Caron Corporation v. Wolf Drug Co.

• Decision Date: 26 July 1941
• Docket Number: Civil No. 1298.
• Parties: CARON CORPORATION v. WOLF DRUG CO. et al.
• Court: U.S. District Court — District of New Jersey

40 F. Supp. 103

CARON CORPORATION v. WOLF DRUG CO. et al.

Civil No. 1298.

District Court, D. New Jersey.

July 26, 1941.

Choate, Byrd, Leon & Garretson, by William Byrd, all of New York City, for plaintiff.

Kraemer, Siegler & Siegler, by Joseph Kraemer, all of Newark, N. J., for defendants.

WALKER, District Judge.

The plaintiff, a corporation of the State of New York, owner of certain trade marks registered in the United States Patent Office for perfumes and other toilet preparations,¹ is engaged in selling and distributing in the State of New Jersey and elsewhere in the United States, perfumes bearing trade marks so registered, in open competition with goods of the same general class produced by others. Said perfumes have enjoyed and still enjoy a high reputation in New Jersey and elsewhere under the trade mark "Caron" and the particular trade mark used by it on each of its perfumes as aforesaid.²

On or about March 1, 1938, plaintiff duly notified the defendants, who are residents of the State of New Jersey, of its rights under the New Jersey Fair Trade Act, by forwarding notice, form of contract, price list and catalog.³

The plaintiff charges that the defendants, well knowing the rights of the plaintiff under the New Jersey Fair Trade Act,⁴ and in violation thereof, advertised, offered for sale and sold certain of plaintiff's products consisting of perfumes, at prices less than the prices set by the plaintiff in its price list and catalog, which have been in force continuously since March 1, 1938.

The matter comes before the court at this time on application of the plaintiff for a preliminary injunction and on motion of the defendants to vacate the order for a temporary injunction heretofore entered; for an order dismissing the action on the ground that the court lacks jurisdiction because the amount in controversy is less than $3,000, exclusive of interest and costs or for an order of dismissal due to an absence of equity.

Decision on whether or not there is an absence of equity must await final hearing, so it is passed without further discussion.

It is a firmly established principle of law that when a litigant seeks an injunction to protect a right, and shows that some invasion of that right has occurred or been threatened, the test of the jurisdictional amount is the value of the right that is to be protected and not the extent of the monetary loss or damage which has been suffered or is threatened by the invasion.⁵

The nature of the right asserted by the plaintiff and the elements that go to make up its value are to be ascertained in order to determine whether the amount in controversy is more than $3,000, exclusive of interest and costs.⁶ Basically, the right of the plaintiff is to have its commodities advertised, offered for sale, or sold by the retailers at no less than the price stipulated in any contract entered into pursuant to the provisions of Section 56: 4-5.⁷ It is the right to enforce contracts standardizing the price at which its "identified" commodities are to be sold and the price standardization is primarily effected to protect the good will created or enlarged by the identifying mark or brand.⁸

In Old Dearborn Distributing Corporation v. Seagram-Distillers Corporation, supra, the Supreme Court had to decide the constitutionality of Sections 1 and 2 of the Illinois Fair Trade Act, Smith-Hurd Stats. Ill. c. 121½, §§ 188, 189, at the time the matter arose they were substantially the same as 56:4-5 and 56:4-6 of the New Jersey Act. The Court said:

"In the second place, section 2 does not deal with the restriction upon the sale of the commodity qua commodity, but with that restriction because the commodity is identified by the trade-mark, brand, or name of the producer or owner. The essence of the statutory violation then consists not in the bare disposition of the commodity, but in a forbidden use of the trade-mark, brand, or name in accomplishing such disposition. The primary aim of the law is to protect the property — namely, the good will — of the producer, which he still owns. The price restriction is adopted as an appropriate means to that perfectly legitimate end, and not as an end in itself.

* * *

"Section 2 of the Act does not prevent a purchaser of the commodity bearing the mark from selling the commodity alone at any price he pleases. It interferes only when he sells with the aid of the good will of the vendor; and it interferes then only to protect that good will against injury. It proceeds upon the theory the sale of identified goods at less than the price fixed by the owner of the mark or brand is an assault upon the good will, and constitutes what the statute denominates `unfair competition'".

The Supreme Court in the case aforesaid holds that prices in respect of "identified" goods may be fixed under legislative leave and the primary aim of such a law is to protect the property — namely, the good will — of the producer, and redress or relief will be granted upon the ground that a party has a valuable interest in the good will of his trade or business and in the trade marks adopted to maintain and extend it.

In Miles Laboratories v. Seignious, supra, the court considered the South Carolina Fair Trade Act, and held, that the right of the plaintiff to sell its products in South Carolina and to realize upon the value of its good will therein established, was threatened with disruption by the price-cutting activities of the defendant and the vast amount spent by Miles Laboratories in advertising and the resulting substantial volume of sales of its products, established the value of its right to distribute the product to the public in South Carolina as being substantially in excess of the jurisdictional amount of $3,000, exclusive of interest...