282.,3282.
• Citation: 7 F.2d 967
• Parties: BEECH-NUT PACKING CO. v. P. LORILLARD CO.
• Court: U.S. Court of Appeals — Third Circuit

7 F.2d 967 (1925)

BEECH-NUT PACKING CO. v. P. LORILLARD CO.

No. 3282.

Circuit Court of Appeals, Third Circuit.

September 11, 1925.

Walter A. Scott, James R. Offield, and H. McClure Johnson, all of Chicago, Ill., and Edward C. Lukens, of Philadelphia, Pa., for appellant.

Treacy & Milton, of Jersey City, N. J. (John Milton, of Jersey City, N. J., Livingston Gifford and William R. Perkins, both

of New York City, and Thos. L. Preston, of Richmond, Va., of counsel), for appellee.

Before BUFFINGTON, WOOLLEY, and DAVIS, Circuit Judges.

DAVIS, Circuit Judge.

The Beech-Nut Packing Company brought suit in the District Court against the P. Lorillard Company for alleged infringement of its trade-mark, "Beech-Nut," and for unfair competition, and prayed for profits and damages. Defendant admits the use of the trade-mark on a brand of its scrap tobacco and on a brand of cigarettes, but insists that it has the right so to use the trade-mark, and that such use does not constitute infringement of the trade-mark or unfair competition. This is an appeal from the decree of the District Court dismissing the plaintiff's bill, on the ground that the defendant had not infringed the trade-mark.

The word "Beech-Nut," as a trade-mark for food products, was originated by plaintiff's predecessor, the Imperial Packing Company, in or about 1891. In 1899 the Beech-Nut Packing Company, the plaintiff, was incorporated and acquired the assests, including the trade-mark, of the Imperial Packing Company. At first the word was used on ham and bacon only, but its use was gradually extended to other products, such as peanut butter, baked beans, chili sauce, catsup, jellies, mints, chewing gum, etc., until to-day it is used on most all leading food products. From a very small beginning in 1891 the business grew until in 1921 its total sales amounted to more than $12,000,000.

The trade-mark is used in connection with a label, which is oval-shaped, with a red and white border. Within the upper part of the oval, and correspondingly curved, is the word "Beech-Nut," generally in large, blue letters. Below this, in the center of the oval, is the picture of a beechnut. There is also the picture of a beechnut in the red border on each side of the oval. Within this border, at the top, in large white letters, are the words "Beech-Nut Brand," and at the bottom is the word "Bacon," or the name of the particular product contained in the package to which the label is attached.

The defendant and its predecessors have been in the tobacco business since 1780. In 1897 the Harry Weissinger Tobacco Company, of Louisville, Ky., originated a brand of scrap tobacco called "Beechnut Chewing and Smoking Tobacco," and registered the word "Beechnut" as its trade-mark. This brand of tobacco was sold under this trade-mark by that company and its successors until in the year 1910. The Weissinger Company, however, in 1903 sold and transferred its entire assets, including its business, good will, and the "Beechnut" trade-mark, to the Continental Tobacco Company, a corporation of New Jersey. The Continental Tobacco Company in that year sold and transferred the trade-mark and other assets to the Luhrman & Wilbern Tobacco Company, of Middletown, Ohio, for its issued share capital. The next year the Continental Tobacco Company was merged with the American Tobacco Company.

The government began a suit in equity in 1907 under the Anti-Trust Act of July 2, 1890 (Comp. St. §§ 8820-8823, 8827-8830), against the American Tobacco Company and its affiliated companies as an unlawful combination in restraint of interstate commerce in tobacco. It prevailed, and in accordance with the directions of the decree dissolving the American Tobacco Company in 1911 the defendant company was organized, and to it was transferred in that year the capital stock of the Luhrman & Wilbern Company and the trade-marks and brands belonging to it, including the "Beechnut" trade-mark. From the small beginning of Pierre Lorillard in 1760, the business constantly grew until in 1919 the retail value of the defendant's output was over $80,000,000.

The demand for particular brands of tobacco seems to rise and fall in accordance with the changing tastes of consumers. The defendant company, after personal investigation, discovered in 1914 that the sweeter brands were the more popular, and that sales of brands not so sweet were decreasing. Consequently it decided that it would "get up" a new and sweeter brand, which would suit the changed taste of consumers at that time. After experimenting quite a while, it worked out what seemed to it to be the "ideal product to put out."

It was then confronted with the problem of selecting a suitable name and label for the new brand. It examined the list of brands it received from the American Tobacco Company. It had before selected names for brands from that list, such as "Comet," "Pioneer," and "Yacht Club." On the Luhrman & Wilbern list there were the names of "Bagpipe," "Beechnut," "Honest Scrap," "Natural Leaf," "Old Nut," "Polar Bear," and "Scrap Iron." All of these were actively selling, except "Beechnut," and this was a dormant brand, not having been sold since 1910. "Beechnut" was thereupon selected and used on this new brand of "scrap" tobacco. The word had been written without a hyphen between "Beech" and "Nut," but the defendant added one and wrote it "Beech-Nut." This change made the trade-mark identical with the plaintiff's.

For a label it selected an oval, with a small, deep blue border, from which extended on all sides red bars, or stripes, called a sunburst. At the top of the label, written in blue letters, is the word "Lorillard's." Within the oval at the top is the trade-mark "Beech-Nut," in large blue letters. In the middle of the oval is the picture of two beechnuts inverted, and below them the word "Chewing," and at the bottom the word "Tobacco." Weissinger's label was rectangular. Near the center was the picture of a squirrel eating a nut. At the top, printed in large white letters, was the word "Beechnut," and below the squirrel the words "Chewing and Smoking Tobacco." The oval shape of the label, which the defendant adopted, "had been used on many brands of tobacco in order to give more space for the name." If a circle had been used, the defendant would have been compelled "to pinch the name of the brand down to a point where it would make it less conspicuous." The twin beechnuts, represented in the center of the oval, were actually copied from beechnuts picked up on the New Jersey farm of the president of the defendant company.

The "Beech-Nut" brand of tobacco came out early in 1915 and met with great success. The sales of this single brand, a 10-cent package, have exceeded year by year since 1916 the sales of all the combined products of the plaintiff. In 1919 the sales of the plaintiff's entire output amounted to $8,979,586.35, while the sales of the "Beech-Nut" scrap chewing tobacco amounted to $14,650,865.63. It appears that some people thought that the plaintiff was putting out the "Beech-Nut" scrap tobacco and cigarettes and wrote inquiring about it. These inquiries for a time were sent by the plaintiff to the defendant. Correspondence arose between them regarding their rights in the use of the word "Beech-Nut" as a trade-mark for their commodities. Their respective contentions resulted in this litigation.

The Act of February 20, 1905 (33 Stat. 724), authorizing the registration of trade-marks, provides that the owner of a trade-mark may obtain registration of it by filing in the Patent Office an application therefor, addressed to the Commissioner of Patents, specifying, among other things, "the class of merchandise and the particular description of goods comprised in such class to which the trade-mark is appropriated." Section 1 (Comp. St. § 9485). It further provides "that trade-marks which are identical with a registered or known trade-mark owned and in use by another and appropriated to merchandise of the same descriptive properties * * * shall not be registered." Section 5 (Comp. St. § 9490). Merchandise of the same descriptive properties is merchandise of the same class. The implication in the statute is that a trade-mark, which is identical with a registered trade-mark owned and in use by another, may be registered if it is not appropriated to merchandise of the same class. Therefore the owner of a trade-mark does not have the exclusive right to the use of a name as a trade-mark, except in the class of merchandise to which it is appropriated in an existing business. A trade-mark is merely a protection of good will, and not the subject of property, except in connection with an existing business. Hanover Star Milling Co. v. Metcalf, 240 U. S. 403, 413, 414, 36 S. Ct. 357, 60 L. Ed. 713.

Judge Woolley in his comprehensive exposition of the law of trade-marks, said with reference to the property right of an owner in the mark: "If property it is property of a qualified nature, for it is settled that no absolute ownership in or exclusive right to use a name as a trade-mark is vested in any one." Rosenberg Bros. & Co. v. John F. Elliott, 7 F.(2d) 962. In other words, what gives the owner a property right in a trade-mark is its connection with an existing business of the class to which it is appropriated. "The general rule of law on this subject is that the owner must have used his trade-mark on the same class, but not necessarily on the same species of goods as the alleged infringer in order to entitle him to its protection against infringement." Layton Pure Food Co. v. Church & Dwight Co., 182 F. 35, 37, 104 C. C. A. 475, 477, 32 L. R. A. (N. S.) 274.

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