Clairol, Inc. v. Cody's Cosmetics, Inc.

• Citation: 353 Mass. 385,231 N.E.2d 912
• Parties: , 156 U.S.P.Q. 466 CLAIROL, INCORPORATED v. CODY'S COSMETICS, INCORPORATED.
• Decision Date: 07 December 1967
• Court: United States State Supreme Judicial Court of Massachusetts

Page 912

231 N.E.2d 912

353 Mass. 385, 156 U.S.P.Q. 466

CLAIROL, INCORPORATED v. CODY'S COSMETICS, INCORPORATED.

Supreme Judicial Court of Massachusetts, Essex.

Argued Nov. 7, 1967.

Decided Dec. 7, 1967.

Edward B. Hanify, Boston (Gordon T. Roberts, Thomas G. Dignan, Jr., and Robert F. Hayes, Boston, with him), for plaintiff.

Albert S. Previte, Jr., Lawrence, for defendant.

Before WILKINS, C.J., and WHITTEMORE, CUTTER, KIRK, SPIEGEL and REARDON, JJ.

CUTTER, Justice.

The plaintiff (Clairol) seeks to enjoin the defendant (Cody's) from selling (in the manner theretofore practised by Cody's) at retail to the general public Clairol's products designated 'Professional Use Only.' The facts are stated upon the basis of the trial judge's careful, complete, subsidiary findings, which are fully justified by the reported evidence. The case is before us on report without decree. G.L. c. 214, § 31.

Clairol makes fourteen shades of permanent hair dye and also two blue shades which are to be used only in conjunction with one or more of the basic shades. All these products are sold in two 'different channels of trade at different prices: one through so-called 'retail jobbers' for ultimate resale through * * * retail establishments to the general public for home use; and the other, through so-called 'beauty supply jobbers', for resale to professional hairdressers * * * and beauty schools.'

'The contents of a bottle of * * * dye bearing a particular color number are exactly the same in * * * chemical composition for the * * * 'retail users' as a bottle bearing the same color number sold' for professional use. 'The only differences between the (same size) bottles of the two classes are * * * the labels.' ¹ The retail bottles, however, 'are individually packaged in cartons and each carton has a pamphlet of instructions * * *. (P)rofessional use (bottles) are distributed in * * * cartons containing six bottles (six-packs). Only one instruction sheet, different * * * from the * * * pamphlet inserted in retail * * * cartons in that it describes only the hypersensitivity tests and warnings * * * is placed in each 'six-pack' carton.'

Cody's, 'operating a discount store in Lawrence, has been buying from wholesale outlets * * * six-packs designed for * * * professional users only and selling the * * * bottles singly at retail to home users.' Clairol seeks to enjoin this as unfair competition under G.L. c. 110, § 7A. ²

Clairol has not taken advantage of the Fair Trade Law (G.L. c. 93, §§ 14A--14D). ³ The judge correctly concluded that the Unfair Sales Act (G.L. c. 93, §§ 14E--14K) is not applicable upon this record.

Clairol has a substantial good will for its products and controls thirty per cent of a highly competitive hair dye market with gross sales of its 'hair color bath' of over $15,000,000 a year. It spends for advertising more than $5,000,000. Each bottle for home use is distributed in a distinctive yellow carton with which the product has become associated in consumers' minds. Easily understood instructions in the retail pamphlet were prepared to insure consumers of 'safe and satisfactory results.' ⁴ Directions are given concerning (a) skin tests for hypersensitivity, (b) strand tests to obtain the desired color, (c) use of gloves during application, (d) the assembly and application of the product, and (e) proper utensils. Seriously undersirable and undesired results may follow failure to comply with the instructions.

Because its product may deteriorate upon exposure to heat or light, Clairol has adopted a standard 'shelf life.' Each home use carton and professional use bottle bears a stamp, 'Use before (a specific date).' Outdated merchandise may be returned to Clairol for full credit. Use of product which has deteriorated may result in an undesired color.

Retail channel sales are made at about seventy-three cents a bottle to Clairol's retail wholesalers (who make about a twenty per cent markup), drug store and certain retail chains, 'very large independents,' and certain others. Professional use bottles are sold (a) at thirty-nine cents a bottle in six-packs to beauty jobbers who resell to beauty salons at a forty per cent markup, and (b) directly to beauty fairs and beauty schools at thirty-six cents a bottle. Retail sales are more profitable to Clairol than professional sales which are 'only marginally profitable.' Retail sales, however, are much helped by the professional use of Clairol products. The practice of selling at lower prices for professional use thus 'has become a valuable (advertising) factor * * * in inducing' retail purchases.

In 1963, Clairol abandoned placing each professional use bottle in an individual carton with an instruction pamphlet. The purpose was to save about $200,000 a year and increase profits from the professional sales. ⁵

Cody's has sold Clairol hair color bath in unwrapped bottles, bearing the 'Professional Use Only' labels but without individual cartons, from bins exposed to a bright store lighting system: With many bottles it distributed a mimeographed instruction sheet. The trial judge found that this mimeographed sheet mentioned essentially the hypersensitivity tests prescribed for hair colorings by the Federal act, but he concluded that it did not 'strictly * * * comply with' G.L. c. 94, § 186, ⁶ as amended by St.1961, c. 600, § 2. The mimeographed sheet gave no substantial instructions concerning the other matters dealt with in Clairol's retail use instruction booklet. The judge concluded, however, that, because the mimeograph sheet 'substantially warned * * * of the danger of the products and * * * to make sensitivity tests,' Cody's (in the absence of contract relations with Clairol) was not required to instruct users on other matters. Some Clairol bottles sold by Cody's to private detectives bore use expiration dates earlier than the sale date.

Cody's bought Clairol professional use products at forty-five to fifty cents a bottle from jobbers. It sells about 1,000 bottles a month at seventy-three cents a bottle. Some beauty salons also sell professional use bottles to customers.

There was no evidence of complaints or injuries arising out of Cody's sales. The trial judge took the view, nevertheless, that Cody's sales of professional products 'are extremely likely to injure * * * (Clairol's) business reputation * * * or dilute the distinct qualities of its trade name or trade marks.' He concluded that Clairol was at fault in failing to exercise sufficient control over its professional product jobbers to prevent sales to discount houses like Cody's and that this fault contributed to Clairol's troubles as much as Cody's retail sales of the easily procurable products.

1. The record, as the trial judge indicated, reveals no unfair competition in the usual sense of passing off the product of another as that of Clairol, or of trade mark infringement, or of taking advantage of name or trade mark similarity to 'do some 'free riding' * * * on the plaintiff's business reputation, to the damages of' Clairol's trade mark, as in Skil Corp. v. Barnet, 337 Mass. 485, 494--495, 150 N.E.2d 551. See Angell Elevator Lock Co. Inc. v. Manning, 348 Mass. 623, 625--626, 205 N.E.2d 245. There is no confusion of corporate names or trade marks or possibility of such confusion. Cf. Great Scott Food Mkt. Inc. v. Sunderland Wonder Inc., 348 Mass. 320, 323, 324--325, 203 N.E.2d 376; Massachusetts Mut. Life Ins. Co. v. Massachusetts Life Ins. Co., 351 Mass. 283, 290--292, ^a 218 N.E.2d 564. The product sold by Cody's was made by Clairol. Although marked 'Professional Use Only,' it was identical with Clairol's retail product except for the different label placed upon it by Clairol, the uncovered bottle, and the absence of Clairol's instruction pamphlet.

There also is here no breaking open of Clairol's bottle container and changing the chemical content of the liquid. See e.g. Coca-Cola Co. v. Bennett, 238 F. 513, 516--518 (8th Cir.); Coca-Cola Co. v. J. G. Butler & Sons, 8 Cir., 229 F. 224, 231--233; Callmann, Unfair Competition and Trade-Marks (2d ed. and supp.) § 84.2(c). If there is technical adulteration within the meaning of G.L. c. 94, § 186, as amended (fn. 6), it is because neither the bottle nor Cody's mimeographed sheet (despite its aggregate effect) contains the precise statutory warning.

2. Clairol places principal reliance upon G.L. c. 110, § 7A (fn. 2), in seeking protection against unfair competition by sales of its own products in a manner not intended by it, which it alleges will damage its reputation. Section 7A, by supplementing general equity principles, has encouraged a wider range of relief against allegedly unfair competitive practices than would probably have been granted prior to its enactment. See Michelson, Massachusetts Law of Unfair Competition and Restatement 2d: Torts, 49 Mass.L.Q. 131, 137--139. In each Massachusetts case cited, ⁷ however, there was some element of possible confusion of (1) a product or trade name of another, or the activity of another, with (2) the product, trade name, or activity of the plaintiff. See note, 68 Harv.L.Rev. 814, 851--852.

We do not suggest that such possible confusion is essential either to general equitable relief or to relief under § 7A, but thus far no authority indicates what other equitable considerations will justify granting injunctive relief under § 7A. Although the precise scope of the section, and of related general principles, can be determined only on a case by case basis, we regard § 7A as authorizing protection of business reputation and trade marks from unfair injury and dilution on a somewhat broader basis than was clearly recognized prior to its enactment. See Callmann, Unfair Competition and Trade-Marks (2d ed. and supp.) §§ 84.2--84.2(a); note, 77 Harv.L.Rev. 520, 526--532.

This case calls upon us to consider whether certain dealings by another in a producer's own first quality merchandise, as labeled...