Champion Spark Plug Co. v. Reich

• Decision Date: 23 July 1941
• Docket Number: No. 11910.,11910.
• Citation: 121 F.2d 769
• Parties: CHAMPION SPARK PLUG CO. v. REICH.
• Court: U.S. Court of Appeals — Eighth Circuit

121 F.2d 769 (1941)

CHAMPION SPARK PLUG CO. v. REICH.

No. 11910.

Circuit Court of Appeals, Eighth Circuit.

July 23, 1941.

Wilber Owen, of Toledo, Ohio (Arthur C. Brown, of Kansas City, Mo., and Carl F. Schaffer, of Toledo, Ohio, on the brief), for appellant.

Charles V. Garnett, of Kansas City, Mo. (Charles H. Thompson and Donald W. Johnson, both of Kansas City, Mo., on the brief), for appellee.

Before GARDNER, SANBORN, and THOMAS, Circuit Judges.

THOMAS, Circuit Judge.

The plaintiff in the lower court appeals from that part of a decree denying an injunction to restrain the defendant from acts of unfair competition and trade-mark infringement.

The plaintiff is a manufacturer of spark plugs for use in internal combustion engines, and is also the owner of three registered trade-marks, "Champion", "X", and "Champion X". Its spark plugs, labeled with its trade-marks, are sold throughout the United States and in other countries.

The defendant is a reconditioner of used and discarded spark plugs of various makes which he sells in the channels of trade for use in automobile engines. In the course of his business defendant obtains many such spark plugs originally manufactured by the plaintiff and after repairing or reconditioning them sells them without removing plaintiff's trade-marks and type numbers.

Two ultimate questions are presented on the appeal: (1) whether injunctive relief must be granted where the court finds defendant guilty, as of the time of the commencement of the action, of conduct constituting unfair competition and trademark infringement, but where during the pendency of the action the defendant has in good faith abandoned the practices complained of; and (2) whether the use made of plaintiff's trade-mark and type numbers by defendant in selling his repaired spark plugs constitutes infringement and unfair competition. These questions arise out of the procedural steps taken in the district court and the events occurring while the action was pending. Their determination calls only for an application of the law to the facts found by the court. A brief summary of the proceedings and of the material facts will be sufficient to make the issues clear.

After the action was commenced in the district court plaintiff filed a motion for a preliminary injunction, and a hearing was had thereon. The matter was submitted upon the pleadings and affidavits and testimony taken in open court. On September 24, 1938, the court filed a memorandum opinion finding that the defendant was guilty of unfair competition and that he had infringed plaintiff's trade-marks. 24 F.Supp. 945. Before an order was entered the defendant filed an amended motion for an order denying preliminary injunction upon condition. By the motion defendant offered to market his reconditioned spark plugs, made originally by the plaintiff, in individual cartons, on the sides of which would be printed in bold type a statement disclosing that the enclosed spark plugs had been repaired by the defendant, but not disclosing the name of the original manufacturer.

By such amended motion defendant offered further to indent in the hex portion of the metal shell of each plug repaired and offered for sale by him the words: "Repaired by A.P. Co.", or their equivalent, in capital letters of equal prominence with the word "Champion" placed by the plaintiff on the insulator of the plug, and to abandon all cartons, display cards and advertising matter previously used by him. The methods of doing business proposed to be abandoned had all been condemned by the court in its opinion of September 24, 1938.

The defendant then undertook to change his business practices to conform to the offer contained in his amended motion. Under his changed system of doing business defendant abandoned the use of all cartons, display cards and advertising matter formerly used by him. He indented upon the hex portion of each spark plug the words "Repaired by A.P. Co.", and left plaintiff's trade-mark "Champion" on the insulator. He printed the following legend upon the sides of each carton: "Repaired Spark Plug By The Automotive Products Company 3033 Main St. Kansas City Mo. Distributed By (Dealer's Name). This Spark Plug, While Not New, Has Been Restored To Usefulness By The Automotive Products Co., By Which It Has Been Thoroughly Renovated And Repaired. All Worn Parts Of The Electrodes Removed, The Remaining Parts Refinished And Adjusted So As To Make It An Efficient Used Spark Plug. Guaranteed To Give At Least 10,000 Miles Of Satisfactory Service"; and he stamped or printed the plaintiff's trade-mark and type numbers under the words "Repaired Spark Plug", on the end of each carton.

On March 3, 1939, the court wrote a letter to counsel for the parties saying that he had reached the conclusion that defendant's effort to conform to his opinion of September 24, 1938, was in good faith and would entitle him to continue in business without the restraint of a preliminary injunction and suggesting that the case continue to pend without trial for a period of six months, and that if within that time it should be made to appear that defendant's method of operation deceives the public and in actual practice infringes plaintiff's trade-mark a further hearing be had.

On January 2, 1940, the parties entered into a stipulation providing for filing of further affidavits by both parties covering the changed practices of defendant and for the final submission of the cause upon the pleadings, affidavits, evidence produced on the preliminary hearing and the stipulation. The additional affidavits were filed within the times limited in the stipulation, and the parties submitted briefs, proposed findings of fact, and conclusions of law.

On July 16, 1940, the court filed an opinion rejecting certain findings of fact and conclusions of law proposed by the plaintiff. D.C., 34 F.Supp. 414, 415. In this opinion the court said:

"It is my conclusion that plaintiff is entitled to a decree as prayed in its bill of complaint, but it is not entitled to an injunction, in view of the present attitude of the defendant. This means that the plaintiff is entitled to a decree upholding its patents and for costs and damages for infringements or unfair competition.

"Therefore, the plaintiff should supply a proposed decree in conformity with its petition and this memorandum opinion, as well as an appropriate recital as to the reason why the injunction should not issue, in view of the defendant's disposition to conform to the ruling of the Court and to refrain from selling its repaired spark plugs in such a way as to deceive the public."

On September 14, 1940, the court filed findings of fact, conclusions of law and entered a decree. The decree declared that plaintiff is the owner of its registered trade-marks and they are valid; that the defendant has infringed said trade-marks, and has unfairly competed with plaintiff in the sale of spark plugs; and "4. That an injunction against Defendant restraining further acts of trade-mark infringement and unfair competition as herein found shall not issue because of changes in Defendant's practices inaugurated subsequent to the date of the entry of the Memorandum Opinion herein on September 24, 1938."

The appeal is from paragraph 4 of the decree.

The plaintiff argues that the court erred in refusing to make certain findings of fact requested by it. In view of the completeness of the findings made by the court and the admissions of counsel for defendant in their written brief in this court, we find it unnecessary to discuss this alleged error of the court separately.

Plaintiff concedes that the defendant has a right to deal in the physical property of discarded spark plugs apart from the trademark "Champion" and to make some collateral use of the word "Champion" in an explanatory statement which discloses the truth as to the origin of the plug and in which such word is not given particular prominence. Plaintiff denies that the printed statements upon defendant's cartons are sufficient to protect its rights.

The practices of defendant which plaintiff contends should be permanently enjoined may be considered in three parts: first, those practices relating to defendant's methods of doing business and advertising which were abandoned after the filing of the opinion of the court on September 24, 1938; second, the continued use by defendant of plaintiff's trade-mark "Champion" on the repaired spark plugs; and, third, the stamping or printing of the trade-mark "Champion" and plaintiff's type numbers on the ends of defendant's cartons.

Plaintiff's claim that it is entitled to a permanent injunction against the first group of practices referred to above is without merit. That contention ignores the rule that a court of equity is not restricted to an adjustment of the rights of the parties as they existed when suit was brought, but will give relief appropriate to events occurring pending the suit. 21 C.J. 137. "Equity acts in the present tense", and molds its "decree to actualities not history." Continental Securities Co. v. Interborough Rapid Transit Co., D.C.N.Y., 207 F. 467, 471, affirmed, 2 Cir., 221 F. 44; 32 C.J. 76, § 63.

When an injunction is sought to restrain a continuing injury and, after suit is brought the defendant claims to have abandoned the course of conduct complained of, the question for the court to determine is whether the illegal conduct has in fact been abated or whether the menace to plaintiff's rights still exists. If the menace exists an injunction should be granted; if not, it should be denied. Goshen Mfg. Co. v. Myers Mfg. Co., 242 U.S. 202, 207, 37 S.Ct. 105, 61 L.Ed. 248; Warner & Co. v. Lilly & Co., 265 U.S. 526, 44 S.Ct. 615, 68 L.Ed....