Carl Zeiss Stiftung v. VEB Carl Zeiss, Jena, No. 62 Civ. 850.

CourtUnited States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
Writing for the CourtMANSFIELD
Citation293 F. Supp. 892
Decision Date07 November 1968
Docket NumberNo. 62 Civ. 850.
PartiesCARL ZEISS STIFTUNG, doing business under the name and style of Carl Zeiss; and Zeiss Ikon A.G., Plaintiffs, v. V. E. B. CARL ZEISS, JENA; Steelmasters, Inc.; Ercona Corporation; Exakta Camera Company, Inc.; and Camera Specialty Company, Inc., Defendants, Carl Zeiss, Inc., Additional Defendant on Counterclaims.

293 F. Supp. 892

CARL ZEISS STIFTUNG, doing business under the name and style of Carl Zeiss; and Zeiss Ikon A.G., Plaintiffs,
v.
V. E. B. CARL ZEISS, JENA; Steelmasters, Inc.; Ercona Corporation; Exakta Camera Company, Inc.; and Camera Specialty Company, Inc., Defendants,
Carl Zeiss, Inc., Additional Defendant on Counterclaims.

No. 62 Civ. 850.

United States District Court S. D. New York.

November 7, 1968.


293 F. Supp. 893
COPYRIGHT MATERIAL OMITTED
293 F. Supp. 894
COPYRIGHT MATERIAL OMITTED
293 F. Supp. 895
COPYRIGHT MATERIAL OMITTED
293 F. Supp. 896
Milbank, Tweed, Hadley & McCloy, New York City, for plaintiffs and Carl Zeiss, Inc., William E. Jackson, Isaac Shapiro, Patrick Owen Burns, Walter J. Derenberg, of Von Maltitz, Derenberg, Kunin & Janssen, New York City, of counsel

Harry I. Rand, New York City, for defendants V.E.B. Carl Zeiss Jena, Steelmasters, Inc., and Ercona Corp., Donald E. Nawi, David Kremen, Hays, Sklar & Herzberg, and Warren F. Schwartz, New York City, of counsel.

"At the Court's request the factual background, because of its length, is not published."

DISCUSSION

MANSFIELD, District Judge.

A central and primary issue in this case is whether the plaintiff Foundation or that established in East Germany in 1951 is legally identical with, and the successor to, the original Abbe Foundation, which is without question entitled to exclusive use of the United States trademarks in dispute. The Soviet expropriation purported to encompass all Zeiss trademarks owned by the Zeiss firm, wherever located. In view of the well-settled United States policy against extraterritorial recognition of such decrees, the Foundation or its legal successor, if it has legally continued to exist (whether in East Germany, West Germany, or elsewhere1), must be recognized as the owner of the United States marks. Furthermore, while a United States court may give effect to expropriation of property located within the territory of the expropriating state, Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 84 S.Ct. 923, 11 L.Ed.2d 804 (1964), United States trademarks, for the purpose of determining the applicability of our anti-expropriation policy, are deemed to be located within the United States, even though the trademarked goods may be manufactured elsewhere, Zwack v. Kraus Bros. & Co., 237 F.2d 255 (2d Cir. 1956); F. Palicio y Compania, S.A. v. Brush, 256 F.Supp. 481 (S.D.N.Y.1966); and see Baglin v. Cusenier Co., 221 U.S. 580, 596, 31 S.Ct. 669, 55 L.Ed. 863 (1911), and our anti-expropriation policy applies with full vigor with respect to property outside the taking state. As Judge Friendly said

293 F. Supp. 897
in a learned opinion in Republic of Iraq v. First Natl. City Bank, 353 F.2d 47, 51 (2d Cir. 1965)
"Extra-territorial enforcement of the Iraqi ordinance as to property within the United States at the date of its promulgation turns on whether the decree is consistent with our policy and laws. Footnote omitted We perceive no basis for thinking it to be. Confiscation of the assets of a corporation has been said to be `contrary to our public policy and shocking to our sense of justice.' Vladikavkazsky Ry. Co. v. New York Trust Co., 263 N.Y. 369, 378, 189 N.E. 456, 460, 91 A.L.R. 1426 (1934)."

Since the objective of our policy is to prevent the unfair consequences of expropriation without compensation, we are required as a counterpart of that policy, insofar as it is possible to do so, to identify the owners surviving the confiscation, and to award the property to them. In this case, therefore, since the Soviet's purported expropriation of the United States Zeiss trademarks violated our anti-expropriation policy, leaving the Foundation's ownership unaffected, our task is to identify the surviving owner as between the various claimants.

If the issue of legal identity or successorship, which is central to the case, could be resolved solely as a question of fact, the facts found by the Court would dictate a decision in favor of the plaintiff as the true Zeiss Foundation. The evidence reveals that as between the rival Foundations, the plaintiff is in fact a good faith continuation of the original Abbe organization, in which the Zeiss officers employed for life who were the official representatives of the original Foundation have conscientiously done everything within their power to adhere to the Abbe Statute and carry on the tradition of the organization, to the extent that this has been permitted by circumstances beyond their control (i. e., their forced evacuation from Jena to Heidenheim, and their inability, after two years of efforts, to maintain the organization at Jena, even at the price of forebearing exercise of their own authority, after Soviet seizure of its assets there). The "Foundation" established in 1951 in East Germany, in contrast, is but a sham and subterfuge, erected solely for the purpose of litigation outside of East Germany, and neither a continuation of the original organization nor a good faith effort to resurrect it in substance or adhere to its basic tenets.

If fundamental fairness and equity were the criteria, therefore, the de facto existence and operation of the plaintiff Foundation in the West as a good faith effort to continue what remained of the overall Abbe Foundation enterprise, after expropriation of its assets in the East and its inability to function in its original domicile, would call for its recognition. Such an approach based on the equities was adopted by the United States Supreme Court more than 50 years ago in a remarkably parallel situation in Baglin v. Cusenier Co., 221 U.S. 580, 31 S.Ct. 669, 55 L.Ed. 863 (1911), which involved the trademarks to the well known liqueur "Chartreuse." For many years the liqueur had been manufactured by the order of Carthusian Monks in a monastery in France known as the "Grande Chartreuse" and sold throughout the world (including the United States) under the trademark "Chartreuse." In 1903 the monastic order was dissolved by French law and its property confiscated. Thereupon the Monks moved to Spain where they resumed manufacture of the same liqueur there. In the meantime a French company, as liquidator, continued operation of the expropriated monastery and factory in France. The Supreme Court granted the refugee Monks an injunction against use of the trademark in the United States by the liquidator and his distributor, holding that the Monks were legally identical with the original monastic order and that to permit the defendants to use the marks in the United States would allow the French Government to seize United States trademarks

293 F. Supp. 898
and detach them from the Monks' product. In denying effect to an extraterritorial expropriation by a foreign power that would violate American policy, the court was prepared to overlook technical niceties in favor of doing substantial justice on the basis of the equities

The fashioning of such a doctrine of equitable ownership as a counterpart of our anti-expropriation policy is frequently dictated by necessity, since expropriation usually changes the expropriated enterprise, sometimes so drastically that recognition of the survivors or their successors becomes difficult. Where the ownership of a natural person is involved (such as the expropriation of King Faisal's United States assets by the Republic of Iraq), the inquiry is a relatively simple one, the property being awarded to his estate or heirs upon his death. Republic of Iraq v. First Natl. City Bank, 353 F.2d 47 (2d Cir. 1965). Where a creature of the law, such as a partnership or corporation, is concerned, however, the inquiry into its life, death and succession is more complex. As Judge Cardozo said in Petrogradsky M. K. Bank v. National City Bank, 253 N.Y. 23, 30, 170 N.E. 479, 481 (1930):

"There is a distinction not to be ignored between the life of a human being and the life of a persona ficta, the creature of the state. When a human being dies, his death is equally a fact whether it is brought about legally or illegally, whether he has died of illness in his bed or has been murdered on the highway. The event is not conditioned by the juristic quality of the cause. But in respect of juristic beings, the quality of the cause may determine the event as well. The personality created by the law may continue unimpaired until law rather than might shall declare it at an end. Conceivably, the law will declare it at an end when marauders have brought frustration to the purpose for which personality was given. That is another question. What is not to be lost sight of is that even so it is the law and not merely an assassin that must pronounce the words of doom."

The legal existence, status, identity, and domicile of a foreign corporate entity or juristic personality, such as the Foundation here, must be determined by the laws of the country where it has been created and continues to exist, see Bank of Augusta v. Earle, 13 Pet. 519, 10 L.Ed. 274 (U.S.Sup.Ct.1839); Russian Reinsurance Company v. Stoddard, 240 N.Y. 149, 147 N.E. 703 (1925). Procedural technicalities, lack of clarity in the foreign law involved, or doubt as to its applicability, however, should rarely be viewed as insurmountable obstacles, particularly where United States property is at stake, since failure to resolve the issue would reward the oppressor, give effect to fundamentally unfair acts, or result in the property becoming "ownerless". Expropriation without compensation is an extraordinary and basically unfair measure, frequently resulting in unusual consequences not provided for in the laws of the country where the owner was established, which often assume continuation of governmental institutions according to an existing pattern rather than substitution of drastic new concepts. As a result our courts have developed a willingness to disregard technicalities in favor of equitable considerations. For instance in Zwack v. Kraus Bros. & Co., 237 F.2d...

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51 practice notes
  • Atty. Gen. Canada v. R.J. Reynolds Tobacco, PLAINTIFF-APPELLANT
    • United States
    • United States Courts of Appeals. United States Court of Appeals (2nd Circuit)
    • May 30, 2001
    ...the laws or by the judicial proceedings of the others." 296 U.S. at 277. 30. See, e.g., Carl Zeiss Stiftung v. V.E.B. Carl Zeiss Jena, 293 F. Supp. 892, 913 (S.D.N.Y. 1968) (recognizing the revenue rule), modified on other grounds, 433 F.2d 686 (2d Cir. 1970); Newcomb v. Comm. of Internal R......
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    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • April 10, 1997
    ...may result in an abandonment of trademark protection for the licensed mark. Id. See Carl Zeiss Stiftung v. V.E.B. Carl Zeiss, Jena, 293 F.Supp. 892, 918 (S.D.N.Y.1968) ("a 'naked' license may be the basis for an inference of abandonment where the licensor maintains no control over the quali......
  • Johanna Farms, Inc. v. Citrus Bowl, Inc., No. 78 C 286.
    • United States
    • United States District Courts. 2nd Circuit. United States District Court (Eastern District of New York)
    • May 25, 1978
    ...at 419, 36 S.Ct. 357; National Lead Co. v. Wolfe, 223 F.2d 195, 202 (9th Cir. 1955); Carl Zeiss Stiftung v. V.E.B. Carl Zeiss, Jena, 293 F.Supp. 892, 917 (S.D.N.Y.1968). The roots of this axiom stretch back to Saxlehner v. Eisner & Mendelson Co., 179 U.S. 19, 21 S.Ct. 7, 45 L.Ed. 60 (1900) ......
  • Cuban Cigar Brands NV v. Upmann Intern., Inc., No. 77 Civ. 345.
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • July 20, 1978
    ...Carl Zeiss, Jena, 433 F.2d 686, 703 (2d Cir. 1970), cert. denied, 403 U.S. 905, 91 S.Ct. 2205, 29 L.Ed.2d 680 (1971), aff'g and quoting 293 F.Supp. 892, 917 (S.D.N.Y.1968) (Mansfield, 20 See Menendez v. Holt, 128 U.S. 514, 523, 9 S.Ct. 143, 145, 32 L.Ed. 526 (1888) ("Mere delay or acquiesce......
  • Request a trial to view additional results
51 cases
  • Atty. Gen. Canada v. R.J. Reynolds Tobacco, PLAINTIFF-APPELLANT
    • United States
    • United States Courts of Appeals. United States Court of Appeals (2nd Circuit)
    • May 30, 2001
    ...the laws or by the judicial proceedings of the others." 296 U.S. at 277. 30. See, e.g., Carl Zeiss Stiftung v. V.E.B. Carl Zeiss Jena, 293 F. Supp. 892, 913 (S.D.N.Y. 1968) (recognizing the revenue rule), modified on other grounds, 433 F.2d 686 (2d Cir. 1970); Newcomb v. Comm. of Internal R......
  • Exxon Corp. v. Oxxford Clothes, Inc., Nos. 96-20398
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • April 10, 1997
    ...may result in an abandonment of trademark protection for the licensed mark. Id. See Carl Zeiss Stiftung v. V.E.B. Carl Zeiss, Jena, 293 F.Supp. 892, 918 (S.D.N.Y.1968) ("a 'naked' license may be the basis for an inference of abandonment where the licensor maintains no control over the quali......
  • Johanna Farms, Inc. v. Citrus Bowl, Inc., No. 78 C 286.
    • United States
    • United States District Courts. 2nd Circuit. United States District Court (Eastern District of New York)
    • May 25, 1978
    ...at 419, 36 S.Ct. 357; National Lead Co. v. Wolfe, 223 F.2d 195, 202 (9th Cir. 1955); Carl Zeiss Stiftung v. V.E.B. Carl Zeiss, Jena, 293 F.Supp. 892, 917 (S.D.N.Y.1968). The roots of this axiom stretch back to Saxlehner v. Eisner & Mendelson Co., 179 U.S. 19, 21 S.Ct. 7, 45 L.Ed. 60 (1900) ......
  • Cuban Cigar Brands NV v. Upmann Intern., Inc., No. 77 Civ. 345.
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • July 20, 1978
    ...Carl Zeiss, Jena, 433 F.2d 686, 703 (2d Cir. 1970), cert. denied, 403 U.S. 905, 91 S.Ct. 2205, 29 L.Ed.2d 680 (1971), aff'g and quoting 293 F.Supp. 892, 917 (S.D.N.Y.1968) (Mansfield, 20 See Menendez v. Holt, 128 U.S. 514, 523, 9 S.Ct. 143, 145, 32 L.Ed. 526 (1888) ("Mere delay or acquiesce......
  • Request a trial to view additional results

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