Bulova Watch Company v. Allerton Company

• Decision Date: 13 February 1964
• Docket Number: No. 14254,14255.,14254
• Citation: 328 F.2d 20
• Parties: The BULOVA WATCH COMPANY, Inc., Plaintiff-Appellant, v. The ALLERTON COMPANY, Inc. and A. Hirsch Co., Defendants-Appellees. The BULOVA WATCH COMPANY, Inc., Plaintiff-Appellee, v. The ALLERTON COMPANY, Inc. and A. Hirsch Co., Defendants-Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

328 F.2d 20 (1964)

The BULOVA WATCH COMPANY, Inc., Plaintiff-Appellant, v. The ALLERTON COMPANY, Inc. and A. Hirsch Co., Defendants-Appellees.

The BULOVA WATCH COMPANY, Inc., Plaintiff-Appellee, v. The ALLERTON COMPANY, Inc. and A. Hirsch Co., Defendants-Appellants.

Nos. 14254, 14255.

United States Court of Appeals Seventh Circuit.

February 13, 1964.

J. Herzl Segal, Barnet Hodes, Herman Smith, Chicago, Ill., for Bulova Watch Co.

Melvin L. Goldman, Richard James Stevens, Chicago, Ill., for Allerton Co.

Before DUFFY, CASTLE and SWYGERT, Circuit Judges.

CASTLE, Circuit Judge.

Plaintiff, The Bulova Watch Company, Inc., brought this action in the District Court against the defendants, The Allerton Company, Inc., and A. Hirsch Co., alleging trademark infringement and unfair competition and seeking injunctive relief and damages. The cause was submitted on the pleadings, and on stipulations and exhibits. The issue of damages, if any, was reserved¹ until the issue of liability was determined. The District Court, filed an opinion containing its findings of fact and conclusions of law. The court found and concluded that the defendants' use of plaintiff's trademark "BULOVA" constituted both infringement and unfair competition. The judgment order entered granted injunctive relief (but not to the extent sought by plaintiff) and denied plaintiff's claim for any damages based on acts of the defendants prior to the date of the decree. Both plaintiff and defendants appealed.

The main contested issues on appeal involve the scope of the injunctive relief and the restriction of damages to any sustained by conduct subsequent to the decree.

The record discloses that plaintiff and its predecessor have for many years engaged primarily in the business of manufacturing, distributing and selling watches. The watch "movements" were never sold separately. Plaintiff has a long established registered trademark "BULOVA" which appears on its watch cases and on the dial of watch movements. Plaintiff has invested large sums of money (over 100 million dollars since 1935) in advertising its products and trademark through various media. Plaintiff's watches are identified by its trademark and have wide public acceptance.

It is admitted the defendants use Bulova movements in watches they sell in order to avail themselves of the quality and reputation of plaintiff's product. The defendant Allerton is a wholly owned subsidiary of the defendant Hirsch. Since 1953 the defendants have purchased from sources other than the plaintiff (various dealers who purchased the watches from plaintiff) Bulova watches containing 6¾ × 8 ligne Bulova movements,² and have transferred these movements, bearing the "BULOVA" trademark on the dial, from their original Bulova cases into diamond-decorated cases³ defendants purchase from a watch case manufacturer. The defendants sell these wrist watches with the recased movements under the tradename "TREASURE MATES" to certain retail outlets referred to as catalog houses. The public purchases these women's type, diamond-decorated wrist watches by making a selection from a catalog and placing an order with the catalog house. The individual case or display box in which each watch is furnished bears the legend: "Treasure Mates — Genuine Diamond Case — with 17 J Bulova Movement". No other wording appears on the case. The defendants prepare and furnish color pages or insert sheets covering their watches to the catalog houses for use in the latters' catalogs. These prominently feature the word "BULOVA" in connection with the diamond-decorated watches offered for sale. Although a choice of three different makes of watch movements is offered in any one of some eleven case styles referred to as Allerton Treasure Mate cases, and it is recited that the watches are "fully guaranteed as to material, workmanship and operation" by Allerton, the District Court aptly characterized the exhibit representative of defendants' catalog insert sheets as follows:

"The Court has studied this page and concludes that the most probable impression a prospective customer would get would be that he was buying a Bulova, Hamilton, or Elgin watch in a diamond case. Those brand names are the most prominent words on the page (except the word `Honor\' — which is advertising sales talk describing the prospective donee). The words Bulova, Hamilton, and Elgin were on a background of red and the eye first focuses on them. In not too prominent aspect are the words `Treasure Mates\' which is defendants\' name for its cases. In the block containing the guarantee the name Allerton appears twice. It appears to the Court that defendants\' name is in too inconspicuous a position, size and color to convey to and impress upon an untutored and unwary purchaser the idea that Allerton Company assembled, by first disassembling, a Bulova watch, removing the movement and then recasing it with a different case and crown. It is not immediately apparent from a cursory examination of this page just what `Treasure Mates\' means except to embellish the article with a fancy brand name, but whose brand is not immediately apparent.

"Its proximity to the words Elgin, Hamilton and Bulova might even give the idea that it might be a product of those companies. Much later there appears the rather indirect explanation that Treasure Mates cases have some association with Allerton Company.

* * * * * *

"If this were a catalog page usable only by dealers rather than the public, defendants\' argument would have much greater weight. Dealers might realize the distinction between `movements\' and watches, whereas the public might not.

* * * * * *

"A reader of this catalog page finds but a minimal reference to defendants. Probably none would remember after reading that page any name but that of Bulova, Elgin or Hamilton, with which the reader was already familiar. The fine print in which the somewhat lesser-known Allerton Company\'s name appears would not make a lasting impression. Furthermore, the only name appearing on the face of the watch is Bulova."

A printed form of guarantee bearing Allerton's name accompanies the watches sold by defendants. Defendants maintain a repair department to service watches covered by their guarantee. Plaintiff refuses to service or repair defendants' watches and takes the position that the Bulova guarantee does not apply to Bulova movements which have been removed from their Bulova cases and recased in a case other than Bulova's.

Statements made by some purchasers of defendants' watches and the fact that defendants' watches are sometimes sent to Bulova with a request for repairs etc. evidence that some purchasers or their donees⁴ are confused as to the source of defendants' watch.

The record indicates that the recasing operation, if properly performed, and a case properly designed and sized to fit the particular movement is used, does not adversely affect the movement. The operation includes the substitution of a new crown which matches and is considered a part of the new case.

The District Court found, among other things, that the substitution of the new and different crown and case made the resulting product a "new construction" and "there has been an infringement by defendants of plaintiff's trademarks pertaining to Bulova, and unfair competition by retention of the word `Bulova' on the watch dial and on the catalog page without adding to the word Bulova a clear explanation and identification of defendants' modification of the watch which Bulova had sold, without Bulova's permission or guarantee".

The injunctive relief the District Court awarded requires defendants either to remove the trademark "BULOVA" from the face of the watch or to add the word "movement" thereto; requires that any catalog insert sheets describing such watches be revised in context and format so (a) the fact that the product is guaranteed only by Allerton shall appear on the page, (b) the name, Allerton, shall precede the name, Bulova, on the page, (c) the name, Allerton, shall be given greater prominence in size, type and coloring than the name, Bulova, and (d) it shall plainly and legibly state that "Treasure Mates", if used on the page, is a trademark of The Allerton Company; and requires that if the trademark "BULOVA" is used on the display case furnished with the watch it shall be preceded by the name "Allerton".

Defendants' appeal (No. 14255) is limited to that portion of the decree which precludes retention of the trademark "BULOVA" on the face of the recased watch unless the word "Movement" is added. Defendants contend, in substance, that they are entitled to make such use of plaintiff's trademark — retaining it on the face of the dial of the recased movement without making any addition thereto — so that purchasers are fairly and reasonably informed of what they are buying. Defendants contend the recasing does not constitute "new construction".

Plaintiff in its appeal (No. 14254) contends the court erred in not...