Carl Zeiss Stiftung v. VEB Carl Zeiss Jena
| Decision Date | 02 November 1970 |
| Docket Number | No. 767,Docket 33676.,767 |
| Citation | 433 F.2d 686 |
| Parties | CARL ZEISS STIFTUNG, doing business under the name and style of Carl Zeiss, and Zeiss Ikon A.G., Plaintiffs-Appellees, v. VEB CARL ZEISS JENA, Steelmasters, Inc., and Ercona Corporation, Defendants-Appellants. |
| Court | U.S. Court of Appeals — Second Circuit |
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Milbank, Tweed, Hadley & McCloy, New York City (William E. Jackson, Isaac Shapiro, Walter J. Derenberg, Von Maltitz, Derenberg, Kunin & Janssen, New York City, of counsel), for plaintiffs-appellees.
Botein, Hays, Sklar & Herzberg, New York City (Harry I. Rand, Donald E. Nawi, David Kremen, New York City, of counsel), for defendants-appellants.
Before LUMBARD, Chief Judge, WATERMAN, Circuit Judge, and JAMESON, District Judge.*
This trademark infringement action involves the ownership and use in the United States of the "Zeiss" and "Zeiss Ikon" names and marks on optical and mechanical precision instruments. Plaintiffs-appellees are the Carl Zeiss Stiftung (or Foundation) doing business under the name of Carl Zeiss, located in Heidenheim, West Germany, and its subsidiary, Zeiss Ikon A.G., located in Stuttgart, West Germany. The defendants-appellants are VEB1 Carl Zeiss Jena, located in East Germany, and two of its distributors in the United States, Steelmasters, Inc., and Ercona Corporation.2
Appellees claim ownership and the right to exclusive use of the trademarks as a successor of the original Carl Zeiss Stiftung (Foundation) created in Jena in 1889. Appellants claim the right to exclusive use, or in the alternative the right to concurrent use, as the assignees and licensees of the Jena Foundation.
The district court held that the appellee Heidenheim Foundation was identical to the Carl Zeiss Stiftung and was therefore entitled to the exclusive use of the "Zeiss" name and trademarks in the United States; that Zeiss Ikon A.G. was entitled to the exclusive use of the "Zeiss Ikon" name and mark in the United States; and that since 1953 appellants had infringed those trademarks and had violated Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), by describing and designating goods they had imported from Jena and sold in the United States as goods produced by a licensee of the Zeiss Stiftung. The court rejected the defenses of laches, acquiescence and abandonment; held that the appellants were barred from asserting any claim to ownership of the "Zeiss" name and marks by provisions of Section 5(b) of the Trading With The Enemy Act (50 U.S.C. App. § 1 et seq.) and regulations promulgated thereunder (8 C.F.R. § 507.46); and struck the antitrust defense asserted by the appellants.
The basic facts as set forth in the court's formal findings and supplemental discussion with respect to the ownership and use of the trademarks3 may be summarized as follows:
In 1846 Carl Zeiss established a workshop for the manufacture of optical and mechanical precision instruments in Jena in the Grand Duchy of Saxe-Weimar-Eisenach.4 In 1875, Dr. Ernst Abbe, a mathematician and physicist teaching at the University of Jena, joined Zeiss as a partner. In 1884, with Otto Schott, they organized the companion Schott Works for the manufacture of optical and other types of glass.
In 1889 the Carl Zeiss Stiftung was created in Jena with the required approval of the Duchy of Saxe-Weimar-Eisenach. In 1891 all assets of the Zeiss firm were conveyed to the Carl Zeiss Stiftung (FF 10) and since then the Foundation has been the sole owner of the Zeiss firm (FF 11). JA 817. In 1896 a new basic governing instrument designated a "Statute" was prepared and approved.5 The statute was amended from time to time, the last time in 1941.
The Carl Zeiss Foundation was not charitable or public in nature, but was established as a private foundation for the purpose of owning and operating the Zeiss optical business for profit.6 The profits were to be used primarily to maintain, develop and increase the business enterprises and to provide economic benefits for the workers. Any surplus was to be used for promotion of technical knowledge and science outside of the works, and for participation in community organizations and measures intended to help the working population in Jena, where the works were then located.
The Zeiss and Schott firms were each under the direction of a separate "Board of Management." A "Special Board" was to administer the nonindustrial assets of the Foundation and to supervise the noncommercial activities. A "Foundation Deputy" appointed by the Special Board was to represent it on the Boards of Management of the individual commercial enterprises.7
Between 1891 and 1945 the Foundation acquired interests in numerous other commercial enterprises, including the Schott firm and Zeiss Ikon A.G. Since the early 1900s (with interruptions during the two World Wars) the Zeiss firm has sold high quality optical and other scientific instruments in the United States under the Zeiss name and the trademarks "Zeiss," "Carl Zeiss Jena," "C.Z." and others. Zeiss Ikon has sold photographic and related equipment in the United States since 1926 under the "Zeiss Ikon" and other names and marks.8
Beginning on April 13, 1945 the city of Jena was occupied by the Allies. It was first occupied by the Armed Forces of the United States, who remained for two and one-half months, relinquishing control in July, 1945 to the Soviet Military Forces, after it was decided that Thuringia was to be part of the Soviet Zone, pursuant to the Allied statement on Zones of Occupation, issued on June 5, 1945, which divided Germany into four military occupation zones.
At the time of Germany's surrender, the Zeiss Foundation deputy was Professor Abraham Esau, and its Board of Management consisted of Professor Walter Bauersfeld, Paul Henrichs, Dr. Heinrich Kueppenbender, and Professor Georg Joos. The Schott Board consisted of Dr. Erich Schott, Richard Hirsch and Mr. Henrichs. The administrative offices and principal manufacturing establishments of both firms were in Jena, but Zeiss also had branch establishments in Berlin, Cologne, Hamburg, Vienna, and a number of foreign countries, all outside what was to become the Soviet Zone, and Schott had a branch factory in Landshut, Bavaria, which was within the American Zone.9
In mid-June, 1945, when it was evident that Jena was shortly to become a part of the Soviet Zone, American Military authorities evacuated all members of the Boards of Management of the Zeiss and Schott firms and approximately 122 top scientific, production and administrative personnel, to Heidenheim, Wuerttemburg, in the United States Zone of occupation, where they established a factory to assist in the continuing war effort against Japan. The management and scientists did not depart voluntarily but under military orders.
The members of the Board of Management of Zeiss designated three Zeiss employees, Dr. Friedrich Schomerus, Viktor Sandmann, and Dr. Hugo Schrade, to act during their absence. The Board of Schott made a similar designation of three of its employees.10 Appellants contend that the members of the Boards orally resigned. On conflicting testimony the district court found that the departing Boards of Management did not resign, "but arranged with three trusted employees to exercise their functions during the Board's absence on the understanding that upon the Board's return it would assume exercise of its management functions in Jena."11 (FF 82). JA 839.
On June 9, 1945 the United States Armed Forces attempted to set up a provincial government and "purported to appoint" Herman Brill as Prime Minister of Thuringia. Brill in turn appointed Dr. Walter Wolf as Minister of Education (FF 66). There is no evidence, however, that the Armed Forces of the United States had authority to organize a new provincial government (FF 67). Under the agreement of June 5, 1945 Thuringia had already been allotted to the USSR for occupation, and the agreement provided for the exercise of governmental authority by each Commander-in-Chief only "in his own zone of occupation" (FF 68). JA 834-835.
On July 1, 1945 the military forces of the United States turned over control of Thuringia (including Jena) to the Soviet Armed Forces, who continued Dr. Wolf as Minister of Education for Jena, which had the effect under the statute of constituting him the Zeiss Special Board. Wolf purported to revoke the appointment of Professor Esau as Foundation Deputy and to name Dr. Arno Barth in his place.
Some time after the deportation and when it became apparent that the enforced absence of the Zeiss and Schott Boards of Management from Jena would be longer than expected, a dispute arose over management between the boards in the American Zone and their designees in the Soviet Zone. On conflicting evidence, and after careful analysis of all letters exchanged between the two groups and testimony relating to the intention of the parties, the district court held that the Heidenheim groups remained as the official and legal boards, although they had in the exchange of letters acknowledged that the Jena caretakers were the sole responsible management in Jena.12
In December, 1945 the Soviet Military authorities sequestered the assets of Zeiss firm as reparations, the plants having supplied equipment for the Nazi military effort. Notice was given to the Zeiss Works, and Schrade was appointed sequestrator. Commencing on October 22, 1946 the Zeiss and Schott plants in Jena were almost totally dismantled and 94% of all plant equipment and more than 300 employees were transported to the Soviet Union. Under Order 124, the trademarks used in connection with the sequestered assets were included in the sequestration (FF 226). JA 899.
Thuringia authorized a partial rebuilding of the Jena plants. Between 1945 and 1948 plants for the...
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