Chanel Inc. v. Casa Flora Co.

• Decision Date: 06 February 1967
• Docket Number: No. C--3241,C--3241
• Citation: 94 N.J.Super. 110,226 A.2d 854
• Parties: , 153 U.S.P.Q. 213 CHANEL, INC. and Chanel Industries, Inc., Plaintiffs, v. CASA FLORA COMPANY, Defendant.
• Court: New Jersey Superior Court

Page 110

94 N.J.Super. 110

226 A.2d 854, 153 U.S.P.Q. 213

CHANEL, INC. and Chanel Industries, Inc., Plaintiffs, v. CASA FLORA COMPANY, Defendant.

No. C--3241.

Superior Court of New Jersey

Chancery Division.

Feb. 6, 1967.

Levy, Lemken & Margulies, Jersey City, for plaintiffs (Seymour Margulies, Jersey City, appearing).

Milton M. and Adrian M. Unger, Newark, for defendant (Milton M. Unger, Newark, appearing).

HERBERT, J.S.C.

Plaintiff Chanel Industries, Inc. manufactures and plaintiff Chanel Inc. markets eau de cologne known by the trade-mark 'Chanel No 5.' Relief by injunction is sought against defendant, a company which admits buying Chanel No 5 cologne from sellers other than either of the plaintiffs, and admits rebottling it in small vials which in due course reach the counters of retailers.

The Chanel No 5 cologne which defendant buys is contained in plaintiffs' bottles. The vials into which it is then placed are labelled:

'REBOTTLED CHANEL NO. 5 EAU DE COLOGNE

Rebottled by an independent bottler from the genuine product

wholly independent of CHANEL

Casa Flora Co. Bloomfield, N.J. 1 Dram'

The first three lines of this label are in capital letters and the type used is larger than that used in the rest of the label. What is not shown here--because of a typewriter's limitations--is a heavier type face and small capitals in the final three lines.

Defendant contends that it is entitled to purchase Chanel No 5 cologne from anyone who is the legitimate owner of a supply and is willing to make a sale, and that rebottling and distribution by it are not improper if no misrepresentations are made. Defendant goes on and contends that its vials are so labelled as to make clear to anyone who is willing to read that plaintiffs' product has been placed in the vials by defendant and not by either plaintiff. Plaintiffs assert that defendant should not be permitted to rebottle their product without their permission and, in any event, has not made clear to the public what it is doing. They also claim they are entitled to relief on the basis of R.S. 56:3--1 through 13, as amended, N.J.S.A., being a group of statutory sections dealing with registration of trade-marks and protection of rights conferred by registration; on the basis of the New Jersey bottle law. R.S. 56:3--14, et seq., as amended, N.J.S.A., and on the basis of R.S. 56:4--1, et seq., as amended, N.J.S.A.

Counsel have not been able to cite any New Jersey cases which have dealt with repackaging of a trade-marked product by a business man who has not been given permission to do so by one owning or controlling the mark; and I have not found any. The leading case on the subject is Prestonettes, Inc. v. Coty, 264 U.S. 359, 44 S.Ct. 350, 68 L.Ed. 731 (1924). Coty sued to restrain alleged unlawful uses of registered trade-marks for powder and perfume. Among other things, the proofs showed that Prestonettes, Inc. had been doing what defendant here admits to, namely, buying genuine Coty perfume in larger bottles and selling it in smaller bottles. The District Court ruled that Prestonettes could continue repackaging and selling Coty's products if it used an appropriate label. The Circuit Court of Appeals took a radically different view and enjoined Prestonettes from using the Coty mark or name at all, except on original packages as marked and sold by plaintiff. Then the Supreme Court, with one dissenting vote, reversed the Circuit Court of Appeals and went back to the judgment of the District Court. Justice Holmes said for the court:

'The defendant of course by virtue of its ownership had a right to compound or change what it bought, to divide either the original or the modified product, and to sell it so divided. The plaintiff could not prevent or complain of its stating the nature of the component parts and the source from which they were derived if it did not use the trade-mark in doing so. For instance, the defendant could state that a certain percentage of its compound was made at a certain place in Paris, however well known as the plaintiff's factory that place might be. If the compound was worse than the constituent, it might be a misfortune to the plaintiff, but the plaintiff would have no cause of action, as the defendant was exercising the rights of ownership and only telling the truth. The existence of a trade-mark would have no bearing on the question. Then what new rights does the trade-mark confer? It does not confer a right to prohibit the use of the word or words. It is not a copyright. The argument drawn from the language of the Trade-mark Act does not seem to us to need discussion. A trade-mark only gives the right to prohibit the use of it so far as to protect the owner's good will against the sale of another's product as his.' (264 U.S., at p. 368, 44 S.Ct. at p. 351)

Prestonettes was followed in Champion Spark Plug Co. v. Sanders, 331 U.S. 125, 67 S.Ct. 1136, 91 L.Ed. 1386 (1947), a case which involved both trade-mark and unfair competition questions. Defendants had been reconditioning used spark plugs and selling them. It was held that Champion, the trade-mark owner, had no right to an injunction against sale of the reconditioned plugs, but a decree was affirmed which required clear disclosure to the buyer of the reconditioning and that defendants rather than Champion were doing it.

Judge William Clark, in Bourjois, Inc. v. Hermida Laboratories, 106 F.2d 174 (3 Cir.1939), cited some text writers to the effect that the owner of a trade-mark should be entitled to insist that his product be sold exclusively in his own package, but the case resulted in a judgment allowing Hermida to continue selling its own packages of plaintiff's face powder, though under a drastically revised label. Other cases which have applied the Prestonettes rule are: Bayer Co., Inc. v. Shoyer, 27 F.Supp. 633 (D.C.Pa.1939); Forstmann Woolen Co. v. J. W. Mays, Inc., 89 F.Supp. 964 (D.C.N.Y.1950), and Forstmann Woolen Co. v. Murray Sices Corp., 144 F.Supp. 283 (D.C.N.Y.1956). Cf. Bulova Watch Co. v. Allerton Co., 328 F.2d 20 (7 Cir. 1964); A. Bourjois & Co., Inc. v. Katzel, 260 U.S. 689, 43 S.Ct. 244, 67 L.Ed. 464, 26 A.L.R. 567 (1923), and Guerlain, Inc. v. F. W. Woolworth Co., 297 N.Y. 11, 19, 74 N.E.2d 217 (Ct.App.1947), certiorari denied, 332 U.S. 837, 68 S.Ct. 220, 92 L.Ed. 410 (1947). Although it can be said about the two Forstmann cases that the trade-marked cloth there involved was intended to be cut and fashioned into garments by a purchaser, nevertheless those cases support the proposition that ownership legitimately acquired carries with it the right to offer the product for resale coupled with a representation that it is in fact the trade-marked product and has been reformed, processed or repackaged by another.

There can be no doubt that the small vials being marketed by defendant in this case are made readily salable by the customer's belief that they contain plaintiffs' wellknown cologne. Thus, defendant is getting to a considerable extent the benefit of the reputation which plaintiffs have established for their product, but wholesalers and retailers who sell that product in plaintiffs' own bottles are getting a similar benefit and, like those dealers, defendant is in fact marketing Chanel cologne purchased in the avenues of trade where plaintiffs placed it for the very purpose of having it bought.

From the authorities cited I conclude that plaintiffs, owning and controlling a trade-mark, are not by virtue of that ownership and control to be granted an injunction barring defendant from buying, rebottling and selling in its own bottles the trade-marked cologne.

The sale of the rebottled product under conditions amounting to unfair competition would be another matter, and that leads to a consideration of defendant's labels and advertising. The text of the label on defendant's one-dram vials has already been quoted. Defendant also has prepared various other devices to attract a shopper's attention. There is a small display card about 4 6 to which a vial is attached. The card bears essentially the same text as the label on the vial, plus some decoration. At the top of the card in 18-point type is the legend 'REBOTTLED CHANEL No. 5.' Defendant also uses a small box which serves as a mounting and display device for a vial. The printing on that box is almost identical with the quoted label, and again the words 'CHANEL NO. 5 REBOTTLED' are the most prominent part of the reading matter. Both card and box state that the rebottling has been done 'by an independent bottler from the genuine product wholly independent of Chanel,' and the name of defendant appears on all of the advertising matter. There was also placed in evidence a larger advertising sheet about 8 1/2 11 showing that three other brands of cologne as well as Chanel No. 5 are being bottled and sold in one-dram vials. This sheet also makes it plain that the cologne in the vials has been rebottled 'wholly independent of the original makers.'

Although defendant does not sell at retail--nor do plaintiffs--the advertising material just described is furnished to merchants for use on their racks and counters. Defendant's label and advertising material do not bear any facsimile or imitation of a distinctive trade-mark; in that respect this case differs from Bayer Co., Inc. v. Shoyer, supra, where Bayer's design and coloring reproduced on Shoyer's packages led to injunctive relief. In fact, plaintiffs do not use as part of their mark any abstract or representational design. The word 'Chanel' is printed on plaintiffs' bottles and boxes in conventional type face. On the bottle the label is: 'No 5 Chanel,' and on the box 'Chanel No 5.' One distinctive, though scarcely noticeable feature of the label, not reproducible with an ordinary typewriter, is placement of the 'o' in 'No' opposite the top of the 'N' rather than on the base line. And the conventional period after an abbreviation is missing. These...