Coca-Cola Company v. Howard Johnson Company

• Decision Date: 15 November 1974
• Docket Number: Civ. A. No. C 74-870 A.
• Citation: Coca-Cola Company v. Howard Johnson Company, 386 F.Supp. 330 (N.D. Ga. 1974)
• Parties: The COCA-COLA COMPANY, a corporation, Plaintiff, v. HOWARD JOHNSON COMPANY, a corporation, doing business as Howard Johnson's, Defendant.
• Court: U.S. District Court — Northern District of Georgia

386 F. Supp. 330

The COCA-COLA COMPANY, a corporation, Plaintiff, v. HOWARD JOHNSON COMPANY, a corporation, doing business as Howard Johnson's, Defendant.

Civ. A. No. C 74-870 A.

United States District Court, N. D. Georgia, Atlanta Division.

November 15, 1974.

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COPYRIGHT MATERIAL OMITTED

Charles L. Gowen, John C. Staton, Jr., King & Spalding, Julius R. Lunsford, Jr., James W. Young, III, Atlanta, Ga., for plaintiff.

Earle C. Cooley, Blair L. Perry, Hale & Dorr, Boston, Mass., Ben L. Weinberg, Jr., Long, Weinberg, Ansley & Wheeler, Atlanta, Ga., for defendant.

ORDER

JAMES C. HILL, District Judge.

This is an action for trademark infringement and unfair competition. Plaintiff, a manufacturer of soft drink syrup and beverage made therefrom, asserts that it is the registered holder of the trademarks "Coca-Cola" and "Coke." These trademarks, allege plaintiff, symbolize a valuable good will. Plaintiff further alleges defendant, a corporation which operates restaurants, has infringed these trademarks and engaged in unfair competition by serving a beverage not produced by plaintiff or its licensees to customers who order Coca-Cola or Coke.

In its answer defendant asserted nine defenses and two counterclaims. Of present concern to the Court is plaintiff's motion to strike six of the defenses (the Second, Third, Fifth, Sixth, Seventh and Eighth) on the ground that they are insufficient as a matter of law. Plaintiff has also moved for dismissal of defendant's first counterclaim on the ground that no claim is stated.

Fed.R.Civ.P. 12(f) provides that any insufficient defense may be stricken. Motions to strike are not favored by the courts. Great Northern Paper Co. v. Babcock & Wilcox Co., 46 F.R.D. 67, 69 (N.D.Ga.1968); Giraud v. Teamsters, Chauffeurs, Ware. & Help., Local 901, 46 F.R.D. 5, 6 (D.P.R.1969). A successful motion requires that the insufficiency of the defense be clearly apparent. Carter-Wallace, Inc. v. Riverton Laboratories, Inc., 47 F.R.D. 366, 367-368 (S.D.N.Y.1969). It has also been said that a motion to strike should be granted "only when the pleading to be stricken has no possible relationship to the controversy." Augustus v. Board of Public Instruction, 306 F.2d 862, 868 (5th Cir. 1962). Furthermore, unless there is a showing of prejudicial harm to the movant, the courts are reluctant to determine disputed and substantial questions of law on a motion to strike. Augustus, supra. Also see Gilbert v. Eli Lilly & Co. Inc., 56 F.R.D. 116, 120-121 (D.P.R.1972). Finally, district courts have broad discretion in disposing of motions to strike. Smith, Kline & French Laboratories v. A. H. Robins Co., 61 F.R.D. 24, 34 (E.D.Pa.1973).

The Second Defense.

Defendant's second defense is that plaintiff is barred from relief in whole or in part by applicable statute or statutes of limitations. Plaintiff contends the defense should be stricken because trademark infringement and unfair competition are continuous torts, and hence a fresh cause of action arises so long as the wrong continues.

Since there is no federal statute of limitations for a trademark infringement action, the applicable statute of limitations is determined by looking to the law of the forum state. McGuire v. Baker, 421 F.2d 895, 898 (5th Cir. 1970); Local Trademarks v. Price, 170 F.2d 715, 717 (5th Cir. 1948). Neither party has, however, pointed to a Georgia statute of limitations that should apply to this case. Since the parties have not addressed the issue, the Court will not make a ruling as to what statute applies. It is sufficient at this time simply to deny plaintiff's motion to strike the defense. Presently, since no time is stated with respect to the alleged infringement and no statute of limitations period is put forth as applicable, the Court would be required to hypothesize various possible situations and announce various results. In the interest of economy of judicial time, it is better to deny the motion addressed to the pleadings and await the development, at least, of contentions and, hopefully, of facts.

The Third Defense.

Defendant's third defense is that plaintiff is barred in whole or in part by laches. Plaintiff contends the defense should be stricken because laches is not a defense to a prayer for injunctive relief.¹

Plaintiff cites Blue Bell, Inc. v. Ruesman, 335 F.Supp. 236, 237 (N.D. Ga.1971), and Youthform Company v. R. H. Macy & Co., 153 F.Supp. 87, 95 (N. D.Ga.1957), as standing for the proposition that laches is never a defense to a request for an injunction. The Court does not read these cases as standing for that proposition as an iron-clad rule.² The Court views the cases as stating the principle contended for by plaintiff as being generally, but not always, true. The Blue Bell case cited Youthform as authority, and Youthform cited Menendez v. Holt, 128 U.S. 514, 9 S.Ct. 143, 32 L.Ed. 526 (1888). The Court does not, however, read Menendez as holding that laches may never be a defense to an action for injunction. The Court did say in Menendez, supra, 128 U.S. at 523, 9 S.Ct. 143, that in some circumstances delay might bar an accounting for profits, but not an injunction. However, mere delay is not synonymous with laches. See Carl Zeiss Stiftung v. VEB Carl Zeiss Jena, 433 F.2d 686, 704 (2nd Cir. 1970), cert. denied, 403 U.S. 905, 91 S. Ct. 2205, 29 L.Ed.2d 680 (1971). Laches is a defense which appeals to the conscience of the Chancellor to invoke his soundest and wariest discretion and its purpose is to prevent the prosecution of claims which have gone stale. Davidson v. Grady, 105 F.2d 405, 408 (5th Cir. 1939). Whether laches bars an action depends on the circumstances of the particular case and is a question addressed to the discretion of the trial court. Burnett v. New York Central Railroad Company, 380 U.S. 424, 435, 85 S.Ct. 1050, 13 L.Ed.2d 941 (1965). Unlike Blue Bell (summary judgment motion) and Youthform (after trial), the facts of the case now before the Court have not been developed. The Court, accordingly, declines to strike the defense on the present pleadings.

The Fifth Defense.

Defendant's fifth defense is an antitrust misuse of trademark defense. Defendant alleges that plaintiff has misused the trademarks "Coke" and "Coca-Cola" in violating the antitrust laws and that such misconduct by plaintiff bars equitable relief under the doctrine of "unclean hands." The specific violation of the antitrust laws about which defendant complains is the imposition, by plaintiff, of territorial resale restrictions upon licensed users of the trademarks. Plaintiff is not such a licensee.

To determine the sufficiency of this defense, the Court must consider the fairly well established criteria of the "unclean hands" doctrine; the effect of 15 U.S.C. Sec. 1115(b) (7)³; and several well reasoned decisions and opinions touching upon antitrust defenses in trademark infringement cases.

Two cases illustrate the opposite results which have been reached when antitrust defenses have been proffered to trademark infringement cases. What appears to be the majority view is ably presented in Carl Zeiss Stiftung v. V. E. B. Carl Zeiss, Jena, 298 F.Supp. 1309 (S.D.N.Y.1969), modified on other grounds, 433 F.2d 686 (2nd Cir. 1970), cert. denied, 403 U.S. 905, 91 S.Ct. 2205, 29 L.Ed.2d 680 (1971). In that case, Judge Mansfield viewed Sec. 1115(b) (7) as not mandating an antitrust misuse defense. He said at 298 F.Supp. 1311-1312:

"Both the express language of Sec. 33(b) (7) of the Lanham Act and its legislative history reveal strong support for plaintiffs' contention that the intent and effect of the Act is merely to make the defense of antitrust misuse available to defeat the conclusive evidentiary force that would otherwise attach to a trademark certificate under the Act."

Judge Mansfield felt that a court could, in the exercise of its equitable powers, deny the enforcement of a trademark to one who has used the trademark, itself, as the vehicle of unlawful antitrust activities. Such a defense should be rejected, however, where it asserts collateral antitrust activities with respect to the goods bearing the trademark as opposed to the use of the trademark, itself, as the prime and effective instrument to effectuate the antitrust activity. The following cases are examples of rejection of the defense based upon such "collateral activities with respect to goods bearing the trademark." O. & W. Thum Co. v. Dickinson, 245 F. 609, 622-623 (6th Cir. 1917), cert. denied, 246 U.S. 664, 38 S.Ct. 334, 62 L.Ed. 928 (1918); Searchlight Gas Co. v. Prest-O-Lite Co., 215 F. 692, 697 (7th Cir. 1914); Prest-O-Lite Co. v. Davis, 215 F. 349, 351 (6th Cir. 1914); Coca Cola Co. v. Gay-Ola Co., 200 F. 720, 726 (6th Cir. 1912), cert. denied, 229 U. S. 613, 33 S.Ct. 773, 57 L.Ed. 1352 (1913); Forstmann Woolen Co., v. Murray Sices Corporation, 10 F.R.D. 367, 370 (S.D.N.Y.1950); Cantrell & Cochrane v. United Bottle Co., 2 F.Supp. 22, 24 (S.D.N.Y.1921); Coca-Cola Co. v. Deacon Brown Bottling Co., 200 F. 105 (N.D.Ala.1912); Weyman-Burton Co. v. Old Indian Snuff Mills, 197 F. 1015 (S. D.N.Y.1912); Independent Baking Powder Co., v. Boorman, 130 F. 726 (D.N.J. 1904).

Indeed, it might be stated, as a general rule, that an antitrust defense is insufficient in a trademark infringement case. However, that cannot be stated as an ironclad proposition, for we have the equally well reasoned opinion of Judge Oliver in Phi Delta Theta Fraternity v. J. A. Buchroeder & Company, 251 F.Supp. 968 (W.D.Mo.1966). The complex arrangement there denounced appears in the report. Suffice it to say that restraints were placed upon commerce in jewelry, bearing the crests and arms of fraternal orders, and the fraternities had obtained trademark registration of those insignias. Trademark infringement actions by the registered owners were met by antitrust defenses and found to be sufficient.

In Phi Delta Theta, Judge Oliver buttressed his conclusion...